<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ---
ACT OF 1934
For the quarterly period ended May 31, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---
EXCHANGE ACT OF 1934
Commission File Number: 0-15925
CAPITAL PACIFIC HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2956559
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4100 MacArthur Blvd., Suite 200, Newport Beach, CA 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 622-8400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) 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 XX No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class and Title of Shares Outstanding as of
Capital Stock July 10, 1996
------------------ ------------------------
Common Stock, $.10 Par Value 14,995,000
<PAGE> 2
CAPITAL PACIFIC HOLDINGS, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
<S> <C>
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets -
May 31, 1996 and February 29, 1996 1
Consolidated Statements of Operations for the
Three Months Ended May 31, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Three Months Ended May 31, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
</TABLE>
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8K
<TABLE>
<CAPTION>
(a) Exhibits Method
Number Description of Filing
-------- -------------------------------------- ---------
<S> <C> <C>
3.1 Second Restated Certificate Filed with
of Incorporation of the this
Registrant document
3.2 Second Amended and Restated Bylaws Filed with
of the Registrant this
document
27 Financial Data Schedule Filed with
this
document
(b) Reports on Form 8-K
None Filed
</TABLE>
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
ASSETS
<TABLE>
<CAPTION>
May 31 February 29
1996 1996
(Unaudited)
----------- ------------
<S> <C> <C>
Cash and cash equivalents $ 15,223 $ 13,850
Restricted cash 1,499 1,429
Accounts and notes receivable 5,820 4,421
Residential inventories 233,955 227,194
Plant, property and equipment 6,908 6,685
Prepaid expenses and other assets 11,086 12,929
----------- ------------
$274,491 $266,508
=========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts Payable $ 16,158 $ 26,333
Accrued liabilities 11,241 10,006
Notes payable 82,124 63,929
Bonds payable 100,000 100,000
----------- ------------
Total liabilities 209,523 200,268
----------- ------------
Minority Interest 1,295 2,894
Stockholders' equity (deficit):
Common stock, par value $.10 per share,
30,000,000 shares authorized;
14,995,000 issued and outstanding 1,500 1,500
Additional paid-in capital 211,888 211,888
Accumulated deficit (149,715) (150,042)
----------- ------------
Total stockholders' equity 63,673 63,346
----------- ------------
$274,491 $266,508
=========== ============
</TABLE>
The accompanying notes are an integral part of these
Consolidated financial statements.
-1-
<PAGE> 4
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended May 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Revenue:
Sales of homes $44,732 $31,703
Sales of land and lots 700 733
Interest and other income 468 704
------- -------
45,900 33,140
------- -------
Costs and expenses:
Cost of homes 36,846 26,568
Cost of land and lots 561 442
Selling, general and administrative 7,872 6,470
Minority Interest 114 83
------- -------
45,393 33,563
------- -------
Income (loss) before income taxes 507 (423)
Provision (benefit) for income taxes 180 (150)
------- -------
NET INCOME/(LOSS) $ 327 $ (273)
======= =======
Net income/(loss) per common share: $ 0.02 $ (0.02)
======= =======
Weighted average number of common shares 14,995 14,995
======= =======
</TABLE>
The accompanying notes are an integral part of these
Consolidated financial statements.
- 2 -
<PAGE> 5
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
May 31,
--------------------------
1996 1995
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 327 $ (273)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Change in restricted cash (70) --
Depreciation and amortization 413 308
(Increase) decrease in residential inventories (6,761) 477
(Increase) decrease in receivables, prepaid
expenses and other assets (1,086) 470
Decrease in accounts payable and
accrued liabilities (8,870) (3,835)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (16,047) (2,853)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant, property and equipment, net (636) (474)
Decrease in investment in partnerships 1,459 144
-------- --------
NET CASH FLOW FROM (USED IN) INVESTING ACTIVITIES 823 (330)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in minority interest in joint ventures (1,599) (1,674)
Borrowings from (payments to) notes payable, net 18,196 (5,345)
-------- --------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 16,597 (7,019)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,373 (10,202)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,850 22,401
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,223 $ 12,199
======== ========
</TABLE>
The accompanying notes are an integral part of these
Consolidated financial statements.
-3-
<PAGE> 6
CAPITAL PACIFIC HOLDINGS, INC., AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements, and notes thereto, included in the Form 10-K for the fiscal year
ended February 29, 1996 of Capital Pacific Holdings, Inc. (the "Company"). In
the opinion of management, the financial statements presented herein include
all adjustments (which are solely of a normal recurring nature) necessary to
present fairly the Company's financial position and results of operations. The
results of operations for the three month period ended May 31, 1996, are not
necessarily indicative of the results that may be expected for the year ending
February 28, 1997.
2. Notes payable:
Notes payable at May 31, 1996 and February 29, 1996, are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
May 31, February 29,
1996 1996
--------------------------
<S> <C> <C>
Promissory notes collateralized by
deeds of trust, including
interest varying from 9.5 percent to
prime plus 1.0 percent $ 2,358 $ 3,661
Notes payable to bank at bank's prime rate
plus 1.0 percent, maturing December 31, 1996 0 241
Notes payable to bank, including interest
at prime plus 2.5 percent, maturing
September 7, 1996 1,915 1,915
Notes payable to banks, including
interest varying from prime plus
1.0 percent to prime plus 2.0 percent,
maturing between June 30, 1996 & March 31,
1998 secured by certain real estate
inventories on a non-recourse basis 44,379 30,158
Notes payable to banks, including interest
at prime plus 1.0 percent with terms of
the commitment reducing commencing
October 1, 1997 through March 31, 1998,
secured by certain real estate
inventories on a recourse basis 30,972 25,454
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C> <C>
Contingent promissory note payable to previous
owner of Clark Wilson secured by Stock Pledge
Agreement on a non-recourse basis under which
the amounts due, including interest at 8 percent,
are fully dependent upon the performance of the
entity acquired 2,500 2,500
------- -------
$82,124 $63,929
======= =======
</TABLE>
5
<PAGE> 8
3. Supplemental Guarantor Information
In connection with the offering in fiscal 1995 of $100,000,000 in
senior unsecured notes (the "Offering"), the Company and certain of its
wholly-owned subsidiaries (Guarantors) jointly, severally, fully and
unconditionally guaranteed such notes (the "Notes"). Supplemental condensed
combined financial information of the Company, Guarantors and non-guarantors is
presented as follows. As discussed in Note 3 in Notes To Supplemental Guarantor
Information, these financial statements are prepared using the equity method of
accounting for the Company's and the Guarantors' Investments in subsidiaries
and partnerships. This supplemental financial information should be read in
conjunction with the consolidated financial statements.
As Of And For The three Months Ended May 31, 1996
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Capital Pacific Non- Total
Holdings, Inc. Guarantors(1) Guarantors(2) Eliminations(4) Consolidated
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
Cash $ 12,767 $ 1,285 $ 1,171 $ 0 $ 15,223
Inventories 155,264 28,911 49,656 124 233,955
Investment in Partnerships and
subsidiaries(3) 28,548 1,419 0 (28,947) 1,020
Intercompany advances 35,083 0 0 (35,083) 0
Other 14,436 1,714 6,187 1,956 24,293
----------------------------------------------------------------------------------------
Total Assets $246,098 $33,329 $57,014 $(61,950) $274,491
========================================================================================
Accounts payable and accrued
liabilities $ 18,779 $ 5,041 $ 4,529 $ (950) $ 27,399
Intercompany advances 0 6,817 23,306 (32,123) 0
Notes payable 163,647 2,076 16,401 182,124
Minority interest 0 0 0 1,295 1,295
Shareholders' equity 63,672 17,395 12,778 (30,172) 63,673
----------------------------------------------------------------------------------------
Total Liabilities & Equity $246,098 $33,329 $57,014 $(61,950) $274,491
========================================================================================
STATEMENT OF OPERATIONS
Revenues:
Sales of homes and land $ 19,683 $ 8,254 $17,495 $ 0 $ 45,432
Interest and other income, net 251 149 464 (792) 72
Equity in income of partnerships
and subsidiaries(3) 810 93 0 (507) 396
----------------------------------------------------------------------------------------
Total Revenues 20,744 8,496 17,959 (1,299) 45,900
----------------------------------------------------------------------------------------
Cost of homes and land 16,737 6,769 14,452 (551) 37,407
Selling, general and administrative 3,860 1,341 2,671 7,872
Minority interest 0 0 0 114 114
----------------------------------------------------------------------------------------
Income (loss) before provision
(benefit) for income taxes 147 386 836 (862) 507
Provision (benefit) for income taxes (180) 136 224 180
----------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 327 $ 250 $ 612 $ (862) $ 327
========================================================================================
</TABLE>
- 6 -
<PAGE> 9
<TABLE>
<CAPTION>
Capital Pacific Non- Total
Holdings, Inc. Guarantors(1) Guarantors(2) Eliminations(4) Consolidated
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
Net cash from (used in) operating
activities $(6,620) $ (795) $(9,407) $ 775 $(16,047)
Net cash from (used in) investment
activities 0 0 0 823 823
Net cash from (used in) financing
activities 13,353 (667) 5,509 (1,598) 16,597
----------------------------------------------------------------------------------------
Net increase (decrease) in cash 6,733 (1,462) (3,898) 0 1,373
Cash - beginning of period 6,034 2,747 5,069 0 13,850
----------------------------------------------------------------------------------------
Cash - end of period $12,767 $ 1,285 $ 1,171 $ 0 $15,223
========================================================================================
</TABLE>
-7-
<PAGE> 10
NOTES TO SUPPLEMENTAL GUARANTOR INFORMATION
(1) Guarantors are Durable Homes, Inc., J.M. Peters Nevada, Inc., and
Peters Ranchland Company, Inc., all wholly-owned subsidiaries of
Capital Pacific Holdings, Inc.
(2) The non-guarantors are:
(a) The limited partnership in which Peters Ranchland Company, Inc., is
a general partner:
- Ranchland Alicante Development, L.P.
- Ranchland Montilla Development, L.P.
- Ranchland Fairway Estates Development, L.P.
- Ranchland Portola Development, L.P.
(b) The limited partnership in which J.M. Peters California, Inc., is
a general partner:
- J.M.P. Mulholland Estates I, L.P.
- J.M.P. Mulholland Estates II, L.P.
(c) The limited partnership in which J.M. Peters Nevada, Inc. and
Durable Homes, Inc. are general partners:
- Taos Estates, L.P.
(d) The general partnership in which Capital Pacific Holdings, Inc.,
is a general partner:
- Peters Walnut Estates
(e) The wholly-owned subsidiaries of Capital Pacific Holdings, Inc.:
- Newport Design Center
- Capital Pacific Communities, Inc.
- Capital Pacific Homes, Inc. (formally knows as Durable Homes of
California, Inc.)
- J.M. Peters Arizona, Inc. (expected to become a guarantor in
fiscal year 1997)
- Capital Pacific Mortgage, Inc. (expected to become a guarantor
in fiscal year 1997)
- Clark Wilson Homes, Inc. (expected to become a guarantor in
fiscal year 1997)
- Fairway Financial Company
- Parkland Estates Company, Inc. (expected to become a guarantor
in fiscal year 1997)
- J.M. Peters California, Inc. (expected to become a guarantor in
fiscal year 1997)
- J.M. Peters Homes of Arizona, Inc.
8
<PAGE> 11
NOTES TO SUPPLEMENTAL GUARANTOR INFORMATION (CONT.)
(f) Fifty percent owned entities of Capital Pacific Holdings, Inc.:
- Bay Hill Escrow, Inc.
- J.M.P. Harbor View, L.P.
- J.M.P. Canyon Estates, L.P.
(3) Investments in partnerships and subsidiaries are accounted for by the
Company and the Guarantors on the equity method of accounting for
purposes of the supplemental combining presentation.
(4) The elimination entries eliminate investments in subsidiaries,
partnerships and intercompany balances.
9
<PAGE> 12
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
FINANCIAL CONDITION
In August 1995 the Company successfully completed negotiations with its
principal bank lender increasing total contingent availability under all credit
facilities with the bank from $50 million to $90 million. As of May 31, 1996
the Company has in place three separate facilities (the "Facilities") with the
bank as follows:
- $25 million Non-Recourse Secured Acquisition and
Development line of credit ("Non-Recourse A & D Line")
- $40 million Recourse Secured Production line of credit
("Recourse Production Line")
- $25 million Non-Recourse Secured Production line of credit
("Non-Recourse Production Line")
A commitment fee is payable annually. Availability of funds under the
Facilities is subject to certain bank and other requirements. At May 31, 1996,
the Company had aggregate borrowings outstanding of $61.1 million under the
Facilities.
The Facilities are secured by liens on various completed or under construction
homes and lots held by the Company. Pursuant to the Facilities, the Company is
subject to certain covenants, which require, among other things, the
maintenance of a consolidated liabilities to consolidated net worth ratio,
minimum liquidity, minimum net worth and loss limitations, all as defined in
the documents that evidence the Facilities. At May 31, 1996, the Company was in
compliance with these covenants. The Facilities also define certain events that
constitute events of default. As of May 31, 1996, no such event of default has
occurred.
Effective June 18, 1996, the Company successfully negotiated extensions of the
Facilities to dates ranging from October 1, 1997 to March 31, 1998.
Durable and Clark Wilson also have secured non-recourse lines of credit to
facilitate construction activity. Durable's $15.0 million facility has a
maturity date of July 1, 1997. Clark Wilson has a non-recourse secured line of
credit for $15.0 million with a maturity date of June 30, 1996. Clark Wilson is
currently negotiating an extension of its facility and expects to successfully
complete this negotiation. Clark Wilson has an additional $11.5 million
non-recourse secured line of credit with a bank having a term of one year
(maturity date of May 31, 1997).
10
<PAGE> 13
For the three months ended May 31, 1996, the Company closed the sale of 252
homes and 3 land lots. This amount includes 11 homes closed in unconsolidated
joint ventures. The Company, at May 31, 1996 had in excess of 450 homes under
construction. Construction activity is being financed out of Company cash, bank
financing and the existing joint ventures, including joint ventures with
investment advisors to the State of California Public Employees Retirement
System ("CalPERS"). The Company anticipates that it will continue to utilize
both bank financing and joint ventures to cover liquidity needs in excess of
Company cash.
The Company expects that cash flow generated from operations and from
additional financing permitted by the terms of the Indenture will be sufficient
to cover the debt service on the Offering, the Facilities and the Company's
other bank lines and to fund the Company's current development and construction
activities for the foreseeable future.
BALANCE SHEET ITEMS
Cash and cash equivalents increased to $15.2 million at May 31, 1996 from $13.8
million at February 29, 1996 due to increased construction borrowing.
Residential inventories increased from $227 million at February 29, 1996 to
$234 million at May 31, 1996. The increase is due to the progress made on homes
under construction.
Accounts payable and accrued liabilities have decreased to $27.4 million at
May 31, 1996 from $36.3 million at February 29, 1996, while notes payable have
increased from $63.9 million at February 29, 1996, to $82.1 million at May 31,
1996, due principally to increased construction activity.
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL 1997 COMPARED WITH THE FIRST QUARTER OF FISCAL 1996:
Revenues from housing sales increased by 41% for the first quarter of fiscal
1997 compared to the first quarter of fiscal 1996, to $44.7 million from $31.7
million. Home closings increased 3% to 252 in the first quarter of fiscal 1997
from 245 homes during the first quarter of fiscal 1996. The average sales price
of homes closed increased 37% to $177 thousand in the first quarter of fiscal
1997 from $129 thousand in the corresponding quarter of fiscal 1996.
11
<PAGE> 14
The Company's increased closings resulted in an increase in cost of sales for
the first quarter of 1997 to $36.8 million versus $26.6 million for the
corresponding quarter of fiscal 1996. The Company's increased average sales
price contributed to a 10% increase in gross profit margin, to 17.7% in the
first quarter of fiscal year 1997 as compared to 16.1% for the corresponding
quarter of fiscal 1996.
The increase in Company activity resulted in an increase in selling, general
and administrative expense of $1.4 million or 21.6% for the first quarter of
fiscal 1997 as compared to the first quarter of fiscal 1996. As a percentage of
gross revenue, selling, general and administrative expenses declined to 17.6%
in the first quarter of fiscal 1997 compared to 20.4% for the corresponding
quarter of fiscal 1996.
Minority interest expense was $114 thousand for the first quarter of fiscal
1997 compared to $83 thousand for the first quarter of fiscal 1996. The
increase was due to the increased number of closings in the Company's
consolidated joint venture projects.
As a result of the foregoing factors the Company increased net income by
$600 thousand to a positive $327 thousand for the three months ended May 31,
1996 compared to a net loss of $273 thousand for the three months ended
May 31, 1995.
The Company's net orders (homes contracted for sale, less cancellations)
increased by 15% to 376 in the first quarter of fiscal 1997 as compared to 327
for the corresponding quarter of fiscal 1996. The Company's backlog (homes
under contract but not closed) increased by 10% from 562 homes at May 31, 1996,
compared to 511 at May 31, 1995.
Item 6 - EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number
<S> <C>
3.1 Second Restated Certificate of Incorporation of the Registrant
3.2 Second Amended and Restated Bylaws of the Registrant
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8K
None Filed
- 12 -
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAPITAL PACIFIC HOLDINGS, INC.
Date: July 12, 1996 BY: /s/ DALE DOWERS
-------------------------------------
Dale Dowers, President and
Chief Executive Officer
Date: July 12, 1996 BY: /s/ ANTHONY M. LAUGHLIN
-------------------------------------
Anthony M. Laughlin, Vice President
and Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
3.1 Second Restated Certificate of Incorporation of the Registrant
3.2 Second Amended & Restated Bylaws of the Registrant
27 Financial Data Schedule
</TABLE>
- 14 -
<PAGE> 1
Exhibit Number 3.1
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
CAPITAL PACIFIC HOLDINGS, INC.
(formerly known as J.M. Peters Company, Inc.)
The undersigned, being duly authorized by the Board of Directors of
Capital Pacific Holdings, Inc., a corporation originally organized under the
name of J.M. Peters Company, Inc. by virtue of a Certificate of Incorporation
filed with the Secretary of State of Delaware on February 19, 1993 (the
"Corporation"), hereby certifies that this Second Restated Certificate of
Incorporation has been adopted by the Board of Directors of the Corporation in
accordance with the provisions of Section 245 of the General Corporation Law of
the State of Delaware for the purpose of restating the Corporation's original
Certificate of Incorporation as theretofore amended and restated. The
undersigned further certifies that this Second Restated Certificate of
Incorporation only restates and integrates and does not further amend the
provisions of the Corporation's original Certificate of Incorporation as
theretofore amended and restated, and that there is no discrepancy between
those provisions and the provisions of this Second Restated Certificate of
Incorporation.
The undersigned, for the purposes of forming a corporation pursuant to
Section 101 of the Delaware General Corporation Law, hereby certify that:
1st. The name of the Corporation is CAPITAL PACIFIC HOLDINGS, INC.
<PAGE> 2
2nd. The location of the registered office of the Corporation within
the State of Delaware is at 1013 Centre Road, City of Wilmington, County of New
Castle 19805. The resident agent at this address is Corporation Service
Company.
3rd. The Corporation may engage in any lawful activity without
limitation.
4th. The aggregate number of shares which the Corporation shall have
authority to issue is Thirty Million (30,000,000), all of which shall be shares
of common voting stock of $.10 par value (the "Common Stock"). A holder of
record of one or more shares of the Common Stock shall have one (1) vote on any
matter submitted to a stockholder vote for each share of the Common Stock held.
Holders of the Common Stock are entitled to the entire voting power, all
dividends declared, and all assets of the Corporation upon liquidation.
Holders of the Common Stock shall not be entitled to any preemptive or other
subscription rights.
5th. The members of the governing board of the Corporation shall be
styled "directors" and the number thereof shall not be less than three (3) nor
more than nine (9), the exact number to be fixed by resolution of the Board of
Directors of the Corporation, provided that the number so fixed by the
Directors may be increased or decreased from time to time.
6th. The capital stock and the holders thereof, after the amount of
the subscription price has been paid in, shall not be subject to any assessment
to pay the debts of the Corporation or for any other purpose.
7th. The Corporation is to have perpetual existence.
- 2 -
<PAGE> 3
8th. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter, amend and rescind the By-Laws of the
Corporation, to fix the amount to be reserved as working capital, to
fix the times for the declaration and payment of dividends, and to
authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
In order to promote the interests of the Corporation and to
encourage the utilization of the Corporation's lands and other
property, to sell, assign, transfer, lease and in any lawful manner
dispose of such portions of said property as the Board of Directors
shall deem advisable, and to use and apply the funds received in
payment therefor to the surplus account for the benefit of the
Corporation, or to the payment of dividends, or otherwise; and further
provided that the capital stock shall not be decreased except in
accordance with the laws of the State of Delaware.
9th. The personal liability of a director of the Corporation to the
Corporation or its stockholders for damages for breach of fiduciary duty as a
director shall be limited to an amount not exceeding said director's
compensation for services as a director during the twelve-month period
immediately preceding such breach, (the "Liability Amount"), except that a
director's liability shall not be limited for (i) any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) any actions in violation of Section 174 of the Delaware
General Corporation Law or (iv) any transaction from which the director derived
an improper personal benefit. If the Delaware General Corporation Law is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the full extent permitted by law,
except as to the Liability Amount.
- 3 -
<PAGE> 4
For purposes of this Article 9, the Liability Amount shall not involve
amounts received as reimbursement for expenses, or for services as an officer,
employee or agent.
Any repeal or modification of all or any portion of the provisions of
this Article by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing at the time
of such repeal or modification.
10th. The Corporation reserves the right to amend, alter or repeal
any provisions contained in this Second Restated Certificate of Incorporation
in the manner now or hereafter prescribed by statute, and all rights conferred
on stockholders or directors herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Corporation has hereunto affixed his signature and seal this 3rd day of July,
1996.
/s/ DALE DOWERS
-------------------------------------
DALE DOWERS
Chief Executive Officer
- 4 -
<PAGE> 1
Exhibit Number 3.2
SECOND AMENDED AND RESTATED BYLAWS
OF
CAPITAL PACIFIC HOLDINGS, INC.
(A Delaware Corporation)
JUNE 26, 1996
* * *
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF HOLDING ANNUAL MEETINGS. Annual meetings
of the stockholders shall be held at the principal office of the Corporation in
Newport Beach, California, or at such other place or places within or without
the State of Delaware as the directors shall from time to time determine.
Section 2. ANNUAL ELECTION OF DIRECTORS. The annual meeting
of stockholders for the election of directors and the transaction of other
business shall be held following the end of the fiscal year, at such time and
on such day as designated by the Board of Directors and stated in the notice of
the meeting. At each annual meeting, the stockholders entitled to vote shall,
by plurality vote, elect the members of the Board of Directors then standing
for election, and then may transact such other corporate business as shall be
stated in the notice of the meeting.
Failure to hold the annual meeting at the designated time shall not
work a dissolution of the Corporation.
Section 3. VOTING. Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation and in accordance
with the provisions of these Bylaws shall be entitled to one (1) vote, in
person or by proxy, for each share of stock entitled to vote held by such
stockholder. Except where a date shall have been fixed as the record date for
the determination of the stockholders of the Corporation entitled to vote, as
hereinafter provided in Section 4 of Article VI, no share of stock shall be
voted on at any election for directors which shall have been transferred on the
books of the Corporation within twenty (20) days next preceding such election.
All elections shall be had and all questions decided by plurality vote except
as otherwise provided by the Certificate of Incorporation and/or by the laws of
the State of Delaware. Voting by ballot shall not be required for any
corporate action other than the election of directors, except as otherwise
provided by the Delaware General Corporation Law.
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Section 4. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting shall
constitute a quorum for the transaction of business.
Section 5. ACTION WHICH MAY BE TAKEN WITHOUT MEETING. Any
action that may be taken at a meeting of the stockholders may be taken without
a meeting if authorized by a writing signed by all of the holders of shares who
would be entitled to vote at a meeting for such purpose, and filed with the
Secretary of the Corporation.
Section 6. ADJOURNMENT OF MEETINGS. If less than a quorum
shall be in attendance at any time for which the meeting shall have been
called, the meeting may, after a lapse of at least half an hour, be adjourned
from time to time by a majority of the stockholders present or represented and
entitled to vote thereat, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 7. SPECIAL MEETINGS: HOW CALLED. Special meetings of
the stockholders for any purpose or purposes may be called by the President or
Secretary, and shall be called upon a request in writing therefor, stating the
purpose or purposes thereof, delivered to the President or Secretary, signed by
a majority of the directors or by fifty-one percent (51%) in interest of the
stockholders entitled to vote, or by resolution of the directors.
Section 8. NOTICE OF STOCKHOLDERS' MEETINGS. Written or
printed notice, stating the place, date and time of the meeting, and the
general nature of the business to be considered, shall be delivered personally
by the Secretary or mailed, postage prepaid, to each stockholder entitled to
vote thereat at his last known post office address, at least ten (10) but not
more than sixty (60) days before the meeting. Notice by mail shall be deemed
to be given when deposited in the United States mail, postage prepaid. The
notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called. If any action is proposed to be
taken which would, if taken, entitle stockholders to receive payment for their
shares of stock, the notice shall include a statement of that purpose and to
that effect. If a meeting is adjourned to another time, not more than thirty
days hence, and/or to another place, and if an announcement of the adjourned
time and/or place is made at the meeting, it shall not be necessary to give
notice of the adjourned meeting unless the directors, after adjournment, fix a
new record date for the adjourned meeting.
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Section 9. STOCKHOLDER LIST. The officer who has charge of
the stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city or other municipality
or community where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place where the meeting is to be held during the whole time thereof, and
may be inspected by any stockholder who is present. The stock ledger shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by this section or the books of the Corporation, or
to vote at any meeting of stockholders.
Section 10. CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in the order of
seniority and if present and acting: the Chairman of the Board, the Chief
Executive Officer, the Vice-Chairman of the Board, the President, the
Treasurer, a Vice-President, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the Corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present, the Chairman of the meeting shall appoint a
secretary of the meeting.
Section 11. INSPECTORS AND JUDGES. The directors, in advance
of any meeting will appoint one or more inspectors of election or judges of the
vote, as the case may be, to act at the meeting or any adjournment thereof and
make a written report thereof. If an inspector or inspectors or judge or judges
are not appointed, the person presiding at the meeting will appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector
or judge fails to appear or act, the vacancy may be filled by appointment made
by the directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector or judge, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector or judge at such meeting with strict impartiality and according to
the best of his ability. The inspectors or judges shall determine the number
of shares of stock outstanding and the voting power of each, the shares of
stock represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors or judge or judges shall make a report in writing of
any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
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ARTICLE II
DIRECTORS
Section 1. NUMBER: ELECTION AND TERM OF OFFICE. A director
need not be a stockholder, a citizen of the United States, or a resident of the
State of Delaware. The number of directors of the Corporation will be not
fewer than three (3) nor more than nine (9), the total number to be fixed from
time to time by the Board of Directors. No decrease in the number of directors
will have the effect of shortening the term of an incumbent director. Except
as provided herein, directors will be elected at the annual meeting of
stockholders for such year, or at a special meeting of stockholders called for
purposes that include the election of directors. Each director, except in case
of death, resignation, retirement, disqualification or removal, will serve
until the next meeting at which directors are elected and thereafter until his
successor has been elected and has qualified.
Section 2. QUORUM. A majority of the directors shall
constitute a quorum for the transaction of business, except when a vacancy or
vacancies prevents such majority, whereupon a majority of the directors in
office shall constitute a quorum, provided, that such majority shall constitute
at least one-third of the whole Board. If at any meeting of the board there
shall be less than a quorum present, a majority of those present may adjourn
the meeting from time to time until a quorum is obtained, and no further notice
thereof need be given other than by announcement at said meeting which shall be
so adjourned.
Section 3. FIRST MEETING. The directors named in the Amended
and Restated Certificate of Incorporation of the Corporation shall hold their
first meeting for the purpose of organization and the transaction of business,
at such time and place as may be fixed by consent in writing of a majority of
the directors.
Section 4. ELECTION OF OFFICERS. At the first meeting or at
any subsequent meeting called for the purpose, the directors shall elect a
President, a Treasurer, a Secretary, and such other officers as may be deemed
necessary, who need not be directors. Such officers shall hold office until
their successors have been elected and have qualified.
Section 5. REGULAR MEETINGS. Regular meetings of the
directors may be held without notice at such places and times as shall be
determined from time to time by resolution of the directors.
Section 6. SPECIAL MEETINGS: HOW CALLED; NOTICE. Special
meetings of the Board may be called by the President or by the Secretary or by
any director on two (2) days' notice to each director.
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Section 7. PLACE OF MEETING. The directors may hold their
meetings and have one or more offices, and keep the books of the Corporation,
outside the State of Delaware, at any office or offices of the Corporation or
at any other place as they may from time to time by resolution determine;
provided, however that certified copies of the Certificate of Incorporation and
Bylaws and all amendments thereto, and a stock ledger or duplicate stock ledger
(revised annually), or a statement setting out the name and address of the
custodian thereof, shall be kept at the principal office in California.
Section 8. CHAIRMAN OF THE MEETING. The Chairman of the
Board, if any and if present and acting, shall preside at all meetings.
Otherwise, the President, if any and if present and acting, or any other
director chosen by the Board, shall preside.
Section 9. REMOVAL OF DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or Bylaws, any director or the entire Board
of Directors may be removed, with or without cause, by the holders of a
majority of shares entitled to vote at an election of directors.
Section 10. GENERAL POWERS OF DIRECTORS. The business and
affairs of the Corporation shall be managed by the Board of Directors. In
addition to the powers and authority expressly conferred upon it by these
Bylaws, the Board of Directors may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by law, by any legal
agreement among stockholders, by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
Section 11. SPECIFIC POWERS OF DIRECTORS. Without prejudice
to such general powers, it is hereby expressly declared that the directors
shall have the following powers, to wit:
(1) To adopt and alter a common seal of the Corporation.
(2) To make and change regulations, not inconsistent with
these Bylaws, for the management of the Corporation's business and affairs.
(3) To purchase or otherwise acquire for the Corporation
any property, rights, or privileges which the Corporation is authorized to
acquire.
(4) To pay for any property purchased for the Corporation
either wholly or partly in money, stock, bonds, debentures, or other securities
of the Corporation.
(5) To borrow money and to make and issue notes, bonds,
and other negotiable and transferable instruments, mortgages, deeds of trust,
and trust agreements, and to do every act and thing necessary to effectuate the
same.
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(6) To remove any officer for cause or summarily without
cause, and in their discretion from time to time, to devolve the powers and
duties of any officer upon any other person for the time being.
(7) To appoint and remove or suspend such subordinate
officers, agents or factors as they may deem necessary and to determine their
duties and fix, and from time to time change, their salaries or remuneration,
and to require security as and when they think fit.
(8) To confer upon any officer of the Corporation the
power to appoint, remove and suspend subordinate officers, agents and factors.
(9) To determine who shall be authorized on the
Corporation's behalf to make and sign bills, notes, acceptances, endorsements,
checks, releases, receipts, contracts and other instruments.
(10) To determine who shall be entitled to vote in the
name and behalf of the Corporation upon, or to assign and transfer, any shares
of stock, bonds, or other securities of other corporations held by this
Corporation.
(11) To delegate any of the powers of the Board in
relation to the ordinary business of the Corporation to any standing or special
committee, or to any officer or agent (with power to sub-delegate), upon such
terms as they think fit,
(12) To call special meetings of the stockholders for any
purpose or purposes.
Section 12. COMPENSATION OF DIRECTORS. Directors may receive
such compensation for their services as directors as may from time to time be
fixed by vote of the Board of Directors. A director may also serve the
Corporation in a capacity other than that of director and receive compensation,
as determined by the Board of Directors, for services rendered in such other
capacity.
Section 13. VOTE REQUIRED FOR ACTION. Except as otherwise
provided in these Bylaws and by the Delaware General Corporation Law, the act
of a majority of the directors present at a meeting at which a quorum is
present at the time shall be the act of the Board of Directors.
Section 14. PARTICIPATION BY CONFERENCE TELEPHONE. Members
of the Board of Directors, or members of any committee designated by the Board
of Directors, may participate in a meeting of the Board or of such committee by
means of conference telephone or similar communications equipment through which
all persons participating in the meeting can hear and speak with each other.
Participation in a meeting pursuant to this Section 14 shall constitute
presence in person at such meeting.
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Section 15. ACTION BY DIRECTORS WITHOUT A MEETING. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any action which may be taken at a meeting of a committee of
directors may be taken without a meeting if a written consent thereto shall be
signed by all the directors, or all of the members of the committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Board or the committee. Such consent shall have the same
force and effect as a unanimous vote of the Board of Directors or the
committee.
ARTICLE III
COMMITTEES
Section 1. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation, which, to the extent provided in such resolution or resolutions or
in these Bylaws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may have power to authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors.
No such committee, however, shall have the power or authority
to amend the Certificate of Incorporation, to adopt an agreement of merger or
consolidation, to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, to recommend
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or to amend the Bylaws of the Corporation; and, unless the
resolution or the Certificate of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 2. The committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors when required.
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ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Corporation shall be
a Chairman of the Board, a President, one or more Vice Presidents as determined
and designated by the Board of Directors, a Secretary, a Treasurer, and one or
more Assistant Secretaries, which Assistant Secretaries may be designated by
the Chairman of the Board, and one or more Assistant Treasurers, as may be
determined by the Board of Directors. The Board of Directors may from time to
time create and establish the duties of such other officers and elect or
provide for the appointment of such other officers as it deems necessary for
the efficient management of the Corporation, but the Corporation shall not be
required to have at any time any officers other than a President, Secretary,
and a Treasurer. Any two or more offices may be held by the same person,
except the offices of President and Secretary.
Section 2. ELECTION AND TERM. All officers shall be elected
by the Board of Directors and shall serve at the will of the Board of Directors
and until their successors have been elected and have qualified or until the
earlier of their death, resignation, removal or retirement.
Section 3. REMOVAL. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board of Directors
whenever in its judgment the best interests of the Corporation will be served
thereby.
Section 4. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall call to order meetings of the stockholders and of the Board of Directors,
and shall act as chairman of such meetings except as may otherwise be provided
by the Board of Directors. The Chairman of the Board shall perform such other
duties and have such other powers as the Board of Directors may determine from
time to time.
Section 5. PRESIDENT. In the absence of the Chairman of the
Board, the President shall perform the duties and exercise the powers specified
in these Bylaws of the Chairman. The President shall perform such other duties
and have such other powers as the Board of Directors may determine from time to
time.
Section 6. VICE PRESIDENTS. A Vice President shall in the
absence or disability of the President, or at the direction of the President,
perform the duties and exercise the powers, whether such duties and powers are
specified by these Bylaws or otherwise, of the President. If the Corporation
has more than one Vice President, the one so designated by the Board of
Directors shall act in lieu of the President. Vice Presidents shall perform
whatever duties and have whatever powers the Board of Directors may determine
from time to time.
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Section 7. SECRETARY. The Secretary shall be responsible for
causing there to be maintained accurate records of the acts and proceedings of
all meetings of stockholders and directors. He shall have authority to give
all notices required by law or these Bylaws. He shall be responsible for the
custody of the corporate books, records, contracts, and other documents. The
Secretary may affix the corporate seal to any lawfully executed documents
requiring it and shall sign instruments as may require his signature. The
Secretary shall perform such other duties and have such other powers as the
Board of Directors may determine from time to time.
Section 8. TREASURER. The Treasurer shall be responsible for
the custody of all funds and securities belonging to the Corporation and for
the receipt, deposit or disbursement of such funds and securities under the
direction of the Board of Directors. The Treasurer shall cause full and true
accounts of all receipts and disbursements to be maintained and shall make such
reports of the same to the Board of Directors and President upon request. The
Treasurer shall perform such other duties and have such other powers as the
Board of Directors may determine from time to time. In the absence of a
Treasurer elected by the Board of Directors to serve these purposes, the
Secretary shall fulfill the duties of Treasurer.
Section 9. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The Assistant Secretary and Assistant Treasurer (or if there be more that one
of either such officer, the one so designated by the Board of Directors) shall,
in the absence of disability, or at the direction, of the Secretary or the
Treasurer, respectively, perform the duties and exercise the powers, whether
such duties and powers are specified in these Bylaws or otherwise, of those
offices. Each Assistant Secretary and Assistant Treasurer shall perform such
other duties and have such other powers as the Board of Directors may determine
from time to time, and each Assistant Secretary may affix the corporate seal to
all corporate documents and attest the signature of any officer of the
Corporation.
Section 10. SALARIES. The salaries of all corporate officers
and agents shall be fixed from time to time as may be authorized by the Board
of Directors. No officer shall be prevented from receiving such salary by
reason of being a director.
ARTICLE V
RESIGNATIONS: FILING OF VACANCIES:
INCREASE OR DECREASE OF DIRECTORS
Section 1. RESIGNATIONS. Any director, member of a committee
or other officer may resign at any time. Such resignations shall be made in
writing and shall take effect at the time specified therein, and, if no time be
specified, at the time of its receipt
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by the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective.
Section 2. FILLING OF VACANCIES. If the office of any
director, member of a committee, or other officer becomes vacant, the remaining
directors in office, though less than a quorum, by a majority vote, may appoint
any qualified person to fill such vacancy, who shall hold office for the
unexpired term and until his successor shall be duly chosen.
Section 3. INCREASE IN NUMBER OF DIRECTORS. The Board of
Directors may elect or appoint any qualified person or persons to the Board if
the number of directors is increased as provided in Section I of Article II of
these Bylaws. Any director elected or appointed as provided in this Section 3
shall hold office until the next meeting of the stockholders called for the
purpose of electing directors and until a successor is elected and qualified.
ARTICLE VI
CAPITAL STOCK
Section 1. CERTIFICATE OF STOCK. Certificates of stock,
numbered and with the seal of the Corporation affixed, signed by the President
or Vice President, and the Treasurer or Secretary, shall be issued to each
stockholder certifying the number of shares owned by him in the Corporation.
When such certificates are signed by a transfer agent, or an assistant transfer
agent, or by a transfer clerk acting on behalf of the Corporation and a
registrar, the signatures of such officers may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Section 2. LOST CERTIFICATES. A new certificate of stock may
be issued in the place of any certificate theretofore issued by the
Corporation, alleged to have been lost or destroyed, and the directors may, in
their discretion, require the owner of the lost or destroyed certificate, or
his legal representatives, to give the Corporation a bond, in such sum as they
may direct, not exceeding double the value of the stock to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate or the issuance of such new certificate.
Section 3. TRANSFER OF SHARES. Subject to the restrictions
contained in the Certificate of Incorporation, the shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or lead representatives, and upon
such transfer the old certificates shall be
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surrendered to the Corporation by the delivery thereof to the person in charge
of the stock and transfer books and ledgers or to such other person as the
directors may designate, by whom they shall be canceled, and new certificates
shall thereupon be issued. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the Corporation shall be made
on the stock ledger of the Corporation by the registered holder thereof, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary of the Corporation or with a transfer agent or a registrar,
if any, and on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 4. SETTING OF RECORD DATE. The Board of Directors may
fix in advance a date, not exceeding sixty (60) days nor fewer than ten (10)
days preceding the date of any meeting of stockholders or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion of or exchange of capital stock shall go into
effect, as a record date for the determination of the stockholders entitled to
receive payment of any such dividends, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion, or exchange
of capital stock, and in such cases such stockholders only as shall be
stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting, or to receive payment of such dividends, or
to receive such allotment of rights, or to exercise such rights, as the case
may be, not withstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 5. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, if any, and the laws of the State of Delaware,
the directors may declare dividends upon the capital stock of the Corporation
as and when they deem expedient. Before declaring any dividend there may be
set apart out of any funds of the Corporation available for dividends such sum
or sums as the directors from time to time in their discretion think proper for
working capital or as a reserve fund to meeting contingencies or for equalizing
dividends or for such other purposes as the directors shall think conducive to
the interest of the Corporation.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. CORPORATE SEAL. The corporate seal shall be
circular in form and shall contain such words as shall be determined by the
Board of Directors. Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
Section 2. FISCAL YEAR. The fiscal year of the Corporation
shall commence on March 1, and shall end the last day of February of each
succeeding year.
Section 3. PRINCIPAL OFFICE. The principal office of the
Corporation shall be established and maintained at 3501 Jamboree Road, Suite
200, Newport Beach, California 92660. The Corporation may have branch offices
at such place or places within or without the State of Delaware as the
directors shall from time to time determine.
Section 4. CHECKS, DRAFTS, NOTES. All checks, drafts or other
orders for the payment of money, notes, or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents, of the Corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.
Section 5. NOTICE. Whenever any notice is required by these
Bylaws to be given, personal notice is not meant unless expressly so stated
and, unless otherwise provided in these Bylaws, any notice so required shall be
deemed to be sufficient if given by depositing the same in a post office box in
a sealed post-paid wrapper addressed to the person entitled thereto at his last
known post office address, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meeting except as otherwise provided by
statute.
Section 6. WAIVER OF NOTICE. Whenever any notice is required
to be given under the provisions of these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent to notice. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders need be specified in any written waiver of notice.
In addition, attendance of a person at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
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Section 7. RELATED PARTY TRANSACTIONS. All transactions
between the Corporation and its affiliates must be on terms no less favorable
to the Corporation than terms with unaffiliated parties for similar
transactions. All such transactions that are not in the ordinary course of the
Corporation's business must be approved by a majority of the Corporation's
directors not affiliated with any parent corporation of the Corporation, or any
of such parent corporation's subsidiaries, or employed by the Corporation, and
who do not have a financial interest in the transaction.
ARTICLE VIII
INDEMNIFICATION
Section 1. INDEMNIFICATION OF DIRECTORS. The Corporation
shall indemnify and hold harmless any person (an "Indemnified Person") who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director of the Corporation, or is or
was serving at the request of the Corporation as a director of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Any person (an "Indemnified Person") who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a Judgment in its favor
by reason of the fact that he is or was a director of the Corporation, or is or
was serving at the request of the Corporation as a director of another
corporation, partnership, joint venture, trust or other enterprise shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity pursuant to the applicable
provisions of the Delaware General Corporation Law.
Section 2. INDEMNIFICATION OF OFFICERS AND OTHERS. The Board
of Directors shall have the power to cause the Corporation to provide to
officers, employees and agents of the Corporation all or any part of the fight
to indemnification and other fights of the type provided under Sections 1, 5
and 11 of this Article VIII (subject to
13
<PAGE> 14
the conditions, limitations and obligations specified therein), upon a
resolution to that effect identifying such officers, employees or agents (by
position or name) and specifying the particular rights provided, which may be
different for each of the officers, employees and agents identified. Each
officer, employee or agent of the Corporation so identified shall be an
"Indemnified Person" for purposes of the provisions of this Article VIII.
In the event a director of the Corporation is also an officer of the
Corporation and/or a Subsidiary (as defined below), such director shall have
the right to indemnification and other rights of the type provided under
Sections 1, 5 and 11 of this Article VIII (subject to the conditions,
limitations and obligations specified herein and therein) with regard to
amounts actually and reasonably incurred by such person by reason of the fact
that he is or was an officer of the Corporation and/or the Subsidiary, and such
person shall be deemed to be an "Indemnified Person" for purposes of this
Article VIII.
Section 3. SUBSIDIARIES. The Board of Directors shall have
the power to cause the Corporation to provide to any director, officer,
employee or agent of this Corporation who also is a director, officer, trustee,
general partner, employee or agent of a Subsidiary (as defined below), all or
any part of the right to indemnification and other rights of the type provided
under Sections 1, 5 and 11 of this Article VIII (subject to the conditions,
limitations and obligations specified therein), with regard to amounts actually
and reasonably incurred by such person by reason of the fact that he is or was
a director, officer, trustee, general partner, employee or agent of the
Subsidiary. The Board of Directors shall exercise such power, if at all,
through a resolution identifying the person or persons to be indemnified (by
position or name) and the Subsidiary (by name or other classification), and
specifying the particular rights provided, which may be different for each of
the directors, officers, employees and agents identified. Each person so
identified shall be an "Indemnified Person" for purposes of the provisions of
this Article VIII. As used in this Article VIII, "Subsidiary" shall mean (i)
another corporation, joint venture, trust, partnership or unincorporated
business association more than twenty percent (20%) of the voting capital stock
or other voting equity interest of which was, at or after the time the
circumstances giving rise to such action, suit or proceeding arose, owned,
directly or indirectly, by the Corporation, or (ii) a nonprofit corporation
which receives its principal financial support from the Corporation or its
subsidiaries.
Section 4. DETERMINATION. Notwithstanding any judgment,
order, settlement, conviction or plea in any action, suit or proceeding of the
kind referred to in Section I of this Article VIII, an Indemnified Person shall
be entitled to indemnification as provided in such Section I unless a
determination that such Indemnified Person is not entitled to such
indemnification (because of the conditions and limitations imposed in Section
1) shall be made (i) by the Board of Directors by a majority vote or consent of
a quorum consisting of directors who are not seeking the benefits of such
indemnification; or if obtainable if a quorum of such disinterested (ii) if
such quorum is not obtainable, or even if obtainable if a quorum of such
disinterested directors so directs, in a written opinion by independent legal
counsel (which counsel may be the outside legal counsel regularly employed or
retained by the Corporation); or (iii) if a
14
<PAGE> 15
quorum cannot be obtained under (i) above and in the absence of a written
opinion by independent legal counsel, by majority vote or consent of a
committee duly designated by the Board of Directors (in which designation
interested directors may participate), consisting solely of one or more
directors who are not seeking the benefit of such indemnification. Provided,
however, that notwithstanding any determination pursuant to the preceding
sentence, if such determination shall have been made at a time that the members
of the Board of Directors, so serving when the events upon which such
Indemnified Person's liability has been based occurred, no longer constitute a
majority of the members of the Board of Directors, then such Indemnified Person
shall nonetheless be entitled to indemnification as set forth in such Section I
unless the Company shall carry the burden of proving, in an action before any
court of competent jurisdiction, that such Indemnified Person is not entitled
to indemnification because of the conditions and limitations imposed in Section
1.
Section 5. ADVANCES. Expenses (including, but not limited to,
attorneys' fees and disbursements, court costs, and expert witness fees)
incurred by the Indemnified Person in defending any action, suit or proceeding
of the kind described in Section 1 hereof shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as set
forth herein. The Corporation shall promptly pay the amount of such expenses
to the Indemnified Person, but in no event later than ten (10) days following
the Indemnified Persons's delivery to the Corporation of a written request for
an advance pursuant to this Section 5, together with a reasonable accounting of
such expenses; provided, that the Indemnified Person shall undertake and agree
to repay to the Corporation any advances made pursuant to this Section 5 if it
shall be determined pursuant to Section 4 that the Indemnified Person is not
entitled to be indemnified by the Corporation for such amounts. The
Corporation shall make the advances contemplated by this Section 5 regardless
of the Indemnified Person's financial ability to make repayment. Any advances
and undertakings to repay pursuant to this Section 5 shall be unsecured and
interest-free.
Section 6. NON-EXCLUSIVITY; CONTINUING BENEFITS. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which a person seeking indemnification may be entitled
under any provision of the Certificate of Incorporation, or any Bylaw,
agreement, vote of the Corporation's stockholders or disinterested directors or
otherwise, both as to actions in his official capacity and as to actions 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 of the Corporation,
as the case may be, and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 7. INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, trustee, general
partner, employee or agent of another corporation, nonprofit corporation, joint
venture, trust, partnership, unincorporated
15
<PAGE> 16
business association or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Section 8. SECURITY. The Corporation may designate certain of
its assets as collateral, provide self-insurance or otherwise secure its
obligations under this Article VII, or under any indemnification agreement or
plan of indemnification adopted and entered into in accordance with the
provisions of this Article VIII, as the Board of Directors deem appropriate.
Section 9. AMENDMENT. Any amendment to this Article VII which
limits or otherwise adversely affects the right of indemnification or other
rights of any Indemnified Person hereunder shall, as to such Indemnified
Person, apply only to claims, actions, suits or proceedings based on actions,
events or omissions (collectively, "Post Amendment Events") occurring after
such amendment and after delivery of notice of such amendment to the
Indemnified Person so affected. Any Indemnified Person shall, as to any claim,
action, suit or proceeding based on actions, events or omissions occurring
prior to the date of receipt of such notice, be entitled to the right of
indemnification and other rights under this Article VII to the same extent as
had such provisions continued as part of the Bylaws of the Corporation without
such amendment. This Section 9 cannot be altered, amended or repealed in a
manner effective as to any Indemnified Person (except as to Post Amendment
Events) without the prior written consent of such Indemnified Person.
Section 10. AGREEMENTS. The provisions of this Article VIII
shall be deemed to constitute an agreement between the Corporation and each
person entitled to indemnification hereunder. In addition to the rights
provided in this Article VIII, the Corporation shall have the power, upon
authorization by the Board of Directors, to enter into an agreement or
agreements providing to any person who is or was a director, officer, employee
or agent of the Corporation indemnification rights substantially similar to
those provided in this Article VII.
Section 11. SUCCESSORS. For purposes of this Article VIII,
the terms "the Corporation" or "this Corporation" shall include any
corporation, joint venture, trust, partnership or unincorporated business
association which is the successor to all or substantially all of the business
or assets of this Corporation, as a result of merger, consolidation, sale,
liquidation or otherwise, and any such successor shall be liable to the persons
indemnified under this Article VII on the same terms and conditions and to the
same extent as this Corporation.
16
<PAGE> 17
Section 12. ADDITIONAL INDEMNIFICATION. In addition to the
specific indemnification rights set forth herein, the Corporation shall
indemnify each of its directors and officers to the full extent permitted by
action of the Board of Directors without stockholder approval under the
Delaware General Corporation Law or other laws of the State of Delaware as in
effect from time to time.
ARTICLE IX
AMENDMENTS
Section 1. POWER TO AMEND BYLAWS. These Bylaws may be
altered, amended or repealed from time to time, and new Bylaws may be made and
adopted by action of the stockholders or by action of the Board of Directors,
at any regular meeting of the stockholders or of the Board of Directors or at
any special meeting of the stockholders or of the Board of Directors (if notice
of such alteration, amendment, repeal or adoption of new Bylaws be contained in
the notice of such special meeting).
17
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