<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ 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 0-17162
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KEY PRODUCTION COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 84-1089744
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Norwest Center, 20th Floor
1700 Lincoln Street, Denver, Colorado 80203-4520
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (303) 837-0779
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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
------ ------
The number of shares of Key Production Company, Inc. common stock, $.25 par
value, outstanding as of June 30, 1995, is 9,176,126.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1 - FINANCIAL STATEMENTS
-----------------------------
KEY PRODUCTION COMPANY, INC.
STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
------------------ ------------------
(In thousands, except per share data) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas production revenues $ 4,685 $ 4,106 $ 9,421 $ 6,880
Other revenues 3 3 5 14
------ ------- ------ -------
4,688 4,109 9,426 6,894
------ ------- ------ -------
OPERATING EXPENSES:
Depreciation, depletion and
amortization 1,806 1,286 3,562 2,262
Operating costs 1,539 1,270 3,113 2,036
Administrative, selling and other 401 411 738 692
Financing costs:
Interest expense 53 28 109 28
Interest income (3) (27) (6) (99)
------ ------- ------ -------
3,796 2,968 7,516 4,919
------ ------- ------ -------
INCOME BEFORE INCOME TAXES 892 1,141 1,910 1,975
PROVISION FOR INCOME TAXES 107 434 494 751
------ ------- ------ -------
NET INCOME $ 785 $ 707 $1,416 $ 1,224
====== ======= ====== =======
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ .08 $ .07 $ .15 $ .12
======= ======= ====== =======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 9,667 10,258 9,614 10,257
====== ======= ====== =======
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-2-
<PAGE>
KEY PRODUCTION COMPANY, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-------------------
(In thousands) 1995 1994
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,416 $ 1,224
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion and
amortization 3,562 2,262
Deferred income taxes 418 672
Changes in operating assets and
liabilities:
(Increase) decrease in receivables 454 (258)
Increase in prepaid expenses and
deposits (294) (72)
Increase (decrease) in accounts
payable and accrued expenses (810) 468
Increase (decrease) in deferred
credits and other noncurrent
liabilities (65) 519
------ ------
Net cash provided by operating
activities 4,681 4,815
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Oil and gas exploration and
development expenditures (5,164) (2,277)
Acquisition of oil and gas
properties (128) (22,792)
Proceeds from sale of oil and gas
properties 107 10
Other capital expenditures (135) (241)
------ -------
Net cash used by investing
activities (5,320) (25,300)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 900 12,500
Payments on long-term debt (300) (1,000)
Payments to acquire treasury stock (2) (2)
------ -------
Net cash provided by financing
activities 598 11,498
------ -------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (41) (8,987)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 281 9,215
------ -------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 240 $ 228
====== =======
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-3-
<PAGE>
KEY PRODUCTION COMPANY, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1995 1994
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 240 $ 281
Receivables 2,922 3,376
Prepaid expenses 454 160
-------- -------
3,616 3,817
-------- -------
OIL AND GAS PROPERTIES, ON THE BASIS OF
FULL COST ACCOUNTING:
Proved properties 54,250 49,381
Unproved properties and properties
under development, not being amortized 8,134 7,953
-------- -------
62,384 57,334
Less - accumulated depreciation,
depletion and amortization (12,602) (9,105)
-------- -------
49,782 48,229
-------- -------
OTHER ASSETS, NET 635 565
-------- -------
$ 54,033 $52,611
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,693 $ 2,193
Accrued lease operating expense and
other 1,098 1,565
-------- -------
2,791 3,758
-------- -------
LONG-TERM DEBT 10,600 10,000
-------- -------
DEFERRED CREDITS AND OTHER NONCURRENT
LIABILITIES
Income taxes 3,074 2,656
Long-term property liabilities and
other 1,875 1,940
-------- -------
4,949 4,596
-------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.25 par value,
50,000,000 shares authorized,
11,656,350 shares issued 2,914 2,914
Paid-in capital 34,393 34,388
Retained earnings 7,851 6,435
Treasury stock at cost, 2,480,224 and
2,484,351 shares, respectively (9,465) (9,480)
-------- -------
35,693 34,257
-------- -------
$ 54,033 $52,611
======== =======
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-4-
<PAGE>
KEY PRODUCTION COMPANY, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
TOTAL
STOCK-
COMMON PAID-IN RETAINED TREASURY HOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
------- -------- -------- --------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $2,914 $34,388 $6,435 $(9,480) $34,257
Net income - - 1,416 - 1,416
Treasury stock issued - 5 - 17 22
Treasury stock purchased - - - (2) (2)
------ ------- ------ ------- -------
BALANCE, JUNE 30, 1995 $2,914 $34,393 $7,851 $(9,465) $35,693
====== ======= ====== ======= =======
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-5-
<PAGE>
KEY PRODUCTION COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission, and reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods, on a basis consistent with the annual audited statements. All such
adjustments are of a normal, recurring nature except as disclosed herein.
Certain information, accounting policies, and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with the financial statements and summary of significant
accounting policies and notes thereto included in the Company's latest annual
report on Form 10-K.
INCOME TAXES
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
------------ ----------
<S> <C> <C>
Current Taxes:
Federal $ - $ -
State 76 79
Deferred Taxes: 418 672
----- ----
$ 494 $ 751
===== =====
</TABLE>
In connection with adoption of Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," effective January 1, 1993, the
Company established a valuation allowance for a portion of its deferred tax
asset. At that time, it was unknown whether the Company would be able to fully
utilize the net operating loss (NOL) carryforwards underlying the deferred tax
asset.
In 1994, a significant portion of the NOL carryforwards were utilized in
connection with a sale of non-producing leasehold and, based on current
projections, it appears likely that the Company will be able to utilize the
remaining NOL carryforwards before they expire. As a result, the Company has
determined that it is no longer necessary to provide a valuation allowance. The
Company expects this adjustment to decrease the combined federal and state
effective tax rate from 38% to approximately 12% for the remainder of 1995.
Second quarter 1995 net income has been calculated using the lower rate.
STATEMENT OF CASH FLOWS
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. These
investments earned 5.1 percent and 5.3 percent rates of interest at June 30,
1995 and December 31, 1994, respectively, with cost approximating market.
-6-
<PAGE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
------------------
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized) $ 68 $(30)
Income taxes (net of refunds received) $360 $ 4
</TABLE>
PRO FORMA FINANCIAL INFORMATION
On April 29, 1994, Key completed a transaction to purchase all the assets
of a privately-held oil and gas company for $22.75 million. The following
unaudited pro forma information was prepared as if the acquisition occurred on
January 1, 1994. The pro forma data presented is based on numerous assumptions
and is not necessarily indicative of future operations.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1994
----------------
(In thousands, except per share data)
<S> <C>
Revenues $9,405
Net income $1,535
Net income per share $ .15
</TABLE>
-7-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL RESULTS
Key is reporting net income of $.08 per share, or $785,000, for the second
quarter of 1995 up 14 percent from the $.07 per share, or $707,000, reported for
the corresponding period of 1994. Earnings for the second quarters of 1995 and
1994 are based on revenues of $4.7 million and $4.1 million, respectively.
On a year to date basis, Key is reporting net income of $.15 per share, or
$1,416,000. This represents a 25% increase from net income of $.12 per share,
or $1,224,000, reported for the first half of 1994.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1995 1994 1995 1994
------- ------- ------ -------
<S> <C> <C> <C> <C>
Selected Oil and Gas
Operating Statistics
--------------------
Gas Volume - Mcf per day 14,432 12,094 14,319 11,291
Gas Price - Per Mcf $ 1.64 $ 2.04 $ 1.67 $ 2.20
Oil Volume - Barrels per day 1,616 1,357 1,712 926
Oil Price - Per barrel $ 16.67 $ 14.73 $ 15.99 $ 13.89
Full Cost Amortization Rate 37.8% 30.9% 37.1% 32.4%
</TABLE>
Oil and gas revenues for the second quarter were $4.7 million, up 14 percent
from the $4.1 million reported in 1994. Year-to-date oil and gas revenues rose
37 percent to $9.4 million. Increased production from a major acquisition in the
second quarter of 1994 and from successful drilling projects contributed to the
gains. Oil and gas revenues for 1995 include a full six months of production and
sales from the acquisition. Only two months of sales from the acquisition are
reported in the first six months of 1994.
Oil sales of $2.5 million for the second quarter are $.6 million or 35
percent above those from a year ago due to favorable pricing and increased
production. Average daily production went from 1,357 barrels a day to 1,616
barrels per day in 1995. The average price received increased from $14.73 to
$16.67 per barrel in 1995.
Oil sales more than doubled between the first six months of 1994 and 1995.
In the first half of 1995, oil revenues comprise 53 percent of total sales,
compared to 34 percent in 1994. Key is reporting oil revenue of almost $5
million in 1995 compared to $2.3 million in 1994. Production for the six month
period increased 85 percent which increased revenue by $2 million. The
production increases are largely attributable to the Company's second quarter
1994 acquisition which was predominantly oil. Key's average oil price increased
from $13.89 in 1994 to $15.99 per barrel in 1995. The favorable pricing added
$.7 million to sales.
Key's second quarter gas production increased to 14,432 Mcf per day from
12,094 Mcf per day in 1994 and the average price received dropped to $1.64 per
Mcf from $2.04 per Mcf in 1994. The 19 percent increase in daily gas production
was more than offset by the 20 percent price decline which resulted in a 4
percent decrease in gas revenue.
-8-
<PAGE>
Gas revenue for the six month period also declined by 4 percent between 1995
and 1994. Daily production increased 27 percent from 11,291 Mcf per day in 1994
to 14,319 per day in 1995. The increase in production was due to an aggressive
drilling and recompletion program and the Company's 1994 acquisition. Key's
average gas price for the six months slipped from $2.20 to $1.67.
Depreciation, depletion and amortization (DD&A) expense for the second
quarter and first six months of 1995 increased 40 percent and 57 percent,
respectively, from the comparable periods of 1994. The DD&A increases correspond
with Key's higher oil and gas sales and increased investment in net properties
in 1995. Key's second quarter amortization rate as a percentage of revenue
increased from 30.9 percent in 1994 to 37.8 percent in 1995. For the six months,
the amortization rate increased from 32.4 percent to 37.1 percent. Lower gas
prices in 1995 are the primary contributing factor to the increased DD&A rate.
Operating expenses increased 21 percent between the second quarter of 1995
and 1994 and remain in line with escalating revenues. Year-to-date operating
expenses are up 53 percent from a year ago, but on a unit of production basis,
operating expenses for the second quarter of 1995 are relatively flat at $.70
per EMcf, compared to $.69 per EMcf in 1994. For the first six months of 1995,
operating expenses are $.70 per EMcf compared to $.67 per EMcf in 1994. The
Company attributes the increase to the fact that the acquired properties have a
higher oil percentage than Key's pre-acquisition properties and oil properties
generally have higher lifting costs than gas properties. (Oil is compared to
natural gas in terms of equivalent thousand cubic feet, "EMcf." One barrel of
oil is the energy equivalent of six Mcf of natural gas.)
Administrative, selling and other costs declined on a units of production
basis from $.23 per EMcf in the first half of 1994 to $.17 per EMcf in 1995. The
absolute dollar level of administrative expense was relatively flat between the
second quarter of 1994 and 1995, but increased 7 percent between the first six
months of 1995 and 1994 due to the increased burden of administering the larger
post acquisition property base.
Interest expense increased from $116,000 in 1994 to $381,000 in 1995. In the
second quarter of 1994, Key entered into a $50 million credit facility with
NationsBank of Texas, N.A. The Company drew $12.5 million to fund the
acquisition. The 1994 results include two months of interest versus six months
of interest incurred for the first six months of 1995.
Interest of $272,000 was capitalized in the first six months of 1995 for
borrowings associated with the undeveloped leasehold acquired in the second
quarter of 1994. Capitalized interest of $88,000 was recorded for the same
period of 1994.
Interest income of $6,000 and $99,000 was recorded for the first six months
of 1995 and 1994, respectively. The higher interest income in 1994 reflects the
investment of the large cash balance that existed before the 1994 acquisition.
Interest income for 1995 declined due to a decrease in the average cash balance.
Available cash was used to partially fund the 1994 property acquisition.
-9-
<PAGE>
As discussed in more detail under the heading "Income Taxes" in the notes to
the financial statements, the Company has determined it is no longer necessary
to maintain a valuation allowance against its deferred tax asset. The Company
expects this adjustment to decrease the combined federal and state effective tax
rate from 38% to approximately 12% for the remainder of 1995. Second quarter net
income has been calculated using the lower rate.
CASH FLOW AND LIQUIDITY
Liquidity refers to the ability of an enterprise to generate adequate amounts
of cash to satisfy its financial commitments. Key's primary needs for cash are
for payment of existing financing obligations and trade commitments related to
oil and gas operations. The Company's primary sources of liquidity are cash
flows from operating activities and debt financing. Management believes that the
overall sources of funds available to Key, including cash on hand, will continue
to be more than sufficient to satisfy the Company's financial obligations.
Cash from operating activities decreased 3 percent to $4.7 million between
the first six months of 1995 and 1994. Increased income and DD&A were offset by
ordinary fluctuations in working capital accounts.
Year-to-date expenditures of $5.2 million for exploration and development are
more than double the $2.3 million spent in 1994. In the first six months of
1995, exploration and development expenditures amounted to 110 percent of cash
from operating activities. For the same period of 1994, only 47 percent of cash
from operating activities was expended for exploration and development.
Since year-end 1994, long-term debt increased from $10 million to $10.6
million. Proceeds from this net increase in debt were used to fund exploration
and development expenditures in excess of cash generated by operating
activities.
The Company's ratio of current assets to current liabilities was 1.3 to 1 at
June 30, 1995, an increase from the 1 to 1 ratio calculated at December 31,
1994.
FUTURE TRENDS
As discussed previously, the Company invested $5.2 million in exploration and
development activities during the first half of 1995 and intends to continue to
pursue opportunities to expand its drilling program. To the extent Key is able
to identify attractive drilling opportunities in excess of cash generated by
operations, there is sufficient remaining capacity under the Company's existing
line of credit to capitalize on those opportunities. The Company expects that
its exploration and development expenditures will continue at a comparable pace
during the second half of 1995. However, depressed product prices may cause
some reduction in drilling activity in the industry as a whole which could have
an impact, either positive or negative, on the drilling opportunities available
to Key during the remainder of the year.
The mid-continent region continues to be the strongest region in terms of
drilling activity. More than half of the drilling dollars invested year to date
were spent in this area and the Company has committed to participating in
several additional projects scheduled for the remainder of 1995. The Company has
also been able to acquire relatively larger working interests in certain
projects in this region as other companies become "capital constrained" due to
lower product prices.
-10-
<PAGE>
In March 1995, the Company entered into a joint venture with a major oil
company for the exploration of certain fields located in the gas-prone
Sacramento Basin of California. Progress on this project continues. The drilling
season in this area begins in early fall and Key hopes to drill several wells
here by yearend.
During the second quarter of 1995, the Company received $.09 per Mcf less
than in the previous quarter and gas prices have continued to drift lower
through the first half of the third quarter. Although, the Company received a
higher price per barrel of oil in the second quarter than in the first, the oil
price decline which began in May 1995 has continued. If the current trend in oil
and gas prices continues, the Company expects overall price realizations to be
lower for the second half of the year. There is, however, no assurance as to the
future direction of either oil or gas prices.
Although the acquisition arena is still extremely competitive, the current
product price environment may lessen competition somewhat and result in more
realistic acquisition pricing scenarios. The Company continues to evaluate
acquisition, merger and joint venture opportunities as they arise and would
actively pursue entering into a transaction of this type if the economic and
strategic factors appeared favorable.
Cash on hand at June 30, 1995, together with net cash provided by operating
activities and amounts available under the credit facility, are expected to be
adequate to meet future liquidity needs under current corporate policies.
Management believes that the overall sources of funds available to Key will
continue to be sufficient to satisfy the Company's financial obligations and to
provide resources for exploration, development and acquisition activities.
-11-
<PAGE>
PART II. - OTHER INFORMATION
----------------------------
ITEM 1. LEGAL PROCEEDINGS
--------------------------
None.
ITEM 2. CHANGES IN SECURITIES
------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
----------------------------------------------------------------
On June 8, 1995, the Company held its annual meeting of stockholders at
which Francis H. Merelli, Cortlandt S. Dietler and Timothy J. Moylan were
elected as directors.
The following are the number of votes cast on the election of directors.
<TABLE>
<CAPTION>
Directors: For Withhold Authority
---------------------- --------- ------------------
<S> <C> <C>
Francis H. Merelli 7,382,021 98,748
Cortlandt S. Dietler 7,379,443 101,326
Timothy J. Moylan 7,378,773 101,996
</TABLE>
ITEM 5. OTHER INFORMATION
--------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Exhibits filed herewith:
3.3 Bylaws of the Registrant, amended and restated as of June 8,
1995.
27.1 Financial Data Schedule for Commercial and Industrial
Companies per Article 5 of Regulation S-X for the quarter ended
June 30, 1995.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
June 30, 1995.
-12-
<PAGE>
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.
Dated: August 11, 1995
KEY PRODUCTION COMPANY, INC.
/s/ MONROE W. ROBERTSON
___________________________________
Monroe W. Robertson
Senior Vice President and Secretary
(Principal Financial Officer)
/s/ CATHY L. ANDERSON
___________________________________
Cathy L. Anderson
Controller
(Principal Accounting Officer)
-13-
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
KEY PRODUCTION COMPANY, INC.
Amended and Restated as of June 8, 1995
ARTICLE I
Offices
Section 1.01 Business Offices. The corporation may have such
----------------
offices, either within or outside Delaware, as the board of directors may from
time to time determine or as the business of the corporation may require.
Section 1.02 Registered Office. The registered office of the
-----------------
corporation required by the Delaware General Corporation Law to be maintained in
Delaware shall be as set forth in the certificate of incorporation, unless
changed as provided by law.
ARTICLE 2
Stockholders
Section 2.01 Annual Meeting. An annual meeting of the stockholders
--------------
shall be held on such date as may be determined by the board of directors for
the purpose of electing directors and for the transaction of such other business
as may properly come before the meeting. If the election of directors shall not
be held on the day designated herein for any annual meeting of the stockholders,
or at any adjournment thereof, the board of directors shall cause the election
to be held at a meeting of the stockholders as soon thereafter as conveniently
may be. Failure to hold an annual meeting as required by these bylaws shall not
invalidate any action taken by the board of directors or officers of the
corporation.
Section 2.02 Special Meetings. Special meetings of the stockholders,
----------------
for any purpose or purposes, may be called only by the Chairman of the Board or
the board of directors pursuant to a resolution approved by the affirmative vote
of a majority of directors then in office.
Section 2.03 Place of Meeting. Each meeting of the stockholders
----------------
shall be held at such place, either within or outside Delaware, as may be
designated in the notice of meeting, or, if no place is designated in the
notice, at the principal office of the corporation.
1
<PAGE>
Section 2.04 Conduct of Meeting. Meetings of stockholders shall be
------------------
conducted in accordance with the following rules:
(i) The chairman of the meeting shall have absolute authority over
matters of procedure, and there shall be no appeal from the ruling of the
chairman. If the chairman, in his absolute discretion, deems it advisable to
dispense with the rules of parliamentary procedure as to any one meeting of
stockholders or part thereof, the chairman shall so state and shall clearly
state the rules under which the meeting or appropriate part thereof shall be
conducted.
(ii) If disorder should arise that prevents continuation of the
legitimate business of the meeting, the chairman may quit the chair and announce
the adjournment of the meeting and upon his so doing the meeting is immediately
adjourned.
(iii) The chairman may ask or require that anyone who is not a bona
fide stockholder or proxy leave the meeting.
Section 2.05 Notice of Meetings. Except as otherwise required by
------------------
law, written notice of each meeting of the stockholders stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given either personally
(including delivery by private courier) or by first class, certified or
registered mail, to each stockholder of record entitled to notice of such
meeting, not less than ten nor more than 60 days before the date of the meeting.
Such notice shall be deemed to be given, if personally delivered, when
delivered to the stockholder, and, if mailed, when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the corporation, but if notice of two consecutive
annual meetings and all notices of meetings of or the taking of action by
written consent without a meeting to any stockholder during the period between
such two consecutive annual meetings, or all, and at least two, payments (if
sent by first class mail) of dividends or interest on securities during a 12-
month period, have been mailed addressed to such person at his address as shown
on the records of the corporation and have been returned undeliverable, the
giving of such notice to such person shall not be required until another address
for such person is delivered to the corporation.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting, the
corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting in accordance with the foregoing provisions of this Section 2.05.
2
<PAGE>
Section 2.06 Fixing Date for Determination of Stockholders of Record.
-------------------------------------------------------
For the purpose of determining stockholders (i) entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or (ii) to consent to
corporate action in writing without a meeting, or (iii) entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
(iv) entitled to exercise any rights in respect of any change, conversion, or
exchange of stock or for any other lawful action, the board of directors may
fix, in advance, a date as the record date for any such determination of
stockholders, which date shall be not more than 60 nor less than ten days before
the date of such meeting, and not more than 60 days prior to any other action.
If no record date is fixed, then the record date shall be, for
determining stockholders entitled to notice of or to vote at a meeting of the
stockholders, the close of business on the date next preceding the day on which
notice is given, or, if notice is waived, the close of business on the day next
preceding the day on which the meeting is held, or, for determining stockholders
for any other purpose, the close of business on the day on which the board of
directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjournment
meeting.
Section 2.07 Voting List. The officer who has charge of the stock
-----------
books of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and 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 where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 2.08 Proxies. Each stockholder entitled to vote at a meeting
-------
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
Section 2.09 Quorum and Manner of Acting. At all meetings of
---------------------------
stockholders, the holders of a majority of the combined voting power of the
outstanding shares of common stock of the corporation entitled to vote at the
meeting, represented in person or by proxy, shall constitute a quorum. If a
quorum is present, the affirmative vote of shares representing a majority of
voting power of shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless the vote of a
greater proportion or number or voting by classes is otherwise required by law,
the certificate of incorporation or these bylaws. In the absence of a quorum,
the stockholders of the corporation present in person or by proxy and entitled
to vote, by
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majority vote, may adjourn the meeting from time to time in accordance with
Section 2.04, until a quorum shall be present.
Section 2.10 Voting Shares. Subject to the provisions of Section
-------------
2.05, each stockholder entitled to vote shall have the number of votes specified
in the certificate of incorporation for each outstanding share of capital stock
held of record by such stockholder on each matter submitted to a vote of the
stockholders. In the election of directors each record holder of stock entitled
to vote at such election shall have the right to vote the number of shares owned
by him multiplied by the number of votes per share specified in the certificate
of incorporation for as many persons as there are directors to be elected, and
for whose election he has the right to vote. Cumulative voting shall not be
allowed.
Section 2.11 Voting of Shares by Certain Holders.
-----------------------------------
(a) Fiduciaries; Pledgors. Persons holding stock in a fiduciary
---------------------
capacity shall be entitled to vote the shares so held. Persons whose stock is
pledged shall be entitled to vote, unless in the transfer by the pledgor on the
books of the corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee or his proxy may represent such shares
and vote thereon.
(b) Joint Owners. If shares stand of record in the names of two
------------
or more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same shares, unless
the secretary of the corporation is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following effects: (i) if only one votes, his act binds all; (ii) if
more than one votes, the act of the majority so voting binds all; (iii) if more
than one votes, but the vote is evenly split on any particular matter, each
faction may vote the shares in question proportionally, or any person voting the
shares, or a beneficiary, if any, may apply to any court having jurisdiction to
appoint an additional person to act with the persons so voting the shares, in
which case the shares shall then be voted as determined by a majority of such
persons; and (iv) if a tenancy is held in unequal interests, a majority or even
split for the purposes of subparagraph (iii) shall be a majority or even split
in interest.
Section 2.12 Nomination of Directors and Presentation of Business at
-------------------------------------------------------
Stockholder Meetings.
--------------------
(a) General. Nominations of persons for election to the board
-------
of directors and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
corporation's notice of meeting, (ii) by or at the direction of the board of
directors or (iii) by a stockholder who was a stockholder of record at the time
of the giving of notice provided for in this Section 2.12, who is entitled to
vote at the meeting and who complied with the notice of procedures set forth in
this Section 2.12.
(b) Annual Meetings. For nominations or other business to be
---------------
properly brought before an annual meeting by a stockholder pursuant to clause
(iii) of paragraph (a) of this
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Section 2.12, the stockholder must have given timely notice thereof in writing
to the secretary of the corporation. To be timely, a stockholder's notice shall
be delivered to the secretary at the principal executive offices of the
corporation not less than 60 days or more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that if
the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, notice by the stockholder to be
timely must be delivered not earlier than the 90th day prior to such annual
meeting and not later than the close of business on the later of (i) the 60th
day prior to such annual meeting or (ii) the 10th day following the day on which
public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or re-election as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; (iii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (1) the name and address of such stockholder, as
they appear on the corporation's books, and of such beneficial owner, and (2)
the class and number of shares of the corporation that are owned beneficially
and of record by such stockholder and such beneficial owner.
Notwithstanding anything in the second sentence of this paragraph (b)
to the contrary, if the number of directors to be elected to the board of
directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased board of directors
made by the corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal executive
offices of the corporation not later than the close of business on the 10th day
following the day on which the public announcement is first made by the
corporation.
(c) Special Meetings. Only such business shall be conducted at a
----------------
special meeting of stockholders as shall have been brought before the meeting
pursuant to the corporation's notice of meeting or as otherwise required by law.
Nominations of persons for election to the board of directors may be made at a
special meeting of stockholders with regard to which the board of directors has
determined that directors are to be elected (i) pursuant to the corporation's
notice of meeting; (ii) by or at the direction of the board of directors or
(iii) by any stockholder who is a stockholder of record at the time of the
giving of notice provided for in this Section 2.12. If the corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the board, any such stockholder may nominate a person or persons
(as the case may be) for election to such position(s) as specified in the
corporation's notice of meeting, if the stockholder's
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notice setting forth the information and complying with the form described in
paragraph (b) of this Section 2.12 shall be delivered to the secretary at the
principal executive offices of the corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of (i) the 60th day prior to such special meeting or (ii) the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the board of directors to be
elected at such meeting.
(d) Procedures. Only such persons who are nominated in
----------
accordance with the procedure set forth in this Section 2.12 shall be eligible
to serve as directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 2.12. The chairman of the meeting of
stockholders shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made in accordance
with the procedures set forth in this Section 2.12 and, if any proposed
nomination or business is not in compliance with this Section 2.12, to declare
that such defective nominations or proposal shall be disregarded.
(e) Public Announcement. For the purpose of this Section 2.12,
-------------------
"public announcement" shall mean disclosure of a press release reported by the
Dow Jones News Service, Associated Press or comparable national news service or
in a document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Sections 13, 14, or 15(d) of the Exchange Act.
(f) Special Procedures. Notwithstanding the foregoing
------------------
provisions of this Section 2.12, (i) if any class or series of stock has the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, such directors shall be nominated and elected
pursuant to the terms of such class or series of stock; and (ii) a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Section 2.12. Nothing in this Section 2.12 shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
(g) Management Proposals. Nominations of persons to stand for
--------------------
election at any annual or special meeting of stockholders may be made at any
time prior to the vote thereon by the board of directors or a committee of the
board. For any new business proposed by management to be properly brought
before the annual meeting of stockholders, such new business shall be approved
by the board of directors, either directly or through its approval by proxy
solicitation materials related thereto, and shall be stated in writing and filed
with the secretary of the corporation at least five days before the date of the
annual meeting, and all business so stated, proposed and filed shall be
considered at the annual meeting.
Section 2.13 Advisory Stockholder Votes. In order for the
--------------------------
stockholders to adopt or approve any proposal submitted to them for the purpose
of requesting the board of directors to take specified action, a majority of the
outstanding stock of the corporation entitled to vote thereon must be voted for
the proposal.
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ARTICLE 3
Board of Directors
Section 3.01 General Powers. The business and affairs of the
--------------
corporation shall be managed by or under the direction of its board of
directors, except as otherwise provided in the Delaware General Corporation Law
or the certificate of incorporation.
Section 3.02 Number, Tenure and Qualifications. The number of
---------------------------------
directors of the corporation shall be fixed from time to time by resolution of
the board of directors. Directors shall be elected to hold office for a term
expiring at the next succeeding annual meeting. Except as otherwise provided in
Sections 2.01 and 3.04, directors to be elected shall be elected at each annual
meeting of the stockholders, by a plurality of the votes present in person or
represented by proxy at the meeting and entitled to vote at the election of
directors. Each director shall hold office until his successor shall have been
elected and qualified or until his earlier death, resignation or removal.
Directors need not be residents of Delaware or stockholders of the corporation.
Except as otherwise required by law, whenever the holders of any one or more
series of preferred stock shall have the right, voting separately as a class, to
elect one or more directors of the corporation, the terms of the director or
directors elected by such holders shall expire at the next succeeding annual
meeting of the stockholders.
Section 3.03 Resignation. Any director may resign at anytime by
-----------
giving written notice to the corporation. A director's resignation shall take
effect at the time specified therein; and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 3.04 Vacancies. Unless otherwise provided in the certificate
---------
of incorporation, any vacancy or any newly created directorship resulting from
any increase in the authorized number of directors may be filled by a majority
of directors then in office, although less than a quorum, or by the affirmative
vote of two directors if there are only two directors remaining or by a sole
remaining director, or by the stockholders if there are no directors remaining.
A director so chosen shall hold office until the next succeeding annual meeting
of the stockholders and until his successor is duly elected and qualified,
unless sooner displaced. When one or more directors shall resign from the
board, effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this Section for the filling of other vacancies.
Section 3.05 Regular Meetings. A regular meeting of the board of
----------------
directors shall be held immediately after and at the same place as the annual
meeting of stockholders, or as soon thereafter as conveniently may be, at the
time and place, either within or outside Delaware, determined by the board, for
the purpose of electing officers and for the transaction of such other business
as may come before the meeting. Failure to hold such a meeting, however, shall
not
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invalidate any action taken by any officer then or thereafter in office.
The board of directors may provide by resolution the time and place, either
within or outside Delaware, for the holding of additional regular meetings
without other notice than such resolution.
Section 3.06 Special Meetings. Special meetings of the board of
----------------
directors may be called by or at the request of the chairman of the board or any
other two directors. The persons authorized to call special meetings of the
board of directors may fix any convenient place, either within or outside
Delaware, as the place for holding any special meeting of the board of directors
called.
Section 3.07 Meetings by Telephone. Members of the board of
---------------------
directors may participate in a meeting of such board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting in such manner shall constitute presence in person at the meeting.
Section 3.08 Notice of Meetings. Notice of each meeting of the board
------------------
of directors (except those regular meetings for which notice is not required)
stating the place, day and hour of the meeting shall be given to each director
at lease five days prior thereto by the mailing of written notice by first
class, certified or registered mail, or at least two days prior thereto by
personal delivery (including delivery by private courier) of written notice or
by telephone, telegram, telex, facsimile, cablegram or other similar method,
except that in the case of a meeting to be held pursuant to Section 3.07 notice
may be given by telephone one day prior thereto. The method of notice need not
be the same to each director. Notice shall be deemed to be given when deposited
in the United States mail, with postage thereon prepaid, addressed to the
director at his business or residence address, when delivered or communicated to
the director or when the telegram, telex, cablegram, or other form of notice is
personally delivered to the director or delivered to the last address of the
director furnished by him to the corporation for such purpose. Neither the
business to be transacted at nor the purpose of any meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.
Section 3.09 Quorum and Manner of Acting. Except as otherwise may be
---------------------------
required by law, the certificate of incorporation or these bylaws, a majority of
the number of directors fixed in accordance with these bylaws, present in
person, shall constitute a quorum for the transaction of business at any meeting
of the board of directors, and the vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the board of
directors. If less than a quorum is present at a meeting, the directors present
may adjourn the meeting from time to time without further notice other than
announcement at the meeting, until a quorum shall be present. No director may
vote or act by proxy or power of attorney at any meeting of the board of
directors.
Section 3.10 Action Without a Meeting Any action required or
------------------------
permitted to be taken at any meeting of the board of directors may be taken
without a meeting, without prior notice and without a vote, if all members of
the board consent thereto in writing and the writing or writings are filed with
the minutes of the proceedings of the board.
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Section 3.11 Executive and Other Committees. The board of directors,
------------------------------
by resolution adopted by a majority of the whole board, may designate one or
more committees, each committee to consist of two or more of the directors of
the corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power of
authority in reference to (a) amending the certificate of incorporation (except
as permitted by the Delaware General Corporation Law with respect to fixing the
terms and conditions of series of stock); (b) adopting an agreement of merger or
consolidation; (c) recommending to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's property and assets; (d)
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution; (e) amending the bylaws of the corporation; or (f)
unless the resolution of the board expressly so provides, declaring a dividend
or authorizing the issuance of stock.
The delegation of authority to any committee shall not operate to
relieve the board of directors or any member of the board from any
responsibility imposed by law. Subject to the foregoing, the board of directors
may provide such powers, limitations, and procedures for such committees as the
board deems advisable. To the extent the board of directors does not establish
other procedures, each committee shall be governed by the procedures set forth
in Sections 3.06 (except as they relate to an annual meeting), 3.07 through 3.10
and 7.01 and 7.02 as if the committee were the board of directors. Each
committee shall keep regular minutes of its meetings, which shall be reported to
the board of directors when required and submitted to the secretary of the
corporation for inclusion in the corporate records.
Section 3.12 Compensation. Unless otherwise restricted by the
------------
certificate of incorporation, the board of directors shall have the authority to
fix the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and each meeting of
any committee of the board of which he is a member and may be paid a fixed sum
for attendance at each such meeting or a stated salary or both a fixed sum and a
stated salary. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
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ARTICLE 4
Officers
Section 4.01 Number and Qualifications. The officers of the
-------------------------
corporation shall consist of a chairman of the board, chief executive officer, a
president and chief operating officer, one or more vice-presidents, a secretary
and such other officers, including a vice-chairman or vice-chairmen of the
board, chief financial officer, a treasurer and a controller, as may from time
to time be elected or appointed by the board. In addition, the board of
directors or the chief executive officer may elect or appoint such assistant and
other subordinate officers including assistant vice-presidents, assistant
secretaries and assistant treasurers, as it or he shall deem necessary or
appropriate. Any number of offices may be held by the same persons, except that
no person may simultaneously hold the offices of president and secretary.
Section 4.02 Election and Term of Office. Except as provided in
---------------------------
Sections 4.01 and 4.06, the officers of the corporation shall be elected by the
board of directors annually at the first meeting of the board held after each
annual meeting of the stockholders and provided in Section 3.05. If the
election of officers shall not be held as provided herein, such election shall
be held as soon thereafter as conveniently may be. Each officer shall hold
office until his successor shall have been duly elected and shall have qualified
or until the expiration of his term in office if elected or appointed for a
specified period of time or until his earlier death, resignation, or removal.
Section 4.03 Compensation. Officers shall receive such compensation
------------
for their services as may be authorized or ratified by the board of directors
and no officer shall be prevented from receiving compensation by reason of the
fact that he is also a director of the corporation. Election or appointment as
an officer shall not of itself create a contract or other right to compensation
for services performed by such officer.
Section 4.04 Resignation. Any officer may resign at any time,
-----------
subject to any rights or obligations under any existing contracts between the
officer and the corporation, by giving written notice to the corporation. An
officer's resignation shall take effect at the time stated therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 4.05 Removal. Any officer may be removed at any time by the
-------
chief executive officer (whether or not such officer was appointed by the chief
executive officer) or by the board of directors, whenever in his or its
judgement, as the case may be, the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4.06 Vacancies. A vacancy occurring in any office by death,
---------
resignation, removal or otherwise may be filled by the chief executive officer
or the board of directors for the unexpired portion of the term.
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Section 4.07 Authority of Duties. The officers of the corporation
-------------------
shall have the authority and shall exercise the powers and perform the duties
specified below, and as may be additionally specified by the chief executive
officer, the board of directors or these bylaws (and in all cases where the
duties of any officer are not prescribed by the bylaws or the board of
directors, such officer shall follow the orders and instructions of the chief
executive officer), except that in any event each officer shall exercise such
powers and perform such duties as may be required by law:
(a) Chairman of the Board. The chairman of the board, who shall
---------------------
be elected from among the directors, shall preside at all meetings of the
stockholders and directors of the corporation and shall have and may exercise
all such powers and perform such other duties as may be assigned to him from
time to time by the board of directors.
(b) Chief Executive Officer. The chief executive officer shall,
-----------------------
subject to the direction and supervision of the board of directors, (i) have
general and active control of its affairs and businesses and general supervision
of its officers, agents, and employees; (ii) in the absence of the chairman of
the board, preside at all meetings of the stockholders and the board of
directors; (iii) see that all orders and resolutions of the board of directors
are carried into effect; and (iv) perform all other duties incident to the
office of chief executive officer and as from time to time may be assigned to
him by the board of directors.
(c) President and Chief Operating Officer. The president and
-------------------------------------
chief operating officer shall, subject to the direction and supervision of the
board of directors and the chief executive officer, supervise the day to day
operations of the corporation and perform all other duties incident to the
office of chief operating officer as from time to time may be assigned to him by
the chairman of the board, the board of directors or the chief executive
officer. At the request of the chief executive officer or in his absence or in
the event of his inability or refusal to act, the president and chief operating
officer shall perform the duties of the chief executive officer, and when so
acting shall have all the powers and be subject to all the restrictions upon the
chief executive officer.
(d) Vice President. The vice-president or senior vice president,
--------------
if any (or if there is more than one then each vice-president or senior vice
president), shall assist the president and chief operating officer and shall
perform such duties as may be assigned to him by the chief executive officer,
the president and chief operating officer or by the board of directors.
Assistant vice-presidents, if any, shall have the powers and perform the duties
as may be assigned to them by the chief executive officer or by the board of
directors.
(e) Chief Financial Officer; Treasurer. The chief financial
----------------------------------
officer or, in the absence of a chief financial officer, the treasurer shall:
(i) be the principal financial officer of the corporation and have the care and
custody of all funds, securities, evidences of indebtedness and other personal
property of the corporation and deposit the same in accordance with the
instructions of the board of directors; (ii) unless assigned to the controller,
receive and give receipts and acquittances for moneys paid in on account of the
corporation, and pay out of the funds on hand all bills, payrolls and other just
debts of the corporation of whatever nature upon maturity; (iii) unless there is
a controller, be the principal accounting officer of the corporation and as such
prescribe and
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maintain the methods and systems of accounting to be followed, keep complete
books and records of account, prepare and file all local, state, and federal tax
returns, prescribe and maintain an adequate system of internal audit and prepare
and furnish to the chief executive officer and the board of directors statements
of account showing the financial position of the corporation and the results of
its operations; (iv) upon request of the board, make such reports to it as may
be required at any time; and (v) perform all other duties incident to such
office and such other duties as from time to time may be assigned to him by the
board of directors or by the chief executive officer. Assistant treasurers, if
any, shall have the same powers and duties, subject to the supervision of the
chief financial officer or treasurer. If there is no chief financial officer or
treasurer, these duties shall be performed by the secretary or the chief
executive officer or other person appointed by the board of directors.
(f) Secretary. The secretary shall: (i) keep the minutes of the
---------
proceedings of the stockholders, the board of directors and any committees of
the boards of directors; (ii) see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; (iii) be custodian of
the corporate records and of the seal of the corporation; (iv) keep at the
corporation's registered office or principal place of business a record
containing the names and addresses of all stockholders and the number and class
of shares held by each, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (v) have general charge of the stock
books of the corporation, unless the corporation has a transfer agent; and (vi)
in general, perform all other duties incident to the office of secretary and
such other duties as from time to time may be assigned to him by the chief
executive officer or by the board of directors. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the secretary.
Section 4.08 Surety Bonds. The board of directors may require any
------------
officer or agent of the corporation to execute to the corporation a bond in such
sums and with such sureties as shall be satisfactory to the board, conditioned
upon the faithful performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE 5
Stock
Section 5.01 Issuance of Shares. The issuance or sale by the
------------------
corporation of any shares of its authorized capital stock of any class,
including treasury shares, shall be made only upon authorization by the board of
directors, except as otherwise may be provided by law. Every issuance of shares
shall be recorded on the books of the corporation maintained for such purpose by
or on behalf of the corporation.
Section 5.02 Stock Certificates; Uncertificated Shares. The shares
-----------------------------------------
of stock of the corporation shall be represented by certificates, except that
the board of directors may, in accordance with applicable provisions of law,
authorize the issuance of some or all of any or all classes or series of stock
of the corporation without certificates. If shares are represented by
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certificates (or if a holder of uncertificated shares requests his shares to be
represented by a certificate), each certificate shall be signed by or in the
name of the corporation by the chairman or a vice-chairman of the board of
directors, chief executive officer, or the president or a vice-president, and by
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. Any of or all signatures on the certificates may be
facsimile. 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. Certificates
of stock shall be in such form consistent with law as shall be prescribed by the
board of directors.
Section 5.03 Payment for Shares. Shares shall be issued for such
------------------
consideration (but not less than the par value thereof) as shall be determined
from time to time by the board of directors. Treasury shares shall be disposed
of for such consideration as may be determined from time to time by the board.
Such consideration shall be paid in such form and in such manner as the
directors shall determine. In the absence of actual fraud in the transaction,
the judgement of the directors as to the value of such consideration shall be
conclusive.
The capital stock issued by the corporation shall be deemed to be
fully paid and non-assessable stock if: (a) the entire amount of the
consideration has been received by the corporation in the form of cash, services
rendered, personal property, real property, leases of real property or a
combination thereof; or (b) not less than the amount of the consideration
determined to be capital pursuant to statute has been received by the
corporation in such form and the corporation has received a binding obligation
of the subscriber or purchaser to pay the balance of the subscription or
purchase price; provided, however, nothing contained herein shall prevent the
board of directors from issuing partly paid shares pursuant to statute.
Section 5.04 Lost Certificates. In case of the alleged loss,
-----------------
destruction or mutilation of a certificate of stock the corporation may direct
the issuance of a new certificate in lieu thereof upon such terms and conditions
in conformity with law as it may prescribe. The corporation may in its
discretion require a bond in such form and amount and with such surety as it may
determine before issuing a new certificate.
Section 5.05 Transfer of Shares. Upon presentation and surrender to
------------------
the corporation or to a transfer agent of the corporation of a certificate of
stock duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, payment of all transfer taxes, if any, and the
satisfaction of any other requirements of law, including inquiry into and
discharge of any adverse claims of which the corporation has notice, the
corporation or the transfer agent shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction on the
books maintained for such purpose by or on behalf of the corporation. No
transfer of shares shall be effective until it has been entered on such books.
The corporation or a transfer agent of the corporation may require a signature
guaranty or other reasonable evidence that
13
<PAGE>
any signature is genuine and effective before making any transfer. Transfers of
uncertificated shares shall be made in accordance with applicable provision of
law.
Section 5.06 Registered Holders. The corporation shall be entitled
------------------
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
Section 5.07 Transfer Agents, Registrars, and Paying Agents. The
----------------------------------------------
board of directors may, at its discretion, appoint one or more transfer agents,
registrars and agents for making payment upon any class of stock, bond,
debenture or other security of the corporation. Such agents and registrars may
be located either within or outside Delaware. They shall have such rights and
duties and shall be entitled to such compensation as may be agreed.
ARTICLE 6
Indemnification
Section 6.01 Definitions. For purposes of this Article, the
-----------
following terms shall have the meanings set forth below:
(a) Code. The term "Code" means the Delaware General
----
Corporation Law as it exists on the date of the adoption of this Article and as
it may hereafter be amended from time to time, but in the case of any amendment,
only to the extent that the amendment permits the corporation to provide broader
indemnification rights than the Delaware General Corporation Law permitted the
corporation to provide at the date of the adoption of this Article and prior to
the amendment.
(b) Corporation. The term "corporation" means the corporation
-----------
and, in addition to the resulting or surviving corporation, any domestic or
foreign predecessor entity of the corporation in a merger, consolidation or
other transaction in which the predecessor's existence ceased upon consummation
of the transaction.
(c) Expenses. The term "expenses" means the actual and
--------
reasonable expenses (including but not limited to expenses of investigation and
preparation and fees and disbursements of counsel, accountants or other experts)
incurred by a party in connection with a proceeding.
(d) Liability. The term "liability" means the obligation to pay
---------
a judgement, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan) or expense incurred with respect to a
proceeding.
14
<PAGE>
(e) Party. The term "party" means any individual who was, is,
-----
or is threatened to be made, a named defendant or respondent in a proceeding by
reason of the fact that he is or was a director, officer, or employee of the
corporation and any individual who, while a director, officer, or employee of
the corporation is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any other
foreign or domestic corporation or of any partnership, joint venture, trust,
other enterprise or employee benefit plan. A party shall be considered to be
serving an employee benefit plan at the corporation's request if his duties to
the corporation also impose duties on or otherwise involve services by him to
the plan or to participants in or beneficiaries of the plan.
(f) Proceeding. The term "proceeding" means any threatened,
----------
pending or completed action, suit or proceeding, or any appeal therein, whether
civil, criminal, administrative, arbitrative or investigative (including an
action by or in the right of the corporation), and whether formal or informal.
Section 6.02 Right to Indemnification. The corporation shall
------------------------
indemnify any party to a proceeding against liability incurred in, relating to
or as a result of the proceeding to the fullest extent permitted by law
(including without limitation in circumstances in which, in the absence of this
Section 6.02, indemnification would be (a) discretionary under the Code or (b)
limited or subject to particular standards of conduct under the Code).
Section 6.03 Advancement of Expenses. In the event of any proceeding
-----------------------
in which a party is involved or which may give rise to a right of
indemnification under this Article, following written request to the corporation
by the party, the corporation shall pay to the party, to the fullest extent
permitted by law (including without limitation in circumstances in which, in the
absence of this Section 6.03, advancement of expenses would be (a) discretionary
under the Code or (b) limited or subject to particular standards of conduct
under the Code), amounts to cover expenses incurred by the party in, relating to
or as a result of such proceeding in advance of its final disposition.
Section 6.04 Burden of Proof. If under applicable law the
---------------
entitlement of a party to be indemnified or advanced expenses hereunder depends
upon whether a standard of conduct has been met, the burden of proof of
establishing that the party did not act in accordance with such standard shall
rest with the corporation. A party shall be presumed to have acted in accordance
with such standard and to be entitled to indemnification or the advancement of
expenses (as the case may be) unless, based upon a preponderance of the
evidence, it shall be determined that the party has not met such standard. Such
determination and any evaluation as to the reasonableness of amounts claimed by
a party shall be made by the board of directors of the corporation or such other
body or persons as may be permitted by the Code.
Subject to any express limitation of the Code, if so requested by the
party, such determination and evaluation as to the reasonableness of the amounts
claimed by the party shall be made by independent counsel who is selected by the
party and approved by the corporation (which approval shall not be reasonably
withheld.) For the purpose of this Article, unless otherwise expressly stated,
the termination of any proceeding by judgement, order, settlement (whether with
15
<PAGE>
or without court approval) or conviction, or upon a plea of nolo contendere or
its equivalent, shall not create a presumption that a party did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
Section 6.05 Notification and Defense of Claim. Promptly after
---------------------------------
receipt by a party of notice of the commencement of any proceeding, the party
shall, if a claim in respect thereof is to be made against the corporation under
this Article, notify the corporation in writing of the commencement thereof;
provided, however, that delay in so notifying the corporation shall not
constitute a waiver or release by the party of any rights under this Article.
If the corporation assumes the defense of the proceeding, the party
shall have the right to employ its own counsel, but the fees and expenses of
such counsel incurred after notice from the corporation of its assumption of the
defense of such proceeding shall be at the expense of the party unless (i) the
employment of such counsel has been specifically authorized by the corporation,
(ii) the party shall have reasonably concluded that there may be a conflict of
interest between the corporation and the party in the conduct of the defense of
such proceeding, or (iii) the corporation shall not in fact have employed
counsel to assume the defense of such proceeding.
Notwithstanding the foregoing, if an insurance carrier has supplied
directors' and officers' liability insurance covering a proceeding and is
entitled to retain counsel for the defense of such proceeding, then the
insurance carrier shall retain counsel to conduct the defense of such proceding
unless the party and the corporation concur in writing that the insurance
carrier's doing so is undesirable. The corporation shall not be liable under
this Article for any amounts paid in settlement of any proceeding effected
without its written consent. The corporation shall not settle any proceeding in
any manner that would impose any penalty or limitation on a party without the
party's written consent. Consent to a proposed settlement of any proceeding
shall not be unreasonably withheld by either the corporation or the party.
Section 6.06 Enforcement. The right to indemnification and
-----------
advancement of expenses granted by this Article shall be enforceable in any
court of competent jurisdiction if the corporation denies the claim, in whole or
in part, or if no disposition of such claim is made within 90 days after the
written request for indemnification or advancement of expenses is received. If
successful in whole or in part in such suit, the party's expenses incurred in
bringing and prosecuting such claim shall also be paid by the corporation.
Whether or not the party has met any applicable standard of conduct,
the court in such suit may order indemnification or the advancement of expenses
as the court deems proper (subject to any express limitation of the Code).
Further, the corporation shall indemnify a party from and against any and all
expenses and, if requested by the party, shall (within ten business days of such
request) advance such expenses to the party, which are incurred by the party in
connection with any claim asserted against or suit brought by the party for
recovery under any directors' and officers' liability insurance policies
maintained by the corporation, regardless of whether the party is unsuccessful
in whole or in part in such claim or suit.
16
<PAGE>
Section 6.07 Proceedings by a Party. The corporation shall indemnify
----------------------
or advance expenses to a party in connection with any proceeding (or part
thereof) initiated by the party only if such proceeding (or part thereof) was
authorized by the chief executive officer or board of directors of the
corporation.
Section 6.08 Subrogation. In the event of any payment under this
-----------
Article, the corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the indemnified party, who shall execute all
papers and do everything that may be necessary to assure such rights of
subrogation to the corporation.
Section 6.09 Other Payments. The corporation shall not be liable
--------------
under this Article to make any payment in connection with any proceeding against
or involving a party to the extent the party actually receives payment (under
any insurance policy, agreement or otherwise) of the amounts otherwise
indemnifiable hereunder. A party shall repay to the corporation the amount of
any payment the corporation makes to the party under this Article in connection
with any proceeding against or involving the party, to the extent the party has
otherwise actually received payment (under any insurance policy, agreement or
otherwise) of such amounts advanced.
Section 6.10 Insurance. So long as any party who is or was an
---------
officer or director of the corporation may be subject to any possible proceeding
by reason of the fact that he is or was an officer or director of the
corporation (or is or was serving in any one or more of the other capacities
covered by this Article during his tenure as officer or director), if the
corporation maintains an insurance policy or policies providing directors' and
officers' liability insurance, such officer or director shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage applicable to any then current officer or director of the
corporation, or the corporation shall purchase and maintain in effect for the
benefit of such officer or director one or more valid, binding and enforceable
policy or policies of directors' and officers' liability insurance providing, in
all respects, coverage at least comparable to that provided to any then current
officer or director at the corporation.
Section 6.11 Other Rights and Remedies. The rights to
-------------------------
indemnification and advancement of expenses provided in this Article shall be in
addition to any other rights to which a party may have or hereafter acquire
under any law, provision of the certificate of incorporation, any other or
further provisions of these bylaws, vote of the stockholders or directors,
agreement or otherwise. The corporation shall have the right, but shall not be
obligated, to indemnify or advance expenses to any agent of the corporation not
otherwise covered by this Article in accordance with and to the fullest extent
permitted by the Code.
Section 6.12 Applicability; Effect. The rights to indemnification
---------------------
and advancement of expenses provided in this Article shall be applicable to acts
or omissions that occurred prior to the adoption of this Article, shall continue
as to any party during the period such party serves in any one or more of the
capacities covered by this Article, shall continue thereafter so long as the
party may be subject to any possible proceeding by reason of the fact that he
served in any one or more of the capacities covered by this Article, and shall
inure to the benefit of the estate and personal
17
<PAGE>
representatives of each such person. Any repeal or modification of this Article
or of any Section or provision hereof shall not affect any rights or obligations
then existing. All rights to indemnification under this Article shall be deemed
to be provided by a contract between the corporation and each party covered
hereby.
Section 6.13 Severability. If any provision of this Article shall be
------------
held to be invalid, illegal, or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of this
Article (including without limitation, all portions of any Sections of this
Article containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal, or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Article (including, without limitation, all
portions of any Section of this Article containing any such provision held to be
invalid, illegal, or unenforceable) shall be construed so as to give effect to
the intent of this Article that each party covered hereby is entitled to the
fullest protection permitted by law.
ARTICLE 7
Miscellaneous
Section 7.01 Waivers of Notice. Whenever notice is required to be
-----------------
given by law, by the certificate of incorporation or by these bylaws, a written
waiver thereof, signed by the person entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting or (in the case of a stockholder) by proxy shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting need be specified in any written waiver of notice unless required by
these bylaws to be included in the notice of such meeting.
Section 7.02 Presumption of Assent. A director or stockholder of the
---------------------
corporation who is present at a meeting of the board of directors or
stockholders at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director or stockholder who voted in
favor of such action.
Section 7.03 Voting of Securities by the Corporation. Unless
---------------------------------------
otherwise provided by resolution of the board of directors, on behalf of the
corporation the chief executive officer, president, chief operating officer,
treasurer, or any vice-president shall attend in person or by substitute
appointed by him, or shall execute written instruments appointing a proxy or
proxies to represent the corporation at, all meetings of the stockholders of any
other corporation, association or other entity in which the corporation holds
any stock or other securities, and may execute written
18
<PAGE>
waivers of notice with respect to any such meetings. At all such meetings and
otherwise, the chief executive officer, president, chief operating officer,
treasurer, or any vice-president, in person or by substitute or proxy as
aforesaid, may vote the stock or other securities so held by the corporation and
may execute written consents and any other instruments with respect to such
stock or securities and may exercise any and all rights and powers incident to
the ownership of said stock or securities, subject, however, to the
instructions, if any, of the board of directors.
Section 7.04 Seal. The corporate seal of the corporation shall be in
----
such form as adopted by the board of directors, and any officer of the
corporation may, when and as required, affix or impress the seal, or a facsimile
thereof, to or on any instrument or document of the corporation.
Section 7.05 Fiscal Year. The fiscal year of the corporation shall
-----------
be as established by the board of directors.
Section 7.06 Amendments. These bylaws may be amended or repealed and
----------
new bylaws adopted by the board of directors or, subject to the certificate of
incorporation, by the stockholders entitled to vote.
END
19
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