Page 1 of 9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
___
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
___
|___| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5728
ROLLINS TRUCK LEASING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0074022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Rollins Plaza, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
(302) 426-2700
(Registrant's telephone number, including area code)
(Former name of registrant)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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 the registrant's common stock outstanding
as of March 31, 1997 was 42,027,898.
FORM 10-Q Page 2 of 9
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the quarter and six months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending September 30, 1997. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1996.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended Six Months Ended
March 31, March 31,
1997 1996 1997 1996
Revenues $132,376 $122,192 $266,073 $247,213
Expenses:
Operating 56,884 52,852 111,530 104,053
Depreciation 41,960 38,588 83,734 77,014
Gain on sale of property
and equipment (3,220) (2,480) (5,649) (4,379)
Selling and administrative 12,373 12,535 23,871 24,439
107,997 101,495 213,486 201,127
Operating earnings 24,379 20,697 52,587 46,086
Interest expense 11,876 11,864 23,980 23,667
Earnings before income taxes 12,503 8,833 28,607 22,419
Income taxes 4,875 3,401 11,156 8,631
Net earnings $ 7,628 $ 5,432 $ 17,451 $ 13,788
Earnings per share $ .18 $ .12 $ .41 $ .31
Average common shares
and equivalents
outstanding (000) 42,850 44,830
Dividends paid per
common share $ .05 $ .045 $ .10 $ .09
FORM 10-Q Page 3 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
March 31, September 30,
ASSETS 1997 1996
Current assets
Cash $ 64,100 $ 31,207
Accounts receivable, net of allowance for
doubtful accounts of: March-$2,026;
September-$1,928 65,555 62,389
Inventories 9,060 9,124
Prepaid expenses 18,516 14,195
Refundable income taxes - 897
Deferred income taxes 5,960 5,960
Total current assets 163,191 123,772
Equipment on operating leases, at cost,
net of accumulated depreciation of:
March-$402,232; September-$376,018 806,370 784,346
Other property and equipment, at cost,
net of accumulated depreciation of:
March-$70,063; September-$67,930 201,824 198,681
Excess of cost over net assets of
businesses acquired 12,327 12,497
Other assets 6,331 5,916
Total assets $1,190,043 $1,125,212
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 8,629 $ 8,759
Accrued liabilities 45,717 44,733
Income taxes payable 2,010 -
Current maturities of long-term debt 128 124
Total current liabilities 56,484 53,616
Equipment financing obligations 700,332 640,854
Long-term debt 442 508
Other liabilities 12,648 11,375
Deferred income taxes 139,707 134,811
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value,
100,000,000 shares authorized; issued
and outstanding: March-42,027,898;
September-43,383,935 42,028 43,384
Additional paid-in capital 121 -
Retained earnings 238,281 240,664
Total shareholders' equity 280,430 284,048
Total liabilities and shareholders' equity $1,190,043 $1,125,212
FORM 10-Q Page 4 of 9
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Six Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net earnings $ 17,451 $ 13,788
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 83,903 77,174
Net gain on sale of property and equipment (5,649) (4,379)
Changes in assets and liabilities:
Accounts receivable (3,166) 2,617
Accounts payable and accrued liabilities 854 (1,736)
Current and deferred income taxes 7,803 6,626
Other, net (3,399) (4,507)
Net cash provided by operating activities 97,797 89,583
Cash flows from investing activities:
Purchase of property and equipment (134,671) (177,140)
Proceeds from sales of equipment 31,420 35,472
Excess of cost over net assets of
business acquired - (1,150)
Net cash used in investing activities (103,251) (142,818)
Cash flows from financing activities:
Proceeds of equipment financing obligations 84,536 68,326
Repayment of equipment financing obligations (25,059) (16,460)
Repayment of long-term debt (61) (75)
Payment of dividends (4,243) (4,008)
Proceeds of stock options exercised 391 265
Common stock acquired and retired (17,217) (5,895)
Net cash provided by financing activities 38,347 42,153
Net increase (decrease) in cash 32,893 (11,082)
Cash beginning of period 31,207 22,708
Cash end of period $ 64,100 $ 11,626
Supplemental information:
Interest paid $ 23,114 $ 23,801
Income taxes paid $ 3,353 $ 2,005
FORM 10-Q Page 5 of 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Six Months Ended March 31, 1997 vs. Six Months
Ended March 31, 1996
Revenues increased by $18,860,000 (7.6%) as full-service lease,
guaranteed maintenance, dedicated contract carriage, and commercial rental
revenues all improved over the same period last year. The increase in
revenues was principally volume-related as industry competition continued
to limit price increases.
Operating expenses increased by $7,477,000 (7.2%) reflecting the
increase in revenues. The more significant operating expense increases
resulted from the continued growth in the dedicated contract carriage
business in which drivers' wages increased by $4,176,000 and vehicle
expenses increased by $2,178,000. Operating expenses as a percentage of
revenues were 41.9% and 42.1% in 1997 and 1996, respectively.
Depreciation expense increased by $6,720,000 (8.7%) due to the
increased investment in equipment on operating leases and related
transportation service facilities. The higher levels of investment in
property and equipment reflected, in addition to the higher level of
business, increased prices paid for recently acquired capital assets.
Gain on the sale of property and equipment increased by $1,270,000
(29.0%) principally due to higher average selling prices realized on
transportation equipment.
Selling and administrative expenses decreased by $568,000 (2.3%), and
reflected decreased advertising expenses ($498,000) and bad debt expense
($343,000). Advertising expense has decreased in favor of direct marketing
through the Company's sales force which has been expanded over the past
several years. As a percent of revenues, selling and administrative
expenses decreased to 9.0% in 1997 from 9.9% in 1996.
Interest expense increased by $313,000 (1.3%) due to the increased
level of borrowings when compared with the same period last year. The
increase in interest expense associated with the higher borrowing level was
offset in part by lower interest rates.
The effective income tax rates for the first six months of 1997 and
1996 were 39.0% and 38.5%, respectively.
Net earnings increased by $3,663,000 (26.6%) to $17,451,000 or $.41 per
share from $13,788,000 or $.31 per share in fiscal 1996. The increased net
earnings resulted from higher revenues which were reduced in part by the
incremental costs associated with such revenues.
Results of Operations: Quarter Ended March 31, 1997 vs. Quarter Ended
March 31, 1996
Revenues for the quarter ended March 31, 1997 were $132,376,000
compared with $122,192,000 for the same quarter last year. The increase of
$10,184,000 (8.3%) was broad based as full-service lease, guaranteed
maintenance, dedicated contract carriage and commercial rental revenues all
improved over last year.
FORM 10-Q Page 6 of 9
Operating expenses increased by $4,032,000 (7.6%) reflecting the
increase in revenues. Drivers' wages and vehicle expenses for dedicated
contract carriage for the quarter ended March 31, 1997 increased by
$3,017,000 compared with the same quarter last year due to a higher level
of new business. Operating expenses as a percentage of revenues improved
from 43.3% for the quarter ended March 31, 1996 to 43.0% for the quarter
ended March 31, 1997.
Depreciation expense increased by $3,372,000 (8.7%) due to the
increased investment in equipment on operating leases and related
transportation service facilities. As a percent of revenues, depreciation
expense increased to 31.7% in 1997 from 31.6% in 1996.
Gain on the sale of property and equipment increased by $740,000
(29.8%) principally due to higher average selling prices realized on
transportation equipment.
Selling and administrative expenses decreased by $162,000 (1.3%). The
most significant fluctuation was a decrease in bad debt expense of $259,000
reflecting an improvement compared with the second fiscal quarter last
year. As a percent of revenues, selling and administrative expenses
decreased to 9.3% in 1997 from 10.2% in 1996.
Interest expense was essentially flat with last year and reflected the
increased level of borrowings offset by lower interest rates.
The effective income tax rates for the second fiscal quarter of 1997
and 1996 were 39.0% and 38.5%, respectively.
Net earnings increased by $2,196,000 (40.4%) to $7,628,000 or $.18 per
share from $5,432,000 or $.12 per share in fiscal 1996. The increased net
earnings resulted from the higher revenues which were reduced in part by
the incremental costs associated with such revenues.
Liquidity and Capital Resources
Cash flows from operating activities of $97,797,000 were generated
principally from net earnings of $17,451,000 and the noncash depreciation
and amortization expenses totaling $83,903,000. Investing activities used
$103,251,000 of cash for the purchase of property and equipment net of the
cash proceeds received from the sale of equipment. The net cash flow from
operating activities plus $84,536,000 of proceeds from equipment financing
obligations were used to pay dividends, repurchase 1,458,100 shares of the
Company's $1 par value common stock and to reduce equipment financing
obligations by $25,059,000.
On March 10, 1997, the Company closed on its sale of $75,000,000 of
7.30% Collateral Trust Debentures, Series R, due March 1, 2007. The
proceeds from this sale were used to redeem $50,000,000 of outstanding
Series K, 7.75% Collateral Trust Debentures on April 15, 1997. In addition,
the Company has a current shelf registration under which it can sell an
additional $155,000,000 of Collateral Trust Debentures.
The Company's principal subsidiary, Rollins Leasing Corp., has a
$100,000,000 revolving credit facility all of which was available at March
31, 1997. This credit facility requires the maintenance of specified
financial ratios and restricts payments to the Company.
FORM 10-Q Page 7 of 9
Based on its access to the debt markets and relationships with current
lending institutions and others who have expressed an interest in providing
financing, the Company expects to be able to obtain financing for its
equipment and facility purchases at market rates and under satisfactory
terms and conditions. Covenants in the Company's outstanding Collateral
Trust Debentures restrict the Company's dividend payments to consolidated
net earnings subsequent to September 30, 1984 subject to certain
adjustments.
Otherwise, there have been no material changes in the Company's
financial condition and its liquidity and capital resources since September
30, 1996. For further details, see the Company's 1996 Annual Report on
Form 10-K for the year ended September 30, 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Company or any of
its subsidiaries is a party. Certain subsidiaries of the Company are
involved in ordinary routine litigation incidental to the operation of its
business.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on January 30,
1997. With regard to Proposal No. 1 of the NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON JANUARY 30, 1997 to elect two Class II Directors
to the Board of Directors, John W. Rollins, Jr. and William B. Philipbar,
Jr. were elected. At the meeting, 29,743,180 and 29,742,521 affirmative
votes were cast for John W. Rollins, Jr. and William B. Philipbar, Jr.,
respectively. There were no votes cast against the nominees and 659,277
and 659,936 votes were withheld from John W. Rollins, Jr. and William B.
Philipbar, Jr., respectively.
<PAGE>
FORM 10-Q Page 8 of 9
Item 5. Other Information
The unaudited condensed consolidated statement of earnings for the
twelve months ended March 31, 1997 shown below has been included in
accordance with provisions of the Securities Act of 1933. This statement
has been prepared in accordance with the instructions to Form 10-Q and does
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Twelve Months Ended
March 31, 1997
Revenues $532,639
Expenses:
Operating 219,396
Depreciation 165,127
Gain on sale of property
and equipment (9,220)
Selling and administrative 47,427
422,730
Operating earnings 109,909
Interest expense 47,794
Earnings before income taxes 62,115
Income taxes 24,336
Net earnings $ 37,779
Earnings per share $ .88
Dividends paid per common share $ .19
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3(ii) - By-Laws.
By-Laws of Rollins Truck Leasing Corp. as last amended on January
30, 1997.
Exhibit 4 - Instrument defining rights of security holders.
Seventeenth Supplemental Indenture dated as of March 10, 1997 to
the Collateral Trust Indenture dated as of March 21, 1983 as
supplemented and amended by a Third Supplemental Indenture
thereto dated as of February 20, 1986 and by the Eighth
Supplemental Indenture dated as of May 15, 1990 between Rollins
Truck Leasing Corp. and First Union National Bank, as Trustee, as
filed with the Company's current report on Form 8-K dated March
10, 1997, is incorporated herein by reference.
FORM 10-Q Page 9 of 9
Item 6. Exhibits and Reports on Form 8-K (Continued)
(b) Reports on Form 8-K.
On March 10, 1997, a report on Form 8-K was filed in connection
with the sale of $75,000,000 of the Company's 7.30% Collateral
Trust Debentures, Series R, due March 1, 2007, which were sold
through Goldman, Sachs & Co., sole underwriter under the terms of
an Underwriting Agreement which was filed as an Exhibit to the
Form 8-K and pursuant to Registration Statement No. 333-21835
filed with the Securities and Exchange Commission on February 14,
1997 and which was declared effective on February 18, 1997.
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.
DATE: April 24, 1997 Rollins Truck Leasing Corp.
(Registrant)
/s/ John W. Rollins, Jr.
John W. Rollins, Jr.
President and Chief Operating Officer
/s/ Patrick J. Bagley
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 64,100
<SECURITIES> 0
<RECEIVABLES> 67,581
<ALLOWANCES> 2,026
<INVENTORY> 9,060
<CURRENT-ASSETS> 163,191
<PP&E> 1,480,489
<DEPRECIATION> 472,295
<TOTAL-ASSETS> 1,190,043
<CURRENT-LIABILITIES> 56,484
<BONDS> 700,774
0
0
<COMMON> 42,028
<OTHER-SE> 238,402
<TOTAL-LIABILITY-AND-EQUITY> 1,190,043
<SALES> 266,073
<TOTAL-REVENUES> 266,073
<CGS> 0
<TOTAL-COSTS> 195,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,980
<INCOME-PRETAX> 28,607
<INCOME-TAX> 11,156
<INCOME-CONTINUING> 17,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,451
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
BY-LAWS
OF
ROLLINS TRUCK LEASING CORP.
-----------------------------------------------------------------
ARTICLE I
The Corporation
Section 1.1 Name. The title of this Corporation is
Rollins Truck Leasing Corp.
Section 1.2 Office. The registered office of this
Corporation shall be located at One Rollins Plaza, Wilmington, County
of New Castle, State of Delaware, or at such other place as the Board
of Directors may designate in accordance with Section 133 of the
Delaware Corporation Law.
Section 1.3 Seal. The corporate seal of the Corporation
shall have inscribed thereon the name of the Corporation and the year
of its creation (1954) and the words "Incorporated Delaware".
ARTICLE II
Stockholders
Section 2.1 Annual Meeting. The annual meeting of
stockholders shall be held at such place within or without the State of
Delaware as the Board of Directors from time to time determine.
A majority of the amount of the stock issued and outstanding and
entitled to vote shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, the charter of the
corporation or these by-laws. Each stockholder shall be entitled to
one vote, either in person or by proxy, for each share of stock
standing registered in his or her name on the books of the Corporation
on the record date selected by the Board of Directors in accordance
with these by-laws, unless more or less than one vote per share is, by
the terms of the instrument creating special or preferred shares,
conferred upon the holders thereof.
Notice of the annual meeting shall be mailed by the Secretary to
each stockholder at his or her last known post office address no less
than ten days and no more than fifty days prior thereto.
Section 2.2 Special Meetings. Special meetings of
stockholders for any purpose or purposes may be called at any time by
the Chairman of the Board of Directors, the Vice Chairman of the Board
of Directors, the Chairman of the Executive Committee or the President
and not by any other person.
Section 2.3 Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice
of the meeting shall be given which shall state the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose
or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the mail, postage
prepaid, directed to the stockholder at his address as it appears on
the records of the Corporation.
Section 2.4 Adjournments. Any meeting of the
stockholders, annual or special, may adjourn from time to time to
reconvene at the same or some other place, and notice need not be given
of any such 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 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 2.5 Quorum. At each meeting of stockholders,
except where otherwise provided by law or the certificate of
incorporation or these by-laws, the holders of a majority of the
outstanding shares of stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the
meeting from time to time in the manner provided in Section 2.4 of
these by-laws until a quorum shall attend.
Section 2.6 Organization. Meetings of stockholders shall
be presided over by the Chairman of the Board, if any, or in his
absence by the Vice Chairman of the Board, if any, or in his absence by
the President, or in his absence by a Vice President, or in the absence
of the foregoing persons by a chairman designated by the Board of
Directors, or in the absence of such designation by a chairman chosen
at the meeting. The Secretary shall act as secretary of the meeting,
but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided in
the certificate of incorporation, each stockholder entitled to vote at
any meeting of stockholders shall be entitled to one vote for each
share of stock held by him which has voting power upon the matter in
question. Each stockholder entitled to vote at a meeting of
stockholders 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. A duly
executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient
in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or
another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings of stockholders need not be by
written ballot and need not be conducted by inspectors unless the
holders of a majority of the outstanding shares of all classes of stock
entitled to vote thereon present in person or by proxy at such meeting
shall so determine. At all meetings of stockholders for the election
of directors a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise
provided by law or by the certificate of incorporation or these
by-laws, be decided by the vote of the holders of a majority of the
outstanding shares of stock entitled to vote thereon present in person
or by proxy at the meeting, provided that (except as otherwise required
by law or by the certificate of incorporation or these by-laws) the
Board of Directors may require a larger vote upon any election or
question.
Section 2.8 Fixing Date for Determination of Stockholders
of Record. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion of
exchange or stock or for the purpose of any other lawful action, the
Board of Directors may fix, in advance, a record date, which shall not
be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no
record date is fixed: (1) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; and (2)
the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 2.9 List of Stockholders Entitled To Vote. The
Secretary 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 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 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. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock
ledger, the list of stockholders or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
Section 2.10 Action by Consent Of Stockholders. No action
required to be taken or which may be taken at any annual or special
meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without
a meeting, to the taking of any action is specifically denied.
ARTICLE III
Board of Directors
Section 3.1 Number; Qualifications. The Board of
Directors shall consist of five members. Directors need not be
stockholders.
Section 3.2 Election; Resignation; Removal; Vacancies. At
each annual meeting of stockholders, the stockholders shall elect
Directors to replace those Directors whose terms then expire. Any
Director may resign at any time upon written notice to the Corporation.
Stockholders may remove Directors only for cause. Any vacancy
occurring in the Board of Directors for any cause may be filled only by
the Board of Directors, acting by vote of a majority of the Directors
then in office, although less than quorum. Each Director so elected
shall hold office until the expiration of the term of office of the
Director whom he has replaced.
Section 3.3 Notice Of Nomination Of Directors.
Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than fourteen days nor
more than fifty days prior to any meeting of the stockholders called
for the election of directors; provided, however, that if less than
twenty-one days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the
Secretary of the Corporation not later than the close of the seventh
day following the day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by the Board of
Directors shall be given by the Chairman on behalf of the Board. Each
such notice shall set forth (i) the name, age, business address and, if
known, residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominee and (iii)
the number of shares of stock of the Corporation which are beneficially
owned by each such nominee. The Chairman of the meeting may, if the
facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 3.4 Regular Meetings. Regular meetings of the
Board of Directors may be held at such places within or without the
State of Delaware and at such times as the Board of Directors may from
time to time determine, and if so determined notices thereof need not
be given.
Section 3.5 Special Meetings. Special meetings of the
Board of Directors may be held at any time or place within or without
the State of Delaware whenever called by the President, the Chairman of
the Board of Directors, the Vice Chairman of the Board of Directors, or
by the Chairman of the Executive Committee. Reasonable notice thereof
shall be given by the person calling the meeting, not later than the
second day before the date of the special meeting.
Section 3.6 Telephonic Meetings Permitted. Members of the
Board of Directors, or any committee designated by the Board, may
participate in any meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this by-law shall constitute
presence in person at such meeting.
Section 3.7 Quorum; Vote Required For Action; Informal
Action. At all meetings of the Board of Directors a majority of the
whole Board shall constitute a quorum for the transaction of business.
Except in cases in which the certificate of incorporation or these
by-laws otherwise provide, 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. Unless otherwise restricted by the certificate
of incorporation or these by-laws, any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of
the Board or committee.
Section 3.8 Organization. Meetings of the Board of
Directors shall be presided over by the Chairman of the Board, if any,
or in his absence by the Vice Chairman of the Board, if any, or in his
absence by the President, or in their absence by a chairman chosen at
the meeting. The Secretary shall act as a secretary of the meeting,
but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 3.9 Compensation Of Directors. The Directors and
members of standing committees shall receive such fees or salaries as
fixed by resolution of the Executive Committee and in addition will
receive expenses in connection with attendance or participation in each
regular or special meeting.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or
more committees, each committee to consist of one or more of the
directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of the 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 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 power or authority in reference to amending the certificate of
incorporation of the Corporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or
exchange or all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of dissolution, or amending these by-laws.
The Board of Directors shall, at the annual organization meeting
thereof, elect an Executive Committee which shall consist of not more
than four members, all of whom shall be members of the Board of
Directors. The Executive Committee shall have and may exercise all of
the powers and authority of the Board of Directors in the management of
business and affairs of the Corporation to the fullest extent permitted
by law (as presently allowed under Section 141 (c) to the Delaware
General Corporation Law as revised effective July 1, 1996, and as may
be allowed in the future pursuant to amendments or revisions to
applicable law).
Section 4.2 Committee Rules. Unless the Board of
Directors otherwise provides, each committee designated by the Board
may make, alter and repeal rules for the conduct of its business. In
the absence of such rules each committee shall conduct its business in
the same manner as the Board of Directors conducts its business
pursuant to Article III of these by-laws.
ARTICLE V
Officers
Section 5.1 Executive Officers; Election; Qualifications;
Term of Office; Resignation; Removal; Vacancies. The officers of the
Corporation shall consist of a Chairman, Vice Chairman, President, Vice
Presidents, Secretary, Assistant Secretaries, Treasurer, Assistant
Treasurers, General Counsel, and such other officers as may from time
to time be elected or appointed by the Board of Directors. The
President shall be elected from the Board of Directors. Any officer
may resign at any time upon written notice to the Corporation. The
Board of Directors may remove any officer with or without cause at any
time, but such removal shall be without prejudice to the contractual
rights of such officer, if any, with the Corporation. Any number of
offices may be held by the same person. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise
may be filled for the unexpired portion of the term by the Board of
Directors at any regular or special meeting. In the absence of any
officer, the Board of Directors may delegate his power and duties to
any other officer or to any director for the time being.
Section 5.2 Duties Of The Chairman Of The Board And The
Chairman Of The Executive Committee. The Chairman shall be the Chief
Executive Officer of the Corporation, shall preside at all meetings of
the Board, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the
Board are carried into effect. He shall submit a complete report of
the operations and condition of the Corporation for the year to the
stockholders at their annual meeting. In all cases, where a Chairman
of the Executive Committee is elected, the Chairman of the Executive
Committee shall, in the absence of the Chairman of the Board of
Directors, act in the latter's capacity.
Section 5.3 President. The President shall be the Chief
Operating Officer of the Corporation, shall execute in the name of the
Corporation all contracts and agreements authorized by the Board or the
Executive Committee, and shall affix the seal to any instrument
requiring the same, which shall always be attested by the signature of
the President, the Vice President or the Secretary or any Assistant
Secretary or the Treasurer. He may sign certificates of stock; he
shall have general supervision and direction of all the other officers
of the Corporation; he shall submit a complete report of the operations
and condition of the Corporation for the year to the Chairman and to
the directors at their regular meetings, and from time to time shall
report to the directors all matters which the interest of the
Corporation may require to be brought to their notice. He shall have
the general powers and duties usually vested in the office of a
President of a corporation.
Section 5.4 Vice President Finance. The Vice President
Finance shall be Chief Accounting and Chief Financial Officer of the
Corporation and shall be responsible to the Board of Directors, the
Executive Committee and the President for all financial control and
internal audit of the Corporation and its subsidiaries. He shall
perform such other duties as may be assigned to him by the Board of
Directors, the Executive Committee or the President.
Section 5.5 Vice Presidents. The Vice Presidents elected
or appointed by the Board of Directors shall perform such duties and
exercise such powers as may be assigned to them from time to time by
the Board of Directors, the Executive Committee or the President. In
the absence or disability of the President, the Vice President
designated by the Board of Directors, the Executive Committee, or the
President shall perform the duties and exercise the powers of the
President. A Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
Section 5.6 Secretary. The Secretary shall be ex-officio
Secretary of the Board of Directors and of the standing committees. He
shall attend all sessions of the Board, act as clerk thereof, record
all votes and keep the minutes of all proceedings in a book to be kept
for that purpose. He shall perform like duties for the standing
committees when required. He shall see that the proper notices are
given of all meetings of stockholders and directors, and perform such
other duties as may be prescribed from time to time by the Board of
Directors, the Executive Committee, Chairman or President, and shall be
sworn to the faithful discharge of his duties.
He shall keep the accounts of stock registered and transferred in
such form and manner and under such regulations as the Board of
Directors or Executive Committee may prescribe.
Section 5.7 Treasurer. The Treasurer shall keep full and
accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all monies and other valuable effects
in the name and to the credit of the Corporation, in such depositories
as may be designated by the Board of Directors or Executive Committee.
He shall disburse the funds of the Corporation as may be ordered by the
Board, the Executive Committee or the President, taking proper vouchers
therefor, and shall render to the President and the Executive Committee
and Directors, whenever they may require it, an account of all his
transactions as Treasurer, and of the financial condition of the
Corporation, and at the annual organization meeting of the Board a like
report for the preceding year.
Section 5.8 General Counsel. The General Counsel shall be
the legal adviser of the Corporation and shall perform such services as
the Chairman, President, Board of Directors or Executive Committee may
require.
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of stock shall be
entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors,
if any, or the President of the Corporation, certifying the number of
shares owned by him in the Corporation. Any of or all the signatures
on the certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate, 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 6.2 Lost, Stolen Or Destroyed Stock Certificates;
Issuance Of New Certificates. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore issued
by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1. General. The Company shall indemnify, and
advance Expenses (as hereinafter defined) to, Indemnitee (as
hereinafter defined) to the fullest extent permitted by applicable law
in effect on July 23, 1986, and to such greater extent as applicable
law may thereafter from time to time permit. The rights of Indemnitee
provided under the preceding sentence shall include, but shall not be
limited to, the rights set forth in the other Sections of this Article.
Section 7.2. Proceedings Other Than Proceedings By Or In
The Right Of The Company. Indemnitee shall be entitled to the
indemnification rights provided in this Section 7.2 if, by reason of
his Corporate Status (as hereinafter defined), he is, or is threatened
to be made, a party to any threatened, pending, or completed Proceeding
(as hereinafter defined), other than a Proceeding by or in the right of
the Company. Pursuant to this Section 7.2, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter
therein, 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 Company,
and, with respect to any criminal Proceeding, had no reasonable cause
to believe his conduct was unlawful.
Section 7.3. Proceedings By Or In The Right Of The Company.
Indemnitee shall be entitled to the indemnification rights provided in
this Section 7.3 to the fullest extent permitted by law if, by reason
of his Corporate Status, he is, or is threatened to be made, a party to
any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to
this Section 7.3, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Company.
Section 7.4. Indemnification For Expenses Of A Party Who Is
Wholly Or Partly Successful. Notwithstanding any other provision of
this Article, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice,
shall be deemed to be a successful result as to such claim, issue or
matter.
Section 7.5. Indemnification For Expenses Of A Witness.
Notwithstanding any other provision of this Article, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
Section 7.6. Advancement Of Expenses. The Company shall
advance all reasonable Expenses incurred by or on behalf of Indemnitee
in connection with any Proceeding within twenty days after the receipt
by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after
final disposition of such proceeding. Such statement or statements
shall reasonably evidence the Expenses incurred by Indemnitee and shall
include or be preceded or accompanied by an undertaking by or on behalf
of Indemnitee to repay any Expenses advanced if it shall ultimately be
determined that Indemnitee is not entitled to be indemnified against
such Expenses.
Section 7.7. Procedure For Determination Of Entitlement To
Indemnification.
(a) To obtain indemnification under this Article, Indemnitee
shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available
to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The
determination of Indemnitee's entitlement to indemnification shall be
made not later than 60 days after receipt by the Company of the written
request for indemnification. The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification, advise the
Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Indemnitee's entitlement to indemnification under any of
Sections 7.2, 7.3 or 7.4 of this Article shall be determined in the
specific case: (i) by the Board of Directors by a majority vote of a
quorum of the Board consisting of Disinterested Directors (as
hereinafter defined); or (ii) by Independent Counsel (as hereinafter
defined), in a written opinion, if (A) a Change of Control (as
hereinafter defined) shall have occurred and Indemnitee so requests, or
(B) if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of
Disinterested Directors so directs; or (iii) by the stockholders of the
Company; or (iv) as provided in Section 7.8 of this Article.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 7.7(b) of this Article, the Independent Counsel shall be
selected as provided in this Section 7.7(c). If a Change of Control
shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, and if so
requested by Indemnitee in his written request for indemnification, the
Independent Counsel shall be selected by Indemnitee, and Indemnitee
shall give written notice to the Company advising it of the identity of
the Independent Counsel so selected. In either event, Indemnitee or
the Company, as the case may be, may, within 7 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 7.13 of this Article, and the objection
shall set forth with particularity the factual basis of such assertion.
If such written objection is made, the Independent Counsel so selected
shall be disqualified from acting as such. If, within 20 days after
submission by Indemnitee of a written request for indemnification
pursuant to Section 7.7(a) hereof, no Independent Counsel shall have
been selected, or if selected shall have been objected to, in
accordance with this Section 7.7(c), either the Company or Indemnitee
may petition the Court of Chancery of the State of Delaware for the
appointment as Independent Counsel of a person selected by the Court or
by such other person as the Court shall designate, and the person so
appointed shall act as Independent Counsel under Section 7.7(b) hereof.
The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in acting
pursuant to Section 7.7(b) hereof, and the Company shall pay all
reasonable fees and expenses incident to the procedures of this Section
7.7(c), regardless of the manner in which such Independent Counsel was
selected or appointed.
Section 7.8. Presumptions And Effect Of Certain
Proceedings. If a Change of Control shall have occurred, Indemnitee
shall be presumed (except as otherwise expressly provided in this
Article) to be entitled to indemnification under this Article upon
submission of a request for indemnification in accordance with Section
7.7(a) of this Article, and thereafter the Company shall have the
burden of proof to overcome that presumption in reaching a
determination contrary to that presumption. Whether or not a Change of
Control shall have occurred, if the person or persons empowered under
Section 7.7 of this Article to determine entitlement to indemnification
shall not have made a determination within 60 days after receipt by the
Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be entitled to such indemnification unless (i)
Indemnitee misrepresented or failed to disclose a material fact in
making the request for indemnification, or (ii) such indemnification is
prohibited by law. The termination of any Proceeding described in any
of Sections 7.2, 7.3, or 7.4 of this Article, or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not (except as
otherwise expressly provided in this Article) of itself adversely
affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 7.9. Remedies Of Indemnitee.
(a) In the event that (i) a determination is made pursuant
to Section 7.7 of this Article that Indemnitee is not entitled to
indemnification under this Article, (ii) advancement of Expenses is not
timely made pursuant to Section 7.6 of this Article, or (iii) payment
of indemnification is not made within five (5) days after a
determination of entitlement to indemnification has been made or deemed
to have been made pursuant to Sections 7.7 or 7.8 of this Article,
Indemnitee shall be entitled to an adjudication in an appropriate court
of the State of Delaware, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement
of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to
the rules of the American Arbitration Association. The Company shall
not oppose Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 7.7 of this Article that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 7.9 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination. If a Change of
Control shall have occurred, in any judicial proceeding or arbitration
commenced pursuant to this Section 7.9 the Company shall have the
burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to
have been made pursuant to Sections 7.7 or 7.8 of this Article that
Indemnitee is entitled to indemnification, the Company shall be bound
by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 7.9, unless (i) Indemnitee
misrepresented or failed to disclose a material fact in making the
request for indemnification, or (ii) such indemnification is prohibited
by law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section
7.9 that the procedures and presumptions of this Article are not valid,
binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of
this Article.
(e) In the event that Indemnitee, pursuant to this Section
7.9, seeks a judicial adjudication of, or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this
Article, Indemnitee shall be entitled to recover from the Company, and
shall be indemnified by the Company against, any and all expenses (of
the types described in the definition of Expenses in Section 7.13 of
this Article) actually and reasonably incurred by him in such judicial
adjudication or arbitration, but only if he prevails therein. If it
shall be determined in said judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of Expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
Section 7.10. Non-Exclusivity And Survival Of Rights. The
rights of indemnification and to receive advancement of Expenses as
provided by this Article shall not be deemed exclusive of any other
rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a
vote of stockholders or a resolution of directors, or otherwise.
Notwithstanding any amendment, alteration or repeal of any provision of
this Article, Indemnitee shall, unless otherwise prohibited by law,
have the rights of indemnification and to receive advancement of
Expenses as provided by this Article in respect of any action taken or
omitted by Indemnitee in his Corporate Status and in respect of any
claim asserted in respect thereof at any time when such provision of
this Article was in effect. The provisions of this Article shall
continue as to an Indemnitee whose Corporate Status has ceased and
shall inure to the benefit of his heirs, executors and administrators.
Section 7.11. Severability. If any provision or provisions
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,
each portion of any Section of this Article containing any such
provision held to be invalid, illegal or unenforceable, that is not
itself 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, each portion of any Section of
this Article containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
Section 7.12. Certain Persons Not Entitled To
Indemnification Or Advancement Of Expenses. Notwithstanding any other
provision of this Article, no person shall be entitled to
indemnification or advancement of Expenses under this Article with
respect to any Proceeding, or any claim therein, brought or made by him
against the Company.
Section 7.13. Definitions. For purposes of this Article:
(a) "Change in Control" means a change in control of the
Company of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the
Securities Exchange Act of 1934 (the "Act"), whether or not the Company
is then subject to such reporting requirement; provided, however, that,
without limitation, such a Change in Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Act) is or becomes the "beneficial owner") (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of
the Company's then outstanding securities without the prior approval of
at least two-thirds of the members of the Board of Directors in office
immediately prior to such person attaining such percentage interest;
(ii) the Company is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of
Directors thereafter; or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the
Board of Directors (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who
is or was a director, officer, employee, agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, or being or preparing to be a witness in a
Proceeding.
(e) "Indemnitee" includes any person who is, or is
threatened to be made, a witness in or a party to any Proceeding as
described in Sections 7.2, 7.3 or 7.4 of this Article by reason of his
Corporate Status.
(f) "Independent Counsel" means a law firm, or a member of
a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five (5) years has been, retained
to represent: (i) the Company or Indemnitee in any matter material to
either such party, or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either
the Company or Indemnitee in an action to determine Indemnitee's rights
under this Article.
(g) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other proceeding whether civil, criminal, administrative
or investigative, except one initiated by an Indemnitee pursuant to
Section 7.9 of this Article to enforce his rights under this Article.
Section 7.14. Miscellaneous. Use of the masculine pronoun
shall be deemed to include usage of the feminine pronoun where
appropriate.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the
Corporation shall be determined by resolution of the Board of
Directors.
Section 8.2 Waiver Of Notice Of Meetings Of Stockholders,
Directors, And Committees. Any written waiver of notice, signed by the
person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the stockholders, directors, or members
of a committee of directors need be specified in any written waiver of
notice.
Section 8.3 Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of
its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or participates
in the meeting of the Board or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and
the Board or the committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
Section 8.4 Form Of Records. Any records maintained by
the Corporation in the regular course of its business, including its
stock ledger, books of account, and minute books, may be kept on, or be
in the form of, punch cards, magnetic tape, photographs,
microphotographs, or any other information storage device, provided
that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall so convert any records
so kept upon the request of any person entitled to inspect the same.
Section 8.5 Amendment Of By-Laws. The Board of Directors
of the Corporation is expressly authorized to adopt, amend or repeal
the by-laws of the Corporation by a vote of a majority of the entire
Board. The stockholders may make, alter or repeal any by-law whether
or not adopted by them, provided however, that any such additional
by-laws, alterations or repeal may be adopted only by the affirmative
vote of the holders of 75% or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class), unless such
additional by-laws, alterations or repeal shall have been recommended
to the stockholders for adoption by a majority of the Board of
Directors, in which event such additional by-laws, alterations or
repeal may be adopted by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
