SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
September 30, 1996 1-10210
EXECUTIVE TELECARD, LTD.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3486421
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
ONE BLUE HILL PLAZA, SUITE 1650, PEARL RIVER, NEW YORK 10965
- --------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (914) 627-2060
- --------------------------------------------------------------------------
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 outstanding of each of the registrant's classes of
common stock, as of November 1, 1996 is 15,860,407 shares, all of one
class of $.001 par value Common Stock.
<PAGE>
EXECUTIVE TELECARD, LTD.
FORM 10-Q
Quarter Ended September 30, 1996
TABLE OF CONTENTS
PAGE
FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1996
and March 31, 1996 3,4
Consolidated Statements of Operations for the three months
ended September 30, 1996 and 1995 5
Consolidated Statements of Operations for the six months
ended September 30, 1996 and 1995 6
Consolidated Statements of Cash Flows for the three months
ended September 30, 1996 and 1995 7
Consolidated Statements of Cash Flows for the six months
ended September 30, 1996 and 1995 8
Notes to Consolidated Financial Statements 9-12
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-14
OTHER INFORMATION
Item 1 - Legal Proceedings 15
Item 2 - Changes in Securities 15
Item 3 - Defaults upon Senior Securities 15
Item 4 - Submission of Matters to a Vote of Security Holders 15
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
EXECUTIVE TELECARD, LTD.
PART I: FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND MARCH 31, 1996
<TABLE>
<CAPTION>
ASSETS
September 30, March 31,
1996 1996
----------- ----------
(Unaudited) (Note 1)
Current:
<S> <C> <C>
Cash and cash equivalents $ 3,937,565 $ 950,483
Trade accounts receivable,
less allowance of
$165,000 and $239,000 for
doubtful accounts 5,642,366 5,850,345
Accounts receivable from related
parties 532,126 732,794
Other current assets 459,573 123,482
----------- -----------
Total current assets 10,571,630 7,657,104
Property and equipment - net of
accumulated depreciation
and amortization 10,477,717 8,415,091
Other:
Intangible assets - net 202,743 222,265
Deposits 357,207 251,490
Other assets 186,286 186,124
----------- -----------
Total other assets 746,236 659,879
----------- -----------
Total assets $21,795,583 $16,732,074
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
EXECUTIVE TELECARD, LTD.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND MARCH 31, 1996
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, March 31,
1996 1996
----------- ----------
(Unaudited) (Note 1)
Current:
<S> <C> <C>
Note payable $ 6,000,000 $ -
Accounts payable 2,268,914 2,428,882
Accounts payable to related
parties - 66,321
Accrued expenses 2,649,635 4,293,496
Customer deposits 299,152 302,205
Unearned income 145,157 288,262
Current maturities of long-term debt 281,911 162,250
----------- -----------
Total current liabilities 11,644,769 7,541,416
Long-term debt, less current maturities 1,418,128 2,150,649
----------- -----------
Total liabilities 13,062,897 9,692,065
----------- -----------
Stockholders' equity:
Preferred stock - $.001 par value;
5,000,000 shares authorized
Common stock - $.001 par value;
100,000,000 shares authorized,
15,860,407 and 15,849,488 outstanding 15,861 15,849
Additional paid-in capital 16,047,812 15,901,574
Accumulated deficit (7,412,986) (8,960,196)
Accumulated translation adjustment 81,999 82,782
----------- -----------
Total stockholders' equity 8,732,686 7,040,009
----------- -----------
Total liabilities and stockholders'
equity $21,795,583 $16,732,074
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
EXECUTIVE TELECARD, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(Note 1)
<S> <C> <C>
Net revenue $ 9,076,365 $ 7,674,396
Cost of revenue 4,649,139 4,791,519
----------- -----------
Gross profit 4,427,226 2,882,877
----------- -----------
Costs and expenses:
Selling, general and administrative 3,091,078 1,820,427
Depreciation and amortization 410,332 382,055
----------- -----------
Total costs and expenses 3,501,410 2,202,482
----------- -----------
Income from operations 925,816 680,395
----------- -----------
Other income (expense):
Interest expense (242,347) (43,346)
Interest income 30,089 365
Foreign currency transaction loss (10,653) (13,517)
----------- -----------
Total other expense (222,911) (56,498)
----------- -----------
Income before taxes on income 702,905 623,897
Taxes on income 105,000 64,000
----------- -----------
Net income $ 597,905 $ 559,897
----------- -----------
Net income per share $ 0.04 $ 0.04
----------- -----------
Weighted average number of shares and
share equivalents outstanding 15,860,407 15,794,374
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
EXECUTIVE TELECARD, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(Note 1)
<S> <C> <C>
Net revenue $17,143,874 $14,671,195
Cost of revenue 8,794,088 9,422,252
----------- -----------
Gross profit 8,349,786 5,248,943
----------- -----------
Costs and expenses:
Selling, general and administrative 5,455,865 3,442,267
Depreciation and amortization 796,755 751,232
----------- -----------
Total costs and expenses 6,252,620 4,193,499
----------- -----------
Income from operations 2,097,166 1,055,444
----------- -----------
Other income (expense):
Interest expense (308,115) (85,640)
Interest income 30,095 388
Foreign currency transaction gain
(loss) 1,064 (60,554)
Other income - 350,000
----------- -----------
Total other income (expense) (276,956) 204,194
----------- -----------
Income before taxes on income 1,820,210 1,259,638
Taxes on income 273,000 128,000
----------- -----------
Net income $ 1,547,210 $ 1,131,638
----------- -----------
Net income per share $ 0.10 $ 0.07
----------- -----------
Weighted average number of shares and
share equivalents outstanding 15,857,237 15,757,882
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
EXECUTIVE TELECARD, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Three Months Three Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(Note 1)
<S> <C> <C>
Operating activities:
Net income $ 597,905 $ 559,897
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities:
Depreciation and amortization 410,332 382,055
Provision for bad debts (434) 63,073
Changes in operating assets
and liabilities:
Accounts receivable (404,545) (487,240)
Other assets (105,664) 86,793
Accounts payable 387,310 (110,817)
Accrued expenses (1,179,271) 361,686
Other liabilities (25,693) (6,306)
----------- -----------
Cash provided by (used in) operating
activities (320,060) 849,141
----------- -----------
Investing activities:
Acquisitions of property and equipment (2,335,169) (637,585)
Other assets 357,311 (232,226)
----------- -----------
Cash used in investing activities (1,977,858) (869,811)
----------- -----------
Financing activities:
Principal payments on long-term debt (67,755) (28,035)
Issuance of capital stock - 337,851
Proceeds from long-term debt 313,148 -
----------- -----------
Cash provided by financing activities 245,393 309,816
----------- -----------
Effect of exchange rate changes
on cash 1,576 (25,512)
----------- -----------
Net increase (decrease) in cash
and cash
equivalents (2,050,949) 263,634
Cash and cash equivalents,
beginning of period 5,988,514 1,961,720
----------- -----------
Cash and cash equivalents,
end of period $ 3,937,565 $ 2,225,354
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
EXECUTIVE TELECARD, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Six Months Six Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(Note 1)
<S> <C> <C>
Operating activities:
Net income $ 1,547,210 $ 1,131,638
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities:
Depreciation and amortization 796,755 751,232
Provision for bad debts 104,835 148,590
Changes in operating assets
and liabilities:
Accounts receivable 275,540 (1,392,430)
Other assets (358,571) 132,889
Accounts payable (226,289) 698,645
Accrued expenses (1,497,611) (816,426)
Other liabilities (146,158) (2,744)
----------- -----------
Cash provided by operating activities 495,711 651,394
----------- -----------
Investing activities:
Acquisitions of property and equipment (2,781,733) (1,071,640)
Other assets (113,253) (175,624)
----------- -----------
Cash used in investing activities (2,894,986) (1,247,264)
----------- -----------
Financing activities:
Principal payments on long-term debt (1,617,448) (70,433)
Proceeds from long-term debt 1,004,587 -
Issuance of capital stock - 337,851
Proceeds from note payable 6,000,000 1,000,000
----------- -----------
Cash provided by financing activities 5,387,139 1,267,418
----------- -----------
Effect of exchange rate changes
on cash (782) (180,426)
----------- -----------
Net increase in cash and cash
equivalents 2,987,082 491,122
Cash and cash equivalents,
beginning of period 950,483 1,734,232
----------- -----------
Cash and cash equivalents,
end of period $ 3,937,565 $ 2,225,354
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
EXECUTIVE TELECARD, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
Note 1 - Basis of Presentation
- --------------------------------------------------------------------------
The accompanying consolidated financial statements have been prepared
in accordance with United States generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they 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
considered necessary for a fair presentation have been included.
Operating results for the three and six months ended September 30,
1996 are not necessarily indicative of the results that may be
expected for the year ended March 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended March 31,
1996.
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
material intercompany transactions and balances have been eliminated
in consolidation.
The functional currency for the Company's foreign operations is the
applicable local currency. The translation of the applicable foreign
currency into United States Dollars is computed for balance sheet
accounts using current exchange rates in effect at the balance sheet
date and for revenue and expense accounts using a weighted average
exchange rate during the period. The gains and losses resulting from
such translation are included in stockholders' equity.
Certain items included in the Consolidated Statement of Operations
for the six months ended September 30, 1995 have been reclassified to
conform to the current year's presentation.
Note 2 - Net Income (Loss) Per Share
- --------------------------------------------------------------------------
Net income (loss) per share and common equivalent share is computed
using the weighted average number of shares outstanding during each
period. Warrants and options outstanding to purchase common stock
are included as common stock equivalents when dilutive.
Note 3 - Related Party Transaction
- --------------------------------------------------------------------------
During April 1995, an agreement between the Company and a corporate
stockholder was finalized to resolve certain claims and potential
claims between the two parties. The claims arose out of negotiated
transactions whereby sales of the Company's restricted stock had
occurred at prices at or below the quoted market price. Under the
agreement, the corporate stockholder granted the Company an
irrevocable proxy to vote all of the shares beneficially owned or
controlled by the stockholder in favor of the director nominees
proposed by the Board, to pay the Company the sum of $350,000 and not
to compete with nor solicit Company employees for a period of three
years. The sum of $350,000 has been included in other income for the
six months ended September 30, 1995.
Note 4 - Note Payable
- --------------------------------------------------------------------------
In June 1996, the Company borrowed $6,000,000 from a financial
institution. The note is payable in June 1997 and carries an
interest rate equal to the lender's prime rate plus 2.5% which was
10.75% for the period ended September 30, 1996. Interest on the note
is payable quarterly. In connection with this note, the lender was
granted warrants to purchase 100,000 shares of the Company's common
stock at a price of $14.88 per share. These warrants expire on June
28, 1999. The value assigned to such warrants when granted in
connection with the above note agreement is amortized over the term
of the note. At September 30, 1996 these warrants have not been
exercised.
The note is subject to certain financial covenants and is secured by
the assets of the Company.
Proceeds from this loan were used to retire a $1,000,000 note payable
which was outstanding at March 31, 1996.
Note 5 - Long Term Debt
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
At September 30, 1996 and March 31, 1996, long term debt consisted of the
following:
September 30, March 31,
1996 1996
(Unaudited) (Note 1)
- --------------------------------------------------------------------------
<S> <C> <C>
12% unsecured term note payable to a
stockholder, interest payable monthly,
principal due and payable December 27,
1997(1) $ 500,000 $ -
12% unsecured term note payable to a
foreign corporation, interest payable
monthly, principal due and payable
September 28, 1997(2) - 1,000,000
12% unsecured term note payable to a
stockholder, interest payable monthly,
principal due and payable August 28,
1997(3) - 500,000
Capitalized lease obligations 1,037,485 648,202
9% mortgage note, payable $1,586 monthly,
including interest, through November
1997, with a December 1997 balloon
payment, secured by deed of trust on the
related land and building 162,554 164,697
- --------------------------------------------------------------------------
Total 1,700,039 2,312,899
Less current maturities 281,911 162,250
- --------------------------------------------------------------------------
Total long term debt $1,418,128 $2,150,649
==========================================================================
<FN>
(1) In connection with this transaction, the Company issued options to
purchase 50,000 shares of the Company's common stock at a price of
$12.13 per share, expiring June 27, 1999.
(2) In connection with this transaction, the Company issued options to
purchase 110,000 shares of the Company's common stock at a price of
$5.40 per share, expiring February 28, 1999. The term note payable
was retired in June 1996.
(3) In connection with this transaction, the Company issued options to
purchase 55,000 shares of the Company's common stock at a price of
$5.40 per share, expiring February 28, 1999. The term note payable
was retired in June 1996.
</FN>
The value assigned to such options when granted in connection with the
above note agreements is being amortized over the term of the respective
notes. At September 30, 1996, options issued in connection with these
transactions have not been exercised.
</TABLE>
Note 6 - Common Stock
- --------------------------------------------------------------------------
On May 14, 1996 the Board of Directors declared a stock split,
effected in the form of a ten percent (10%) stock dividend, subject
to shareholders approving an increase in the number of authorized
shares of common stock. As a result of that approval on July 26,
1996, shareholders received the dividend on August 5, 1996.
On June 30, 1995, the Board of Directors declared a stock split,
effected in the form of a ten percent (10%) stock dividend, which was
distributed on August 25, 1995 to shareholders of record on August
10, 1995.
All references to common share and per share amounts in the
accompanying financial statements have been retroactively adjusted to
reflect the effect of these stock dividends.
(Balance of Page Left Blank Intentionally)
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
- --------------------------------------------------------------------------
Net revenue increased by 17% to $17,143,874 for the six months ended
September 30, 1996 as compared to $14,671,195 for the comparable
period last year. For the three months ended September 30, 1996, net
revenue increased by 18% to $9,076,365 from $7,674,396 for the three
months ended September 30, 1995. This continued growth resulted
primarily from increases in volume usage of the Company's calling
card services by existing customers as well as the addition of
customers due to new agreements.
Cost of revenue for the six months was $8,794,088, a decrease of 7%
from the prior year's amount of $9,422,252. For the three months
ended September 30, 1996, cost of revenue was $4,649,139, a decrease
of 3% from the prior year's amount of $4,791,519. As a percentage of
revenue, these costs decreased 13% from 64% for the six months ended
September 30, 1995 to 51% for the current period. For the three
months ended September 30, 1996, these costs were 51% compared to 62%
for the prior period, a decrease of 11%. These reductions in costs
reflect general rate decreases and volume discounts negotiated with
domestic and foreign telephone carriers based upon the continued
increase in volume of traffic generated over their networks.
Selling, general and administrative expenses increased by $2,013,598
(58%) to $5,455,865, during the six months ended September 30, 1996
versus $3,442,267 for the comparable period last year. For the three
months ended September 30, 1996, selling, general and administrative
expenses were $3,091,078, an increase of $1,270,651 (70%) over the
$1,820,427 reported for the prior period. This increase is primarily
attributable to the addition of personnel and related employee costs
necessary to manage the increasing business volume, provide
additional marketing and promotion for the Company's calling card
services, develop new business services (primarily Internet related),
and maintain quality customer support and assistance. As a
percentage of revenue, selling, general and administrative expenses
increased from 23% to 32% for the six months and from 24% to 34% for
the three months ended September 30, 1996 compared to the same
periods last year. As additional revenue is realized from the
Company's current activities, selling, general and administration
expenses as a percentage of revenue are expected to decrease.
Depreciation and amortization expense increased by $45,523 to
$796,755 as compared to $751,232 for the six months and by $28,277 to
$410,332 compared to $382,055 for the three months ended September
30, 1996. This increase primarily relates to equipment placed in
service during the current period.
Interest expense increased by $222,475 to $308,115 for the six months
ended September 30, 1996, from $85,640 and for the three months ended
September 30, 1996, interest expense increased $199,001 to $242,347
versus $43,346 for the comparable periods last year. This increase
primarily relates to interest payments on term notes payable
including the $6 million borrowed from a financial institution during
June 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended September 30, 1996, cash and cash
equivalents decreased $2,050,949 to $3,937,565. The decrease in cash
and cash equivalents consisted of the following components: (i) net
cash flows used in operating activities in the amount of $320,060,
resulting primarily from a decrease in accrued expenses of $1,179,271
and an increase in accounts receivable of $404,545 which were
primarily offset by net income for the quarter of $597,905 and an
increase in accounts payable of $387,310, (ii) net cash flows used in
investing activities in the amount of $1,977,858, which related
primarily to $2,335,169 in acquisitions of new equipment to expand
the Company's global network (which had a nominal effect on
depreciation expense for the period but will increase depreciation
expense in subsequent periods) offset by a decrease in other assets
of $357,311 related to advance payments on orders for equipment which
were delivered and placed in operation, (iii) cash flows provided by
financing activities of $245,393 primarily consisting of equipment
lease financing of $313,148 partially offset by principal payments on
long term debt of $67,755, and (iv) the effect of exchange rate
changes on cash which served to increase cash and cash equivalents by
$1,576.
The $6,500,000 proceeds from notes issued during the quarter ended
June 30, 1996 and included as cash flows provided by financing
activities for the six months ended September 30, 1996, were used to
provide additional working capital, capital for the acquisition of
additional property and equipment planned for the year, and to retire
long-term debt of $1,500,000.
The Company's future plans to fund its working capital needs consist
of the following: (i) use of the remaining funding available of
approximately $300,000 from a master lease agreement for capital
expenditures, (ii) issuance of additional shares of common or
preferred stock, (iii) the creation of a long term debt facility, and
(iv) cash flow generated from operations. There can be no assurance
that the Company will be successful in its efforts to raise such
additional capital.
Item 1 Legal Proceedings
- --------------------------------------------------------------------------
None
Item 2 Change In Securities
- --------------------------------------------------------------------------
None
Item 3 Defaults Upon Senior Securities
- --------------------------------------------------------------------------
None
Item 4 Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------------------
At the Annual Meeting of Stockholders held on July 26, 1996
(discussed in Part II, Item 4 of the Company's Form 10-Q for the
quarter ended June 30, 1996), because of a large number of
broker non-votes on the issue, a sufficient number of
stockholder votes had not yet been cast to approve proposed
amendments to the Company's Certificate of Incorporation to
authorize 5,000,000 shares of preferred stock. The meeting of
stockholders was adjourned until August 10, 1996 and was then
re-adjourned to August 21, 1996, at which time the proposed
amendments were approved by the affirmative vote of a majority
of the stockholders of the Company. The votes cast for were
7,333,223, the votes cast against were 1, 079,819, and the
abstentions were 78,377.
Item 5 Other Information
- --------------------------------------------------------------------------
None
Item 6 Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------
a) Exhibits
3.1 Restated Certificate of Incorporation as amended July
26, 1996 and August 29, 1996
3.2 Bylaws as amended March 15, 1995 and July 26, 1996
27 Financial Data Schedule
b) Reports on Form 8-K
None
EXECUTIVE TELECARD, LTD.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed in its behalf by the undersigned, thereunto duly authorized.
EXECUTIVE TELECARD, LTD.
(Registrant)
Date: November 13, 1996 By:---------------/S/---------------
Timothy A. Peach
Controller, Treasurer
and Chief Accounting Officer
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- ----------------
3.1 Restated Certificate of
Incorporation as amended
July 26, 1996 and August
29,1996 Filed herewith electronically
3.2 Bylaws as amended March
15, 1995 and July 26, 1996 Filed herewith electronically
27 Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 3,938
<SECURITIES> 0
<RECEIVABLES> 5,642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,752
<PP&E> 10,478
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,796
<CURRENT-LIABILITIES> 11,645
<BONDS> 0
0
0
<COMMON> 15,861
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,796
<SALES> 0
<TOTAL-REVENUES> 9,076
<CGS> 0
<TOTAL-COSTS> 4,649
<OTHER-EXPENSES> 3,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 242
<INCOME-PRETAX> 703
<INCOME-TAX> 105
<INCOME-CONTINUING> 598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 598
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
EXECUTIVE TeleCard, LTD.
-----------------------------------------------
(adopted in accordance with the provisions of
Section 245 of the General Corporation
Law of the State of Delaware)
-----------------------------------------------
It is hereby certified that:
1. The name of the corporation (the "Corporation") is
Executive TeleCard, Ltd.
2. The original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware
on February 19, 1987, with the original name International 800 TeleCard,
Inc.
3. This Restated Certificate of Incorporation amends, restates
and integrates the Certificate of Incorporation to read in its entirety as
follows:
ARTICLE I
Name
The name of the Corporation is:
Executive TeleCard, Ltd.
ARTICLE II
Registered Office and Agent
The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
New Castle County, Delaware 19801. The Corporation's registered agent at
such address is The Corporation Trust Company.
ARTICLE III
Purpose
The purpose for which the Corporation is organized is to engage
in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
Capital Stock
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 20,000,000 shares of Common
Stock, par value $.001 per share.
ARTICLE V
Management and Indemnification
SECTION 1. MANAGEMENT. The business and affairs of the
Corporation shall be managed by the Board of Directors.
SECTION 2. NO BALLOT. The directors need not be elected by
written ballot unless the by-laws of the Corporation shall so provide.
SECTION 3. (a) (1) LIABILITY. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts of omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended
after this restated Certificate of Incorporation becomes effective to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended.
(2) Any repeal or modification of the foregoing
subparagraph (a) (1) by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
(b) (1) RIGHT TO INDEMNIFICATION. Each person who
was or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of
the fact that he or she, or a person of whom he or she is a legal
representative, is or was a director or officer of the Corporation or is
or was servicing at the request of the Corporation as a director or
officer of another corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction
in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorney's
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid
or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director or officer and shall inure to
the benefit of his or hers heirs, executors and administrators; PROVIDED,
HOWEVER, that, except as provided in this paragraph (b), the Corporation
shall indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this paragraph
(b) shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; PROVIDED, HOWEVER, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by
a director or officer in his or her capacity as a director or officer of
the Corporation (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this Section or otherwise. The Corporation may, by action of its
Board of Directors, provide indemnification to employees and agents of the
Corporation, and to a person who is or was serving at the request of the
Corporation as an employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, with the same scope
and effect as the foregoing indemnification of directors and officers.
(2) RIGHT OF CLAIMANT TO BRING SUIT. If a claim
under subparagraph (b) (1) is not paid in full by the Corporation within
30 days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor
an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
(3) NON-EXCLUSIVITY OF RIGHTS. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this paragraph
(b) shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterest
directors or otherwise.
(4) INSURANCE. The Corporation may maintain
insurance, at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
ARTICLE VI
Meetings of Stockholders
Meetings of the Stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the
Delaware statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
by-laws of the Corporation.
ARTICLE VII
By-Laws
In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, amend or repeal the by-laws of the Corporation.
ARTICLE VIII
Perpetual Existence
The Corporation is to have perpetual existence.
ARTICLE IX
Compromise or Arrangement
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this Corporation under the provisions of section 291 of
Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of section 279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence
of such compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to which the
said application has been made, be binding on all the creditors or class
of creditors, and/or on all the stockholders or class of stockholders, of
this Corporation, as the case may be, and also on this Corporation.
ARTICLE X
Amendments and Repeal
The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by the laws of the State of
Delaware, and all rights herein conferred are granted subject to this
reservation.
4. This Restated Certificate of Incorporation was recommended
and approved by the Board of Directors of the Corporation and duly adopted
in accordance with the provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware by written consent of the
sole stockholder of the Corporation dated October 4, 1988.
Dated: October 24, 1988
Executive TeleCard, Ltd.
By: /s/ R.N. Schuck
Vice President/Secretary
ATTEST:
By: /s/ Stewart Dunn
Asst. Secretary
APPENDIX
Certificate of Amendment
to the
Restated Certificate of Incorporation
of
Executive TeleCard, Ltd.
Executive TeleCard, Ltd., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Executive
TeleCard, Ltd., held on May 14, 1996, resolutions were duly adopted
setting forth proposed amendments to the Restated Certificate of
Incorporation of said corporation, declaring said amendments to be
advisable and calling a meeting of the shareholders of said corporation
for consideration thereof. The resolutions setting forth the proposed
amendments are as follows:
RESOLVED, that the Board of Directors declares it advisable and
recommends that the Restated Certificate of Incorporation of the
Corporation be amended by striking out all of Article IV of the Restated
Certificate of Incorporation and inserting in place thereof:
"The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
100,000,000 shares of Common Stock, with a par value
of $0.001."
RESOLVED, that the Board of Directors declares it advisable and
recommends that the Restated Certificate of Incorporation of the
Corporation be amended by striking out all of Article V of the Restated
Certificate of Incorporation and inserting in place thereof:
"Meetings of the stockholders may be held within or
without the State of Delaware as the by-laws may
provide. The books of the Corporation may be kept,
subject to any provision contained in Delaware
statutes, outside the State of Delaware at such
place(s) as may be designated from time to time by the
Board of Directors or in the by-laws of the
Corporation. Any action required or permitted to be
taken by the stockholders of the Corporation must be
effected at a duly called Annual or Special Meeting of
such holders and may not be effected by a consent in
writing by any such holders. This Article may not be
amended except by the affirmative vote of the holders
of at least sixty-six and two-thirds percent (66 2/3%)
of the shares of stock of the Corporation issued and
outstanding and entitled to vote."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an Annual Meeting of the stockholders of said Corporation was
duly called upon notice in accordance with Section 222 of the Delaware
General Corporation Law and held on July 26, 1996, at which Meeting the
stockholders of the Corporation duly approved said proposed amendments by
majority vote.
THIRD: That said amendments were duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said Executive TeleCard, Ltd. has caused
this Certificate to be signed by Robert N. Schuck, its Executive Vice
President, and John J. Gitlin, its Secretary, this 30th day of July, 1996.
By:/s/ Robert N. Schuck
Robert N. Schuck
Its: Executive Vice President
Attest:/s/John J. Gitlin
John J. Gitlin
Its: Secretary
APPENDIX
Certificate of Amendment
to the
Restated Certificate of Incorporation
of
Executive TeleCard, Ltd.
Executive TeleCard, Ltd., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Executive
TeleCard, Ltd., held on May 14, 1996, a resolution was duly adopted
setting forth a proposed amendment to the Restated Certificate of
Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the shareholders of said corporation
for consideration thereof. The resolution setting forth the proposed
amendment are as follows:
RESOLVED, that the Board of Directors declares it advisable and
recommends that the Restated Certificate of Incorporation of the
Corporation be amended by striking out all of Article IV of the Restated
Certificate of Incorporation of the Corporation and inserting in place
thereof:
"The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
100,000,000 shares of Common Stock, with a par value
of $0.001 and 5,000,000 shares of Preferred Stock with
a par value of $.001 per share."
The Board of Directors is hereby authorized to divide
the Preferred Stock into one or more series of stock
and to fix and determine the relative rights and
preferences of the various series, including but not
limited to: the rate of dividend, if any; whether
dividends will be cumulative or non-cumulative;
whether preferred stockholders will participate in
dividends declared on Common Stock, if any; whether
Preferred Stock may be redeemed and the terms of any
such redemption; the amount payable upon shares in the
event of voluntary or involuntary liquidation; the
terms on which Preferred Stock may be converted to
Common Stock, if any; and the voting rights, if any,
of holders of Preferred Stock."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an Annual Meeting of the stockholders of said Corporation was
duly called upon notice in accordance with Section 222 of the Delaware
General Corporation Law and held on July 26, 1996, adjourned to August 9,
and re-adjourned to August 29, 1996, at which re-adjourned Meeting the
stockholders of the Corporation duly approved said proposed amendments by
majority vote.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, said Executive TeleCard, Ltd. has caused
this Certificate to be signed by Robert N. Schuck, its Executive Vice
President, and John J. Gitlin, its Secretary, this 11th day of September,
1996.
By:/s/ Robert N. Schuck
Robert N. Schuck
Its: Executive Vice President
Attest:/s/ John J. Gitlin
John J. Gitlin
Its: Secretary
BY-LAWS
OF
EXECUTIVE TELECARD, LTD.
ARTICLE I. MEETINGS OF STOCKHOLDERS
SECTION 1.1. TIME AND PLACE. All meetings of stockholders
shall be held at such time and place, whether within or without the State
of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 1.2. ANNUAL MEETINGS. An annual meeting of
stockholders, commencing with the year 1988, shall be held on the second
Tuesday in May of each year, or, if such day be a legal holiday, on the
next business day following; PROVIDED, that if the Board of Directors
shall determine that in any year it is not advisable or convenient to hold
the meeting on such day, then in such year the annual meeting shall
instead be held on such other day as the Board shall prescribe.
SECTION 1.3. SPECIAL MEETINGS. Special meetings of
stockholders, unless otherwise prescribed by statute, may be called by the
Chairman of the Board, the President or the Board of Directors, and shall
be called by the Chairman of the Board, the President or the Secretary at
the request in writing of any one or more stockholders owning at least
twenty-five percent (25) of the shares of the Corporation issued and
outstanding and entitled to vote. Any such request shall state the
purpose or purposes of the proposed meeting. Special meetings may also be
called as provided in Section 2.4 of these By-Laws.
SECTION 1.4. NOTICE OF MEETINGS. Written notice of each
meeting of stockholders stating the time and place thereof, and, in the
case of a special meeting, specifying the purpose or purposes thereof
shall be given, in the manner prescribed by Section 5.1 of these By-Laws,
to each stockholder entitled to vote thereat, not less than ten (10) nor
more than sixty (60) days prior to the meeting except that where the
matter to be acted on is a merger or consolidation of the Corporation or a
sale, lease or exchange of all or substantially all of its assets, such
notice shall be given not less than twenty (20) nor more than sixty (60)
days prior to such meeting.
SECTION 1.5. QUORUM. Except as otherwise provided by statute,
the holders of a majority of the shares of the Corporation issued and
outstanding and entitled to vote thereat, present in person or by proxy,
shall be necessary and sufficient to constitute a quorum for the
transaction of business at each meeting of stockholders.
SECTION 1.6. VOTE REQUIRED. At any meeting of stockholders at
which a quorum is present, directors shall be elected by a plurality of
the votes cast and any other corporate action shall be authorized by a
majority of the votes cast, unless the action is one on which, by express
provisions of a statute, a different vote is required, in which case such
express provision shall govern the determination of such action.
SECTION 1.7. VOTING. At any meeting of stockholders, each
stockholder having the right to vote shall be entitled to vote in person
or by proxy; and each stockholder of record shall be entitled to one vote
for each outstanding share standing in his name on the books of the
Corporation as of the record date for determining the stockholders
entitled to notice of and to vote at such meeting. The order of business
at all meetings of stockholders shall be determined by the presiding
officer.
SECTION 1.8. PROXIES. Each proxy shall be in writing executed
by the stockholder giving the proxy or his duly authorized attorney. No
proxy shall be valid after the expiration of three (3) years from its
date, unless a longer period is provided for in the proxy. Unless voted,
every proxy shall be revocable at the pleasure of the person who executed
it or of his legal representatives or assigns, except in those cases where
an irrevocable proxy permitted by statute has been given.
[*Amended. The following section has been deleted.
SECTION 1.9. CONSENTS. Whenever a vote of stockholders at a
meeting thereof is required or permitted to be taken in connection with
any corporate action by any provision of statute or the Certificate of
Incorporation or these By-Laws, the meeting, prior notice thereof and vote
of stockholders may be dispensed with if the holders of shares having not
less than the minimum number of votes that would have been necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted shall consent in writing to the taking
of such action. Where corporate action is taken in such manner by less
than unanimous written consent, prompt written notice of the taking of
such action shall be given to all stockholders who have not consented in
writing thereto.]
ARTICLE II. DIRECTORS
SECTION 2.1. BOARD OF DIRECTORS. The property and business of
the Corporation shall be managed by its Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts
and things on its behalf as are not required to be exercised or done by
the stockholders.
SECTION 2.2. NUMBER; ELECTION AND TENURE. The first Board of
Directors shall consist of three (3) members and thereafter the number of
directors constituting the whole Board of Directors shall be not less than
one (1) nor more than nine (9) as fixed from time to time by resolution of
the whole Board or by the stockholders at any annual or special meeting;
PROVIDED, that no decrease in the number of directors shall shorten the
term of any incumbent director. With the exception of the first Board of
Directors, which shall be elected by the incorporators of the Corporation,
and except as otherwise provided in these By-Laws, directors shall be
elected at the annual meeting of stockholders. Each director shall hold
office until the annual meeting of the stockholders next succeeding his
election and until his successor is elected and has qualified or until his
earlier displacement from office by resignation, removal or otherwise.
SECTION 2.3. RESIGNATION AND REMOVAL. Any director may resign
at any time by written notice to the Corporation. Any director may be
removed, for cause or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
SECTION 2.4. VACANCIES. Any vacancy in the Board of Directors
occurring by reason of the death, resignation or disqualification of any
director, the removal of any director from office for cause or without
cause, an increase in the number of directors, or otherwise, may be filled
by vote of the stockholders or the Board or, if the number of directors
then in office is less than a quorum, by vote of a majority of the
directors then in office or by a sole remaining director. 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 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 in the filling of other vacancies. If at any time, by reason
of death or resignation or other cause, the Corporation should have no
directors in office, then any officer or any stockholder or an executor,
administrator, trustee or guardian of a stockholder, or other fiduciary
entrusted with like responsibility for the person or estate of a
stockholder, may call a special meeting of stockholders in accordance with
the provisions of these By-Laws. Each director elected to fill a vacancy
shall hold office until the next succeeding annual meeting of stockholders
and until his successor is elected and has qualified or until his earlier
displacement from office by resignation, removal, replacement or
otherwise.
SECTION 2.5. ACCESS TO BOOKS AND RELIANCE. Any director shall
have the right to examine the Corporation's stock ledger, a list of its
stockholders and its other books and records for a purpose reasonably
related to his position as a director. A director shall, in the
performance of his duties, be fully protected in relying in good faith
upon the books of account or reports made to the Corporation by any of its
officers, or by an independent certified public accountant, or by an
appraiser selected with reasonable care by the Board of Directors, or in
relying in good faith upon other records of the Corporation.
ARTICLE III. MEETINGS OF THE BOARD
SECTION 3.1. TIME AND PLACE. Meetings of the Board of
Directors may be held at such time and place, within or without the State
of Delaware, as shall be determined in accordance with these By-Laws.
SECTION 3.2. FIRST MEETING. The directors elected at each
annual meeting of stockholders shall hold their first meeting at the place
at which the annual meeting of stockholders shall have been held and
immediately thereafter, and no notice of such meeting to the newly-elected
directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present.
SECTION 3.3. REGULAR MEETINGS. Regular meetings of the Board
of Directors may be held, without notice, at such time and place as shall
from time to time be fixed in advance by resolution of the Board.
SECTION 3.4. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by the Chairman of the Board or the President,
and at the written request of any two (2) directors shall be called by the
Chairman of the Board, the President or the Secretary. Written notice of
each special meeting of directors stating the time and place thereof shall
be served on each director, in the manner provided in Section 5.1 of these
By-Laws, at least two (2) business days before such meeting, provided,
however, that if notice is served by mail it shall be posted at least five
(5) business days before such meeting. The time and place of any special
meeting of directors may also be fixed by a duly executed waiver of notice
thereof.
SECTION 3.5. QUORUM AND VOTING. At all meetings of the Board
of Directors one-third (1/3) of the total number of directors but not less
than (2) directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the vote of a majority of the
directors present at the time of the vote, if a quorum is present at such
time, shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute. If a quorum shall not be
present at any meeting of the Board of Directors, the members of the Board
present thereat may adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum shall be
present. Any director who participates in any meeting of the Board by
means of conference telephone or similar communications equipment by means
of which all persons participating in a meeting can hear each other shall
be deemed to be present in person at such meeting.
SECTION 3.6. MEETINGS DURING EMERGENCY. During any nuclear or
atomic disaster, or during the existence of any catastrophe, or other
similar emergency condition, as a result of which a quorum of the Board of
Directors cannot readily be convened for action, notice of any meeting of
the Board during such an emergency may be given only to such of the
directors as it may be feasible to reach at the time and by such means as
may be feasible at the time, including publication or radio. To the
extent required to constitute a quorum at any meeting of the Board of
Directors during such an emergency, the officers of the Corporation who
are present shall be deemed, in order of rank and within the same rank in
order of seniority, directors for such meeting.
SECTION 3.7. CONSENTS. Whenever any action is required or
permitted to be taken at a meeting of the Board of Directors, such action
may be taken without a meeting if all members of the Board consent thereto
in writing and such written consent or consents are filed with the minutes
of the Proceedings of the Board.
ARTICLE IV. COMMITTEES
SECTION 4.1. EXECUTIVE COMMITTEE. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate directors
of the Corporation in such number as the Board shall see fit, but not less
than two (2), as an Executive Committee which shall have and may exercise,
during intervals between meetings of the Board, the powers of the Board of
Directors in the management of the business and affairs of the Corporation
(including, but without limitation, the powers of the Board of Directors
as specified in these By-Laws, provided, however, that it shall not have
power to fill vacancies in its membership, to authorize the issuance of
shares of the capital stock of the Corporation, or to make or amend these
By-Laws), and may authorize the seal of the Corporation to be affixed to
all papers which may require it. The Board of Directors shall designate
one of the members of the Executive Committee to be the Chairman of said
Committee. Each member of the Executive Committee shall continue to act
as such only so long as he shall be a director of the Corporation and only
during the pleasure of a majority of the total number of directors of the
Corporation at the time in office. In the absence or disqualification of
a member of the Executive Committee, the member or members present at any
meeting and not disqualified from voting, whether or not he/she or they
constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member.
SECTION 4.2. MEETINGS. Regular meetings of the Executive
Committee, of which no notice shall be necessary, shall be held on such
days and at such places, within or without the State of Delaware, as shall
be fixed by resolution adopted by a majority of, and communicated to all,
the members of the Executive Committee. Special meetings of said
Committee may be called at the request of any member. Notice of each
special meeting of said Committee shall be given in the manner provided in
Sections 3.4 and 5.1 of these By-Laws. Subject to the provisions of this
Article IV, the Executive Committee, by resolution of the majority of all
its members, shall fix its own rules of procedure and keep a record of its
proceedings and report them to the Board of Directors at the next regular
meeting thereof after such proceedings shall have been taken.
SECTION 4.3. QUORUM AND MANNER OF ACTING. Not less than a
majority of the members of the Executive Committee then in office shall
constitute a quorum for the transaction of business, and the act of a
majority of those present at a meeting thereof at which a quorum is
present shall be the act of the Executive Committee. The directors
comprising said Committee shall act only as a committee, and such
directors, individually, shall have no power as such.
SECTION 4.4. VACANCIES. The Board of Directors, by vote of a
majority of the whole Board, shall have power to fill any vacancy in the
Executive Committee due to death, resignation, removal, or any other
cause.
SECTION 4.5. RESIGNATION. Any director may resign from the
Executive Committee at any time by giving written notice of his
resignation to the Board of Directors or to the Chairman of the Board, the
Chairman of the Executive Committee, the President, or the Secretary.
Such resignation shall take effect at the date of receipt of such notice
or at any later time specified therein; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective.
SECTION 4.6. OTHER COMMITTEES. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board,
designate one or more other committees, each such committee to consist of
two (2) or more directors of the Corporation, which shall have any may
exercise such powers as the Board of Directors may determine and specify
in such resolution or resolutions, such committee or committees to have
such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. A majority of all the members of any
such committee may fix its rules of procedure, determine its actions, and
fix the time and place (whether within or without the State of Delaware)
of its meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise by resolution provide. The
Board of Directors shall have the power to change the members of any such
committee at any time, to fill vacancies, and to discharge any such
committee, either with or without cause, at any time. In the absence or
disqualification of a member of any such committee, the member or members
present at any meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent
or disqualified member.
SECTION 4.7. ACTION BY CONSENT. Any action required or
permitted to be taken at any meeting of any committee authorized hereunder
may be taken without a meeting if prior to such action a written consent
thereto is signed by all members of such committee, and such written
consent is filed with the minutes of the proceedings of the Board or such
committee.
ARTICLE V. NOTICES
SECTION 5.1. DELIVERY OF NOTICES. Notices to directors and
stockholder shall be in writing and may be delivered personally or by
mail. Notice by mail shall be deemed to be given at the time when
deposited in the post office or a letter box, with first class postage
prepaid, and addressed to directors or stockholders at their respective
addresses appearing on the books of the Corporation. Notice to directors
may also be given by telegram or telex addressed to directors at their
respective addresses appearing on the books of the Corporation or by
leaving the notice at the residence or usual place of business of a
director. Notice by telegram shall be deemed to be given when received by
the communications carrier. Notice by telex shall be deemed to be given
when transmitted.
SECTION 5.2. WAIVER OF NOTICE. Whenever the Corporation or the
Board of Directors is authorized to take any action after notice to any
person or persons, such action may be taken without notice, if at any time
before or after such action is completed the person or persons entitled to
such notice submit a signed waiver of notice. Attendance of a person at a
meeting of stockholders or directors, as the case may be, shall constitute
a waiver of notice of such meeting, except where the person is attending
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 stockholders or directors need be
specified in any written waiver or notice.
ARTICLE VI. OFFICERS
SECTION 6.1. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be a Chairman of the Board, a President, one (1) or more
Vice Presidents, a Treasurer and a Secretary. The Chairman of the Board
and the President shall be selected from among the directors, but no other
executive officer need be a member of the Board. Two (2) or more
officers, except those of President and Vice President and those of
President and Secretary, may be held by the same person, but no officer
shall execute, acknowledge or verify an instrument in more than one
capacity. The executive officers of the Corporation shall be appointed
annually by the Board of Directors at its first meeting following the
meeting of stockholders at which the Board was elected.
SECTION 6.2. OTHER OFFICERS AND AGENTS. The Board of Directors
may also appoint one or more Assistant Vice Presidents, Assistant
Treasurers and Assistant Secretaries, and such other officers and agents
as the Board may determine to be advisable.
SECTION 6.3. TENURE; RESIGNATION; REMOVAL; VACANCIES. Each
officer of the Corporation shall hold office until his successor is
appointed or until his earlier displacement from office by resignation,
removal or otherwise. Any officer may resign by written notice to the
Corporation and may be removed for cause or without cause by the Board of
Directors, PROVIDED, that any such removal shall be without prejudice to
the rights, if any, of the officer so removed under any employment
contract or other agreement with the Corporation. If the office of any
officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
SECTION 6.4. AUTHORITY AND DUTIES. All officers as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of the Corporation as may be provided in these
By-Laws, or, to the extent not provided, as may be prescribed by the Board
of Directors.
SECTION 6.5. THE CHAIRMAN OF THE BOARD. [** Amended. The
following sentence has been deleted. The Chairman of the Board shall be
the Chief Executive Officer of the Corporation.] The Chairman of the
Board may, but shall not necessarily be the Chief Executive Officer of the
Corporation. He shall preside at all meetings of the stockholders and the
directors. He shall have general and active management of the business of
the Corporation, shall see to it that all resolutions and orders of the
Board of Directors are carried into effect, and, in connection therewith,
shall be authorized to delegate to the President and the other executive
officers such of his powers and duties as Chairman of the Board at such
times and in such manner as he may deem to be advisable. Except where by
law or by order of the Board of Directors the signature of the President
is required, the Chairman of the Board shall have the same power as the
President to execute instruments on behalf of the Corporation.
SECTION 6.6. THE PRESIDENT. The President shall be the Chief
Operating Officer of the Corporation, and its executive officer next in
authority to the Chairman of the Board. He shall assist the Chairman of
the Board in the management of the business of the Corporation and, in the
absence or disability of the Chairman, or in the event of the explicit
refusal of the Chairman to discharge the duties of his office, he shall
preside at all meetings of the stockholders and the directors, and
exercise the other powers and perform the other duties of the Chairman or
designate the executive officers of the Corporation by whom such other
powers shall be exercised and other duties performed; and he shall have
such other powers and duties as may from time to time be assigned to him
by the Board of Directors or the Chairman of the Board. During the
vacancy in the office of Chairman of the Board the President shall serve
as Acting Chairman.
SECTION 6.7. THE VICE PRESIDENTS. The Vice President or, if
there be more than one, the Vice Presidents, shall assist the Chairman of
the Board in the management of the business of the Corporation and the
implementation of resolutions and orders of the Board of Directors at such
times and such manner as the Chairman of the Board may deem to be
advisable. If there be more than one Vice President, the Board of
Directors may grant such titles as shall be descriptive of their
respective functions or indicative of their relative seniority. The Vice
President, or, if there be more than one, the Vice Presidents in the order
of their seniority as indicated by their titles or as otherwise determined
by the Board of Directors shall in the absence or disability of the
Chairman of the Board and the President, or in the event of the explicit
refusal of the Chairman and the President to discharge the duties of their
offices, exercise the powers and perform the duties of those officers; and
he or they shall have such other powers and duties as the Board of
Directors or the Chairman of the Board may from time to time prescribe.
Said Vice President shall serve as Acting President during a vacancy in
the office of President and, in the event the offices of both the Chairman
of the Board and the President are vacant, shall serve as Acting Chairman.
SECTION 6.8. THE ASSISTANT VICE PRESIDENTS. The Assistant Vice
President, if any, or, if there be more than one, the Assistant Vice
Presidents, shall perform such duties as may from time to time be
prescribed by the Board of Directors or by the Chairman of the Board.
SECTION 6.9. THE TREASURER. The Treasurer shall have the care
and custody of the corporate funds, and other valuable effects, including
securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name of and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, shall render to the Chairman of the Board and the Board of
Directors, at meetings or whenever it may require it, an account of all
his transactions as Treasurer of the financial condition of the
Corporation; and he shall perform such other duties as the Board of
Directors or the Chairman of the Board may from time to time prescribe.
SECTION 6.10. THE ASSISTANT TREASURERS. The Assistant
Treasurer, if any, or, if there be more than one, the Assistant
Treasurers, in the order determined by the Board of Directors or by the
Chairman of the Board, shall, in the absence or disability of the
Treasurer, or in the event of the explicit refusal of the Treasurer to
discharge the duties of his office, exercise the powers and perform the
duties of the Treasurer, and he or they shall perform such other duties as
the Board of Directors or the Chairman of the Board may from time to time
prescribe. Said Assistant Treasurer shall serve as Acting Treasurer
during a vacancy in the office of Treasurer.
SECTION 6.11 THE SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and shall
record the minutes of all proceedings taken at such meetings, and maintain
all documents evidencing corporate actions taken by written consent of the
stockholders or of the Board of Directors, in a book to be kept for that
purpose. He shall see to it that all notices of meetings of the
stockholders and of special meetings of the Board of Directors are duly
given in accordance with these By-Laws or as required by statute; he shall
be the custodian of the seal of the Corporation, and, when authorized by
the Board of Directors, he shall cause the corporate seal to be affixed,
attested by his signature as Secretary or by the signature of an Assistant
Secretary; he shall also keep or cause to be kept a stock book, containing
the names, alphabetically arranged, of all persons who are stockholders of
the Corporation showing their respective addresses, the number of shares
registered in the name of each, and the dates when they respectively
became the owners of record thereof, and such book shall be open for
inspection as prescribed by the laws of the State of Delaware; and he
shall perform such other duties as may from time to time be prescribed by
the Board of Directors or by the Chairman of the Board.
SECTION 6.12. THE ASSISTANT SECRETARY. The Assistant
Secretary, if any, or, if there be more than one, the Assistant
Secretaries, in the order determined by the Board of Directors or by the
Chairman of the Board shall, in the absence or disability of the
Secretary, or in the event of the explicit refusal of the Secretary to
discharge the duties of his office, exercise the powers and perform the
duties of the Secretary; and he or they shall perform such other duties as
the Board of Directors or the Chairman of the Board may from time to time
prescribe. Said Assistant Secretary shall serve as Acting Secretary
during a vacancy in the office of the Secretary.
ARTICLE VI. STOCK CERTIFICATES
SECTION 7.1. FORM AND SIGNATURE. The stock certificates of the
Corporation shall be in such form as shall be determined by the Board of
Directors, and shall be numbered and entered in the books of the
Corporation as they are issued. Each certificate shall exhibit the
registered holder's name and the number of shares that it evidences, shall
set forth such other statements as may be required by statute, and shall
be signed by the Chairman of the Board, President or Vice President and by
the Treasurer or an Assistant Treasurer or by the Secretary or an
Assistant Secretary.
SECTION 7.2. LOST CERTIFICATES. The Board of Directors may
direct that a new stock certificate or certificates be issued in place of
any certificate or certificates which have been mutilated or which are
alleged to have been lost, stolen or destroyed, upon presentation of each
such mutilated certificate or the making by the person claiming any such
certificate to have been lost, stolen or destroyed of an affidavit as to
the fact and circumstances of the loss, theft or destruction thereof. The
Board, in its discretion and as a condition precedent to the issuance of
any new certificate, may require the owner of any certificate alleged to
have been lost, stolen or destroyed, or his legal representative, to
furnish the Corporation with a bond, in such sum and with such surety or
sureties as it may direct, as indemnity against any claim that may be made
against the Corporation in respect of such lost, stolen or destroyed
certificate.
SECTION 7.3. REGISTRATION OF TRANSFER. Upon surrender to the
Corporation or any transfer agent of the Corporation of a stock
certificate duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, the Corporation shall issue or cause
its transfer agent to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its
books.
ARTICLE VIII. GENERAL PROVISIONS
SECTION 8.1. RECORD DATE.
(a) For the purpose of determining the stockholders entitled to
notice of, or to vote at, any meeting of stockholders or any adjournment
thereof in respect of which a new record date is not fixed, [** Amended.
The following phrase has been deleted: or to express written consent to
the taking of corporate action without a meeting or to receive notice that
any such corporate action was taken without a meeting] or for the purpose
of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise
any rights in respect of any change, conversion or exchange of shares, or
for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
stockholders. Such date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60)
days prior to any other action.
(b) If no record date is fixed:
(1) The record date for determining the
stockholders entitled to notice of or to vote at a
meeting shall be at the close of business on the day
next preceding the date on which notice is given, or,
if no notice is given, the day next preceding the day
on which the meeting is held;
(2) The record date for determining stockholders
entitled to express written consent to the taking of
any corporate action without a meeting, when no prior
action by the Board of Directors is necessary, shall
be the day on which the first written consent is
expressed; and
(3) The record date for determining stockholders
for any purpose other than those specified in
subparagraphs (1) and (2) shall be at the close of
business on the day on which the resolution of the
Board of Directors relating thereto is adopted.
SECTION 8.2. REGISTERED STOCKHOLDERS. There shall be kept at
the office of the Corporation in the State of Delaware a record containing
the names and addresses of all stockholders, the number of shares held by
each and the dates when they respectively became the owners of record
thereof. Except as otherwise required by law, the Corporation shall be
entitled to recognize a person registered on its books as the holder of
shares as the sole owner of such shares for all purposes, and shall not be
bound to recognize any equitable or legal claim to or interest in such
shares on the part of any person other than such registered holder,
regardless of whether it shall have knowledge or notice of any such claim
or interest. Without limiting the generality of the foregoing, the
Corporation shall be entitled to recognize the exclusive right of a person
whose holding of shares is so registered on its books as of any record
date fixed or determined pursuant to Section 7.1 of these By-Laws to be
treated as the sole owner of such shares for the purpose for which such
record date was so fixed or determined.
SECTION 8.3. DIVIDENDS AND DISTRIBUTIONS; RESERVES. Subject to
all applicable requirements of law and any indenture or other agreement to
which the Corporation is a party or by which it is bound, the Board of
Directors may declare to be payable, in cash, in other property or in
shares of the Corporation, such dividends and distributions upon or in
respect of outstanding shares of the Corporation as the Board may deem to
be advisable. Before declaring any such dividend or distribution, the
Board may cause to be set aside, out of any funds or other property or
assets of the Corporation legally available for the payment of dividends
or distributions, such sum or sums as the Board, in its absolute
discretion, may consider to be proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as
the Board may deem conducive to the interest of the Corporation, and the
Board may modify or abolish any such reserve in the manner in which it was
created.
SECTION 8.4. ANNUAL STATEMENT. The Board of Director shall
present at each annual meeting of the stockholders a full and clear
statement of the business and financial condition of the Corporation.
SECTION 8.5. FISCAL YEAR. The fiscal year of the Corporation
shall be fixed and may from time to time be changed by resolution of the
Board of Directors.
SECTION 8.6. SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal Delaware."
SECTION 8.7. SECURITIES OF OTHER CORPORATIONS. The Chairman of
the Board or any other officer authorized by the Board of Directors shall
have power to vote and otherwise act on behalf of the Corporation, in
person or by proxy, at any meeting of stockholders of or with respect to
any action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any and all
rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
SECTION 8.8. LOANS TO DIRECTORS. A loan shall not be made by
the Corporation to any director, provided, however, that the Corporation
may lend money to, or guarantee any obligation of, or otherwise assist any
officer or other employee of the Corporation or of any of its
subsidiaries, including any officer or employee who is a director of the
Corporation, whenever in the judgment of the directors such loan,
guarantee or assistance may reasonably be expected to benefit the
Corporation.
SECTION 8.9. LITIGATION BY CORPORATION. No court action, suit
or arbitration proceeding shall be commenced by the Corporation against a
member of the Board of Directors unless authorized by a specific
resolution of the Board.
ARTICLE IX. INDEMNIFICATION
SECTION 9.1. INDEMNIFICATION. The Corporation shall (a)
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit, and (b) indemnify
any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the Corporation), by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or served
at the request of the Corporation as a director, officer, employee or
agent of (the Corporation, or served at the request of the Corporation as
a director, officer, employee or agent of) another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any
such action, suit or proceeding; in each case to the fullest extent
permissible under subsections (a) through (e) of Section 145 of the
General Corporation Law of Delaware or the indemnification provisions of
any successor statute. The foregoing right of indemnification shall in no
way be exclusive of any other rights of indemnification to which any such
person may be entitled, under any bylaw, agreement, vote of stockholders
or disinterested directors or direction of any court or otherwise, and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
For purposes of the Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "service at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries.
For purposes of this Section, references to "the Corporation"
include all constituent corporations absorbed in a consolidation or merger
as well as the resulting or surviving corporation so that any person who
is or was a director, officer, employee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise shall
stand in the same position under the provisions of this Section with
respect to the resulting or surviving corporation as he would if he served
the resulting or surviving corporation in the same capacity.
ARTICLE X. AMENDMENTS
SECTION 10.1. POWER TO AMEND. These By-Laws may be amended or
repealed, and new By-Laws may be adopted, in the manner provided in the
Certificate of Incorporation.
* On May 16, 1996, the Board of Directors adopted a resolution to
amend the Company's Restated Certificate of Incorporation to add
a provision that requires any action required or permitted to be
taken by the stockholders of the Corporation to be effected at a
duly called annual or special meeting of stockholders and not by
a consent in writing by the stockholders. This amendment was
approved by the stockholders on July 26, 1996.
** On March 15, 1995, the Board of Directors adopted a resolution
to amend the first sentence of Section 6.5 to read in its
entirety as follows: The Chairman of the Board may, but shall
not necessarily be the Chief Executive Officer of the
Corporation.
