<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 1-5397
------------------ --------
Automatic Data Processing, Inc
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter )
Delaware 22-1467904
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One ADP Boulevard, Roseland, New Jersey 07068
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (201) 994-5000
No change
- - --------------------------------------------------------------------------------
Former name, former address & former fiscal year, if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed with the commission and (2) has
been subject to the filing requirements for at least the past 90 days.
X Yes No
- - ---------------------------------- --------------------------------
As of May 2, 1997, there were 292,832,377 shares outstanding.
<PAGE>
Form 10Q
Part I. Financial Information
STATEMENTS OF CONSOLIDATED EARNINGS
-----------------------------------
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenue $1,126,284 $1,031,864 $3,032,589 $2,598,681
---------- ---------- ---------- ----------
Operating expenses 440,329 428,360 1,249,684 1,087,828
General, administrative and
selling expenses 308,063 276,730 830,563 702,095
Depreciation and amortization 59,163 55,298 167,515 148,386
Systems development and 74,849 63,762 213,977 176,808
programming costs
Interest expense 7,250 7,804 21,410 22,254
---------- ---------- ---------- ----------
889,654 831,954 2,483,149 2,137,371
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 236,630 199,910 549,440 461,310
Provision for income taxes 71,700 56,010 163,650 126,610
---------- ---------- ---------- ----------
NET EARNINGS $ 164,930 $ 143,900 $ 385,790 $ 334,700
========== ========== ========== ==========
EARNINGS PER SHARE $ .56 $ .49 $ 1.33 $ 1.16
========== ========== ========== ==========
Dividends per share $ .115 $ .10 $ .33 $ .2875
========== ========== ========== ==========
See notes to consolidated statements.
<PAGE>
Form 10Q
CONSOLIDATED BALANCE SHEETS
---------------------------
(IN THOUSANDS)
March 31, June 30,
Assets 1997 1996
- - ------ ---------- ----------
Cash and cash equivalents $ 537,817 $ 314,416
Short-term marketable securities 445,992 321,743
Accounts receivable 632,300 507,198
Other current assets 233,219 310,926
---------- ----------
Total current assets 1,849,328 1,454,283
---------- ----------
Long-term marketable securities 395,083 462,461
---------- ----------
Long-term receivables 178,378 188,184
---------- ----------
Land and buildings 343,085 322,975
Data processing equipment 639,715 578,935
Furniture, leaseholds and other 359,266 330,610
---------- ----------
1,342,066 1,232,520
Less accumulated depreciation 841,311 764,254
---------- ----------
500,755 468,266
---------- ----------
Other assets 25,621 19,597
---------- ----------
Intangibles 1,334,160 1,247,094
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$4,283,325 $3,839,885
========== ==========
Liabilities and Shareholders' Equity
Notes payable $ 126,626 $ 90,746
Accounts payable 96,986 96,351
Accrued expenses & other current
liabilities 704,840 590,355
Income taxes 65,813 52,954
Current portion of long-term debt 1,093 5,207
---------- ----------
Total current liabilities 995,358 835,613
---------- ----------
Long-term debt 402,672 403,743
---------- ----------
Other liabilities 87,803 78,508
---------- ----------
Deferred income taxes 107,815 112,880
---------- ----------
Deferred revenue 105,826 93,795
---------- ----------
Shareholders' equity:
Common stock 31,429 31,428
Capital in excess of par value 402,527 406,200
Retained earnings 2,828,111 2,537,952
Treasury stock (678,216) (660,234)
---------- ----------
2,583,851 2,315,346
---------- ----------
$4,283,325 $3,839,885
========== ==========
See notes to consolidated statements.
<PAGE>
Form 10Q
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------
(IN THOUSANDS)
Nine Months Ended
March 31,
1997 1996
------ -------
Cash Flows From Operating Activities:
Net earnings $ 385,790 $ 334,700
Expenses not requiring outlay of cash 203,638 158,300
Changes in operating net assets 1,970 8,060
--------- ---------
Net cash flows from operating activities 587,458 501,060
--------- ---------
Cash Flows From Investing Activities:
Purchase of marketable securities (832,442) (918,839)
Proceeds from sale of marketable securities 773,256 1,031,265
Capital expenditures (111,799) (115,844)
Other changes to property, plant and equipment 6,076 6,804
Additions to intangibles (40,961) (14,040)
Acquisitions of businesses (92,238) (466,105)
--------- ---------
Net cash flows from investing activities (298,108) (476,759)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from issuance of notes 45,802 92,378
Repayments of long-term debt (52,426) (11,769)
Proceeds from issuance of common stock 69,323 107,952
Repurchases of common stock (107,990) (55,097)
Dividends paid (62,438) (83,181)
Other 41,780 (15,360)
--------- ---------
Net cash flows from financing activities (65,949) 34,923
--------- ---------
Net change in cash and cash equivalents 223,401 59,224
Cash and cash equivalents, at beginning of period 314,416 313,612
Cash and cash equivalents, at end of period $ 537,817 $ 372,836
========= =========
See notes to consolidated statements.
<PAGE>
Form 10Q
NOTES TO CONSOLIDATED STATEMENTS
--------------------------------
The information furnished herein reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results for the
interim periods. All adjustments are of a normal recurring nature. These
statements should be read in conjunction with the annual financial statements
and related notes of the Company for the year ended June 30, 1996.
Note A - The results of operations for the nine months ended March 31, 1997 may
not be indicative of the results to be expected for the year ending
June 30, 1997.
Note B - Earnings per share are based on a weighted average number of shares
outstanding, which for the quarters ended March 31, 1997 and 1996 were
292,624,000 and 291,311,000 respectively. The weighted average number
of shares for the nine months ended March 31, 1997 and 1996 were
290,504,000 and 289,020,000 respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OPERATING RESULTS
Revenue and earnings again reached record levels during the quarter ended March
31, 1997.
Revenue and revenue growth by ADP's major business units are shown below:
Revenue
----------------------------------
3 Months Ended 9 Months Ended
March 31, March 31,
1997 1996 1997 1996
------ ------ ------ ------
($ in millions)
Employer Services (a) $ 667 $ 575 $1708 $1418
Brokerage Services 226 202 614 539
Dealer Services 164 145 479 403
Other (a) 69 110 232 239
------ ------ ------ ------
$1126 $1032 $3033 $2599
====== ====== ====== ======
Revenue Growth
-----------------------------------
3 Months Ended 9 Months Ended
March 31, March 31,
1997 1996 1997 1996
------ ------ ------ ------
Employer Services (a) 16% 22% 20% 17%
Brokerage Services 12 19 14 21
Dealer Services 13 29 19 28
Other (a) (37) 150 (3) 91
------ ------ ------ ------
9% 29% 17% 24%
====== ====== ====== ======
(a) reclassified
Revenue exceeded $1.1 billion in the quarter ended March 31, 1997, an increase
of 12% before factoring in a non-recurring 3% reduction in revenue arising from
the recent disposition of GSI's facilities management business. Revenue growth
in the Company's three largest businesses, Employer, Brokerage and Dealer
Services, was strong at 16%, 12%, and 13%, respectively. Each includes some
acquisitions.
The primary components of "Other revenue" are claims services, services for
wholesalers, the non-employer services businesses of GSI, interest income and
foreign exchange differences. In addition, "Other revenue" has been reduced to
adjust for the difference between actual interest income earned on invested tax
filing funds and income credited to Employer Services at a standard rate. In
prior years, this standard rate was 7.8%. In fiscal '97 the standard rate was
changed to 6.0% and, accordingly, the previously reported balances for Employer
Services and "Other revenue" have been reclassified.
Pretax earnings for the quarter increased 18% from last year. As expected,
overall corporate margins improved compared to the prior year's quarter as we
passed the anniversary date of several of last year's acquisitions. Systems
development and programming investments increased to accelerate automation,
migrate to new computing technologies, and develop new products.
<PAGE>
Net earnings for the quarter, after a higher effective tax rate, increased 15%
to $165 million. The effective tax rate of 30.3% increased from 28.0% in the
comparable quarter last year, primarily because of the impact of non-deductible
intangibles arising from the GSI acquisition and an increased mix of taxable vs.
non-taxable investments.
Earnings per share grew 14% to $.56 from $.49 last year.
For the full year, we continue to expect revenue and earnings per share growth
of approximately 15%.
FINANCIAL CONDITION
The Company's financial condition and balance sheet remain exceptionally strong,
and operations continue to generate a strong cash flow. At March 31, 1997, the
Company had cash and marketable securities of approximately $1.4 billion.
Shareholders' equity was approximately $2.6 billion and the ratio of long-term
debt to equity was 16%.
Capital expenditures for fiscal 1997 are expected to approximate $200 million,
compared to $168 million in fiscal 1996.
During the first nine months of fiscal '97, ADP purchased about 2.7 million
shares of common stock for treasury at an average price of about $40. The
Company has remaining Board authorization to purchase up to 4.9 million
additional shares to fund equity related employee benefit plans.
PART II. OTHER INFORMATION
Except as noted below, all other items are inapplicable or would result in
negative responses and, therefore, have been omitted.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Exhibit
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3.2 By-laws, as amended and restated on March 24, 1997
<PAGE>
Form 10Q
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.
AUTOMATIC DATA PROCESSING, INC.
-------------------------------
(Registrant)
Date: May 9, 1997 /s/ Richard J. Haviland
-----------------------------
Richard J. Haviland
Vice President, Finance
(Principal Financial Officer)
-----------------------------
(Title)
<PAGE>
Exhibit 3.2
AUTOMATIC DATA PROCESSING, INC.
BY -LAWS
As Amended and Restated on March 24, 1997
<PAGE>
AUTOMATIC DATA PROCESSING, INC.
BY-LAWS
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I STOCKHOLDERS 1
Section 1.01. Annual Meetings 1
Section 1.02. Special Meetings 1
Section 1.03. Notice of Meetings; Waiver 2
Section 1.04. Quorum 2
Section 1.05. Voting 2
Section 1.06. Voting by Ballot 2
Section 1.07. Adjournment 2
Section 1.08. Proxies 2
Section 1.09. Organization; Procedure 3
Section 1.10. Inspectors of Elections 3
Section 1.11. Opening and Closing of Polls 4
Section 1.12. Consent of Stockholders in Lieu of Meeting 4
ARTICLE II BOARD OF DIRECTORS 4
Section 2.01. General Powers 4
Section 2.02. Number and Term of Office 4
Section 2.03. Election of Directors 5
Section 2.04. Annual and Regular Meetings 5
Section 2.05. Special Meetings; Notice 5
Section 2.06. Quorum; Voting 5
Section 2.07. Adjournment 6
Section 2.08. Action Without a Meeting 6
Section 2.09. Regulations; Manner of Acting 6
Section 2.10. Action by Telephonic Communications 6
Section 2.11. Resignations 6
Section 2.12. Removal of Directors 6
Section 2.13. Vacancies and Newly Created 6
Directorships 6
Section 2.14. Compensation 7
Section 2.15. Reliance on Accounts and Reports, etc. 7
Section 2.16. Honorary Directors 7
ARTICLE III EXECUTIVE COMMITTEE, AUDIT COMMITTEE,
<PAGE>
COMPENSATION COMMITTEE AND OTHER COMMITTEES 7
Section 3.01. How Constituted 7
Section 3.02. Powers; Duties and Responsibilities 8
Section 3.03. Proceedings 10
Section 3.04. Quorum and Manner of Acting 10
Section 3.05. Action by Telephonic Communications 10
Section 3.06. Absent or Disqualified Members 10
Section 3.07. Resignations 10
Section 3.08. Removal 11
Section 3.09. Vacancies 11
ARTICLE IV OFFICERS 11
Section 4.01. Number 11
Section 4.02. Election 11
Section 4.03. Salaries 11
Section 4.04. Removal and Resignation; Vacancies 11
Section 4.05. Authority and Duties of Officers 12
Section 4.06. Chairman 12
Section 4.07. President 12
Section 4.08. Vice Presidents 12
Section 4.09. Secretary 12
Section 4.10. Treasurer 13
Section 4.11. Assistant Secretary and Assistant
Treasurers 13
Section 4.11. Security 13
ARTICLE V CAPITAL STOCK 13
Section 5.01. Certificates of Stock, Uncertificated
Shares 13
Section 5.02. Signatures; Facsimile 14
Section 5.03. Lost, Stolen or Destroyed Certificates 14
Section 5.04. Transfer of Stock 14
Section 5.05. Record Date 14
Section 5.06. Registered Stockholders 15
Section 5.07. Transfer Agent and Registrar 15
ARTICLE VI INDEMNIFICATION 15
Section 6.01. Nature of Indemnity 15
Section 6.02. Successful Defense 16
Section 6.03. Determination that Indemnification is Proper 16
Section 6.04. Advance Payment of Expenses 16
<PAGE>
Section 6.05. Procedure for Indemnification of Directors
& Officers 17
Section 6.06 Survival; Preservation of Other Rights 17
Section 6.07. Insurance 18
Section 6.08. Severability 18
ARTICLE VII GENERAL PROVISIONS 18
Section 7.01. Dividends 18
Section 7.02. Reserves 19
Section 7.03. Execution of Instruments 19
Section 7.04. Corporate Indebtedness 19
Section 7.05. Fiscal Year 19
Section 7.06. Seal 19
Section 7.07. Books and Records; Inspection 19
ARTICLE VIII AMENDMENT OF BY-LAWS 20
Section 8.01. Amendment 20
ARTICLE IX CONSTRUCTION 20
Section 9.01. Construction 20
<PAGE>
AUTOMATIC DATA PROCESSING, INC.
BY-LAWS
As Amended and Restated on March 24, 1997
ARTICLE I
STOCKHOLDERS
Section 1.01. ANNUAL MEETINGS. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held at such
place, either within or without the State of
Delaware, and at such date and hour, as may be fixed from time to time by
resolution of the Board of Directors and set forth in the notice or waiver of
notice of the meeting. [Sections 211(a), (b).](1)
Section 1.02. SPECIAL MEETINGS. Special meetings of the stockholders may
be called at any time by the Chief Executive Officer or the Secretary or by the
Board of Directors. A special meeting shall be called by the Chief Executive
Officer or by the Secretary immediately upon receipt of a written request
therefor by stockholders holding in the aggregate not less than one-third in
number of the outstanding shares of the Corporation at the time entitled to vote
at any meeting of the stockholders. Such special meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as shall
be specified in the respective notices or waivers of notice thereof. [Section
211(d).]
Section 1.03. NOTICE OF MEETINGS; WAIVER. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the stockholders, and, in the case of a special meeting, the purpose or
purposes for which such
________________
(1) Citations are to the General Corporation Law of the State of Delaware
as in effect on January 1, 1996 (the "GCL"). The citations are inserted for
reference only, and do not constitute a part of the By-Laws.
<PAGE>
meeting is called, to be given personally or by mail, not less than ten nor more
than sixty days prior to the meeting, to each stockholder of record entitled to
vote at such meeting. If such notice is mailed, it shall be deemed to have been
given to a stockholder when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the record
of stockholders of the Corporation, or, if he or she shall have filed with the
Secretary of the Corporation a written request that notices to him or her be
mailed to some other address, then directed to him or her at such other address.
Such further notice shall be given as may be required by law.
No notice of any meeting of stockholders need be given to any stockholder
who submits a signed waiver of notice, whether before or after the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need be specified in a written waiver of
notice. The attendance of any stockholder at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not lawfully called or convened. [Sections 222, 229.]
Section 1.04. QUORUM. Except as otherwise required by law or by the
Certificate of Incorporation, the presence in person or by proxy of the holders
of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. [Section 216.]
Section 1.05. VOTING. If, pursuant to Section 5.05 of these By-Laws, a
record date has been fixed, every holder of record of shares entitled to vote at
a meeting of stockholders shall be entitled to one vote for each share
outstanding in his or her name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to one vote for each share of stock standing in his or her name on
the books of the Corporation at the close of business on the day next preceding
the day on which notice of the meeting 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. Except as otherwise required by law or by the Certificate of
Incorporation or by these By-
<PAGE>
Laws, the vote of a majority of the shares represented in person or by proxy at
any meeting at which a quorum is present shall be sufficient for the transaction
of any business at such meeting. [Sections 212(a), 213, 216.]
Section 1.06. VOTING BY BALLOT. No vote of the stockholders need be taken
by written ballot unless demanded by the holders of at least fifteen percent
(15%) of the shares represented in person or by proxy at any meeting at which a
quorum is present or as otherwise required by law. Any vote which need not be
taken by ballot may be conducted in any manner approved by the meeting.
Section 1.07. ADJOURNMENT. If a quorum is not present at any meeting of
the stockholders, the holders of a majority of the shares present in person or
by proxy shall have the power to adjourn any such meeting from time to time
until a quorum is present. Notice of any adjourned meeting of the stockholders
of the Corporation need not be given if the place, date and hour thereof are
announced at the meeting at which the adjournment is taken, provided, however,
that if the adjournment is for more than thirty days, or if after the
adjournment a new record date for the adjourned meeting is fixed pursuant to
Section 5.05 of these By-Laws, a notice of the adjourned meeting, conforming to
the requirements of Section 1.03 of these By-Laws, shall be given to each
stockholder of record entitled to vote at such meeting. At any adjourned
meeting at which a quorum is present, any business may be transacted that might
have been transacted on the original date of the meeting. [Section 222(c).]
Section 1.08. PROXIES. Any stockholder entitled to vote at any meeting of
the stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person or persons to vote at any
such meeting and express such consent or dissent for him or her by proxy. Every
proxy shall be revocable at the pleasure of the stockholder executing it, except
in those cases where applicable law provides that a proxy shall be irrevocable.
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 by filing another duly executed proxy bearing a later date with the
Secretary. [Section 212.]
Section 1.09. ORGANIZATION; PROCEDURE. At every meeting of stockholders
the presiding officer shall be the Chairman or, in
<PAGE>
the event of his or her absence or should the Chairman in his or her discretion
determine not to preside, in the following order of availability, the Chief
Executive Officer, the President, or a Vice President, and in the case more than
one Vice President shall be present, that Vice President designated by the Board
of Directors (or in the absence of any such designation, the most senior Vice
President, based on title). In case none of the foregoing officers designated
to be the presiding officer shall be present, a presiding officer shall be
chosen by the vote of a majority of the shares represented in person or by proxy
and entitled to vote at the meeting. The Secretary, or in the event of his or
her absence or disability, the Assistant Secretary, if any, or if there be no
Assistant Secretary, in the absence of the Secretary, an appointee of the
presiding officer, shall act as secretary of the meeting. The order of business
and all other matters of procedure at every meeting of stockholders may be
determined by such presiding officer.
Section 1.10. INSPECTORS OF ELECTIONS. Preceding any meeting of the
stockholders, the Board of Directors shall appoint one or more persons to act as
Inspectors of Elections, and may designate one or more alternate inspectors. In
the event no inspector or alternate is able to act, the person presiding at the
meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of the duties of an inspector,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall:
(a) ascertain the number of shares outstanding and the voting power
of each;
(b) determine the shares represented at a meeting and the validity of
proxies and ballots;
(c) count all votes and ballots;
(d) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors;
and
(e) certify his or her determination of the number of shares
represented at the meeting, and his or her count of all votes and ballots.
<PAGE>
The inspector may appoint or retain other persons or entities to assist in the
performance of the duties of inspector. [Sections 231(a), (b).]
Section 1.11. OPENING AND CLOSING OF POLLS. The date and time for the
opening and the closing of the polls for each matter to be voted upon at a
stockholder meeting shall be announced at the meeting. The inspector of the
election shall be prohibited from accepting any ballots, proxies or votes or any
revocations thereof or changes thereto after the closing of the polls, unless
the Court of Chancery upon application by a stockholder shall determine
otherwise. [Section 231(c).]
Section 1.12. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. To the fullest
extent permitted by law, whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, such action may be taken without a meeting, without prior notice and
without a vote of stockholders, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered in the manner required by law to the Corporation,
written consents signed by a sufficient number of holders to take action are
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
<PAGE>
record date for such meeting had been the date that written consents signed by a
sufficient number of stockholders to take the action were delivered to the
Corporation as provided in this Section 1.12. [Section 228(a), (c), (d).]
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. GENERAL POWERS. Except as may otherwise be provided by law,
by the Certificate of Incorporation or by these By-Laws, the property, affairs
and business of the Corporation shall be managed by or under the direction of
the Board of Directors and the Board of Directors may exercise all the powers of
the Corporation. [Section 141(a) .]
Section 2.02. NUMBER AND TERM OF OFFICE. The number of directors
constituting the entire Board of Directors shall be between 9 and 13, which
number may be modified from time to time by resolution of the Board of
Directors, but in no event shall the number of directors be less than three. No
director shall be elected to office after he or she has passed his or her 65th
birthday, unless (I) such director has served less than one term prior thereto,
in which event he or she shall be permitted to stand for re-election to serve a
maximum of two terms, including any fractional terms as a full term, or (II) if
such director is active on a daily basis in a senior executive capacity in a
company or in his or her chosen profession, such director shall be permitted to
stand for re-election so long as he or she continues such activity on a daily
basis, but in no event shall such director be elected to office after he or she
has passed his or her 72nd birthday, unless such director continues to be active
on a daily basis in an executive capacity with a company whose shares are
publicly traded and the Executive Committee of the Board of Directors has voted
to approve the continued service of such person as a director. Each director
(whenever elected) shall hold office until his or her successor has been duly
elected and qualified, or until his or her earlier death, resignation or
removal. [Section 141(b).]
Section 2.03. ELECTION OF DIRECTORS. Except as otherwise provided in
Sections 2.12 and 2.13 of these By-Laws, the directors shall be elected at each
annual meeting of the stockholders. If the annual meeting for the election of
directors
<PAGE>
is not held on the date designated therefor, the directors shall cause the
meeting to be held as soon thereafter as convenient. At each meeting of the
stockholders for the election of directors, provided a quorum is present, the
directors shall be elected by a plurality of the votes validly cast in such
election. [Sections 211(b), (c), 216.]
Section 2.04. ANNUAL AND REGULAR MEETINGS. The annual meeting of the
Board of Directors for the purpose of electing officers and for the transaction
of such other business as may come before the meeting shall be held as soon as
possible following adjournment of the annual meeting of the stockholders at the
place of such annual meeting of the stockholders. Notice of such annual meeting
of the Board of Directors need not be given. The Board of Directors from time
to time may by resolution provide for the holding of regular meetings and fix
the place (which may be within or without the State of Delaware) and the date
and hour or such meetings. Notice of regular meetings need not be given.
[Section 141(g).]
Section 2.05. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors may be called by the Chairman, the Chief Executive Officer, the
Secretary or an Assistant Secretary, if any, and, on the written request of any
two directors, the Secretary or an Assistant Secretary shall call such meeting.
Special meetings shall be held at such place (within or without the State of
Delaware), date and hour as may be specified in the respective notices or
waivers of notice of such meetings. Special meetings of the Board of Directors
may be called on twenty-four hours' notice, if notice is given to each director
personally or by telephone or telegram, or on five days' notice, if notice is
mailed to each director, addressed to him or her at his or her usual place of
business. Notice of any special meeting need not be given to any director who
attends such meeting without protesting the lack of notice to him or her, prior
to or at the commencement of such meeting, or to any director who submits a
signed waiver of notice, whether before or after such meeting, and any business
may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. QUORUM; VOTING. At all meetings of the Board of Directors,
the presence of at least one-third of the total authorized number of directors,
but not less than two directors, shall constitute a quorum for the transaction
of business. Except as otherwise required by law, the Certificate of
<PAGE>
Incorporation or these By-Laws, the vote of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. ADJOURNMENT. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No notice need be given of any adjourned meeting unless
the time and place of the adjourned meeting are not announced at the time of
adjournment, in which case notice conforming to the requirements of Section 2.05
of these By-Laws shall be given to each director.
Section 2.08. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if all members of the Board of Directors consent thereto in writing, and
such writing or writings are filed with the
minutes of proceedings of the Board of Directors. [Section 141(f).]
Section 2.09. REGULATIONS; MANNER OF ACTING. To the extent consistent
with applicable law, the Certificate of Incorporation and these By-Laws, the
Board of Directors may adopt such rules and regulations for the conduct of
meetings of the Board of Directors and for the management of the property,
affairs and business of the Corporation as the Board of Directors may deem
appropriate. The directors shall act only as a Board, and the individual
directors shall have no power as such.
Section 2.10. ACTION BY TELEPHONIC COMMUNICATIONS. Except as otherwise
determined by the Board of Directors, members of the Board of Directors may
participate in a meeting of the Board of Directors 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 provision shall constitute presence in person at such meeting.
[Section 141(i).]
Section 2.11. RESIGNATIONS. Any director may resign at any time by
delivering a written notice of resignation, signed by such director, to the
Chairman or the Chief Executive Officer. Unless otherwise specified therein,
such resignation shall take effect upon delivery. [Section 141(b).]
Section 2.12. REMOVAL OF DIRECTORS. Any director may be
<PAGE>
removed at any time, either for or without cause, upon the affirmative vote of
the holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote for the election of such director. Any vacancy in the Board of
Directors caused by any such removal may be filled at such meeting by the
stockholders entitled to vote for the election of the director so removed. If
such stockholders do not fill such vacancy at such meeting (or in the written
instrument effecting such removal, if such removal was effected by consent
without a meeting), such vacancy may be filled in the manner provided in Section
2.13 of these By-Laws. [Section 141(k).]
Section 2.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If any vacancies
shall occur in the Board of Directors, by reason of death, resignation, removal
or otherwise, or if the authorized number of directors shall be increased, the
directors then in office shall continue to act, and such vacancies and newly
created directorships may be filled by a majority of the directors then in
office, although less than a quorum. A director elected to fill a vacancy or a
newly created directorship shall hold office until his or her successor has been
elected and qualified or until his or her earlier death, resignation or removal.
Any such vacancy or newly created directorship may also be filled at any time by
vote of the stockholders. [Section 223.]
Section 2.14. COMPENSATION. Each director, in consideration of his or her
service as such, shall be entitled to receive from the Corporation such amount
per annum or such fees for attendance at directors' meetings, or both, as the
Board of Directors may from time to time determine, together with reimbursement
for the reasonable out-of-pocket expenses, if any, incurred by such director in
connection with the performance of his or her duties. Each director who shall
serve as a member of any Committee designated by the Board of Directors in
consideration of serving as such shall be entitled to such additional amount per
annum or such fees for attendance at committee meetings, or both, as the Board
of Directors may from time to time determine, together with reimbursement for
the reasonable out-of-pocket expenses, if any, incurred by such director in the
performance of his or her duties. Nothing contained in this Section 2.14 shall
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving proper compensation. [Section 141(h).]
<PAGE>
Section 2.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC. A director, or a
member of any Committee designated by the Board of Directors shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, or Committees designated by the Board of Directors, or by any other
person as to the matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation. [Section 141(e).]
Section 2.16. HONORARY DIRECTORS. The Board of Directors may, by vote at
a regularly held meeting, appoint at its discretion individuals as Honorary
Directors to serve for such period of time and with such compensation as shall
be fixed by the Board of Directors. Individuals appointed as Honorary Directors
shall have the right to attend regularly scheduled Board of Directors meetings
but shall not have the right to cast a vote.
ARTICLE III
EXECUTIVE COMMITTEE, AUDIT COMMITTEE,
COMPENSATION COMMITTEE AND OTHER COMMITTEES
Section 3.01. HOW CONSTITUTED. The Board of Directors shall have an
Executive Committee, an Audit Committee and a Compensation Committee, each such
Committee to consist of such number of directors as from time to time may be
fixed by the Board of Directors in accordance with this Section 3.01. The
Executive Committee shall consist of three or more directors. The Audit
Committee and Compensation Committee shall each consist of three or more outside
directors, with each Audit Committee member having such level of independence as
shall be deemed necessary by the Board of Directors. The Board of Directors may
designate one or more other Committees, each of which shall consist of such
number of directors as from time to time may be fixed by the Board of Directors.
The Board of Directors may designate one or more directors as alternate members
of any Committee, who may replace any absent or disqualified member or members
at any meeting of such Committee. Thereafter, members (and alternate members,
if any) of each Committee may be designated at the annual meeting of the Board
of Directors. Any Committee, other than the Executive Committee, Audit
Committee
<PAGE>
and Compensation Committee, may be abolished or re-designated from time to time
by the Board of Directors. Each member (and each alternate member) of any
Committee (whether designated at an annual meeting of the Board of Directors or
to fill a vacancy or otherwise) shall hold office until his or her successor
shall have been designated or until he or she shall cease to be a director, or
until his or her earlier death, resignation or removal. [Section 141(c).]
Section 3.02. POWERS; DUTIES AND RESPONSIBILITIES. During the intervals
between the meetings of the Board of Directors, the Executive Committee, except
as otherwise provided in this Section 3.02, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
property, affairs and business of the Corporation, including the power to
declare dividends and to authorize the issuance of stock.
The Audit Committee shall have the power and authority of the Board of
Directors to perform the following duties:
(a) Review the recommendation of senior management of the Corporation
as to the selection, retention or discharge of the independent certified
public accountants to serve as the independent auditors of the Corporation
for each fiscal year of the Corporation and report to the full Board of
Directors the agreement or disagreement by the Committee with such
recommendation;
(b) Review with the independent auditors and the Corporate Audit
Department of the Corporation the scope of the separate audits to be
performed by such auditors and such Department for each fiscal year of the
Corporation and report to the full Board of Directors the agreement or
disagreement by the Committee with the scope of each audit;
(c) Review with the independent auditors and senior management of the
Corporation significant proposed changes in the accounting policies of the
Corporation;
(d) Review with the independent auditors and senior
<PAGE>
management of the Corporation the annual financial statements of the
Corporation and report on the same to the full Board of Directors;
(e) Review with the independent auditors, senior management and
Corporate Audit Department of the Corporation the adequacy of the financial
and administrative controls, procedures and practices of the Corporation;
(f) Review the fees of the independent auditors of the Corporation
and the scope of management advisory services to be performed by such
auditors;
(g) Perform such other duties as may otherwise be related to the
foregoing duties or as may be established from time to time by the Board of
Directors.
The Compensation Committee shall have the power and authority of the Board
of Directors to perform the following duties:
(a) Develop guidelines and review the compensation and performance of
officers of the Corporation and review and approve the compensation for the
Chief Executive Officer on behalf of the Board of Directors;
(b) Serve as the Option Committee for the Board of Directors with the
power and authority to establish criteria for the granting of options to
the officers and other employees of the Corporation and to review and
approve the granting of options in accordance with such criteria;
(c) Develop plans for managerial succession for the Corporation and
serve as the Nominating Committee for the Board of Directors;
(d) Review major organizational and staffing matters; and
(e) Perform such other duties as may otherwise be related to the
foregoing duties or as may be established from time to time by the Board of
Directors.
Each Committee, other than the Executive Committee, Audit Committee and
Compensation Committee, except as otherwise provided in this section, shall have
and may exercise such powers
<PAGE>
of the Board of Directors as may be provided by resolution or resolutions of the
Board of Directors. Neither the Executive Committee, the Audit Committee or the
Compensation Committee nor any such other Committee shall have the power or
authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors as provided in Section 151(a) of the General Corporation Law, fix
the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets
of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same
or any other class or classes of stock of the Corporation or fix the number
of shares of any series of stock or authorize the increase or decrease of
the shares of any series);
(b) to adopt an agreement of merger or consolidation;
(c) to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the Corporation
or a revocation of dissolution; or
(e) to amend the By-Laws of the Corporation. [Section 141(c).]
Section 3.03. PROCEEDINGS. The Chairman of each Committee shall be
designated by the Board of Directors. Each Committee may fix its own rules of
procedure and may meet at such place (within or without the State of Delaware),
at such time and upon such notice, if any, as it shall determine from time to
time or as may be required by the Board of Directors. Each Committee shall keep
minutes of its proceedings and shall report such proceedings to the Board of
Directors at the meeting of the Board of Directors next following any such
proceedings.
Section 3.04. QUORUM AND MANNER OF ACTING. Except as may be otherwise
provided in the resolution creating such Committee, at all meetings of any
Committee the presence of members (or
<PAGE>
alternate members) constituting a majority of the total authorized membership of
such Committee shall constitute a quorum for the transaction of business. The
act of the majority of the members present at any meeting at which a quorum is
present shall be the act of such Committee. Any action required or permitted to
be taken at any meeting of any such Committee may be taken without a meeting, if
all members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee. The members of any such Committee shall act only as a Committee, and
the individual members of such Committee shall have no power as such. [Section
141(c), (f).]
Section 3.05. ACTION BY TELEPHONIC COMMUNICATIONS. Except as otherwise
provided by the applicable Committee or by the Board of Directors, members of
any Committee may participate in a meeting of such 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 provision shall constitute presence in person at such
meeting. [Section 141(i).]
Section 3.06. ABSENT OR DISQUALIFIED MEMBERS. In the absence or
disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another qualified member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. [Section 141(c).]
Section 3.07. RESIGNATIONS. Any member (and any alternate member) of any
Committee may resign at any time by delivering a written notice of resignation,
signed by such member, to the Chairman or the Chief Executive Officer. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 3.08. REMOVAL. Any member (and any alternate member) of any
Committee may be removed from his or her position as a member (or alternate
member, as the case may be) of such Committee at any time, either for or without
cause, by the Board of Directors.
Section 3.09. VACANCIES. If any vacancy shall occur in any
<PAGE>
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members (and any alternate members) shall continue to
act, and any such vacancy may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall be a Chairman
of the Board, a President, a Secretary, a Treasurer and such other officers as
the Board of Directors may appoint, including one or more Vice Presidents and
one or more Assistant Secretaries and Assistant Treasurers, who shall exercise
such powers and perform such duties and have such titles as shall be determined
from time to time by the Board of Directors or as otherwise provided in the
By-Laws. The Board of Directors shall designate an officer to be the Chief
Executive Officer of the Corporation and may designate any officer to be the
Chief Operating Officer or Chief Financial Officer of the Corporation. Any
number of offices may be held by the same person unless the Certificate of
Incorporation or these By-Laws provide otherwise. [Section 142 (a) , (b).]
Section 4.02. ELECTION. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the Board
of Directors. Each officer shall hold office until his or her successor has
been elected and qualified, or until his or her earlier death, resignation or
removal. [Section 142(b).]
Section 4.03. SALARIES. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors, the Chief Executive
Officer or such other persons to whom the authority to fix such salaries shall
be delegated by the Board of Directors or the Chief Executive Officer. No
officer shall be prevented from receiving a salary or other compensation by
reason of the fact that the officer is also a director of the Corporation.
<PAGE>
Section 4.04. REMOVAL AND RESIGNATION; VACANCIES. Any officer may be
removed for or without cause at any time by the Board of Directors or by the
Chief Executive Officer. Any officer may resign at any time by delivering a
written notice of resignation, signed by such officer, to the Board of Directors
or the Chief Executive Officer. Unless otherwise specified therein, such
resignation shall take effect upon delivery. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise, shall be
filled by the Board of Directors or by the Chief Executive Officer. [Section
142(b), (e).]
Section 4.05. AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law. [Section 142(a).]
Section 4.06. CHAIRMAN. The Chairman shall preside at all meetings of the
stockholders and the Board of Directors and shall exercise such powers and
perform such other duties as shall be determined from time to time by the Board
of Directors.
Section 4.07. PRESIDENT. The President shall have general supervision
over the business of the Corporation, subject, however, to the control of the
Board of Directors, any duly authorized Committee designated by the Board of
Directors and the Chief Executive Officer (if not the President). The President
may sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments except in cases in which the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the Corporation or shall be
required by statute otherwise to be signed or executed and, in general, the
President shall perform all duties incident to the office of President of a
corporation and such other duties as may from time to time be assigned to the
President by the Board of Directors and the Chief Executive Officer (if not the
President).
Section 4.08. VICE PRESIDENTS. At the request of the Chief Executive
Officer, or, in the Chief Executive Officer's absence, at the request of the
Board of Directors, the Vice Presidents shall (in such order as may be
designated by the Chief Executive
<PAGE>
Officer or the Board of Directors or, in the absence of any such designation,
the most senior Vice President based on title) perform all of the duties of the
President and, in so performing, shall have all the powers of, and be subject to
all restrictions upon, the President. Any Vice President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments, except in cases in which the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these By-Laws to some other
officer or agent of the Corporation, or shall be required by statute otherwise
to be signed or executed, and each Vice President shall perform such other
duties as from time to time may be assigned to such Vice President by the Board
of Directors or by the Chief Executive Officer.
Section 4.09. SECRETARY. The Secretary shall attend all meetings of the
stockholders and the Board of Directors and shall record all the proceedings of
such meetings in a book or books to be kept for that purpose, and shall perform
like duties for the Committees of the Board of Directors, when required. The
Secretary shall give, or cause to be given, all notices to be given in
accordance with these By-Laws or as required by law and shall perform such other
duties as may be prescribed by the Board of Directors or by the Chief Executive
Officer. The Secretary or an Assistant Secretary, if any, may attest all
instruments signed by the Chairman, the Chief Executive Officer, the President,
any Vice President or any other authorized officers of the Corporation. The
Secretary shall have charge of the stock books and ledgers of the Corporation
and all the books, records and papers of the Corporation relating to its
organization and management, shall see that the reports, statements and other
documents required by statute are properly kept and filed and, in general, shall
perform all duties incident to the office of Secretary of a corporation and such
other duties as may from time to time be assigned to the Secretary by the Board
of Directors or by the Chief Executive Officer.
4.10. TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors, the Chief Executive Officer, the Treasurer or by any person to
whom such power to
<PAGE>
designate is delegated by the Board of Directors, the Chief Executive Officer or
the Treasurer; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositories of the Corporation signed in
such manner as shall be determined by the Board of Directors or the Chief
Executive Officer and be responsible for the accuracy of the amounts of all
moneys so disbursed; regularly enter or cause to be entered in books or other
records maintained for the purpose full and adequate account of all moneys
received or paid for the account of the Corporation; have the right to require
from time to time reports or statements giving such information as the Treasurer
may desire with respect to any and all financial transactions of the Corporation
from the officers or agents transacting the same; render to the Chief Executive
Officer or the Board of Directors, whenever the Chief Executive Officer or the
Board of Directors shall require the Treasurer so to do, an account of the
financial condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account to
any of the directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board of Directors and the Chief Executive Officer; and, in
general, perform all duties incident to the office of Treasurer of a corporation
and such other duties as may from time to time be assigned to the Treasurer by
the Board of Directors or the Chief Executive Officer.
Section 4.11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board of Directors or by the Chief Executive Officer.
Section 4.12. SECURITY. The Board of Directors may require any officer,
agent or employee of the Corporation to provide security for the faithful
performance of his or her duties, in such amount and of such character as may be
determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. CERTIFICATES OF STOCK; UNCERTIFICATED SHARES.
<PAGE>
The shares of the Corporation shall be represented by certificates, provided
that the Board of Directors may provide by resolution or resolutions that some
or all of any or all classes or series of the stock of the Corporation shall be
uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until each certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock in the Corporation represented by certificates
and upon request every holder of uncertificated shares shall be entitled to have
a certificate signed by, or in the name of the Corporation, by the Chairman, the
President or a Vice President, and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, representing the number of shares
registered in certificate form. Such certificate shall be in such form as the
Board of Directors may determine, to the extent consistent with applicable law,
the Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. SIGNATURES; FACSIMILE. All of such signatures on the
certificate referred to in Section 5.01 of these By-Laws may be a facsimile,
engraved or printed, to the extent permitted by law. 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 or she were such officer, transfer
agent or registrar at the date of issue. [Section 158.]
Section 5.03. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of proof
satisfactory to the Board of Directors of such loss, theft or destruction. The
Board of Directors may require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise such loss, theft or
destruction in such manner as the Board of Directors may require and 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 any such new certificate. [Section 167.]
<PAGE>
Section 5.04. TRANSFER OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed or
accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Subject to the provisions of the Certificate of Incorporation and these By-Laws,
the Board of Directors may prescribe such additional rules and regulations as it
may deem appropriate relating to the issue, transfer and registration of shares
of the Corporation. [Section 151(f).]
Section 5.05. RECORD DATE. In order to determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date on which the resolution fixing the
record date is adopted by the Board of Directors, and which shall not be more
than sixty nor less than ten days before the date of such meeting. 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.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
of the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto. [Section 213.]
Section 5.06. REGISTERED STOCKHOLDERS. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to
<PAGE>
exercise all the rights and powers of the owner of the shares represented by
such certificate, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any other
person, whether or not the Corporation shall have notice of such claim or
interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for transfer
or uncertificated shares are requested to be transferred, both the transferor
and transferee request the Corporation to do so. [Section 159.]
Section 5.07. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars.
ARTICLE VI
INDEMNIFICATION
Section 6.01. NATURE OF INDEMNITY. The Corporation shall 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, by reason of the fact that he or she
is or was or has agreed to become a director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he or she is or was or has agreed to become an employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an 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 or her or on his or her behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
or she (X) acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the
<PAGE>
Corporation and, in the case of any such employee or agent, in a manner he or
she reasonably believed to be not in violation of any policies or directives of
the Corporation, and (Y) with respect to any criminal action or proceeding had
no reasonable cause to believe his or her conduct was unlawful; except that in
the case of an action or suit by or in the right of the Corporation to procure a
judgment in its favor (I) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (II) no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper. The indemnification
under this Section 6.01 shall apply to all directors and officers of the
Corporation who sit on the boards of directors of non-profit corporations in
keeping with the Corporation's philosophy.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 6.02. SUCCESSFUL DEFENSE. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
6.01 of these By-Laws or in defense of any claim, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a director or officer of the Corporation under Section 6.01
of these By-Laws (unless ordered by a court)
<PAGE>
shall be made by the Corporation unless a determination is made that
indemnification of the director or officer is not proper in the circumstances
because he or she has not met the applicable standard of conduct set forth in
Section 6.01 of these By-Laws. Any indemnification of an employee or agent of
the Corporation under Section 6.01 of these By-Laws (unless ordered by a court)
may be made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any
such determination shall be made (I) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a quorum,
or (II) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (III) by the stockholders.
Section 6.04. ADVANCE PAYMENT OF EXPENSES. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized in this
Article. Such expenses (including attorneys' fees) incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors deems appropriate. The Board of Directors may authorize the
Corporation's counsel to represent such director, officer, employee or agent in
any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the Corporation under Sections
6.01 and 6.02 of these By-Laws, or advance of costs, charges and expenses to a
director or officer under Section 6.04 of these By-Laws, shall be made promptly,
and in any event within thirty days, upon the written request of the director or
officer. If a determination by the Corporation that the director or officer is
entitled to indemnification pursuant to this Article is required, and the
Corporation fails to respond within sixty days to a written request for
indemnity, the Corporation shall be deemed to have approved such request. If
the Corporation denies a written request for indemnity or
<PAGE>
advancement of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty days, the right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for the advance of costs, charges and
expenses under Section 6.04 of these By-Laws where the required undertaking, if
any, has been received by or tendered to the Corporation) that the claimant has
not met the standard of conduct set forth in Section 6.01 of these By-Laws, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and 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 has met the applicable standard of conduct set
forth in Section 6.01 of these By-Laws, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and 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.
Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the General Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his
<PAGE>
or her official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 6.07. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her or on his or her behalf in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article, provided that such insurance is available
on acceptable terms, which determination shall be made by a vote of a majority
of the entire Board of Directors.
Section 6.08. SEVERABILITY. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01. DIVIDENDS. Subject to any applicable provisions of law and
the Certificate of Incorporation, dividends upon the shares of the Corporation
may be declared by the Board of Directors at any regular or special meeting of
the Board of Directors and any such dividend may be paid in cash, property, or
shares of the Corporation's capital stock.
<PAGE>
A member of the Board of Directors, or a member of any Committee designated
by the Board of Directors shall be fully protected in relying in good faith upon
the records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of its officers or employees, or
Committees of the Board of Directors, or by any other person as to matters the
director reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Corporation, as to the value and amount of the assets, liabilities and/or
net profits of the Corporation, or any other facts pertinent to the existence
and amount of surplus or other funds from which dividends might properly be
declared and paid. [Sections 172, 173.]
Section 7.02. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies or for repairing or maintaining any property of
the Corporation or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
similarly modify or abolish any such reserve. [Section 171.]
Section 7.03. EXECUTION OF INSTRUMENTS. The Board of Directors, except as
otherwise provided in these By-Laws, may prospectively or retroactively
authorize any officer or officers, employee or employees or agent or agents, in
the name and on behalf of the Corporation, to enter into any contract or
agreement or execute and deliver any instrument, including checks, drafts and
other orders for the payment of moneys out of the funds of the Corporation,
promissory notes, bonds or other evidences of indebtedness of the Corporation,
endorsements, assignments, transfers, stock powers or other instruments of
transfer of stock or other securities belonging to and/or standing in the name
of the Corporation, and any other documents requiring the execution by or in the
name of the Corporation, and any such authority may be general or confined to
specific instances, or otherwise limited.
Section 7.04. CORPORATE INDEBTEDNESS. The Board of Directors may
prospectively or retroactively authorize the Chief Executive Officer or any
other officer, employee or agent of the Corporation to effect loans and advances
at any time for the
<PAGE>
Corporation from any banks, trust company or other institution, or from any
firm, corporation or individual, and, when authorized by the Board of Directors
so to do, may pledge and hypothecate or transfer any securities or other
property of the Corporation as security for any such loans or advances. Such
authority conferred by the Board of Directors may be general or confined to
specific instances, or otherwise limited.
Section 7.05. FISCAL YEAR. The Board of Directors may determine the
fiscal year of the Corporation and may from time to time change the same.
Section 7.06. SEAL. The seal of the Corporation shall be circular in form
and shall contain the name of the Corporation, the year of its incorporation
and the words "Corporate Seal" and "Delaware". The form of such seal shall be
subject to alteration by the Board of Directors. The seal may be used by
causing it or a facsimile thereof to be impressed, affixed or reproduced, or may
be used in any other lawful manner.
Section 7.07. BOOKS AND RECORDS; INSPECTION. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may be
determined from time to time by the Board of Directors. Subject to the General
Corporation Law, the Board of Directors from time to time may determine whether,
to what extent, at what times and places, and under what conditions and
regulations, the accounts, books and papers of the Corporation, or any of them,
shall be open to the inspection of stockholders; and no stockholder shall have
any right to inspect any account, book or paper of the Corporation except as
expressly conferred by the General Corporation Law or authorized by the Board of
Directors.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Section 8.01. AMENDMENT. Subject to the provisions of the Certificate of
Incorporation, these By-Laws may be amended, altered or repealed:
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board
<PAGE>
of Directors if, in the case of such special meeting only, notice of such
amendment, alteration or repeal is contained in the notice or waiver of
notice of such meeting; or
(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is contained in the notice or waiver of notice of such meeting.
[Section 109(a).]
ARTICLE IX
CONSTRUCTION
Section 9.01. CONSTRUCTION. Whenever in these By-Laws references are made
to the Certificate of Incorporation, such references shall be deemed to be
references to the Certificate of Incorporation, as the same, at the time of the
adoption of these By-Laws, may have been amended and as the same, subsequent to
such time, may be amended; and wherever in these By-Laws references are made to
the By-Laws of the Corporation, such references shall be deemed to be references
to these By-Laws, and to the same as they from time to time may be amended.
Wherever in these By-Laws references are made to the General Corporation Law,
such references shall be deemed to be references to the General Corporation Law
of the State of Delaware.
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