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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-7667
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SANTA FE SNYDER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2722169
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
840 GESSNER, SUITE 1400
HOUSTON, TEXAS 77024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 507-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 [ ]
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
CLASS OUTSTANDING AS OF APRIL 28, 2000
Common stock, $.01 par value 182,301,574
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<PAGE>
SANTA FE SNYDER CORPORATION
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statement of Operations (Unaudited) --
Three Months Ended March 31, 2000 and 1999 ..................... 3
Consolidated Balance Sheet --
March 31, 2000 (Unaudited) and December 31, 1999 ............... 4
Consolidated Statement of Cash Flows (Unaudited) --
Three Months Ended March 31, 2000 and 1999 ..................... 5
Consolidated Statement of Comprehensive Income (Unaudited) --
Three Months Ended March 31, 2000 and 1999 ..................... 6
Notes to Consolidated Financial Statements ....................... 7
Management's Discussion and Analysis of Financial
ITEM 2. Condition and Results of Operations ............................ 12
ITEM 3. Quantitative and Qualitative Disclosures about Market Risks ...... 16
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K ................................. 18
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SANTA FE SNYDER CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In Millions of Dollars, except as noted)
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Revenues
Crude oil and liquids .......................... $ 124.5 $ 43.1
Natural gas .................................... 77.5 24.8
Other .......................................... -- .3
------- -------
202.0 68.2
------- -------
Costs and Expenses
Production costs ............................... 41.9 28.3
Production and other taxes ..................... 11.4 3.5
Exploration .................................... 10.1 11.2
Depletion, depreciation and
amortization ................................ 68.9 31.9
General and administrative ..................... 7.1 5.4
Loss (gain) on disposition of
assets ...................................... (.2) .1
------- -------
139.2 80.4
------- -------
Income (Loss) from Operations .................... 62.8 (12.2)
Interest income ................................ .7 .4
Interest expense ............................... (15.0) (6.8)
Interest capitalized ........................... 1.5 1.3
------- -------
Income (Loss) Before Income Taxes ................ 50.0 (17.3)
Current income tax (expense)
benefit ..................................... (6.3) (.7)
Deferred income tax (expense)
benefit ..................................... (13.0) 5.9
------- -------
Net Income (Loss) ................................ $ 30.7 $ (12.1)
======= =======
Net Income (Loss) per Common Share
(in dollars)
Basic and diluted .............................. $ .17 $ (.12)
======= =======
Weighted Average Shares Outstanding
(in millions) .................................. 182.4 102.2
======= =======
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE>
SANTA FE SNYDER CORPORATION
CONSOLIDATED BALANCE SHEET
(In Millions of Dollars)
MARCH 31, DECEMBER 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
ASSETS (Unaudited)
Current Assets
Cash and cash equivalents .................... $ 11.1 $ 6.0
Accounts receivable .......................... 116.0 106.6
Inventories .................................. 24.4 25.5
Other current assets ......................... 52.3 35.0
-------- --------
203.8 173.1
-------- --------
Properties and Equipment, at cost
Oil and gas (successful efforts
method of accounting) ..................... 3,387.1 3,134.9
Other ........................................ 64.2 53.2
-------- --------
3,451.3 3,188.1
Accumulated depletion, depreciation,
amortization and impairment ............... (1,581.5) (1,531.0)
-------- --------
1,869.8 1,657.1
-------- --------
Other Assets ................................... 32.0 32.6
-------- --------
$2,105.6 $1,862.8
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable ............................. $ 169.1 $ 200.4
Income taxes payable ......................... 5.8 1.3
Interest payable ............................. 9.0 2.1
Other current liabilities .................... 30.1 36.1
-------- --------
214.0 239.9
-------- --------
Long-Term Debt ................................. 794.0 629.4
-------- --------
Deferred Revenues .............................. 166.5 104.8
-------- --------
Other Long-Term Obligations .................... 75.4 70.1
-------- --------
Deferred Income Taxes .......................... 90.5 77.4
-------- --------
Commitments and Contingencies (Note 6)
Shareholders' Equity
Common stock ................................. 1.8 1.8
Paid-in capital .............................. 1,247.3 1,247.4
Accumulated deficit .......................... (467.9) (498.5)
Accumulated other comprehensive income ....... 1.7 1.3
Treasury stock, at cost ...................... (16.6) (10.8)
Unamortized restricted stock awards .......... (1.1) --
-------- --------
765.2 741.2
-------- --------
$2,105.6 $1,862.8
======== ========
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE>
SANTA FE SNYDER CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions of Dollars)
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Operating Activities
Net income (loss) ............................... $ 30.7 $(12.1)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion, depreciation and
amortization ............................ 68.9 31.9
Deferred income taxes ...................... 13.0 (5.9)
Loss (gain) on disposition of
assets .................................. (.2) .1
Exploratory dry hole costs ................. .4 5.5
Other ...................................... 1.2 1.2
Changes in operating assets and
liabilities:
Decrease (increase) in
accounts receivable ..................... (9.4) (3.6)
Decrease (increase) in
inventories ............................. 1.1 .9
Increase (decrease) in
accounts payable ........................ (1.7) .9
Increase (decrease) in income
taxes payable ........................... 4.5 (.6)
Increase (decrease) in
interest payable ........................ 6.9 2.7
Increase (decrease) in
deferred revenues ....................... 61.7 .1
Change in other assets and
liabilities ............................. (22.3) 9.3
------ ------
Net cash provided by operating
activities ................................... 154.8 30.4
------ ------
Investing Activities
Capital expenditures ............................ (115.8) (61.7)
Acquisition of producing properties ............. (191.9) (.5)
Proceeds from disposition of assets ............. .4 .1
------ ------
Net cash used in investing
activities ................................... (307.3) (62.1)
------ ------
Financing Activities
Net change in long-term lines of
credit ....................................... 164.5 31.3
Treasury stock purchased ........................ (8.8) (.2)
Treasury stock reissued ......................... 1.9 --
------ ------
Net cash provided by financing
activities ................................... 157.6 31.1
------ ------
Net Increase (Decrease) in Cash and
Cash Equivalents ................................ 5.1 (.6)
Cash and cash equivalents at
beginning of period .......................... 6.0 12.1
------ ------
Cash and Cash Equivalents at End of
Period .......................................... $ 11.1 $ 11.5
====== ======
Supplemental Disclosure of Cash Flow
Information
Interest paid ................................... $ 7.9 $ 4.0
Income taxes paid ............................... $ 1.9 $ 1.7
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE>
SANTA FE SNYDER CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(In Millions of Dollars)
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Net Income (Loss) .................................. $30.7 $(12.1)
----- -----
Other Comprehensive Income
Unrealized holding gain on securities ............ .5 --
Deferred income taxes ............................ (.1) --
----- -----
.4 --
----- -----
Comprehensive Income (Loss) ........................ $31.1 $(12.1)
===== =====
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
SANTA FE SNYDER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. UNAUDITED INTERIM
FINANCIAL STATEMENTS. The unaudited interim consolidated financial statements
of Santa Fe Snyder Corporation ("Santa Fe Snyder" or the "Company") reflect,
in the opinion of management, all adjustments (consisting only of normal and
recurring adjustments) necessary to present fairly the Company's financial
position at March 31, 2000 and the Company's results of operations and cash
flows for the three-month periods ended March 31, 2000 and 1999. Interim period
results are not necessarily indicative of results of operations or cash flows
for a full-year period.
These unaudited interim consolidated financial statements and the notes thereto
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements of Santa Fe
Snyder and its subsidiaries include the accounts of all wholly owned
subsidiaries. Effective May 5, 1999, Snyder Oil Corporation ("Snyder Oil") was
merged with and into Santa Fe Energy Resources, Inc. ("Santa Fe Energy"), a
Delaware corporation, pursuant to an Agreement and Plan of Merger dated January
13, 1999 (the "Merger"). In connection with the Merger, Santa Fe amended its
Articles of Incorporation to change its name to Santa Fe Snyder Corporation. The
Merger was accounted for as a purchase. See Note 2 -- Merger with Snyder Oil
Corporation.
All significant intercompany accounts and transactions have been eliminated.
Certain amounts in prior periods have been reclassified to conform to the
current year's presentation.
PRICE RISK MANAGEMENT. The Company engages in price risk management activities
for non-trading purposes. Derivative financial instruments (primarily fixed
price swaps, collars and options) are utilized to hedge the impact of market
fluctuations on natural gas and crude oil market prices. Gains and losses on
derivative financial instruments are recognized in oil and gas revenues in the
period in which the hedged production is sold. Gains and losses on hedging
instruments that are closed prior to maturity are deferred and recognized in
earnings over the period the hedged production is sold. The cash flow impact of
hedging activities are reflected in Cash Provided by Operating Activities in the
Consolidated Statement of Cash Flows. See Note 6 -- Commitments and
Contingencies -- Oil and Gas Hedging.
EARNINGS PER SHARE. The computation of earnings per share is discussed in Note
3 -- Earnings Per Share.
USE OF ESTIMATES. The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires the Company to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
and the periods in which certain items of revenue and expense are included. The
Company's most significant financial estimates are related to the Company's
proved oil and gas reserves. Actual results may differ from such estimates.
COMPREHENSIVE INCOME. Comprehensive income is net income, plus certain other
items that are recorded directly to shareholders' equity.
NEW ACCOUNTING STANDARDS. Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"),
as amended by Statement of Financial Accounting Standards No. 137, is effective
for fiscal years beginning after June 15, 2000. The Company intends to implement
the provisions of SFAS 133 beginning January 1, 2001.
SFAS 133 requires all derivatives to be recognized in the balance sheet as
either assets or liabilities and measured at fair value. Derivatives that are
not hedges must be adjusted to fair value through income. If the derivative is a
hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in
7
<PAGE>
SANTA FE SNYDER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (Continued)
earnings. The Company has not yet determined the impact that the adoption of
SFAS 133 will have on its earnings, statement of financial position or cash
flows.
NOTE 2. MERGER WITH SNYDER OIL CORPORATION. Effective May 5, 1999, Snyder Oil
was merged with and into Santa Fe Energy pursuant to an Agreement and Plan of
Merger dated January 13, 1999. In the Merger each issued and outstanding share
of common stock of Snyder Oil was converted into 2.05 shares of common stock of
Santa Fe Snyder. The exchange ratio was determined through arm's length
negotiations between the parties. The Merger has been accounted for as a
purchase and the results of operations of the acquired company are included in
Santa Fe Snyder's results of operations effective May 1, 1999.
The allocation of the purchase price to specific assets was based on certain
estimates of fair values. At the time of the Merger the Company assumed or
accrued the following $19.4 million of costs which were capitalized: (i)
severance costs related to Snyder employees of $9.6 million; (ii) professional
fees of $5.7 million; (iii) provisions for certain lease obligations for
duplicate or unused facilities of $2.5 million; and (iv) other transition costs
of $1.6 million. Subsequently the Company increased the accruals for
professional fees and other transition costs by $0.3 million and $1.0 million,
respectively. At March 31, 2000, after deducting payments made, the Company's
accrued liabilities included $2.0 million with respect to severance costs and
$0.3 million of costs with respect to lease obligations for duplicate or unused
facilities.
The following unaudited proforma condensed income statement information has been
prepared to give effect to the Merger as if such transaction had occurred at the
beginning of the period presented. The historical results of operations have
been adjusted to reflect the difference between Snyder Oil's historical
depletion, depreciation and amortization and such expense calculated based on
the value allocated to the assets acquired in the Merger. The information
presented is not necessarily indicative of the results of future operations of
the merged companies.
THREE MONTHS ENDED
MARCH 31, 1999
- --------------------------------------------------------------------------------
HISTORICAL PROFORMA
- --------------------------------------------------------------------------------
(in millions of dollars, except per
share data)
Revenues .......................................... 68.2 98.9
Net loss .......................................... (12.1) (26.0)
Basic and diluted loss per share .................. (.12) (.15)
Weighted average shares outstanding (millions) .... 102.2 171.0
NOTE 3. EARNINGS PER SHARE. The following table sets forth the components of
the Company's basic and diluted earnings per share calculations:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
COMMON SHARES PER SHARE
NET INCOME (LOSS) OUTSTANDING AMOUNT
- -----------------------------------------------------------------------------------------------------
($/millions) (millions) (in dollars)
<S> <C> <C> <C>
Three Months Ended March 31, 2000
Basic ..................................... 30.7 182.4 0.17
Effect of dilutive stock options,
performance awards and
restricted stock grants ................. -- 2.3 --
----- ----- -----
Basic and diluted ......................... 30.7 184.7 0.17
===== ===== =====
Three Months Ended March 31, 1999
Basic and diluted ......................... (12.1) 102.2 (.12)
===== ===== =====
</TABLE>
The Company had 4.7 million and 6.7 million stock options outstanding at
March 31, 2000 and 1999, respectively, which were not included in the
computation of diluted earnings per share because the
8
<PAGE>
SANTA FE SNYDER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (Continued)
exercise price of these options was greater than the average market price of the
common shares. At March 31, 1999 the Company had 1.0 million outstanding stock
options and performance awards whose exercise price was less than the average
market price of the common shares. Since the Company reported a loss for the
three months ended March 31, 1999, the potential dilutive effects of such stock
options and performance awards were not included in the computation of diluted
earnings per share as they are antidilutive.
NOTE 4. INVESTMENTS. The Company's investment in SOCO International plc
("SOCO") is classified as an available-for-sale security and such investment
is reported at fair value, with unrealized gains and losses excluded from
earnings and reported in Comprehensive Income. The fair value of the Company's
investment in SOCO was $9.6 million at March 31, 2000 and at December 31, 1999
the fair value of such securities was $9.1 million. Accordingly, Comprehensive
Income for the three months ended March 31, 2000 includes an unrealized gain of
$0.5 million ($0.4 million after deducting $0.1 million in deferred income
taxes). The Company's investment in SOCO is included in Other Assets in the
Consolidated Balance Sheet.
NOTE 5. SEGMENT INFORMATION. The principal business of the Company consists of
the exploration, development and acquisition of oil and gas properties and the
production and sale of crude oil and liquids and natural gas. The Company has
determined that its reportable segments are those that are based on the
Company's method of internal reporting, which disaggregates its business by
geographic area. The Company's reportable segments are the United States,
Southeast Asia, South America, and West Africa.
The accounting policies of the segments are the same as those described in Note
1. The Company evaluates the performance of its segments and allocates resources
based principally on operating income or loss.
The following table presents information about the reported segments for the
three months ended March 31, 2000 and 1999. Other reconciling items include
other corporate income and expenses, hedging activities and overhead costs not
allocated to specific geographic areas. Asset information by reportable segment
is not presented because such information is not a factor used by management to
evaluate the performance of the segments.
<TABLE>
<CAPTION>
DEPLETION
DEPRECIATION
OPERATING INCOME (LOSS) AMORTIZATION GAIN (LOSS)
TOTAL INCOME BEFORE INCOME AND ON DISPOSITION OF
REVENUES (LOSS) TAXES IMPAIRMENT ASSETS
- ------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C>
2000
United States .................... 157.9 66.2 66.2 53.0 (.2)
Southeast Asia ................... 24.4 4.1 4.1 8.1 --
South America .................... 15.8 6.9 6.9 4.5 --
West Africa ...................... 10.1 2.5 2.5 2.1 --
Other reconciling items .......... (6.2) (16.9) (29.7) 1.2 --
------ ------ ------ ------ ------
202.0 62.8 50.0 68.9 (.2)
====== ====== ====== ====== ======
1999
United States .................... 40.8 (.5) (.5) 20.4 .1
Southeast Asia ................... 16.8 1.3 1.3 4.4 --
South America .................... 7.5 (1.0) (1.0) 4.2 --
West Africa ...................... 3.1 (4.2) (4.2) 1.2 --
Other reconciling items .......... -- (7.8) (12.9) 1.7 --
------ ------ ------ ------ ------
68.2 (12.2) (17.3) 31.9 .1
====== ====== ====== ====== ======
</TABLE>
9
<PAGE>
SANTA FE SNYDER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (Continued)
The information presented for Southeast Asia and South America includes the
following amounts for operations in Indonesia and Argentina, respectively, for
the three months ended March 31, 2000 and 1999:
INDONESIA ARGENTINA
- --------------------------------------------------------------------------------
2000 1999 2000 1999
- --------------------------------------------------------------------------------
(millions of dollars)
Total revenues ................................. 24.4 16.8 15.8 7.4
Operating income (loss) ........................ 6.4 3.3 7.3 (1.0)
Income (loss) before income taxes .............. 6.4 3.3 7.3 (1.0)
Depletion, depreciation, amortization
and impairment ............................... 7.9 4.3 4.4 4.2
NOTE 6. COMMITMENTS AND CONTINGENCIES. OIL AND GAS HEDGING. From time to time
the Company hedges a portion of its oil and gas sales to provide a certain
minimum level of cash flow from its sales of oil and gas. While the hedges are
generally intended to reduce the Company's exposure to declines in market price,
the Company's gain from increases in market price may be limited. The Company
uses various financial instruments whereby monthly settlements are based on
differences between the prices specified in the instruments and the settlement
prices of certain futures contracts quoted on the New York Mercantile Exchange
("NYMEX") or certain other indices. Generally, in instances where the
applicable settlement price is less than the price specified in the contract,
the Company receives a settlement based on the difference; in instances where
the applicable settlement price is higher than the specified price, the Company
pays an amount based on the difference. The instruments utilized by the Company
differ from futures contracts in that there is no contractual obligation which
requires or allows for the future delivery of the product. Gains or losses on
hedging activities are recognized in oil and gas revenues in the period in which
the hedged production is sold.
Crude oil sales hedges resulted in a $6.2 million decrease in revenues in the
first three months of 2000. The Company had no open crude oil sales hedges
during the first three months of 1999. At March 31, 2000, the Company had open
crude oil sales hedges based on NYMEX futures contracts on an average of 16,700
barrels per day through December 31, 2000. The hedges have an average floor of
approximately $20.00 per barrel and an average ceiling of approximately $25.00
per barrel. Based on the March 31, 2000 settlement price of the applicable NYMEX
futures contracts, the Company's unrealized loss with respect to such hedges at
March 31, 2000 was $3.9 million. The actual gains or losses realized by the
Company from these hedges may vary significantly due to the volatility of the
futures markets and other indices.
The Company had no open natural gas sales hedges in the first three months of
2000 or 1999. In April 2000 the Company entered into natural gas sales hedges
for the period May 1, 2000 through October 31, 2000 on an average of 30,000
MMBtu per day based on NYMEX futures contracts and an average of 20,000 MMBtu
per day based on the Index of Colorado Interstate Gas, Rocky Mountains (the
"CIG Index"). The NYMEX hedges have an average floor of $3.00 per MMBtu and an
average ceiling of $3.28 per MMBtu and the CIG Index hedges have an average
floor of $2.60 per MMBtu and an average ceiling of $2.87 per MMBtu.
The Company has a long-term gas swap agreement that was entered into by Snyder
Oil in 1994 to lock in the price difference between the Rocky Mountain and Henry
Hub prices on a portion of its Rocky Mountain gas production. The contract
covers 20,000 MMBtus per day through 2004. The long-term gas swap agreement
reduced natural gas revenues by $0.1 million in the first three months of 2000.
The unrealized gain with respect to the swap agreement at March 31, 2000 was
$0.5 million.
CRUDE OIL SALES CONTRACTS. In August 1999, the Company entered into a crude oil
forward sales contract under the terms of which the Company is to deliver a
total of 6.2 million barrels of crude oil to the purchaser, at specified monthly
volumes, during the period from October 1999 through August 2002. In
consideration the Company received a prepayment of $99.3 million, after
deducting arrangement and
10
<PAGE>
SANTA FE SNYDER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (Continued)
other related costs. In January 2000, the Company entered into a crude oil
forward sales contract under the terms of which the Company is to deliver a
total of 4.2 million barrels of crude oil to the purchaser, at specified monthly
volumes, during the period from February 2000 through August 2002. In
consideration the Company received a prepayment of $74.6 million, after
deducting arrangement and other related costs. The prepayments are recognized in
earnings when the crude oil is delivered. The balance of the prepayment related
to undelivered crude oil, $152.0 million at March 31, 2000, is reflected on the
consolidated balance sheet under the caption Deferred Revenues. Under the terms
of the contracts, the Company will deliver a total of 9.0 million barrels during
the period April 2000 through August 2002. The proceeds from the January 2000
contract were used to pay a portion of the purchase price of certain proved oil
and gas properties acquired in January 2000.
ENVIRONMENTAL REGULATION. The Company's oil and gas operations are subject to
stringent environmental regulation by government authorities. Such regulation
has increased the costs of planning, designing, drilling, installing, operating
and abandoning oil and gas wells and associated facilities. The Company has
expended significant financial and managerial resources to comply with such
regulations. Although the Company believes its operations and facilities are in
general compliance with applicable environmental regulations, the risk of
substantial costs and liabilities are inherent to oil and gas operations. It is
possible that other developments, such as increasingly strict environmental
laws, regulations and enforcement policies or claims for damages to property,
employees, other persons and the environment resulting from the Company's
operations, could result in significant costs and liabilities in the future. As
it has in the past, the Company intends to fund the future costs of
environmental compliance from operating cash flows.
OTHER MATTERS. There are other claims and actions, including certain
environmental matters, pending against the Company. In the opinion of
management, the amounts, if any, which may be awarded in connection with any of
these claims and actions could be significant to the results of operations or
cash flows of any period but are not believed to be material to the Company's
consolidated financial position.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Our U.S. core areas are the Gulf of Mexico, the Permian Basin and the Rocky
Mountains. Our international core areas are Southeast Asia and South America. We
also explore and produce in West Africa.
On May 5, 1999 Snyder Oil Corporation was merged with and into Santa Fe Energy
Resources, Inc. (the "Merger") and the Company's name was changed to Santa Fe
Snyder Corporation. The producing properties that we acquired in the Merger are
entirely located in the U.S., primarily in the Gulf of Mexico and the Rocky
Mountains. The Merger is described in the notes to the consolidated financial
statements. The Merger was accounted for as a purchase and the consolidated
interim financial statements include results of operations attributable to the
acquired Company with effect from May 1, 1999.
RESULTS OF OPERATIONS
The following table reflects the components of our oil and gas revenues:
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
OIL
SALES VOLUMES (MBBLS/DAY)
Domestic ................................... 38.8 21.4
Argentina .................................. 5.6 5.0
Indonesia .................................. 10.6 16.1
Gabon ...................................... 4.1 2.6
------ ------
59.1 45.1
====== ======
SALES PRICES ($/BBL)
Unhedged
Domestic ................................. 23.52 10.17
International ............................ 26.39 11.46
Total .................................... 24.51 10.85
Hedged ..................................... 23.35 10.85
REVENUES ($ MILLIONS)
Sales
Domestic ................................. 83.0 19.6
International ............................ 48.8 24.5
------ ------
131.8 44.1
Hedging .................................... (6.2) --
Net Profits Payments ....................... (1.1) (1.0)
------ ------
124.5 43.1
====== ======
(TABLE CONTINUED ON FOLLOWING PAGE)
12
<PAGE>
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
GAS
SALES VOLUMES (MMCF/DAY)
Domestic ................................... 360.1 155.0
Argentina .................................. 23.7 25.8
Indonesia .................................. .3 .2
------ ------
384.1 181.0
====== ======
SALES PRICES ($/MCF)
Unhedged
Domestic ................................. 2.35 1.66
International ............................ 1.20 1.20
Total .................................... 2.27 1.59
Hedged ..................................... 2.27 1.59
REVENUES ($ MILLIONS)
Sales
Domestic ................................. 76.9 23.1
International ............................ 2.6 2.8
------ ------
79.5 25.9
Hedging .................................... (.1) --
Net Profits Payments ....................... (1.9) (1.1)
------ ------
77.5 24.8
====== ======
The following table sets forth our revenues and costs and expenses on a BOE
basis:
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
(In Dollars Per BOE,
except as noted)
Production -- MMBOE ............................... 11.2 6.8
===== =====
Revenues .......................................... 18.03 10.06
----- -----
Production costs .................................. 3.74 4.17
Production and other taxes ........................ 1.02 .51
General and administrative ........................ .63 .80
Financing costs, net(a) ........................... 1.14 .76
----- -----
6.53 6.24
----- -----
Operating margin ............................. 11.50 3.82
Exploration ....................................... .90 1.66
DD&A .............................................. 6.15 4.71
Loss (gain) on disposition of assets .............. (.02) .01
----- -----
Pre-tax margin ............................... 4.47 (2.56)
===== =====
- ------------
a) Reflects interest expense less amounts capitalized and interest income.
13
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THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1999
Total revenues for the first quarter of 2000 of $202.0 million were 300% higher
than in the first quarter of 1999, reflecting higher prices and increased
production from the properties acquired in the Merger and other producing
property acquisitions. Oil prices increased over 200% to $23.35 per barrel in
2000 and gas prices increased 40% to $2.25 per Mcf in 2000. Oil production
increased 30%, to 59.1 MBbls per day in 2000, due to 11 MBbls per day from newly
acquired deepwater Gulf of Mexico properties. Gas production increased over
200%, to 384.1 MMcf per day in 2000, due to 188 MMcf per day from Rocky Mountain
and Gulf Coast properties acquired in the Merger. Realized oil prices for 2000
were reduced $1.16 per barrel by hedging losses. The Company did not hedge oil
or gas sales in 1999.
Costs and expenses increased from $80.4 million in 1999 to $139.2 million in
2000. Production costs and depletion, depreciation and amortization ("DD&A")
increased reflecting costs attributable to the new properties discussed above.
Production and other taxes increased due to increased production volumes and
sales prices. Exploration costs decreased $1.1 million in 2000, due to lower dry
hole costs. Interest expense increased $8.2 million reflecting increased
long-term debt associated with the Merger and producing propery acquisitions.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
Total revenues for the first quarter of 1999 of $68.2 million were slightly
lower than the first quarter of 1998 as higher oil production volumes were more
than offset by lower prices for oil and gas. Our oil production increased to
45.1 MBbls per day in 1999, due to new production in Indonesia, an increase in
our working interest in the Tuban field in Indonesia in April 1998 and a full
quarter's production from the Tchatamba field in Gabon. Oil sales prices
decreased 16% to $10.85 per barrel in 1999 and gas sales prices decreased 17% to
$1.59 per Mcf in 1999. Realized oil prices for 1998 included $0.09 per barrel of
hedging gains.
Costs and expenses increased from $74.1 million in the first quarter of 1998 to
$80.4 million in the first quarter of 1999. Production costs and DD&A increased
$3.0 million and $3.8 million, respectively, reflecting the increase in
production volumes. Interest income in 1998 includes a $1.9 million benefit
related to refunds on federal income tax audits. Interest expense increased $3.0
million in 1999 due to increased borrowings. Income taxes in 1998 includes a
$2.4 million benefit related to an income tax refund.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL EXPENDITURES. Our primary needs for cash are for exploration,
development and acquisition activities. We spent $307.7 million for capital
expenditures in the first quarter of 2000, including $191.9 million related to
the acquisition of producing oil and gas properties. In 2000 we expect to spend
approximately $340 million on exploration and development programs and
approximately $230 million on the acquisition of producing oil and gas
properties. Since the actual amounts expended in the future and the results
therefrom will be influenced by numerous factors, including many beyond our
control, no assurances can be given as to the amounts that will be expended. The
Board of Directors has authorized the purchase of up to $50 million of our
common stock to meet the requirements of outstanding stock options and to
satisfy the stock requirements of employee benefit plans. Through year-end 1999,
we purchased 2.9 million common shares for $23.6 million and in the first
quarter of 2000 we purchased an additional 1.2 million common shares for $8.8
million.
CAPITAL RESOURCES. Our principal capital resources in the first quarter of 2000
consisted of cash flow from operating activities of $154.8 million, which
included $74.6 million relating to a crude oil forward sale contract, and $164.5
million in borrowings under the Credit Facility.
At March 31, 2000 we had a $10.2 million working capital deficit compared to a
$66.8 million deficit at year-end. Current assets increased $30.7 million as
accounts receivable increased, reflecting higher sales prices, and other current
assets increased, reflecting higher prepaid items related to foreign operations.
Current liabilities decreased $25.9 million as accounts payable decreased $31.3
million with the payment of accrued amounts related to our drilling operations
in the fourth quarter of 1999.
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<PAGE>
At March 31, 2000 our long-term debt totaled $795.3 million, as follows:
o $482.0 million outstanding under the terms of a $600.0 million credit
facility (the "Credit Facility"). At March 31 there were also three
letters of credit for $26.4 million outstanding under the terms of the
Credit Facility. The weighted average interest rate under the Credit
Facility during the first quarter of 2000 was 6.8%.
o $175.0 million of 8.75% Senior Subordinated Notes due 2007 (the
"Subordinated Notes").
o $125.0 million of 8.05% Senior Notes due 2004 (the "Senior Notes").
o $13.3 million outstanding under the terms of $30 million in working
capital lines of credit.
Amounts outstanding under the above lines of credit are classified as long-term
on the balance sheet since we have the ability and intend to refinance on a
long-term basis.
The Credit Facility and the indentures for the Subordinated Notes and the Senior
Notes include covenants that restrict our ability to take certain actions,
including the ability to incur additional indebtedness and to pay dividends or
repurchase capital stock. Under the most restrictive of these covenants, at
March 31, 2000 we could incur $864 million of additional indebtedness, of which
$92 million could be borrowed under the Credit Facility, and could pay dividends
and/or repurchase common stock of up to $125 million.
The fair value of our long-term debt on March 31, 2000 was $786.4 million. The
fair value of the Subordinated Notes and the Senior Notes is based on market
prices and the fair value of our floating-rate debt is assumed to equal carrying
value. This fair value is not representative of the amount that could be
realized or settled and does not consider tax consequences, if any, of
realization or settlement.
In June 1999 we filed a shelf registration statement with the Securities and
Exchange Commission under which, for a period of two years, we may sell
different types of securities in one or more offerings up to a total amount of
$500 million. To date we have issued the $125 million of Senior Notes and sold
12.6 million shares of common stock in a public offering for $114.6 million
under the shelf registration.
In January 2000 we increased our working interest in two recently acquired
offshore Gulf of Mexico fields by purchasing Marathon Oil Company's working
interest for $160.0 million. To finance a portion of this acquisition, we
entered into an oil forward sales contract whereby we will deliver a total of
4.2 million barrels of oil to the purchaser, at specified monthly volumes,
during the period from February 2000 through August 2002. In consideration, we
received a prepaid amount of $74.6 million, after deducting arrangement and
other related costs. The balance of the prepayment related to undelivered oil is
shown on the consolidated balance sheet under the caption Deferred Revenues. The
remainder of the purchase price was paid utilizing the Credit Facility.
In April 2000 Standard & Poor's Credit Rating Agency upgraded our senior
unsecured debt to BBB-, an investment grade rating. As a result of the upgrade
and our improved debt ratios, we estimate savings of $2.5 million this year in
interest costs on the Credit Facility.
Historically we have funded our operations and investment programs with cash
flow from operations, borrowings under credit facilities, public debt, equity
offerings and forward sales of production. We believe we will be able to fund
our anticipated capital requirements for 2000 from the same or similar sources.
ENVIRONMENTAL MATTERS. Almost all phases of our oil and gas operations are
subject to stringent environmental regulation by governmental authorities. These
regulations have increased the costs of planning, designing, drilling,
installing, operating and abandoning oil and gas wells and other facilities. We
have expended significant financial and managerial resources to comply with
these regulations and believe our operations and facilities are in general
compliance with applicable environmental regulations. However, risks of
substantial costs and liabilities are inherent in oil and gas operations. It is
possible that other developments, such as increasingly strict environmental
laws, regulations and enforcement policies or claims for damages to property,
employees, other persons and the environment resulting from our operations,
could result in significant costs and liabilities in the future. As we have done
in the past, we intend to fund the cost of environmental compliance from
operating cash flows.
15
<PAGE>
DIVIDENDS. The determination of the amount of future cash dividends, if any, to
be declared and paid on our common stock is at the sole discretion of our Board
of Directors and is dependent on financial condition, earnings and available
funds from operations, level of capital and exploration expenditures, dividend
restrictions as set forth in financing agreements, future business prospects and
other matters that our Board deems relevant.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to market risk, which includes adverse changes in commodity
prices and interest rates as discussed below.
COMMODITY PRICE RISK
We sell the majority of our oil and gas on a monthly basis at prices based on
NYMEX or other indices. As a result, our financial results can be materially
affected as these commodity prices fluctuate widely in response to changing
market factors. Oil prices are subject to significant changes in response to the
world political situation as it affects OPEC and other producing countries and
to fluctuations in the domestic and world supply and demand and other market
conditions. In 1999 our average unhedged oil sales price ranged from a low of
$10.85 per barrel in the first quarter to a high of $21.70 per barrel in the
fourth quarter. In the first quarter of 2000 our average unhedged oil sales
price was $24.51 per barrel. The price of gas fluctuates due to weather
conditions, the level of gas in storage, the relative balance between supply and
demand and other economic factors. Our average unhedged sales price for gas in
1999 ranged from a low of $1.59 per Mcf in the first quarter to a high of $2.36
per Mcf in the third quarter. In the first quarter of 2000 our average unhedged
gas sales price was $2.27 per Mcf.
Based on operating results for the first quarter of 2000, we estimate that a
$1.00 per barrel change in our average oil sales price would result in a
corresponding $14.2 million change in net income and a $19.2 million change in
cash flow from operating activities. A $0.10 per Mcf change in our average gas
sales price would result in a corresponding $8.5 million change in net income
and an $12.6 million change in cash flow from operating activities. These
estimates do not give effect to other factors that might result from a change in
prices.
From time to time we hedge a portion of our oil and gas sales to provide a
certain minimum level of cash flow. While the hedges are generally intended to
reduce our exposure to declines in market price, our gain from increases in
market price may be limited. We use various financial instruments whereby
monthly settlements are based on differences between the prices specified in the
instruments and the settlement prices of certain futures contracts quoted on the
New York Mercantile Exchange ("NYMEX") or certain other indices. The
instruments we utilize differ from futures contracts in that there is no
contractual obligation which requires or allows for the future delivery of the
product. Gains or losses on hedging activities are recognized in oil and gas
revenues in the period in which the hedged production is sold.
Oil sales hedges resulted in a $6.2 million decrease in revenues in the first
quarter of 2000. At March 31, 2000 we had open oil sales hedges based on NYMEX
futures contracts on an average of 16,700 barrels per day through December 31,
2000. The hedges have an average floor of approximately $20.00 per barrel and an
average ceiling of approximately $25.00 per barrel. Based on the March 31, 2000
settlement price of the applicable NYMEX futures contracts, our unrealized loss
with respect to such hedges at March 31, 2000 was $3.9 million. The actual gains
or losses realized from these hedges may vary significantly due to the
volatility of the futures markets and other indices.
In addition to oil sales hedges, we entered into two forward sales contracts in
August 1999 and January 2000 which cover approximately 9.6 million barrels of
our oil production during the period from February 2000 until August 2002. In
consideration, we received prepayments totaling $173.9 million, after deducting
arrangement and other related costs.
We had no gas sales hedges in the first quarter of 2000. In April 2000 we
entered into natural gas sales hedges for the period May 1, 2000 through October
31, 2000 on an average of 30,000 MMBtu per day based on NYMEX futures contracts
and an average of 20,000 MMBtu per day based on the Index for Colorado
Interstate Gas, Rocky Mountains (the "CIG Index"). The NYMEX hedges have an
average
16
<PAGE>
floor of $3.00 per MMBtu and an average ceiling of $3.28 per MMBtu and the CIG
Index hedges have an average floor of $2.60 per MMBtu and an average ceiling of
$2.87 per MMBtu.
We have a long-term gas swap agreement that was entered into by Snyder Oil in
1994 to lock in the price difference between the Rocky Mountain and Henry Hub
prices on 20,000 MMBtu per day of Rocky Mountain gas production through 2004.
The gas swap agreement reduced gas revenues by $0.1 million in the first quarter
of 2000. The unrealized gain with respect to the gas swap agreement at March 31,
2000 was $0.5 million.
INTEREST RATE RISK
Our exposure to changes in interest rates primarily results from our short-term
and long-term debt with both fixed and floating interest rates. To date, we have
not entered into any financial instruments such as interest rate swaps.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), as amended by Statement of
Financial Accounting Standards No. 137, is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. We intend to implement the
provisions of SFAS 133 beginning January 1, 2001.
SFAS 133 requires all derivatives to be recognized in the balance sheet as
either assets or liabilities and measured at fair value. Derivatives that are
not hedges must be adjusted to fair value through income. If the derivative is a
hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. We have not yet determined the impact that the adoption
of SFAS 133 will have on earnings, financial position or cash flows.
RISK FACTORS AND CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference certain statements (other than
statements of historical fact) that constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. When used herein, the words "budget,"
"budgeted," "anticipates," "expects," "believes," "seeks,"
"estimates," "intends" or "projects" and similar expressions are intended
to identify forward-looking statements. Where any forward-looking statement
includes a statement of the assumptions or bases underlying such forward-looking
statement, we caution that while we believe these assumptions or bases to be
reasonable and to be made in good faith, assumed facts or bases almost always
vary from actual results and the difference between assumed facts or bases and
actual results could be material, depending on the circumstances. It is
important to note that our actual results could differ materially from those
projected by such forward-looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable and
such forward-looking statements are based upon the best data available at the
time this report is filed with the Securities and Exchange Commission, we cannot
assure you that such expectations will prove correct. Factors that could cause
our results to differ materially from the results discussed in such
forward-looking statements include, but are not limited to, the following:
production variances from expectations, volatility of oil and gas prices,
hedging results, the need to develop and replace reserves, the substantial
capital expenditures required to fund operations, exploration risks,
environmental risks, uncertainties about estimates of reserves, competition,
litigation, government regulation, political risks, and our ability to implement
our business strategy. All such forward-looking statements in this document are
expressly qualified in their entirety by the cautionary statements in this
paragraph.
For a discussion of important factors that could cause actual results to differ
materially from those expressed in any forward-looking statement made by us or
on our behalf, see "Risk Factors and Cautionary Statement for Purposes of the
Safe Harbor Provisions of the Private Securities Lithigation Reform Act of
1995" in the Company's 1999 Annual Report on Form 10-K.
17
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1, 2, 3, 4 & 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(a) -- Bylaws of Santa Fe Snyder Corporation, as amended March 9, 2000.
(b) Reports on Form 8-K
None
18
<PAGE>
SIGNATURE
Pursuant to the requirements Section 13 or 15 (d) of the Securities Exchange Act
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 10th day of May, 2000.
SANTA FE SNYDER CORPORATION
(REGISTRANT)
/s/ MARK A. JACKSON
---------------------------------
MARK A. JACKSON
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER AND
DULY AUTHORIZED OFFICER)
Date: May 10, 2000
19
EXHIBIT 3.A
As amended by the Board of Directors on
April 20,1990, February 26, 1993, February 23, September 1, 1998,
May 5, 1999, June 30, 1999 and March 9, 2000
SANTA FE SNYDER CORPORATION
BYLAWS
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL OFFICE. The principal office of the
Corporation shall be in the City of Houston, Texas.
SECTION 1.2 REGISTERED OFFICE. The registered office and registered
agent of the Corporation required to be maintained in the State of Delaware by
the General Corporation Law of the State of Delaware shall be as designated from
time to time by the appropriate filing by the Corporation in the office of the
Secretary of State of the State of Delaware.
SECTION 1.3 OTHER OFFICES. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1 ANNUAL MEETING. The annual meeting of the holders of
shares of each class or series of stock as are entitled to notice thereof and to
vote thereat pursuant to applicable law and the Certificate of Incorporation for
the purpose of electing directors and transacting such other proper business as
may come before it shall be held in each year, at such time, on such day and at
such place, within or without the State of Delaware, as may be designated by the
Board of Directors.
<PAGE>
SECTION 2.2 SPECIAL MEETINGS. In addition to such special meetings
as are provided by law or the Certificate of Incorporation, special meetings of
the holders of any class or series or of all classes or series of the
Corporation's stock for any purpose or purposes, may be called at any time by
the Board of Directors and may he held on such day, at such time and at such
place, within or without the State of Delaware, as shall be designated by the
Board of Directors. Stockholders of the Corporation may not call a special
meeting.
SECTION 2.3 NOTICE OF MEETINGS AND ADJOURNED MEETINGS. Except as
otherwise provided by law, written notice of any meeting of Stockholders shall
be given either by personal delivery or by mail to each Stockholder of record
entitled to vote thereat. Notice of each meeting shall be in such form as is
approved by the Board of Directors and shall state the date, place and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, such written
notice shall be given not less than 10 nor more than 60 days before the date of
the meeting. Except when a 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,
presence in person or by proxy of a Stockholder shall constitute a waiver of
notice of such meeting. Further, a written waiver of any notice required by law
or by these Bylaws, signed by the person entitled to notice, whether before or
after the time stated therein, shall be deemed equivalent to notice. Except as
otherwise provided by law, the business that may be transacted at any such
meeting shall be limited to and consist of the purpose or purposes stated in
such notice. If a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken; provided, however, that if the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each Stockholder of record entitled to vote at the meeting.
2
<PAGE>
SECTION 2.4 VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least 10 days
before each meeting of the Stockholders, a complete list of Stockholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of 10 days prior to such meeting, shall be kept
on file at a place within the city where the meeting is to he held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to he held, and such list shall be subject to
inspection by any Stockholders at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any Stockholder for the duration of
the meeting. The original stock transfer books shall he prima facie evidence as
to who are the Stockholders entitled to examine such list or transfer books or
to vote at any meeting of Stockholders.
SECTION 2.5 QUORUM. The holders of at least a majority of the shares
issued and outstanding and entitled to vote thereat, present at a meeting, shall
constitute a quorum at all meetings of stockholders for the transaction of
business, except as otherwise provided by law or by the Certificate of
Incorporation. If, however, such quorum shall not be present at any meeting of
the stockholders, the Chairman or the stockholders entitled to vote thereat and
present at the meeting, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting unless the
adjournment is for more than 30 days or if after the adjournment a new record
date is fixed for the adjourned meeting, until a quorum shall be present. A
holder of a share shall be treated as being present at a meeting if the holder
of such share is (i) present in person at the meeting or (ii) represented at the
meeting by a valid proxy, whether the instrument granting such proxy is marked
as casting a vote or abstaining, is left blank or does not empower such proxy to
vote with respect to some or all matters to he voted upon at the meeting.
SECTION 2.6 ORGANIZATION. Meetings of the Stockholders shall be
presided over by the Chairman of the Board of Directors, if one shall be
elected, or in his absence, by the Chief Executive Officer, the President or by
any Vice President, or in the absence of any of such officers, by a chairman to
be chosen by a majority of the Stockholders entitled to vote at the meeting who
are present in person or by proxy. The Secretary, or, in his absence, any
Assistant Secretary or any person appointed by the individual presiding over the
meeting, shall act as
3
<PAGE>
secretary at meetings of the Stockholders.
SECTION 2.7 VOTING. Each Stockholder of record, as determined
pursuant to Section 2.8, who is entitled to vote in accordance with the terms of
the Certificate of Incorporation and in accordance with the provisions of these
Bylaws, shall be entitled to one vote, in person or by proxy, for each share of
stock registered in his name on the books of the Corporation. Every Stockholder
entitled to vote at any Stockholders' meeting may authorize another person or
persons to act for him by a written proxy, which may be in the form of a
telegram, cablegram, or other means of electronic transmission, signed by the
Stockholder and executed not more than three years prior to the meeting, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
Stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the Stockholder or the
Stockholder's attorney-in-fact. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only so long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A Stockholder's
attendance at any meeting, when such Stockholder who may have theretofore given
a proxy, shall not have the effect of revoking such proxy unless such
Stockholder shall in writing so notify the Secretary of the meeting prior to the
voting of the proxy. Unless otherwise provided by law, no vote on the election
of directors or any question brought before the meeting need be by ballot unless
the chairman of the meeting shall determine that it shall be by ballot or the
holders of a majority of the shares of stock present in person or by proxy and
entitled to participate in such vote shall so demand. In a vote by ballot, each
ballot shall state the number of shares voted and the name of the Stockholder or
proxy voting. Action on a matter (other than the election of directors) shall be
approved if the votes cast in favor of the matter exceed the votes cast opposing
the matter.
Directors shall be elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting in which a quorum is
present. In the election of directors, votes may not be cumulated. In
determining the number of votes cast, shares abstaining from voting or not voted
on a matter (including elections) will not be treated as votes cast. The
provisions of this paragraph will govern with respect to all votes of
stockholders except as otherwise provided for in these Bylaws or in the
Certificate of Incorporation or by some specific statutory provision superseding
the provisions contained in these Bylaws or the Certificate of Incorporation.
4
<PAGE>
SECTION 2.8 STOCKHOLDERS ENTITLED TO VOTE. The Board of Directors
may fix a date not more than 60 days nor less than 10 days prior to the date of
entitled to notice of and to vote at such meeting and any adjournment thereof,
and in such case such Stockholders and only such Stockholders as shall be
Stockholders of record on the date so fixed shall be entitled to notice of and
to vote at, such meeting and any adjournment thereof notwithstanding any
transfer of any stock on the books of the Corporation after such record date
fixed as aforesaid.
SECTION 2.9 ORDER OF BUSINESS. The order of business at all meetings
of Stockholders shall be as determined by the chairman of the meeting or as is
otherwise determined by the vote of the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote without regard to class
or series at the meeting.
SECTION 2.10 ACTION BY WRITTEN CONSENT. No action required or
permitted to be taken by the Stockholders shall be taken except at an annual or
special meeting with prior notice and a vote. No action may be taken by the
Stockholders by written consent.
SECTION 2.11 NOTICE OF STOCKHOLDER NOMINEES. Only persons who are
nominated in accordance with the procedures set forth in this Section 2.11 shall
be eligible for election as directors of the Corporation. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of the Corporation's stockholders (a) by or at the direction of the
Board of Directors or (b) by any stockholder of the Corporation entitled to vote
for the election of directors at such meeting who complies with the procedures
set forth in this Section 2.11. All nominations by stockholders shall be made
pursuant to timely notice in proper written form to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 90 days nor more than 120 days prior to the meeting; provided,
however, that if less than 100 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on the
l0th day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. To be in proper written form, such
stockholder's notice to the Secretary shall set forth in writing (a) as to each
5
<PAGE>
person whom such stockholder proposes to nominate for election or reelection as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended; including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; and (b) as to such stockholder (i) the name and address, as
they appear on the Corporation's books, of such stockholder and (ii) the class
and number of shares of the Corporation's capital stock that are beneficially
owned by such stockholder. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director unless nominated in accordance with
the procedures set forth in these Bylaws of the Corporation. The chairman of the
stockholders' meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws of the Corporation, and if he shall so determine, he
shall announce such determination to the meeting and the defective nomination
shall be disregarded.
SECTION 2.12 STOCKHOLDER PROPOSALS. At any special meeting of the
Corporation's stockholders, only such business shall be conducted as shall have
been brought before the meeting by or at the direction of the Board of
Directors. At any annual meeting of the stockholders, only such business shall
be conducted as shall have been brought before the meeting (a) by or at the
direction of the Board of Directors or (b) by any stockholder who complies with
the procedures set forth in this Section 2.12. For business properly to be
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in proper written form to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
120 days from the date of the release of the Corporation's proxy statement
relating to the prior year's annual meeting of stockholders; provided, however,
in the event no annual meeting was held in the prior year or if the current
year's annual meeting shall be held
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more than 30 days prior to or after the date of the previous year's annual
meeting a stockholder's notice shall be timely if received by the Corporation
not later than the close of business on the 10th day following the day on which
such notice of the date of the Corporation's annual meeting was mailed or public
disclosure was made. To be in proper written form, such stockholder's notice to
the Secretary shall set forth in writing as to each matter such stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of such stockholder, (c) the class and
number of shares of the Corporation's stock which are beneficially owned by such
stockholder and (d) any material interest of such stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this Section 2.12. The chairman of an annual stockholder's meeting
shall, if the facts warrant, determine and declare to the meeting that business
was not properly brought before the meeting in accordance with the provisions of
this Section 2.12, and, if he should so determine, he shall so announce such
determination to the meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 2.13. DISCRETIONARY VOTING AUTHORITY ON PROXIES. To the
extent permitted in accordance with the Delaware General Corporation Law and
applicable securities laws proxies solicited by the Corporation in connection
with any annual or special meeting of stockholders may confer discretionary
authority to vote on any matters not timely known by the Corporation prior to
such meeting or, if so timely known, provided that the Corporation otherwise
complies with the requirements of securities laws applicable to discretionary
voting on such matter. The Corporation shall be deemed to have received timely
notice of a stockholder proposal to be presented at a stockholders' meeting if
the stockholder shall have furnished notice to the Corporation in accordance
with the requirements of Section 2.12 of these Bylaws and such stockholder
complies with the other applicable requirements of the securities laws.
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ARTICLE III
DIRECTORS
SECTION 3.1 MANAGEMENT. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all powers of the Corporation and do all lawful acts and
things as are not by law, by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the Stockholders.
SECTION 3.2 NUMBER AND TERM. The number of directors may be fixed
from time to time by resolution of the Board of Directors adopted by the
affirmative vote of a majority of the members of the entire Board of Directors,
but shall consist of not less than three nor more than 15 members, one-third of
whom shall be elected each year by the Stockholders except as provided in
Section 3.4. Directors need not be Stockholders. No decrease in the number of
directors shall have the effect of shortening the term of office of any
incumbent director.
SECTION 3.3 QUORUM AND MANNER OF ACTION. At all meetings of the
Board of Directors a majority of the total number of directors holding office
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law, by the Certificate of Incorporation or these
Bylaws. When the Board of Directors consists of one director, the one director
shall constitute a majority and a quorum. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at such
adjourned meeting. Attendance by a director at a meeting shall constitute a
waiver of notice of such meeting except where a director 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
SECTION 3.4 VACANCIES. Except as otherwise provided by law and the
Certificate of Incorporation, in the case of any increase in the authorized
number of
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directors or of any vacancy in the Board of Directors, however created, the
additional director or directors may be elected, or, as the case may be, the
vacancy or vacancies may he filled by majority vote of the directors remaining
on the whole Board of Directors although less than a quorum, or by a sole
remaining director. In the event one or more directors shall resign, effective
at a future date, such vacancy or vacancies shall be filled by a majority of the
directors who will remain on the whole Board of Directors, although less than a
quorum, or by a sole remaining director. Any director elected or chosen as
provided herein shall serve until the sooner of (i) the unexpired term of the
directorship to which be is appointed or (ii) until his successor is elected and
qualified; or (iii) until his earlier resignation or removal.
SECTION 3.5 RESIGNATIONS. A director may resign at any time upon
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless a certain effective date is specified therein, in
which event it will be effective upon such date and acceptance of any
resignation shall not be necessary to make it effective.
SECTION 3.6 REMOVALS. Any director or the entire Board of Directors
may be removed only for cause, and another person or persons may be elected to
serve for the remainder of his or their term, by the holders of a majority of
the shares of the Corporation entitled to vote in the election of directors.
Stockholders may not remove any director without cause. In case any vacancy so
created shall not be filled by the Stockholders at such meeting, such vacancy
may be filled by the directors as provided in Section 3.4
SECTION 3.7 ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held, if a quorum be present, immediately following each
annual meeting of the Stockholders at the place such meeting of Stockholders
took place, for the purpose of organization and transaction of any other
business that might be transacted at a regular meeting thereof, and no notice of
such meeting shall be necessary. If a quorum is not present, such annual meeting
may be held at any other time or place that may be specified in a notice given
in the manner provided in Section 3.9 for special meetings of the Board of
Directors or in a waiver of notice thereof.
SECTION 3.8 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such places and times as shall be
determined
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from time to time by resolution of the Board of Directors. Except as otherwise
provided by law, any business may be transacted at any regular meeting of the
Board of Directors.
SECTION 3.9 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chief Executive Officer, the President or by the
Secretary on the written request of one-third of the members of the whole Board
of Directors stating the purpose or purposes of such meeting. Notices of special
meetings, if mailed, shall be mailed to each director not later than two days
before the day the meeting is to be held or if otherwise given in the manner
permitted by the Bylaws, not later than the day before such meeting. Neither the
business to be transacted at, nor the purpose of, any special meeting need be
specified in any notice or written waiver of notice unless so required by the
Certificate of Incorporation or by the Bylaws and, unless limited by law, the
Certificate of Incorporation or by these Bylaws, any and all business may be
transacted at a special meeting.
SECTION 3.10 ORGANIZATION OF MEETINGS. At any meeting of the Board
or Directors business shall be transacted in such order and manner as such Board
of Directors may from time to time determine, and all matters shall he
determined by the vote of a majority of the directors present at any meeting at
which there is a quorum, except as otherwise provided by these Bylaws or
required by law
SECTION 3.11 PLACE OF MEETINGS. The Board of Directors may hold
their meetings and have one or more offices, and keep the books of the
Corporation, outside the State of Delaware, at any office or offices of the
Corporation, or at any other place as they may from time to time by resolution
determine.
SECTION 3.12 COMPENSATION OF DIRECTORS. Directors shall not receive
any stated salary for their services as directors, but by resolution of the
Board of Directors a fixed honorarium as well as fees and expenses, if any, of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 3.13 ACTION BY UNANIMOUS WRITTEN CONSENT. Unless otherwise
restricted by law, the Certificate of Incorporation or these Bylaws, any action
required or
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permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if prior to such action all
members of the Board of Directors or of such committee, as the case may be,
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or the committee.
SECTION 3.14 PARTICIPATION IN MEETINGS BY TELEPHONE. Unless
otherwise restricted by the Certificate of Incorporation or these Bylaws,
members of the Board of Directors or of any committee thereof may participate in
a meeting of such Board of Directors or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and participation in a meeting
in such manner shall constitute presence in person at such meeting.
SECTION 3.15 THE CHAIRMAN OF THE BOARD. The Chairman of the Board,
if one shall be elected, shall preside at all meetings of the Stockholders and
Board of Directors. In addition, the Chairman of the Board shall perform
whatever duties and shall exercise all powers that are given to him by the Board
of Directors.
ARTICLE IV
COMMITTEES OF THE BOARD
SECTION 4.1 MEMBERSHIP AND AUTHORITIES. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board of
Directors, designate one or more Directors to constitute an Executive Committee
and such other committees as the Board of Directors may determine, each of which
committees to the extent provided in said resolution or resolutions or in these
Bylaws, shall have and may exercise all the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except in those
cases where the authority of the Board of Directors is specifically denied to
the Executive Committee or such other committee or committees by law, the
Certificate of Incorporation or these Bylaws, and may authorize the seal of the
Corporation to be affixed to all papers that may require it. The designation of
an Executive Committee or other committee and the delegation thereto of
authority
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shall not operate to relieve the Board of Directors, or any members thereof, of
any responsibility imposed upon it or him by law.
SECTION 4.2 MINUTES. Each committee designated by the Board of
Directors shall keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
SECTION 4.3 VACANCIES. The Board of Directors may designate one or
more of its members as alternate members of any committee who may replace any
absent or disqualified member at any meeting of such committee. If no alternate
members have been appointed, the committee member or members thereof present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. The Board of Directors shall have the power at any time to fill
vacancies in, to change the membership of, and to dissolve, any committee.
SECTION 4.4 TELEPHONE MEETINGS. Members of any committee designated
by the Board of Directors may participate in or hold a meeting by use of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section 4.4 shall constitute presence in person at such
meeting, except where a person participates in the 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.
SECTION 4.5 ACTION WITHOUT MEETING. Any action required or permitted
to be taken at a meeting of any committee designated by the Board of Directors
may be taken without a meeting if a consent in writing, setting forth the action
so taken, is signed by all the members of the committee and filed with the
minutes of the committee proceedings. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
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ARTICLE V
OFFICERS
SECTION 5.1 NUMBER AND TITLE. The elected officers of the
Corporation shall be chosen by the Board of Directors and shall be a Chief
Executive Officer, one or more Presidents, one or more Vice Presidents, a
Secretary and a Treasurer. The Board of Directors may also choose a Chairman of
the Board, who must be a Board member of the Board of Directors, and additional
Vice Presidents, Assistant Secretaries and/or Assistant Treasurers. One person
may hold any two or more of these offices.
SECTION 5.2 TERM OF OFFICE: VACANCIES. So far as is practicable, all
elected officers shall be elected by the Board of Directors at the annual
meeting of the Board of Directors in each year, and except as otherwise provided
in this Article V, shall hold office until the next such meeting of the Board of
Directors in the subsequent year and until their respective successors are
elected and qualified or until their earlier resignation or removal. All
appointed officers shall hold office at the pleasure of the Board of Directors.
If any vacancy shall occur in any office, the Board of Directors may elect or
appoint a successor to fill such vacancy for the remainder of the term.
SECTION 5.3 REMOVAL OF ELECTED OFFICERS. Any elected officer may be
removed at any time, with or without cause, by affirmative vote of a majority of
the whole Board of Directors, at any regular meeting or at any special meeting
called for such purpose.
SECTION 5.4 RESIGNATIONS. Any officer may resign at any time upon
written notice of resignation to the Chief Executive Officer, the President,
Secretary or Board of Directors of the Corporation. Any resignation shall be
effective immediately unless a date certain is specified for it to take effect,
in which event it shall be effective upon such date, and acceptance of any
resignation shall not be necessary to make it effective, irrespective of whether
the resignation is tendered subject to such acceptance.
SECTION 5.5 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of
the Corporation, shall (in the absence of the Chairman of the Board, if one be
elected) preside at meetings of the Stockholders and Board of Directors; shall
be EX OFFICIO a member of all standing committees, shall have general and active
management of business of the corporation; shall implement the general
directives, plans and policies
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formulated by the Board of Directors; and shall further have such duties,
responsibilities and authorities as may be assigned to him by the Board of
Directors. He may sign, with any other proper officer, any deeds, bonds,
mortgages, contracts and other documents which the Board of Directors has
authorized to be executed, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors or these Bylaws, to some other
officer or agent of the Corporation. In the absence of the Chief Executive
Officer, his duties shall be performed and his authority may be exercised by the
President or a Vice President of the Corporation as may have been designated by
the Chief Executive Officer with the right reserved to the Board of Directors to
designate or supersede any designation so made.
SECTION 5.6 PRESIDENT(S) AND VICE PRESIDENTS. The President(s) and
the several Vice Presidents shall have such powers and duties as may be assigned
to them by these Bylaws and as may from time to time be assigned to them by the
Board of Directors or the Chief Executive Officer and may sign, with any other
proper officer, certificates for shares of the Corporation.
SECTION 5.7 SECRETARY. The Secretary, if available, shall attend all
meetings of the Board of Directors and all meetings of the Stockholders and
record the proceedings of the meetings in a book to be kept for that purpose and
shall perform like duties for any committee of the Board of Directors as shall
designate him to serve. He shall give, or cause to be given, notice of all
meetings of the Stockholders and meetings of the Board of Directors and
committees thereof and shall perform such other duties incident to the office of
secretary or as may be prescribed by the Board of Directors or the Chief
Executive Officer, under whose supervision he shall be. He shall have custody of
the corporate seal of the Corporation and he, or any Assistant Secretary, or any
other person whom the Board of Directors may designate, shall have authority to
affix the same to any instrument requiring it, and when so affixed it may be
attested by his signature or by the signature of any Assistant Secretary or by
the signature of such other person so affixing such seal.
SECTION 5.8 ASSISTANT SECRETARIES. Each Assistant Secretary shall
have the usual powers and duties pertaining to his office, together with such
other powers and
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duties as may be assigned to him by the Board of Directors, the Chief Executive
Officer or the Secretary. The Assistant Secretary or such other person as may be
designated by the Chief Executive Officer shall exercise the powers of the
Secretary during that officer's absence or inability to act.
SECTION 5.9 TREASURER. The Treasurer shall have the custody of and
be responsible for the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in the books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chief Executive Officer and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation and he shall perform all other duties incident to the
position of Treasurer or as may be prescribed by the Board of Directors or the
Chief Executive Officer. If required by the Board of. Directors, he shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
SECTION 5.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall
have the usual powers and duties pertaining to his office, together with such
other powers and duties as may be assigned to him by the Board of Directors, the
Chief Executive Officer or the Treasurer. The Assistant Treasurer or such other
person designated by the Chief Executive Officer shall exercise the power of the
Treasurer during that officer's absence or inability to act.
SECTION 5.11 SUBORDINATE OFFICERS. The Board of Directors may (a)
appoint such other subordinate officers and agents as it shall deem necessary
who shall
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hold their offices for such terms, have such authority and perform such duties
as the Board of Directors may from time to time determine, or (b) delegate to
any committee or officer the power to appoint any such subordinate officers or
agents.
SECTION 5.12 SALARIES AND COMPENSATION. The salary or other
compensation of officers shall be fixed from time to time by the Board of
Directors. The Board of Directors may delegate to any committee or officer the
power to fix from time to time the salary or other compensation of subordinate
officers and agents appointed in accordance with the provisions of Section 5.12.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) 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 (other than
an action by or in the right of the Corporation) by reason of the fact that such
person is or was, at any time, prior to or during which this Article VI is in
effect, a director, officer, employee or agent of the Corporation, or is or was,
at any time prior to or during which this Article VI is in effect, serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, other enterprise or
employee benefit plan against reasonable expenses (including attorneys' fees),
judgments, fines, penalties, amounts paid in settlement and other liabilities
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. 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 such person did
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not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) 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 or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was, at any
time prior to or during which this Article VI is in effect, a director, officer,
employee or agent of the Corporation, or is or was, at any time prior to or
during which this Article VI is in effect, 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 such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; provided, that no
indemnification shall be made under this sub-section (b) 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 other court of appropriate jurisdiction, 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 of such expenses which the Delaware Court of Chancery, or other court
of appropriate jurisdiction, shall deem proper.
(c) Any indemnification under sub-sections (a) or (b) (unless
ordered by the Delaware Court of Chancery or other court of appropriate
jurisdiction) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of such person is proper
in the circumstances because he has met the applicable standard of conduct set
forth in sub-sections (a) and (b). Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors not
parties such action, suit or proceeding; or (2) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel, in written opinion, selected by the Board
of Directors; or (3) by the Stockholders. In the event a determination is made
under this sub-section (c) that
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the director, officer, employee or agent has met the applicable standard of
conduct as to some matters but not as to others, amounts to be indemnified may
be reasonably prorated.
(d) Expenses incurred by a person who is or was a director or
officer of the Corporation in appearing at, participating in or defending any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, shall be paid by the Corporation at
reasonable intervals 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 is not
entitled to be indemnified by the Corporation as authorized by this Article VI.
(e) It is the intention of the Corporation to indemnify the persons
referred to in this Article VI to the fullest extent permitted by law and with
respect to any action, suit or proceeding arising from events which occur at any
time prior to or during which this Article VI is in effect. The indemnification
and advancement of expenses provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be or become entitled under any law, the Certificate
of Incorporation, these Bylaws, agreement, the vote of Stockholders or
disinterested directors or otherwise, or under any policy or policies of
insurance purchased and maintained by the Corporation on behalf of any such
person, both as to action in his 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 person.
(f) The indemnification provided by this Article VI shall be
subject to all valid and applicable laws, and in the event this Article VI or
any of the provisions hereof or the indemnification contemplated hereby are
found to be inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control and this Article VI shall be regarded as modified
accordingly, and, as so modified, to continue in full force and effect.
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ARTICLE VII
CAPITAL STOCK
SECTION 7.1 CERTIFICATES OF STOCK. Certificates of stock shall be
issued to each Stockholder certifying the number of shares owned by him in the
Corporation and shall be in a form not inconsistent with the Certificate of
Incorporation and as approved by the Board of Directors. The certificates shall
be signed by the Chairman of the Board, the President or a Vice President and by
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer and may be sealed with the seal of the Corporation or a facsimile
thereof. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
If the Corporation shall be authorized to issue more than one (1)
class of stock or more than one (1) series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class or stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each Stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 7.2 LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the owner of such certificate, or his legal
representative. When authorizing the issuance of a new certificate, the Board of
Directors may in its discretion, as a condition precedent to the issuance
thereof, require the owner, or his legal representative, to give a
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bond in such form and substance with such surety as it may direct, to indemnify
the Corporation against any claim that may be made on account of the alleged
loss, theft or destruction of such certificate or the issuance of such new
certificate.
SECTION 7.3 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD
FOR CERTAIN PURPOSES. (a) In order that the Corporation may determine the
Stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of capital stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty (60) days prior to the date of payment of such
dividend or other distribution or allotment of such rights or the date when any
such rights in respect of any change, conversion or exchange of stock may be
exercised or the date of such other action. In such a case, only Stockholders of
record on the date so fixed shall be entitled to receive any such dividend or
other distribution or allotment of rights or to exercise such rights or for any
other purpose, as the case may be, notwithstanding any transfer of any stock on
the books of the Corporation after any such record date fixed as aforesaid.
(b) 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 7.4 DIVIDENDS. Subject to the provisions of the Certificate
of Incorporation, if any, and except as otherwise provided by law, the directors
may declare dividends upon the capital stock of the Corporation as and when they
deem it to be expedient. Such dividends may be paid in cash, in property or in
shares of the Corporation's capital stock. Before declaring any dividend there
may be set apart out of the funds of the Corporation available for dividends,
such sum or sums as the directors from time to time in their discretion think
proper for working capital or as a reserve fund to meet contingencies or for
equalizing dividends, or for such other purposes as the directors shall think
conducive to the interests of the Corporation and the directors may modify or
abolish any such reserve in the manner in which it was created.
SECTION 7.5 REGISTERED STOCKHOLDERS. Except as expressly provided by
law, the Certificate of Incorporation and these Bylaws, the Corporation shall be
entitled
20
<PAGE>
to treat registered Stockholders as the only holders and owners in fact of the
shares standing in their respective names and the Corporation shall not be bound
to recognize any equitable or other claim to or interest in such shares on the
part of any other person, regardless of whether it shall have express or other
notice thereof.
SECTION 7.6 TRANSFER OF STOCK. Transfers of shares of the capital
stock of the Corporation shall be made only on the books of the Corporation by
the registered owners thereof, or by their legal representatives or their duly
authorized attorneys. Upon any such transfers the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock transfer books and ledgers, by whom they shall be cancelled and new
certificates shall be issued.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 8.1 CORPORATE SEAL. If one be adopted, the corporate seal
shall have inscribed thereon the name of the Corporation and shall be in such
form as may be approved by the Board of Directors. Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
SECTION 8.2 FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 8.3 CHECKS, DRAFTS, NOTES. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or officers,
agent or agents of the Corporation, and in such manner as shall from time to
time be determined by resolution (whether general or special) of the Board of
Directors or may be prescribed by any officer or officers, or any officer and
agent jointly, thereunto duly authorized by the Board of Directors.
SECTION 8.4 NOTICE AND WAIVER OF NOTICE. Whenever notice is required
to be given to any director or Stockholder under the provisions of applicable
law, the Certificate of Incorporation or of these Bylaws it shall not be
construed to only mean personal notice, rather, such notice may also be given in
writing, by mail, addressed to
21
<PAGE>
such director or Stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid (unless prior to the mailing of such
notice he shall have filed with the Secretary of the Corporation a written
request that notices intended for him be mailed to some other address in which
case, such notice shall be mailed to the address designated in the request), and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram, cable or other form of recorded communication, by personal delivery or
by telephone. Whenever notice is required to be given under any provision of
law, the Certificate of Incorporation or these Bylaws, a waiver thereof in
writing, by telegraph, cable or other form of recorded communication, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting at the beginning
of the meeting, to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or these Bylaws.
SECTION 8.5 EXAMINATION OF BOOKS AND RECORDS. The Board of Directors
shall determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the Corporation (except
such as may by statute be specifically opened to inspection) or any of them
shall be open to inspection by the Stockholders, and the Stockholders rights in
this respect are and shall be restricted and limited accordingly.
SECTION 8.6 VOTING UPON SHARES HELD BY THE CORPORATION. Unless
otherwise provided by law or by the Board of Directors, the Chairman of the
Board of Directors, if one shall be elected, or the President, if a Chairman of
the Board of Directors shall not be elected, acting on behalf of the
Corporation, shall have full power and authority to attend and to act and to
vote at any meeting of Stockholders of any corporation in which the Corporation
may hold stock and, at any such meeting, shall possess and may exercise any and
all of the rights and powers incident to the ownership
22
<PAGE>
of such stock which, as the owner thereof, the Corporation might have possessed
and exercised, if present. The Board of Directors by resolution from time to
time may confer like powers upon any person or persons.
ARTICLE IX
AMENDMENTS
SECTION 9.1 AMENDMENT. Except as otherwise expressly provided in the
Certificate of Incorporation, the directors, by the affirmative vote of a
majority of the entire Board of Directors and without the assent or vote of the
Stockholders, may at any meeting, provided the substance of the proposed
amendment shall have been stated in the notice of the meeting, make, repeal,
alter, amend or rescind any of these Bylaws. The Stockholders shall not make,
repeal, alter, amend or rescind any of the provisions of these Bylaws except by
the holders of not less than 80% of the total voting power of all shares of
stock of the Corporation entitled to vote in the election of directors,
considered for purposes of this Article IX as one class.
23
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<CURRENT-ASSETS> 203,800
<PP&E> 3,451,300
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0
0
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