SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
_______ EXCHANGE ACT OF 1934
For the quarterly period ended July 30, 1994
_____________________
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
_______ EXCHANGE ACT OF 1934
For the transition period from________to__________
Commission file number 1-5392
____________________________________
AMERICAN STORES COMPANY
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 87-0207226
_____________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
709 East South Temple
Salt Lake City, Utah 84102
_____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
801-539-0112
_____________________________________________________________________________
(Registrant's telephone number, including area code)
None
_____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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
___ ___
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes____ No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 27, 1994: Common Stock, Par Value $1.00 -
142,779,420 shares.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Thirteen Weeks Ended
_____________________________________
July 30, July 31,
1994 1993
___________ ____________
Sales $4,669,018 $4,693,057
Cost of merchandise sold, including
warehousing and transportation expenses 3,436,515 3,468,871
__________ _________
Gross profit 1,232,503 1,224,186
Operating and administrative expenses 1,062,673 1,070,491
__________ _________
Operating profit 169,830 153,695
Other income (expense):
Interest income 1,338 1,173
Interest expense (44,882) (46,916)
Losses on asset sales, other (1,900) (2,544)
__________ _________
Net other income (expense) (45,444) (48,287)
__________ _________
Earnings before income taxes 124,386 105,408
Federal and state income taxes 55,352 46,907
__________ _________
Net earnings $69,034 $58,501
========== =========
Net earnings per share (1) $0.48 $0.41
========== =========
Average shares outstanding (1) 142,745 142,066
Dividends per share (1) $0.12 $0.10
____________________________________________________
See accompanying notes to consolidated condensed financial statements.
(1) Second quarter of 1993 has been restated to reflect the March 1994 two-
for-one stock split.
<PAGE>
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Twenty-Six Weeks Ended
_____________________________________
July 30, July 31,
1994 1993
___________ ____________
Sales $9,276,670 $9,361,162
Cost of merchandise sold, including
warehousing and transportation expenses 6,824,366 6,935,191
__________ _________
Gross profit 2,452,304 2,425,971
Operating and administrative expenses 2,150,718 2,154,168
__________ _________
Operating profit 301,586 271,803
Other income (expense):
Interest income 2,377 2,104
Interest expense (89,634) (97,016)
Gains (losses) on asset sales, other (3,523) 29,121
__________ _________
Net other income (expense) (90,780) (65,791)
__________ _________
Earnings before income taxes and extra-
ordinary item 210,806 206,012
Federal and state income taxes 93,809 91,004
__________ _________
Earnings before extraordinary item 116,997 115,008
Extraordinary item -- early retire-
ment of debt, net of tax (1) -- (15,000)
__________ _________
Net earnings $116,997 $100,008
========== =========
Earnings per share before extra-
ordinary item (2) 0.82 $0.81
Extraordinary item (2) -- ($0.11)
__________ _________
Net earnings per share (2) $0.82 $0.70
========== =========
Average shares outstanding (2) 142,682 141,972
Dividends per share (2) $0.24 $0.20
____________________________________________________
See accompanying notes to consolidated condensed financial statements.
(1) A pre-tax charge of $25 million ($15 million, net of tax) for early
retirement of debt which was reported in "Gains (losses) on asset sales,
other" in the first quarter of 1993 has been reclassified as an
extraordinary item.
(2) The year-to-date period of 1993 has been restated to reflect the March
1994 two-for-one stock split.
<PAGE>
AMERICAN STORES COMPANY
Consolidated Condensed Balance Sheets
(unaudited)
(In thousands of dollars)
July 30, January 29,
1994 1994
___________ ____________
Current Assets:
Cash and cash equivalents $ 69,547 $ 59,580
Inventories 1,435,508 1,539,610
Other current assets 365,605 396,619
__________ __________
Total current assets 1,870,660 1,995,809
Property, plant and equipment, less
accumulated depreciation and amortization
of $1,819,551 on July 30, 1994 and
$1,694,150 on January 29, 1994 2,721,320 2,704,040
Property under capital leases, less
accumulated amortization of $112,801
on July 30, 1994 and $108,394 on
January 29, 1994 91,544 97,127
Goodwill 1,800,591 1,827,334
Other assets 281,448 303,124
__________ __________
Assets $6,765,563 $6,927,434
========== ==========
Current Liabilities:
Current maturities of long-term debt and
capital lease obligations $ 17,262 $ 76,538
Accounts payable 863,546 958,272
Accrued payroll and benefits 282,247 303,160
Current portion of self-insurance reserves 199,040 212,891
Income taxes payable 49,875 118,279
Other current liabilities 325,162 384,959
__________ __________
Total current liabilities 1,737,132 2,054,099
Long-term debt, less current maturities 2,077,023 2,003,866
Obligations under capital leases, less
current maturities 82,420 87,595
Self-insurance reserves, less current portion 457,300 520,010
Deferred income taxes 345,041 345,760
Other liabilities 231,499 173,819
Shareholders' equity 1,835,148 1,742,285
__________ __________
Liabilities and Shareholders' Equity $6,765,563 $6,927,434
========== ==========
____________________________________________________
See accompanying notes to consolidated condensed financial statements.
<PAGE>
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands of dollars)
Twenty-Six Weeks Ended
_______________________________
July 30, July 31,
1994 1993
___________ ___________
Cash Flows from Operating Activities:
_____________________________________
Net earnings $116,997 $100,008
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 199,354 188,348
Net loss on asset sales 3,068 16,234
Deferred income taxes (719) (20,870)
Self-insurance reserves and other (12,489) (24,162)
Decrease in current assets:
Inventories 104,102 144,637
Other current assets 31,014 33,839
Decrease in current liabilities:
Accounts payable (94,726) (119,756)
Accrued payroll and benefits (20,913) (56,438)
Other current liabilities (128,201) (58,404)
_________ ________
Total adjustments 80,490 103,428
_________ ________
Net cash provided by operating
activities 197,487 203,436
_________ ________
Cash Flows from Investing Activities:
______________________________________
Expended for property, plant and equipment (183,827) (259,113)
Proceeds from sale of other assets 11,735 12,721
_________ ________
Net cash used in investing activities $(172,092) ($246,392)
_________ ________
<PAGE>
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Cash Flows (continued)
(unaudited)
(In thousands of dollars)
Twenty-Six Weeks Ended
____________________________
July 30, July 31,
1994 1993
__________ __________
Cash Flows from Financing Activities:
_____________________________________
Proceeds from long-term borrowing $530,000 $100,000
Payments of long-term borrowing (718,802) 0
Net increase (decrease) in borrowing under
existing credit facilities 202,569 (2,822)
Principal payments for obligations under
capital leases (5,061) (5,243)
Proceeds from exercise of stock options 10,121 2,560
Other changes in equity (1) (767)
Cash dividends (34,254) (28,413)
_______ ________
Net cash (used in) provided by financing activities (15,428) 65,315
_______ ________
Net increase in cash and cash equivalents 9,967 22,359
Cash and cash equivalents:
Beginning of quarter 59,580 54,048
_______ ________
End of quarter $ 69,547 $ 76,407
======= ========
Supplementary Information - Statements of Cash Flows:
____________________________________________________
Cash paid during the year for:
Interest (net of amounts capitalized) $ 89,867 $ 92,224
Income taxes, net of refunds $164,397 $113,664
____________________________________________________
See accompanying notes to consolidated condensed financial statements.
<PAGE>
AMERICAN STORES COMPANY
Notes to Consolidated Condensed Financial Statements
(unaudited)
July 30, 1994
Basis of Presentation
_____________________
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all normal recurring adjustments
necessary to present fairly the financial position of American Stores Company
and its subsidiaries as of July 30, 1994 and January 29, 1994 and the results
of its operations for the thirteen and twenty-six weeks ended July 30, 1994
and July 31, 1993 and cash flows for the twenty-six weeks ended July 30, 1994
and July 31, 1993. The operating results for the interim periods are not
necessarily indicative of results for a full year. For a further discussion
of the Company's accounting policies, please refer to the Company's Form 10-K
for the fiscal year ended January 29, 1994.
Net Earnings Per Share
______________________
Net earnings per share are determined by dividing the year-to-date weighted
average number of shares outstanding into net earnings. Common share
equivalents in the form of stock options are excluded from the calculation
since they have no material dilutive effect on per share figures. The
assumed conversion of subordinated convertible debt into common stock is also
excluded from the calculation since it has no material dilutive effect on net
earnings per share.
Stock Split
___________
On March 21, 1994, the Board of Directors declared a two-for-one stock split
that was paid to shareholders on April 21, 1994 in the form of a stock
dividend. All references to the number of shares and per share amounts have
been restated to reflect the effect of the split.
Subsequent Event
________________
Subsequent to July 30, 1994, the Company completed the sale of its 33-store
Star Market chain of grocery stores to an investment group for $285 million
in cash and the assumption of substantially all of Star Market's outstanding
liabilities.
<PAGE>
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
_____________________
Total sales for the second quarters of both 1994 and 1993 were approximately
$4.7 billion. Total sales for the twenty-six weeks year-to-date 1994 were
approximately $9.3 billion compared to $9.4 billion in the prior year. The
Company operated 1,679 stores at July 30, 1994 compared to 1,714 stores at
July 31, 1993 (in each case, including the food and drug sides of 149 and 147
jointly operated Jewel Osco combination stores, respectively, which are
counted as two stores). On September 8, 1994, the Company completed the sale
of its 33-store Star Market chain of grocery stores to an investment group
for $285 million in cash and the assumption of substantially all of Star
Market's outstanding liabilities. The table below presents sales by major
operating divisions and in total.
<TABLE>
13 Weeks Ended 26 Weeks Ended
____________________________________ ____________________________________
Comparable July 30, July 31, Comparable July 30, July 31,
Stores 1994 1993 Stores 1994 1993
% Change % Change
(1) (2) (2) (1) (2) (2)
___________ __________ __________ ___________ __________ __________
<S> <C> <C> <C> <C> <C> <C>
Sales:
Eastern food operations 1.12% $1,802,775 $1,833,962 0.09% $3,579,633 $3,672,524
Western food operations -2.90% 1,756,355 1,819,172 -3.00% 3,491,882 3,619,260
Drug store operations 4.80% 1,106,832 1,037,350 4.15% 2,198,606 2,064,695
Other 3,056 2,573 6,549 4,683
____________________________________ ____________________________________
Total sales 0.34% $4,669,018 $4,693,057 -0.22% $9,276,670 $9,361,162
========== ========== ========== ==========
(1) Comparable store sales include stores opened one year or more and replacement
stores and exclude Star Market.
Like store sales, including stores opened one year or more and excluding Star Market,
for the 13 weeks ended July 30, 1994 were:
Eastern food operations 0.59%
Western food operations -2.90%
Drug store operations 4.67%
_____
Total 0.11%
=====
Eastern food operations include Acme Markets, Jewel Food Stores and, except as noted above,
Star Market.
Western food operations include Lucky Northern California Division, Lucky
Southern California Division and Jewel Osco - New Mexico.
Drug store operations include Osco Drug and Sav-on.
(2) Sales include Star Market.
</TABLE>
Net earnings for the second quarter of 1994 were $69.0 million or $0.48 per
share compared to $58.5 million or $0.41 per share for the same period of the
prior year. Net earnings for the twenty-six weeks year-to-date 1994 amounted
to $117.0 million or $0.82 per share. The 1994 year-to-date results include
the impact of expenses related to the on-going consolidation of the
information technology data centers and the impact of a voluntary severance
program initiated at Acme Markets in the first quarter of 1994. Excluding
these non-recurring charges, year-to-date second quarter net earnings were
$123.5 million or $0.87 per share.
Net earnings for the twenty-six weeks year-to-date 1993 amounted to $100.0
million or $0.70 per share which includes a net non-recurring pre-tax gain of
$45.7 million from the resolution of the "Rule of 80" litigation offset by
approximately $13.6 million of miscellaneous one-time charges, amounting to a
net of $0.14 per share. The "Rule of 80" litigation concerned the Company's
termination of the early retirement feature of an employee retirement plan.
See the 1993 Form 10-K for discussion of the litigation. Net earnings for
the year-to-date second quarter of 1993 were also impacted by charges
incurred in the early retirement of debt which was accounted for as an
extraordinary item. In connection with the debt restructuring, the Company
extinguished $146.0 million of debt and expensed the related costs of
prepaying such debt and related derivatives. The restructuring resulted in
an extraordinary pre-tax loss of $25 million ($15 million, net of tax) or
$0.11 per share.
<PAGE>
Part I - Financial Information (continued)
Gross profit for the second quarters of both 1994 and 1993 amounted to $1.2
billion or 26.4% of sales in 1994 and 26.1% of sales in 1993. For the
twenty-six weeks year-to-date, gross profit was approximately $2.45 billion
or 26.4% of sales in 1994 compared to $2.43 billion or 25.9% of sales in the
prior year. The pre-tax LIFO charge to earnings for the second quarter was
$10.0 million in 1994 and $11.0 million in 1993. The pre-tax LIFO charge to
earnings for the twenty-six weeks year-to-date amounted to $20.0 million in
1994 and $22.0 million in 1993.
Total operating profit for the second quarter of 1994 amounted to $169.8
million or 3.6% of sales compared to $153.7 million or 3.3% of sales in the
second quarter of 1993. Operating profit for the twenty-six weeks year-to-
date amounted to $301.6 million or 3.3% of sales compared to $271.8 million
or 2.9% of sales in the prior year. Each of the Company's three principal
operating groups reported higher operating profit compared to the prior year
for the second quarter and year-to-date periods, although the increase in the
second quarter was primarily in the eastern food operations and drug store
operations, with more modest gains in the western food operations. The
increase in operating profit is primarily attributable to reduced costs,
particularly in the Company's food operations due to improved warehouse and
store labor productivity and better workers' compensation and health
insurance claims costs. An increase in gross profit in the drug store
operations due to higher margins on generic drugs and increased private label
sales also increased operating profit. The table which follows presents
operating profit by major operating division and in total.
<TABLE>
13 Weeks Ended 26 Weeks Ended
____________________ ____________________
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Profit:
Eastern food operations $ 72,504 $67,601 $130,843 $120,317
Western food operations 60,510 59,057 120,678 108,112
Drug store operations 59,059 53,390 107,101 96,388
LIFO (10,000) (11,000) (20,000) (22,000)
Purchase accounting amortization (19,746) (19,839) (39,517) (39,683)
Other 7,503 4,486 2,481 8,669
________ ________ ________ ________
Total operating profit $169,830 $153,695 $301,586 $271,803
======== ======== ======== ========
Eastern food operations include Acme Markets, Jewel Food Stores and Star
Market.
Western food operations include Lucky Northern California Division, Lucky
Southern California Division and Jewel Osco - New Mexico.
Drug store operations include Osco Drug and Sav-on.
"Other" includes real estate operations.
</TABLE>
Net other expense for the second quarter of 1994 included interest income of
$1.3 million, net loss from asset sales and miscellaneous items of $1.9
million and interest expense of $44.9 million. Net other expense for the
second quarter of 1993 included interest income of $1.2 million, net loss
from asset sales and miscellaneous items of $2.5 million and interest expense
of $46.9 million.
<PAGE>
Part I - Financial Information (continued)
Net other expense for the twenty-six weeks year-to-date in 1994 included
interest income of $2.4 million, net loss from asset sales and other
miscellaneous items of $3.5 million and interest expense of $89.6 million.
Net other expense for the same period in 1993 included interest income of
$2.1 million, net loss from asset sales and other miscellaneous income of
$29.1 million and interest expense of $97.0 million. The lower interest
expense reported in the current year was primarily due to lower levels of
average outstanding debt and lower interest rates. The 1993 net gain of
$29.1 million includes $45.7 million from the resolution of the "Rule of 80"
litigation offset by approximately $13.6 million of miscellaneous one-time
charges.
The second quarter of 1994 earnings before income taxes amounted to $124.4
million or 2.7% of sales compared to $105.4 million or 2.2% of sales in 1993.
For the twenty-six weeks year-to-date in 1994, earnings before income taxes
and extraordinary item amounted to $210.8 million or 2.3% of sales compared
to $206.0 million or 2.2% of sales for the same period of 1993.
The effective income tax rate for the second quarters of 1994 and 1993 was
44.5%. The year-to-date effective income tax rate was 44.5% compared to
44.2% in 1993. The Omnibus Budget Reconciliation Act of 1993 increased the
Company's annual effective federal tax rate retroactively to January 1, 1993.
The retroactive portion of the increased tax rates on the 1993 first and
second quarter earnings (approximately $0.03 per share) was reflected in the
third quarter of 1993.
Average shares outstanding for the twenty-six weeks in 1994 and 1993 were
142.7 million and 142.0 million, respectively.
<PAGE>
Part I - Financial Information (continued)
Financial Condition
___________________
The Company uses cash provided from operations and, if necessary, borrowing
under credit facilities to finance its daily operations. Net cash provided
by operations for the twenty-six weeks ended July 30, 1994 amounted to $197.5
million, compared to $203.4 million in the first twenty-six weeks of 1993.
Working capital amounted to $133.5 million at July 30, 1994 compared to a
negative $58.3 million at January 29, 1994. The change in working capital is
due to seasonal changes and a decrease in the current portion of long-term
debt of approximately $59 million. Significant changes in the components of
working capital are customary and are not indicative of long-term trends.
Net cash used in investing activities amounted to $172.1 million in 1994,
compared to $246.4 million in 1993. Cash capital expenditures for the first
twenty-six weeks of 1994 and 1993, amounted to $183.8 million and $259.1
million, respectively. The Company plans to substantially increase capital
spending in the second half of 1994 compared to the spending levels in the
first half of 1994. Additionally, capital expenditures represented by the
net present value of operating leases, amounted to $5.9 million in 1994,
compared to $41.2 million for the corresponding period in 1993 which included
the acquisition of 55 Reliable drug stores. For the year-to-date period of
1994, 13 stores were opened, 29 were closed and 19 stores were remodeled.
Net cash used in financing activities in the first twenty-six weeks of 1994
was $15.4 million, compared to $65.3 million provided by financing activities
in the corresponding 1993 period and reflects a larger net increase in debt
in 1993 compared to 1994. In the second quarter of 1994, the Company entered
into a $1.0 billion revolving credit facility which expires in 1999 which
replaced an existing $800 million credit facility which would have expired in
1996. Additionally, the Company prepaid a $139 million loan which matured in
1996 and borrowed $50 million due in 1996. The prepayment of the Company's
indebtedness under the previous credit agreement reduced the Company's
mandatory debt payments and made more of the Company's cash flow available
for working capital and capital expenditures. Cash flow from operations,
supplemented by credit available under the Company's existing credit
facilities, is expected to be adequate to meet the Company's presently
identifiable requirements.
The ratio of total debt (debt plus obligations under capital leases) to total
capitalization (total debt plus common shareholders' equity) amounted to
54.3% at July 30, 1994 and 55.4% at January 29, 1994. The Company
anticipates that the current portion of long-term debt will be paid through
internally generated funds or through refinancing of existing debt.
The Company's ratio of earnings to fixed charges for the twenty-six week
periods ending July 30, 1994 and July 31, 1993 were 2.53 to 1 and 2.23 to 1,
respectively. In computing the ratio of earnings to fixed charges, earnings
consist of pre-tax income from continuing operations including the impact of
an extraordinary item, plus fixed charges (adjusted for capitalized
interest.) Fixed charges consist of interest, whether expensed or
capitalized (including the amortization of debt expense), plus the amount of
rental expense which is representative of the interest factor in the
particular case. The improvement in the ratio from 1993 to 1994 is primarily
due to reduced interest expense resulting from lower average outstanding debt
and lower interest rates, as well as higher pre-tax income from continuing
operations in the current year.
One measure commonly used in the financial community to measure a company's
ability to service debt and make interest payments is through a FIFO-EBITDA
analysis. The FIFO-EBITDA calculation eliminates non-cash charges to
earnings as well as interest expense and taxes. FIFO-EBITDA should not be
considered an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flows as a measure of
liquidity. The Company's earnings before LIFO charge, interest expense,
taxes, depreciation and amortization and extraordinary item (FIFO-EBITDA) for
the twenty-six weeks ended July 30, 1994 were $519.8 million compared to
$513.4 million for the comparable 1993 period. The 1993 FIFO-EBITDA included
$29.1 million in net gains on asset sales, other, compared to a net loss on
asset sales, other of $3.5 million in 1994 which was offset by higher profit
and lower interest expense in 1994. The Company's cash interest payments
(net of amounts capitalized) for the twenty-six weeks in 1994 were 17.3% of
FIFO-EBITDA compared to 18.0% of FIFO-EBITDA for the corresponding 1993
period.
Contingencies
_____________
The Company, from time to time, has disposed of leased properties and may
retain certain contingent lease liabilities, either by contract or law.
Although the Company is unaware of any material assertions against it from
such dispositions, such claims may arise in the future. If such claims were
asserted, the expense to the Company would consist of unpaid lease
obligations, such as rents, which may be offset by subletting the property,
negotiating favorable lease terminations, operating the facilities or
applying existing reserves.
The Company has identified environmental contamination sites related
primarily to underground petroleum storage tanks at various store, warehouse,
office and manufacturing facilities (related to current operations as well as
previously disposed of businesses). At most such locations, remediation is
either underway or has been completed. One of the Company's subsidiaries,
Acme Markets, Inc., has been identified by the Environmental Protection
Agency as one of several potentially responsible parties (PRP) for the costs
of cleaning up a hazardous waste disposal site in New Jersey pursuant to the
Comprehensive Environmental Response Compensation and Liabilities Act of 1980
(CERCLA) and other environmental laws. Based on negotiations conducted to
date, the Company believes its share of negotiated remediation costs will not
exceed $100,000. Two of the Company's other subsidiaries, Jewel Food Stores,
Inc. and Jewel Osco Southwest, Inc. have been identified by the Montana
Department of Health and Environmental Services as two of five PRPs for the
costs related to the release of hazardous wastes at a Montana site. Jewel
Food Stores, Inc. and Jewel Osco Southwest, Inc. have been ordered to
investigate and monitor the contamination, along with one other PRP. The
Company does not believe that the costs for investigation and remediation
will be material; Jewel has also filed suit against other PRPs for
contribution to the costs it has incurred and may incur in the future.
Although the ultimate outcome and expense of environmental remediation is
uncertain, the Company believes that required remediation and continuing
compliance with environmental laws, in excess of current reserves, will not
have a material adverse effect on the financial position or results of
operations of the Company.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings -- For a description of legal proceedings, please
refer to the footnote entitled "Legal Proceedings" contained in the
Notes to Consolidated Financial Statements section of the Company's
Form 10-K for the fiscal year ended January 29, 1994.
Food 4 Less Litigation. Lucky Stores, Inc. and the Company are
defendants in an action filed in the Superior Court of the State of
California, County of Los Angeles, Central District, Case No.
BC100799, by Food 4 Less Supermarkets, Inc., Food 4 Less of Southern
California, Inc., Food 4 Less of California, Inc. and Alpha Beta
Company. The action was originally filed in March 1994 and the
complaint was amended in July 1994. The amended complaint generally
alleges that the defendants have engaged in acts of false and
misleading advertising, unfair competition, intentional interference
with plaintiffs' prospective economic advantage, and trade libel, on
the grounds that Lucky's advertising does not include Food 4 Less in
its price comparisons and on the further grounds that its
advertising is misleading in several respects. The complaint
generally seeks an injunction restraining the defendants from
engaging in unfair competition; restoration to plaintiffs of all
funds acquired by the acts of unfair competition; damages of not
less than $100,000,000 and punitive damages in an amount according
to proof on each of two causes of action; costs of suit; and such
other and further relief as the court may deem just and proper. The
Company intends to vigorously defend the action and assert all
available counterclaims. The Company believes the amended complaint
to be without merit and believes it is unlikely that the proceeding
will result in any material adverse impact on the Company's
financial condition or results of operation.
The Company is also involved in various claims, administrative
proceedings and other legal proceedings which arise from time to
time in connection with the ordinary conduct of the Company's
business.
Item 2. Changes in Securities -- None
Item 3. Defaults upon Senior Securities -- None
Item 4. Submission of Matters to a Vote of Security Holders -- The Annual
Meeting of the Company's Shareholders was held on June 21, 1994, at
which time the shareholders re-elected five Directors of the Company
to serve for a term of three years. Of the 127,592,703 total shares
voted, the following number of shares were voted for the nominees
for director: Fernando Gumucio - 126,984,111; Leon G. Harmon -
126,969,732; John E. Masline - 126,972,507; L. S. Skaggs -
126,943,446; and Arthur K. Smith - 126,996,773. Of the 127,592,703
total shares voted, the following number of shares were cast to
ratify the appointment of Ernst & Young as independent certified
public accountants to audit the accounts and records of the Company
for the fiscal year ending January 28, 1995: 125,251,485 votes were
cast for ratification; 1,857,195 votes were cast against
ratification and 484,023 votes abstained. Of the 127,592,703 total
shares voted, the following number of shares were cast to amend the
Restated Certificate of Incorporation to increase the number of
authorized shares of common stock from 200 million to 325 million
shares: 121,229,226 votes were cast to amend; 5,379,911 votes were
cast against the proposal and 983,566 votes abstained.
Item 5. Other Information -- On September 8, the Company completed the
sale of its 33-store Star Market chain of grocery stores to an
investment group for $285 million in cash and the assumption of
substantially all of Star Market's outstanding liabilities.
Item 6. Exhibits and Reports on Form 8-K --
(a) Exhibits -- (3)a Certificate of Amendment of Restated
Certificate of Incorporation of American
Stores Company
(3)b Restated By-Laws of American Stores Company
(11) Calculations of earnings per share.
(27) Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter -- None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
American Stores Company
____________________________
(Registrant)
Dated _________________ /s/ Teresa Beck
_____________________________
Teresa Beck
Executive Vice President,
Chief Financial Officer and
Assistant Secretary
Dated _________________ /s/ Kathleen E. McDermott
_____________________________
Kathleen E. McDermott
Executive Vice President,
General Counsel and Assistant Secretary
Dated _________________ /s/ Bradley M. Vierig
_____________________________
Bradley M. Vierig
Vice President and Controller
Financial Accounting
(Chief Accounting Officer)
<TABLE> Exhibit 11
AMERICAN STORES COMPANY
Calculation of Earnings Per Share
(unaudited)
(In thousands, except per share data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
___________________________ __________________________
July 30, July 31, July 30, July 31,
1994 1993 (1) 1994 1993 (1)
_____________ __________ ___________ ___________
<S> <C> <C> <C> <C>
Earnings Per Share - Before Dilution
____________________________________
Earnings applicable to shareholders before
extraordinary item - before dilution $ 69,034 $ 58,501 $116,997 $115,008
Extraordinary item 0 0 0 (15,000)
________ ________ ________ ________
Earnings applicable to shareholders -
before dilution $ 69,034 $ 58,501 $116,997 $100,008
======== ======== ======== ========
Earnings per share before extraordinary
item - before dilution $0.48 $0.41 $0.82 $0.81
Extraordinary item 0 0 0 (0.11)
________ ________ ________ ________
Earnings per share - before dilution $0.48 $0.41 $0.82 $0.70
======== ======== ======== ========
Average share outstanding - before dilution 142,745 142,066 142,682 141,972
======== ======== ======== ========
Earnings Per Share - After Dilution
___________________________________
Earnings applicable to shareholders before
extraordinary item - before dilution $ 69,034 $ 58,501 $116,997 $115,008
Plus interest on convertible debentures 1,903 1,903 3,806 3,806
________ ________ ________ ________
Earnings applicable to shareholders before
extraordinary item - after dilution 70,937 60,404 120,803 118,814
Extraordinary item 0 0 0 (15,000)
________ ________ ________ ________
Earnings applicable to shareholders -
after dilution $ 70,937 $ 60,404 $120,803 $103,814
======== ======== ======== ========
Earnings per share before extraordinary
item - after dilution $0.47 $0.40 $0.80 $0.79
Extraordinary item 0 0 0 (0.10)
________ ________ ________ ________
Earnings per share - after dilution $0.47 (2) $0.40 (2) $0.80 (2) $0.69 (2)
======== ======== ======== ========
Average shares outstanding - after dilution 151,211 150,842 151,205 150,804
======== ======== ======== ========
(detail on page following)
Calculation of Average Shares Outstanding - After Dilution
__________________________________________________________
Effect of assumed exercise of stock options:
___________________________________________
Proceeds from assumed exercise $ 14,524 $ 25,220 $ 15,346 $ 26,400
Shares under options outstanding 1,251 2,144 1,340 2,254
Shares assumed acquired with proceeds
under the treasury stock method (563) (1,146) (595) (1,200)
________ ________ ________ ________
Incremental shares due to assumed
exercise of stock options 688 998 745 1,054
======== ======== ======== ========
Average shares outstanding - after dilution:
___________________________________________
Average shares outstanding - before dilution 142,745 142,066 142,682 141,972
Assumed exercise of stock options 688 998 745 1,054
Assumed conversion of debentures 7,778 7,778 7,778 7,778
________ ________ ________ ________
Total 151,211 150,842 151,205 150,804
======== ======== ======== ========
(1) Restated as necessary to reflect the March 1994 two-for-one stock split.
(2) Dilution is less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statements for the twenty-six week period ended July 30, 1994.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 69,547<F1>
<SECURITIES> 0
<RECEIVABLES> 257,264
<ALLOWANCES> 0
<INVENTORY> 1,435,508
<CURRENT-ASSETS> 1,870,660
<PP&E> 4,745,216
<DEPRECIATION> 1,932,352
<TOTAL-ASSETS> 6,765,563
<CURRENT-LIABILITIES> 1,737,132
<BONDS> 2,159,493
<COMMON> 144,542
0
0
<OTHER-SE> 1,690,606
<TOTAL-LIABILITY-AND-EQUITY> 6,765,563
<SALES> 9,276,670
<TOTAL-REVENUES> 9,276,670
<CGS> 6,824,366
<TOTAL-COSTS> 6,824,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89,634
<INCOME-PRETAX> 210,806
<INCOME-TAX> 93,809
<INCOME-CONTINUING> 116,997
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,997
<EPS-PRIMARY> $0.82
<EPS-DILUTED> $0.80
<FN>
<F1>All numbers except EPS are in (000's).
</FN>
</TABLE>
<PAGE>
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
AMERICAN STORES COMPANY
AMERICAN STORES COMPANY, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of AMERICAN STORES
COMPANY, held on March 21, 1994, a resolution was duly adopted setting forth
a proposed amendment to the Restated Certificate of Incorporation of such
corporation. The resolution setting forth the proposed amendment is as
follows:
WHEREAS, the Company presently has 210,000,000 authorized shares of stock, of
which 200,000,000 are common shares ("Common Stock") and 10,000,000 are
preferred shares ("Preferred Stock"); and
WHEREAS, the Board has authorized a two-for-one Common Stock split in the
form of a dividend of one share of Common Stock for each outstanding share of
Common Stock ("Stock Split"); and
WHEREAS, the Board believes it to be in the best interests of the Company and
its shareholders that the number of authorized but unissued shares of Common
Stock be increased so that a substantial number of authorized but unissued
shares are available for proper corporate actions including, without
limitation, the raising of additional capital, stock dividends or splits, and
acquisitions; and
WHEREAS, the Board has determined that it is advisable and in the best
interests of the Company to increase the number of authorized shares of the
Company's Common Stock; and
WHEREAS, subject to the approval of the Company's shareholders at the
Company's 1994 Annual Meeting of Shareholders, the Board has decided to amend
the Company's Restated Certificate of Incorporation to increase the number of
authorized shares.
NOW, THEREFORE, IT IS HEREBY RESOLVED, that the Company's Restated
Certificate of Incorporation be amended by deleting the existing Section 4.01
of Article FOURTH and substituting the following Section 4.01, which shall
read in its entirety as follows:
4.01 The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 335,000,000, consisting of
(a) 325,000,000 shares of Common Stock, par value $1 per share ("Common
<PAGE>
Stock"); and
(b) 10,000,000 shares of Preferred Stock, par value $1 per share ("Preferred
Stock").
RESOLVED FURTHER, that the Board of Directors deems it advisable to propose
to the Company's shareholders the amendment of 4.01 of Article FOURTH to
increase the number of shares of Common Stock authorized and directs that it
be submitted for consideration at the 1994 Annual Meeting of Shareholders.
RESOLVED FURTHER, that the Board of Directors recommend that the Company's
shareholders approve the amendment of 4.01 of Article FOURTH.
RESOLVED FURTHER that, upon receipt of the requisite shareholder approval,
the appropriate officers of the Company be, and each such officer hereby is,
authorized and directed to take such action as necessary to file or cause to
be filed a certificate of amendment reflecting the authorized amendment to
the Company's Restated Certificate of Incorporation with the Secretary of
State of Delaware.
RESOLVED FURTHER, that the proper officers of the Company be, and each of
them is authorized and directed, jointly and severally, for and on behalf of
the Company, to execute and deliver any and all such other instruments and to
do or cause to be done any and all such other acts as they deem necessary or
advisable to carry out the intent and purposes of the foregoing resolutions
and to comply with applicable laws and regulations.
RESOLVED FURTHER, that the Board of Directors hereby adopts, as if expressly
set forth herein, the form of any resolution required by any authority to be
filed in connection with any applications, consents to service, issuer's
covenants or other documents if (i) in the opinion of the officers of the
Company executing the same, the adoption of such resolutions is necessary or
desirable and (ii) the Secretary or an Assistant Secretary of the Company
evidences such adoption by inserting in the minutes of this meeting copies of
such resolutions, which will thereupon be deemed to be adopted by the Board
of Directors with the same force and effect as if presented at this meeting.
SECOND: That, thereafter, pursuant to resolution of its Board of Directors,
the 1994 annual meeting of the shareholders of such corporation was duly
called and held on June 21, 1994, upon notice in accordance with Section 222
of the General Corporation law of the State of Delaware, at which meeting the
necessary number of shares as required by statute were voted in favor of the
amendment.
THIRD: That such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of such corporation shall not be reduced under or
<PAGE>
by reason of such amendment.
IN WITNESS WHEREOF, AMERICAN STORES COMPANY has caused this certificate to be
signed by Kathleen E. McDermott, Executive Vice President, and Jack Lunt, its
Secretary, this 21st day of June, 1994.
AMERICAN STORES COMPANY
By ________________________________________
ATTEST: Kathleen E. McDermott
By _________________________________
Jack Lunt, Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF AMERICAN STORES COMPANY
PURSUANT TO SECTION 245 OF THE GENERAL CORPORATION LAW OF DELAWARE
Article FIRST
Name
The name of the corporation is American Stores Company.
Article SECOND
Registered Office
Its registered office in the state of Delaware is located at Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware
19801. Its registered Agent at that address is The Corporation Trust
Company.
Article THIRD
Purposes
The sole purpose of the corporation is the acquisition and hold of stock of
other corporations for the purpose of controlling the management of affairs
of such other corporations; and, in furtherance of the foregoing, the
corporation may engage in such activities as are incidental to the business
of acquiring and holding such stock.
Article FOURTH
Shares
4.01 The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 210,000,000, consisting of
(a) 200,000,000 shares of Common Stock, par value $1 per share ("Common
Stock"), and
(b) 10,000,000 shares of Preferred Stock, par value $1 per share ("Preferred
Stock").
4.02 The Board of Directors is hereby expressly authorized, by resolution or
resolutions, to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock. Before any shares of any such series are issued,
the Board of Directors shall fix, and hereby is expressly empowered to fix,
<PAGE>
by resolution or resolutions, the following provisions of the shares thereof:
(a) the designation of such series, the number of shares to constitute such
series and the stated value thereof if different from the par value thereof;
(b) whether the shares of such series shall have voting rights, in addition
to any voting rights provided by law, and, if so, the terms of such voting
rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, the preference or
relation which such dividends shall bear to the dividends payable on any
shares of stock of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption by the
Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the
assets, of the Corporation;
(f) whether the shares of such series shall be subject to the operation of a
retirement or sinking fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of
this class or any other securities and, if so, the price or prices or the
rate or rates of conversion or exchange and the method, if any, of adjusting
the same, and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of dividends or the
making of
other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this
class or of any other class; and
(j) any other powers, preferences and relative, participating, optional and
<PAGE>
other special rights, and any qualifications, limitations and restrictions
thereof.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of
such series except that shares of any one series issued at different times
may differ as to the dates from which dividends thereon shall accrue and/or
be cumulative.
Pursuant to the authority granted to and vested in the Board of Directors of
the Corporation in accordance with the provisions of this Section 4.02, the
Board of Directors has created a series of Preferred Stock and has stated the
designation and number of shares, and fixed the relative rights, preferences,
and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 380,000. Such number of shares may be increased or decreased
by resolution of the Board; provided, that no decrease shall reduce the
number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance
upon the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Corporation
convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Junior Preferred Stock with respect to dividends, the holders of shares of
Junior Preferred Stock, in preference to the holders of Common Stock, $1 par
value per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Junior Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share
amount of al cash dividends, and 100 times the aggregate per share amount
<PAGE>
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend on shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date or issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date or issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
<PAGE>
Section 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Junior Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such even
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of stock holders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders of
Junior Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Junior Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Junior Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
<PAGE>
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of
Junior Preferred Stock, or any shares of stock ranking on a parity with the
Junior Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Charter, or in any other Supplemental Charter Section
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Junior Preferred Stock
unless, prior thereto, the holders of shares of Junior Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Junior Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
Junior Preferred Stock, except distributions made ratably on the Junior
Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
<PAGE>
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Junior Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Junior Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Junior Preferred Stock shall not be
redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Junior Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Junior Preferred
Stock, voting together as a single class.
4.03 Deleted.
<PAGE>
4.04 Deleted.
4.05 Common Stock Provision.
(a) Subject to the provisions of applicable law and the preference of the
Preferred Stock, the holders of Common Stock shall be entitled to receive
dividends at such time and in such amounts as may be determined by the Board
of Directors.
(b) Except as otherwise provided by law or by the provisions of this
Restated Certificate of Incorporation, the holders of Common Stock shall have
sole voting power and shall have one vote for each share on each matter
submitted to a vote of the stockholders of the corporation.
(c) In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the corporation and
preferential amounts to which the holders of the Preferred Stock shall be
entitled, the holders of the Common Stock shall be entitled to share ratably
in all of the remaining assets of the corporation.
4.06 Deleted.
4.07 Deleted.
4.08 Deleted.
4.09 Deleted.
4.10 Deleted.
Article FIFTH
Cumulative Voting
Deleted.
Article SIXTH
Preemptive Rights
No stockholder of this corporation shall by reason of his holding shares of
any class have any preemptive or preferential rights to purchase or subscribe
to any shares of any class of this corporation, now or hereafter to be
authorized, or any notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase shares of any class, now or
hereafter to be authorized, whether or not the issuance of any such shares,
<PAGE>
or such notes, debentures, bonds or other securities, would adversely affect
the dividend or voting rights of such stockholder, other than such rights, if
any, as the Board of Directors, in its discretion from time to time, may
grant and at such price as the Board of Directors in its discretion may fix;
and the Board of Directors may issue shares of any class of this corporation,
or any notes, debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of any class, without
offering any such shares of any class, either in whole or in part, to the
existing stockholders of any class.
Article SEVENTH
Perpetual existence
The Corporation is to have perpetual existence.
Article EIGHTH
Non-Liability of Shareholders
The private property of the stockholders shall not be subject to the payment
of corporate debts to any extent whatever.
Article NINTH
Indemnification and Insurance
9.01 Elimination of Certain Liability of Directors. A Director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the Director derived an improper personal benefit.
If the Delaware General Corporation Law is amended after approval by the
stockholders of this Article to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the stockholders of
the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or
modification.
<PAGE>
9.02 Indemnification and Insurance.
(a) Right to indemnification. Each person who was or is made party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a Director or
officer, of the Corporation or while serving as a Director or officer of the
Corporation is or was also serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgements, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased to be a
Director or officer, and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to indemnification
conferred in this Section shall be a contract right (which may not be reduced
or limited by any repeal or modification of this Section 9.02) and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by a Director or officer in his or her capacity as
a Director or officer (and not in any other capacity in which service was or
is rendered by such person while a Director or officer, including, without
limitation, service to any employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the company
of an undertaking, by or on behalf of such Director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such Director
or officer is not entitled to be indemnified under this section or otherwise.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of Directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this
Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant
<PAGE>
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking, if any is required,
has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss whether or not
the Corporation would have the power to indemnify such person against such
expense, liability to or loss under the Delaware General Corporation Law.
Article TENTH
Directors
10.01 The Board of Directors shall consist of such number of directors not
less than five or more than twenty as may be determined from time to time by
the Board of Directors, subject to the provisions of Sections 4.02(i) and
4.04(h)(1). The Board is divided into three classes, Class I, Class II and
Class III. Such classes shall be as nearly equal in number of directors as
possible. Each director shall serve for a term ending on the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve
for a term ending at the annual meeting next following the end of the fiscal
<PAGE>
year 1981, the directors first elected to Class II shall serve for a term
ending at the second annual meeting next following the end of the fiscal year
1981, and the directors first elected to Class III shall serve for a term
ending at the third annual meeting next following the end of the fiscal year
1981. The foregoing notwithstanding, each director shall serve until his
successor shall have been duly elected and qualified, unless he shall resign,
become disqualified, disabled or shall otherwise be removed.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless,
by reason of any intervening changes in the authorized number of directors,
the Board shall designate one or more directorships whose term then expires
as directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors, each director then continuing to serve as such shall
nevertheless continue as director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation or
removal. If any newly created directorship may, consistent with the rule
that the three classes shall be as nearly equal in number of directors as
possible, be allocated to one of two or more classes, the Board shall
allocate it to that of the available classes whose term of office is due to
expire at the earliest date following such allocation.
10.02 Deleted.
10.03 In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware and by this Certificate of Incorporation, the
Board of Directors is expressly authorized:
(a) to make, alter or repeal the by-laws of the corporation;
(b) to authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation;
(c) to set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created;
(d) by resolution passed by a majority of the whole Board to designate one
or more committees, each committee to consist of two ore more of the
directors of the corporation, which, to the extent provided in the resolution
or in the by-laws of the corporation, shall have and may exercise the powers
of the Board of Directors in the management of the business and affairs of
the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it. Such committee or committees shall have
such name or names as may be stated in the by-laws of the corporation or as
<PAGE>
may be determined from time to time by resolution adopted by the Board of
Directors;
(e) subject to the provisions of Article TWELFTH, when and as authorized by
the affirmative vote of the holders of a majority of the stock issued and
outstanding having voting power as to such matter given at a stockholders'
meeting duly called for that purpose, to sell, lease or exchange all of the
property and assets of the corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock, in and/or
other securities, of, any other corporation or corporations, as the Board of
Directors shall deem expedient and for the best interests of this
corporation.
Article ELEVENTH
Meetings
11.01 Meetings of stockholders may be held outside the State of Delaware, if
the by-laws so provide. The books of the corporation may be kept (subject to
any provision contained in the statute) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors in the by-laws of the corporation.
11.02 No action shall be taken by the stockholders except at an annual or
special meeting of stockholders.
11.03 Except as provided in Section 4.08, special meetings of the
stockholders of the corporation for any purpose or purposes may be called at
any time by the Board of Directors or by any person or committee expressly so
authorized by the Board of Directors and by no other person or persons.
Article TWELFTH
Amendment of By-Laws
By-laws shall not be made, repealed, altered, amended or rescinded by the
stockholders of the corporation except by the vote of the holders of not less
than 80% of the total outstanding shares of Common Stock, as well as, a
majority of the total outstanding shares of Common Stock not held by a
Related Person (as defined in Article THIRTEENTH) and/or its affiliates.
Nothing contained herein shall detract from the authority of the Board of
Directors to make, alter or repeal the by-laws of the corporation (as set
forth in Article 10.03(a)).
Article THIRTEENTH
<PAGE>
Transactions with Related Persons
The approval of any proposal that the corporation:
(a) merge or consolidate with any other person or entity if such other
person or entity and its affiliates singly or in the aggregate are directly
or indirectly the beneficial owners of more than ten percent (10%) of the
outstanding shares of Common Stock of the corporation (any such other person
or entity being herein referred to as a "Related Person"); or
(b) sell or exchange all or substantially all of its assets or business to
or with a Related Person; or
(c) issue or deliver any stock or other securities of its issue in exchange
or payment for any properties or assets of a Related Person or securities
issued by a Related Person, or in a merger of any affiliate of the Company
with or into a Related Person or any of its affiliates; shall require, in
addition to any approval otherwise required by law or this Certificate of
Incorporation, the affirmative vote of the holders of not less that two-
thirds of those outstanding shares of Common Stock not held by the Related
Person and/or its affiliates; provided, however, that the foregoing shall not
apply to any such merger, consolidation, sale or exchange, or issuance or
delivery of stock or other securities which is (i) approved by resolution of
the Board of Directors adopted by the affirmative vote of not less than two-
thirds(2/3) of the then authorized number of directors, or (ii) approved by
resolution of the Board of Directors prior to the acquisition of the
beneficial ownership of more than ten percent (10%) of the Common Stock by
such Related Person and its affiliates. For the purposes hereof, an
"affiliate" is any person (including a corporation, partnership, trust,
estate or individual) who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, the person specified; "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities,
by contract, or otherwise; and in computing the percentage of outstanding
Common Stock beneficially owned by any person, the shares outstanding and the
shares owned shall be determined as of the record date fixed to determine the
stockholders entitled to vote or express consent with respect to such
proposal. The stockholder vote, if any, required for mergers,
consolidations, sales or exchanges of assets or issuances of stock or other
securities not expressly provided for in this Article, shall be such as may
be required by applicable law.
Article FOURTEENTH
Evaluation of Certain Acquisition Proposals
The Board of Directors of the corporation, when evaluating any proposal from
<PAGE>
another party to (a) make a tender offer for equity securities of the
Corporation; (b) merge or consolidate the corporation with another
corporation; or (c) purchase or otherwise acquire substantially all of the
properties and assets of the corporation, shall, in connection with the
exercise of its judgement in determining what is in the best interests of the
corporation and its stockholders, give due consideration to all relevant
factors, including, without limitation, the social and economic effects on
the employees, customers, suppliers and other constituents of the corporation
and its subsidiaries and on the communities in which they operate or are
located.
Article FIFTEENTH
Amendments
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation. Notwithstanding
the foregoing, the provisions of Article FOURTH relating to the voting rights
of the $5.51 Cumulative Preferred Stock shall not be changed except in
accordance with the provisions contained therein; and the provisions of this
Article, Section 10.01 of Article TENTH, Sections 11.02 and 11.03 of Article
ELEVENTH, Article TWELFTH, Article THIRTEENTH and Article FOURTEENTH may
only be amended by the affirmative vote of the holders of not less than 80%
of the outstanding shares of Common Stock, as well as, a majority of the
total outstanding shares of Common Stock not held by a Related Person, as
defined in Article THIRTEENTH, and/or its affiliates.
RESTATED BY-LAWS OF
AMERICAN STORES COMPANY
ARTICLE I
OFFICES
Section 1.01. Registered Office. The registered office of the Company
shall be at 100 West Tenth Street, Wilmington, County of New Castle, Delaware,
until otherwise established by a vote of a majority of the Board of Directors in
office, and a statement of such change is filed in the manner provided by
statute.
Section 1.02. Other Offices. The Company may also have offices at such
other places within or without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Company requires.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Place of Meeting. All meetings of the stockholders of the
Company shall be held in Wilmington, Delaware, or at such other place within or
without the State of Delaware as shall be designated by the Board of Directors
in the notice of such meeting.
Section 2.02. Annual Meeting. The Board of Directors may fix the date
and time of the annual meeting of the stockholders, but if no such date and time
is fixed by the Board, the meeting for any calendar year shall be held at such
time and date as the Board of Directors may determine and at said meeting the
stockholders then entitled to vote shall elect by written ballot directors and
shall transact such other business as may properly be brought before the
meeting.
Section 2.03. Special Meetings. Special meetings of the stockholders of
the Company for any purpose or purposes for which meetings may lawfully be
called, may be called at any time for any purpose or purposes by the Board of
Directors or by any person or Committee expressly so authorized by the Board of
Directors and by no other person or persons. At any time, upon written request
of any person or persons who have duly called a special meeting, which written
request shall state the purpose or purposes of the meeting, it shall be the duty
of the Secretary to fix the date of the meeting to be held at such date and time
as the Secretary may fix, not less than ten nor more than sixty days after the
receipt of the request, and to give due notice thereof. If the Secretary shall
neglect or refuse to fix the time and date of such meeting and give notice
thereof, the person or persons calling the meeting may do so.
Section 2.04. Notice of Meetings. Written notice of the place, date
Amended as of June 21, 1994
and hour of every meeting of the stockholders, whether annual or special, shall
be given to each stockholder of record entitled to vote at the meeting not less
than ten nor more than sixty days before the date of the meeting. Every notice
of a special meeting shall state the purpose or purposes thereof.
Section 2.05. Quorum, Manner of Acting and Adjournment. The holders of a
majority of the stock issued and outstanding (not including treasury stock) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the Certificate of
Incorporation or by these by-laws. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any such adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. When a quorum is present at any meeting, the
vote of the holders of the majority of the stock having voting power present in
person or represented by proxy shall decide any questions brought before such
meeting, unless the question is one upon which, by express provision of the
applicable statute, the Company's Certificate of Incorporation or these by-laws,
a different vote is required in which case such express provision shall govern
and control the decision of such question. Except upon those questions governed
by the aforesaid express provisions, the stockholders present in person or by
proxy at a duly organized meeting can continue to do business until adjournment,
notwithstanding withdrawal of enough stockholders to leave less than a quorum.
Section 2.06. Organization. At every meeting of the stockholders the
Chairman of the Board, if there be one, or in the case of vacancy in office or
absence of the Chairman of the Board, such person as may be designated by the
Board of Directors, or, in the absence of any such person, one of the following
persons present in the order stated: the Vice Chairmen of the Board, if there
be one in their order of rank and seniority; the President; the Executive Vice
Presidents and the Vice Presidents, in their order of rank and seniority; or a
Chairman chosen by the stockholders entitled to cast a majority of the votes
which all stockholders present in person or by proxy are entitled to cast, shall
act as Chairman, and the Secretary, or, in his absence, an Assistant Secretary,
or in the absence of both the Secretary and Assistant Secretaries, a person
appointed by the Chairman shall act as Secretary.
Section 2.07. Voting: Proxies. Each stockholder shall at every meeting
of the stockholders be entitled to one vote in person or by proxy for each share
of capital stock having voting power registered in his name on the books of the
Company on the record date for such meeting. All elections of directors shall
be by written ballot. The vote upon any other matter need not be by ballot. No
proxy shall be voted after three years from its date, unless the proxy provides
for a longer period. Every proxy shall be executed in writing by the
stockholder or by his duly authorized attorney-in-fact and filed with the
Secretary of the Company. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provisions in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the Secretary of the Company. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Company generally. A proxy shall not be revoked by the death or
incapacity of the maker unless, before the vote is counted or the authority is
exercised, written notice of such death or incapacity is given to the Secretary
of the Company.
Section 2.08. Voting Lists. The officer who has charge of the stock
ledger of the Company shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.09. Inspectors of Election. In advance of any meeting of
stockholders the Board of Directors may appoint inspectors of election, who need
not be stockholders, to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, the Chairman of any such meeting
may, and upon the demand of any stockholder or his proxy at the meeting and
before voting begins, shall appoint inspectors of election. The number of
inspectors shall be either one, two or three, as determined, in the case of
inspectors appointed upon demand of a stockholder, by stockholders present
entitled to cast a majority of the votes which all stockholders present are
entitled to cast thereon. No person who is a candidate for office shall act as
an inspector. In case any person appointed as inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the convening of the meeting, or at the meeting
by the Chairman of the meeting.
If inspectors of election are appointed as aforesaid, they shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result, and do such acts as
may be proper to conduct the election or vote with fairness to all stockholders.
If there be three inspectors of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
On request of the Chairman of the meeting or of any stockholder or his
proxy, the inspectors shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. Board Powers. The business and affairs of the Company
shall be managed by or under the direction of the Board of Directors; and all
powers of the Company, except those specifically reserved or granted to the
stockholders by statute, the Certificate of Incorporation or these by-laws, are
hereby granted to and vested in the Board of Directors. The primary functions
of the Board are to select principal senior executives, evaluate their
performance, fix their compensation, oversee the conduct of the business to
evaluate whether it is being managed properly, review the Company's financial
objectives, major plans and major accounting and auditing issues, and to perform
all other functions prescribed by law or the Certificate of Incorporation.
Section 3.02. Number, Term of Office and Qualification. The Board of
Directors shall consist of such number of directors, not less than five nor more
than twenty, as may be determined from time to time by the Board of Directors.
The Board is divided into three classes, Class I, Class II and Class III. Such
classes shall be as nearly equal in number of directors as possible. Each
director shall serve for a term ending on the third annual meeting following the
annual meeting at which such directors were elected; provided, however that the
directors first elected to Class I shall serve for a term ending at the annual
meeting next following the end of the fiscal year 1981, the directors first
elected to Class II shall serve for a term ending at the second annual meeting
next following the end of the fiscal year 1981, and the directors first elected
to Class III shall serve for a term ending at the third annual meeting next
following the end of the fiscal year 1981. The foregoing notwithstanding, each
director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of directors, the
Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal
in number of directors as possible, in the event of any change in the authorized
number of directors, each director then continuing to serve as such shall
nevertheless continue as director of the class of which he is a member until the
expiration of his current term, or his prior death, resignation or removal. If
any newly created directorship may, consistent with the rule that the three
classes shall be as nearly equal in number of directors as possible, be
allocated to one or two or more classes, the Board shall allocate it to that of
the available classes whose term of office is due to expire at the earliest date
following such allocation. All directors of the Company shall be natural
persons of full age, but need to be residents of Delaware or stockholders of the
Company.
Section 3.03. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the event of their death, resignation or removal. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole Board of Directors (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3.04. Resignations. Any director of the Company may resign at
any time by giving written notice to the Chairman of the Board or the Secretary
of the Company. Such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.05. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the Vice Chairmen of the Board, if there be one in
their order of rank and seniority; the President; the Executive Vice Presidents
or Vice Presidents in their order of rank and seniority; or a Chairman chosen by
a majority of the directors present, shall preside, and the Secretary, or in his
absence, an Assistant Secretary, or in the absence of the Secretary and the
Assistant Secretaries, any person appointed by the Chairman of the meeting,
shall act as Secretary.
Section 3.06. Place of Meeting. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the State of Delaware as the Chairman of the Board or the Board of Directors may
from time to time determine, or as may be designated in the notice calling the
meeting.
Section 3.07. Organization Meeting. Immediately after each annual
election of directors or other meeting at which the entire Board of Directors is
elected, the newly elected Board of Directors shall meet for the purpose of
organization, election of officers, and the transaction of other business, at
the place where said election of directors was held. Notice of such meeting
need not be given. Such organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 3.08. Regular Meetings. Regular meetings of the Board of
Directors shall be held without notice at such time and at such place as shall
be determined from time to time by the Board of Directors. Notice of any
regular meeting shall be given in the manner prescribed for special meetings of
the Board of Directors.
Section 3.09. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board of
Directors, the President or on the written request of three or more of the
directors. Notice of each such meeting shall be given to each director in
writing, or by telephone personally, at least 24 hours before the time at which
the meeting is to be held. Each such notice shall state the time and place of
the meeting to be so held.
Section 3.10. Quorum, Manner of Acting and Adjournment. At all meetings
of the Board of Directors a majority of the total number of directors 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
statute or by the Certificate of Incorporation. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Unless otherwise restricted by the Certificate of Incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board or 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 or committee as the case may be.
Section 3.11. Committees of the Board of Directors. The Board of
Directors may, by a resolution adopted by the Board, designate an Executive
Committee and other committees. Each committee, other than the Executive
Committee, shall consist of two or more directors who shall be approved by a
majority of the whole Board. The Executive Committee shall consist of three or
more directors, one of whom shall be the Chairman of the Board of the Company.
The Board may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member or the alternate
or alternates, if any, designated for such member of any committee, the member
or members thereof present at any meeting and not disqualified, whether or not
they constitute a quorum, may unanimously appoint another director to act at the
meeting in place of any such absent or disqualified member.
The committees of the Board shall have and exercise the authority of the
Board of Directors to the extent provided in the resolution designating the
committee.
No committee of the Board of Directors shall have the authority of the
Board with respect to any of the following actions:
(1) Declaring any dividend;
(2) Authorizing the issuance of any stock of the Company;
(3) Amending the Certificate of Incorporation;
(4) Adopting an agreement of merger or consolidation;
(5) Recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Company's property and assets;
(6) Recommending to the stockholders a dissolution of the Company or a
revocation of a dissolution; or
(7) Amending the by-laws of the Company.
The provisions of Section 3.09 with respect to the provision of notice for
special meetings shall be applicable to all committees of the Board.
At all meetings of any committee of the Board of Directors, a majority of
the members of the committee shall constitute a quorum for the transaction of
business and the act of a majority of the members of the committee present at
any meeting thereof at which there is a quorum shall be the act of the
committee, except as may be otherwise specifically provided for in the
resolution establishing the committee, or by law or by the Certificate of
Incorporation. If a quorum is not present at any meeting of any committee of
the Board, the committee members present thereat may adjourn the meeting from
time to time without notice other than announcement at the meeting, until a
quorum shall be present.
Section 3.12. Interested Directors or Officers. No contract or
transaction between the Company and one or more of its directors or officers, or
between the Company and any other corporation, partnership, association, or
other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors
or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Company as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
Section 3.13. Compensation. Each director who is not also a full-time
active employee of the Company or any subsidiary thereof shall be paid such
compensation for his or her services as a director and shall be reimbursed for
such expenses as may be fixed by the Board of Directors.
ARTICLE IV
NOTICE, WAIVERS, MEETINGS
Section 4.01. Notice, What Constitutes. Whenever, under the provisions
of the statutes or of the Certificate of Incorporation or of these by-laws,
written notice is required to be given to any directors or stockholder, such
notice may be given to such person, either personally or by sending a copy
thereof through the mail, or by telegraph, facsimile transmission, charges
prepaid, to his address appearing on the books of the Company. If the notice is
sent by mail, by telegraph or by private delivery service, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States mail or with a telegraph office or private delivery service for
transmission to such person.
Section 4.02. Waivers of Notice. Whenever any written notice is required
to be given under the provisions of the Certificate of Incorporation, these by-
laws, or by statute, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. 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 of such meeting.
Attendance of a person, either in person or by proxy, at any meeting,
shall constitute a waiver of notice of such meeting, except when a person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting was not lawfully
called or convened.
Section 4.03. Conference Telephone Meetings.
(a) Directors and Officers of the Company may not participate in a
meeting of the Board or of a Committee of the Board or of the Real Estate or
Benefit Plans Committees of the Company by means of conference telephone or
similar communications equipment except in an emergency.
(b) An emergency is defined as a sudden unexpected happening rendering it
absolutely necessary to obtain immediate Board action and there is insufficient
time to convene a meeting of the Board where all members could be present in
person. In the event of such an emergency, to be determined in the sole and
absolute discretion of the Chief Executive Officer of the Company, one or more
directors may participate in such a meeting by means 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 shall constitute presence in person at such meeting.
ARTICLE V
OFFICERS
Section 5.01. Number, Qualifications and Designation. The officers of
the Company shall be chosen by the Board of Directors and shall be a Chairman of
the Board, a President and/or Chief Executive Officer, one or more Executive
Vice Presidents, Senior Vice Presidents and Vice Presidents, a Secretary, a
Treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article. One person may hold more than one
office.
Section 5.02. Election and Term of Office. The officers of the Company,
except those elected by delegated authority pursuant to Section 5.03 of this
Article, shall be elected annually by the Board of Directors, and each such
officer shall hold his office until his successor shall have been elected and
qualified, or until his earlier resignation or removal.
Section 5.03. Subordinate Officers, Committees and Agents. The Board of
Directors may, from time to time, elect such other officers, employees or other
agents as it deems necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as are provided in these by-
laws, or as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any officer or committee the power to elect
subordinate officers and to retain or appoint employees or other agents, or
committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
Section 5.04. Resignations. Any officer or agent may resign at any time
by giving written notice to the Board of Directors, or to the Chairman of the
Board or the Secretary of the Company. Any such resignation shall take effect
at the date of the receipt of such notice or at any later time specified therein
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5.05. Removal. Any officer, committee, employee or other agent
of the Company may be removed, either for or without cause, by the Board of
Directors or other authority which elected or appointed such officer, committee
or other agent whenever in the judgment of such authority the best interests of
the Company will be served thereby.
Section 5.06. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03 of this Article, as the
case may be, and if the office is one for which these by-laws prescribe a term,
shall be filled for the unexpired portion of the term.
Section 5.07. General Powers. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, the day-to-day management of the
Company's business and affairs shall be conducted by or under the supervision of
the President and Chief Executive Officer and by those other officers and
employees to whom management functions are delegated by the Board of Directors
or the President and Chief Executive Officer.
Section 5.08. Corporate Authority. The Chairman of the Board shall,
subject to the control of the Board of Directors, have general and active
supervision of the affairs, business, officers and employees of the Company.
By virtue of his office, the Chairman of the Board shall be a member of all
committees of the Board of Directors or of the Company except as otherwise
specifically provided. He shall, from time to time, in his discretion or at the
order of the Board, submit to the Board reports of the operations and affairs of
the Company. He shall also perform such other duties and have such other powers
as may be assigned to him from time to time by the Board of Directors.
Section 5.09. The Chairman and Vice Chairmen of the Board. The Chairman
of the Board shall preside at all meetings of the stockholders and of the Board
of Directors, and shall perform such other duties as may from time to time be
assigned to him by the Board of Directors. The Vice Chairmen of the Board, if
there be one, in their order of rank and seniority, shall perform such duties as
may from time to time be assigned to them by the Board of Directors, by the
Chairman of the Board or these by-laws.
Section 5.10. The President. DELETED IN ITS ENTIRETY.
Section 5.11. The Vice Presidents. The Company may have one or more
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents having
such duties as from time to time may be determined by the Board of Directors or
by the Chairman of the Board, or by the President and/or Chief Executive Officer
pursuant to Section 5.07.
Section 5.12. The Secretary. The Secretary shall keep full minutes of
all meetings of the stockholders and of the Board of Directors; shall be ex-
officio Secretary of the Board of Directors; shall attend all meetings of the
stockholders and of the Board of Directors; shall record all the votes of the
stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors and of committees of the Board in a
book or books to be kept for that purpose. The Secretary shall give, or cause
to be given, notices of all meetings of the stockholders of the Company and of
the Board of Directors; shall be the custodian of the seal of the Company and
see that it is affixed to all documents to be executed on behalf of the Company
under its seal; shall have responsibility for the custody and safekeeping of all
permanent records and other documents of the Company; and, in general, shall
perform all duties incident to the office of Secretary and such other duties as
may be prescribed by the Board of Directors or by the Chairman of the Board,
under whose supervision he shall be. The Board of Directors may elect one or
more Assistant Secretaries to perform such duties as shall from time to time be
assigned to them by the Board of Directors or the Chairman of the Board.
Section 5.13. The Treasurer. The Treasurer shall have or provide for the
custody of all funds, securities and other property of the Company; shall
collect and receive or provide for the collection or receipt of money earned by
or in any manner due to or received by the Company; shall deposit or cause to be
deposited all said moneys in such banks or other depositories as the Board of
Directors may from time to time designate; shall make disbursements of Company
funds upon appropriate vouchers; shall keep full and accurate accounts of
transactions of his office in books belonging to the Company; shall, whenever so
required by the Board of Directors, the Executive Committee or an Audit
Committee, render an accounting showing his transactions as Treasurer, and the
financial condition of the Company; and, in general, shall discharge any other
duties as may from time to time be assigned to him by the Board of Directors.
The Board of Directors may elect one or more Assistant Treasurers to perform the
duties of the Treasurer as shall from time to time be assigned to them by the
Board of Directors or the Treasurer.
Section 5.14. The Controller. The Board of Directors may appoint a
Controller who shall maintain full and accurate records of all assets and
liabilities and transactions of the Company, see that adequate audits thereof
are currently and regularly made and, in conjunction with other officers and
department heads, initiate and enforce measures and procedures whereby the
business of the Company shall be conducted with maximum safeguards, efficiency
and economy. He shall make all such records available for examination when so
required by the Board of Directors, the Executive Committee, or an Audit
Committee. He shall perform such other duties and have such other obligations
as may be prescribed by the Board of Directors or by the Chairman of the Board.
Section 5.15. Officer's Bonds. Any officer shall give a bond for the
faithful discharge of his duties in such sum, if any, and with such surety or
sureties as the Board of Directors shall require. The Company may obtain such
bonds at its expense as the Board of Directors shall require.
Section 5.16. Compensation. The compensation of the officers and agents
of the Company elected by the Board of Directors shall be fixed from time to
time by the Board of Directors or by such committee as may be designated by the
Board of Directors to fix salaries or other compensation of officers.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
Section 6.01. Issuance. The certificates for stock of the Company shall
be numbered and registered in the stock ledger and transfer books or equivalent
records of the Company as they are issued. They shall be signed by the Chairman
of the Board, the President, an Executive Vice President or a Vice President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and shall bear the corporate seal, which may be a facsimile, engraved
or printed. Any of or all the signatures upon such certificate may be a
facsimile, engraved or printed if such certificate of stock is signed or
countersigned by a transfer agent or by a registrar, which signature may also be
a facsimile. In case any officer, transfer agent or registrar who has signed,
or whose facsimile signature has been placed upon any share certificate shall
have ceased to be such officer, transfer agent or registrar before the
certificate is issued, it may be issued with the same effect as if he were such
officer, transfer agent or registrar at the date of its issue.
Section 6.02. Transfer. Transfers of shares of stock of the Company
shall be made on the books of the Company upon surrender of the certificates
therefor, endorsed by the person named in the certificate or by attorney
lawfully constituted in writing. No transfer shall be made inconsistent with
the provisions of the Uniform Commercial Code, Article 8 of Title 5A of the
Delaware Code, and its amendments and supplements.
Section 6.03. Stock Certificates. Stock certificates of the Company
shall be in such form as provided by statute and approved by the Board of
Directors. The stock record books and the blank stock certificate books shall
be kept by the Secretary or by any agency designated by the Board of Directors
for that purpose.
Section 6.04. Lost, Stolen, Destroyed or Mutilated Certificates. The
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Company
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of the fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the Company a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Company with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 6.05. Record Holder of Shares. The Company shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
Section 6.06. Determination of Stockholders of Record. In order that the
Company may determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action.
If no record date is fixed:
(1) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(2) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
Only such stockholders as shall be stockholders on the record date fixed
or determined as aforesaid shall be entitled to notice of or to vote at such
meeting or adjournment, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful acction. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
ARTICLE VII
INDENMIFICATION OF DIRECTORS, OFFICERS, ETC.
DELETED IN ITS ENTIRETY.
ARTICLE VIII
INSURANCE
DELETED IN ITS ENTIRETY.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Corporate Seal. The corporate seal of the Company shall
have inscribed thereon the name of the Company, the year of its incorporation
and the words "Corporate Seal, Delaware". The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or otherwise reproduced.
Section 9.02. Checks. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the Board of
Directors, or officer or officers authorized by resolution of the Board of
Directors may, from time to time, designate.
Section 9.03. Contracts. Except as otherwise provided in these by-laws,
the Board of Directors may authorize any officer or officers including the
Chairman and Vice Chairmen of the Board of Directors, or any agent or agents, to
enter into any contract or to execute or deliver any instrument on behalf of the
Company and such authority may be general or confined to specific instances.
Section 9.04. Audit. The Board of Directors shall cause the accounts and
records of the Company and its subsidiaries to be examined and audited by a firm
of independent certified public accountants at least once each year. The Board
of Directors each year shall cause a report of the financial condition of the
Company and its subsidiaries as of the closing date of the preceding fiscal year
to be prepared. Such report shall be in such form as shall be approved by the
Board of Directors and shall be examined and audited by a firm of independent
certified public accountants.
Section 9.05. Inspection. The books, accounts and records of the Company
shall be open for inspection in person by any member of the Board of Directors
at all times.
Section 9.06. Amendment of By-Laws. These by-laws shall not be made,
repealed, altered, amended or rescinded by the stockholders of the Company
except by the vote of not less than 80% of the total outstanding shares of
common stock as well as a majority of the total outstanding shares of common
stock not held by a Related Person (as defined in Article Thirteenth of the
Certificate of Incorporation) and/or its affiliates. Nothing contained herein
shall detract from the authority of the Board of Directors to make, alter or
repeal the by-laws of the Company (as set forth in Article 10.03(a) of the
Certificate of Incorporation).
