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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 14, 1997
ADVANTA CORP.
(Exact name of Registrant as specified in its charter)
Delaware 0-14120 23-1462070
(State or other juris- (Commission (IRS Employer
diction of incorporation) File No.) Identification No.)
Welsh and McKean Roads, P.O. Box 844
Spring House, Pennsylvania 19044
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 657-4000
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
(a) Company Announcements.
On March 17, 1997, Advanta Corp. (the "Company") announced that its
Board of Directors and senior management have commenced a thorough and
systematic review of its business strategy, growth prospects and operating
environment aimed at maximizing the Company's value for its shareholders and
other constituents.
The Company said it has retained the firm of BT Wolfensohn to assist
it in the process, and to explore all strategic alternatives that build upon the
historic strength and success of the Company as a whole and of its business
units, including its mortgage, leasing and insurance operations as well as its
core credit card business. There can be no assurance that the Company will elect
to pursue any of the strategic actions it may consider.
The Company also reported that, in light of the foregoing, Alex W.
"Pete" Hart, the Company's Chief Executive Officer, has assumed the additional
responsibilities of David A. Brooks, the Company's Chief Operating Officer, who
has resigned. The nature and responsibilities of the job of Chief Operating
Officer are now very different from what was contemplated when Mr. Brooks joined
the Company two months ago.
Separately, the Company announced that it expects to report 1997
results well below previous expectations. For the first quarter, the Company
currently expects to report a loss in the area of $20 million, or approximately
$0.44 cents per share, compared to earnings of $41 million, or $0.91 per share,
in the first quarter of 1996. Advanta said that the interruption in its
historical pattern of strong financial results reflects a number of factors,
including continuing increases in consumer bankruptcies and charge-offs and
lower receivable balances than originally anticipated in its credit card
business. The Company emphasized that its mortgage financing, leasing and
insurance businesses continue to perform very well.
The Company said that it currently expects to report a net profit
for full-year 1997, with estimated earnings for the full year of approximately
$1.50 per share. In 1996, Advanta earned $3.89 per share. In response to
inquiries, the Company stated its expectation that the second fiscal quarter
would be profitable, but no details were provided for the quarter.
The Company said it is pursuing a number of steps to return the
Company to its historical levels of financial performance by increasing revenue
and stemming credit card losses. These steps include:
- More aggressively repricing certain segments of the Company's
credit card portfolio to match better the risk profiles of
particular customer segments.
- Bringing the Company's credit card fees, some of which are below
the industry average, more into line with current industry norms.
- Improving the Company's collection process by further customizing
collection methods.
- Reducing the introductory-rate period applied to certain new
cardholders.
- Tightening underwriting standards further to improve the credit
quality of the receivables portfolio.
- More quickly identifying and intervening on potentially troubled
accounts by means of advanced risk management systems.
- Developing new retention marketing programs to build upon
existing relationships with high-credit-quality cardholders.
- Continuing to develop additional products that offer customers
added value, rather than relying solely on a low price.
The Company also announced that its Board of Directors has adopted a
Shareholder Rights Plan, as described in paragraph (b) of this Item 5.
The Company's press release setting forth the above also contains a
statistical supplement and other information. A copy of the entire press release
is filed herewith as Exhibit 20.1.
This Current Report on Form 8-K contains forward-looking statements,
including but not limited to projections of future earnings, that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The most significant among these risks and
uncertainties are: (1) the Company's managed net interest margin, which in turn
is affected by the Company's success in originating new credit card accounts,
the receivables volume and initial pricing of new accounts, the impact of
repricing existing accounts and account attrition, the mix of account types and
interest rate fluctuations; (2) the level of delinquencies and charge-offs; and
(3) the level of expenses. Earnings also may be affected by factors that affect
consumer debt, competitive pressures and the ratings on debt of the Company and
its subsidiaries. Additional risks that may affect the Company's future
performance are detailed in the Company's prior filings with the Securities and
Exchange Commission, including its most recent Annual Report on Form 10-K and
its Quarterly Reports on Form 10-Q.
(b) Shareholder Rights Plan.
On March 14, 1997, the Board of Directors of the Company adopted a
Shareholder Rights Plan, providing that one Class A Right (a "Class A Right")
shall be attached to each share of Class A Common Stock, par value $0.01 per
share, of the Company (the "Class A Common Stock") and one Class B Right (a
"Class B Right" and, together with the Class A Rights, the "Rights") shall be
attached to each share of Class B Common Stock, par value $0.01 per share, of
the Company (the "Class B Common Stock" and, together with the Class A Common
Stock, the "Common Stock"). Each Right entitles the registered holder to
purchase from the Company a unit (a "Unit") consisting of one ten-thousandth of
a share of Series A Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), at a Purchase Price of $150.00 per Unit (the
"Purchase Price"), subject to adjustment. The Preferred Stock is a series of
the Company's Class B Preferred Stock, par value $.01 per share. The
description and terms of the Rights are set forth in the Rights Agreement (the
"Rights Agreement"), dated as of March 14, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Initially, the Class A Rights will be attached to all Class A Common
Stock certificates representing shares then outstanding and the Class B Rights
will be attached to all Class B Common Stock certificates representing shares
then outstanding, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of Common Stock or 15% or more of the outstanding
shares of Class A Common Stock (the "Stock Acquisition Date") or (ii) ten (10)
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15% or more of such
outstanding shares of Common Stock or Class A Common Stock. The definition of
Acquiring Person excludes any Exempted Person (as defined below). Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
Any person who, together with all affiliates and associates of such
person, is the beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 15% or more of the shares of
Common Stock outstanding or 15% or more of the shares of Class A Common Stock
outstanding on the date the Board of Directors authorizes the rights dividend
(the "Rights Dividend Declaration Date"), will be an "Exempted Person." In
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addition, any person who, together with all affiliates and associates of such
person, becomes the beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 15% or more of the shares of
Common Stock then outstanding, or 15% or more of the shares of Class A Common
Stock then outstanding, in either case as a result of a purchase by the Company
or any of its Subsidiaries of shares of Common Stock will also be an "Exempted
Person." However, any such person will no longer be deemed to be an Exempted
Person and will be deemed to be an Acquiring Person if such person, together
with all affiliates and associates of such person, becomes the beneficial owner,
at any time after the date such person became the beneficial owner of 15% or
more of the then outstanding shares of Common Stock or Class A Common Stock, of
additional securities representing 1,000 or more shares of Common Stock, except
if such additional securities are acquired (x) pursuant to the exercise of
options or warrants to purchase Common Stock outstanding and beneficially owned
by such person as of the date such person became the beneficial owner of 15% or
more of the then outstanding shares of Common Stock or Class A Common Stock or
as a result of an adjustment to the number of shares of Common Stock or Class A
Common Stock for which such options or warrants are exercisable pursuant to the
terms thereof, or (y) as a result of a stock split, stock dividend or the like.
A purchaser, assignee or transferee of the shares of Common Stock (or options or
warrants exercisable for Common Stock) from an Exempted Person will not thereby
become an Exempted Person, except that a transferee from the estate of an
Exempted Person who receives Common Stock as a bequest or inheritance from an
Exempted Person shall be an Exempted Person so long as such transferee continues
to be the beneficial owner of the requisite percentage of shares.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on April 11, 2007 unless earlier redeemed by the
Company as described below. At no time will the Rights have any voting power.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that an Acquiring Person, other than an Exempted
Person, becomes the beneficial owner of 15% or more of the then outstanding
shares of Common Stock or 15% or more of the then outstanding shares of Class A
Common Stock (unless such acquisition is made pursuant to a tender or exchange
offer for all outstanding shares of the Company, at a price determined by a
majority of the independent directors of the Company who are Continuing
Directors (as defined below) and who are not representatives, nominees,
affiliates or associates of an Acquiring Person to be fair and otherwise in the
best interest of the Company and its shareholders after receiving advice from
one or more investment banking firms (a "Qualifying Offer")), each holder of a
Class A Right will thereafter have the right to receive, upon exercise, Class A
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) and each holder of a Class B Right will thereafter have the
right to receive, upon
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exercise, Class B Common Stock (or, in certain circumstances, cash, property or
other securities of the Company), having a value equal to two times the Exercise
Price of the Right. The Exercise Price is the Purchase Price times the number of
Units associated with each Right (initially, one). Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph (the "Flip-In Events"), all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of any of the Flip-In Events set forth above until such
time as the Rights are no longer redeemable by the Company as set forth below.
In the event that following the Stock Acquisition Date, (i) the
Company engages in a merger or business combination transaction in which the
Company is not the surviving corporation (other than a merger consummated
pursuant to a Qualifying Offer); (ii) the Company engages in a merger or
business combination transaction in which the Company is the surviving
corporation and the Common Stock is changed or exchanged; or (iii) 50% or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which have previously been voided as set forth above)
shall thereafter have the right to receive, upon exercise of the Right, common
stock of the acquiring company having a value equal to two times the Exercise
Price of the Right.
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will
be required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after the Stock Acquisition Date and prior to the
acquisition by the Acquiring Person of 50% or more of the then outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by an Acquiring Person), in whole or in part, at
an exchange ratio equal to one share of Class A Common Stock per Class A Right
(subject to adjustment) and one share of Class B Common Stock per Class B Right
(subject to adjustment). Any such exchange shall require the concurrence of a
majority of the Continuing Directors (as defined below).
At any time until ten (10) days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right. Under
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certain circumstances, the decision to redeem shall require the concurrence of a
majority of the Continuing Directors. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the $0.001 redemption
price.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the adoption of
the Rights Plan and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders or to the Company, shareholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock (or other consideration) of the Company as
set forth above or in the event the Rights are redeemed.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
Summary of Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated herein by
reference.
(c) By-law Amendments.
On March 14, 1997, the Board of Directors of the Company approved
two amendments to the By-laws of the Company. One such amendment requires
shareholders wishing to bring a matter for a vote or to be discussed at any
meeting of shareholders to provide prior notice to the Company setting forth
certain information with respect to such shareholder and the matter to be voted
upon or discussed. The other amendment requires shareholders wishing to nominate
persons for election as a Director of the Company to provide prior notice to the
Company setting forth certain information with respect to the nominee and the
shareholder making the nomination.
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The Board of Directors approved the adoption of a new Section 2-7 of
the By-laws, which provides that a shareholder who wishes to bring a matter for
a vote or to be discussed at any meeting of the shareholders must give notice in
writing to the President, which must be delivered at the principal executive
offices of the Company, not less than 60 days nor more than 90 days prior to the
anniversary date of the preceding year's annual meeting, provided, that a
proposal submitted by a stockholder for inclusion in the Company's proxy
statement for an annual meeting which is appropriate for inclusion therein and
otherwise complies with the Securities Exchange Act of 1934 Rule 14a-8
(including timeliness), shall be deemed to have been submitted timely pursuant
to the By-laws. In the event that the date of the meeting is changed by more
than 30 days from the anniversary date, notice by the shareholder to be timely
must be received no later than the close of business on the fifth day following
the earlier of the day on which such notice of the date of the meeting was
mailed or publicly disclosed. Notwithstanding the foregoing, with respect to
any meeting of stockholders in 1997, any such notice will be deemed timely if
such notice is received by the Company within 30 days following the date of
filing of this Current Report on Form 8-K.
Section 2-7 also provides that the shareholder must set forth
certain information in the written notification to bring a matter before the
meeting, including a brief description of the business desired to be brought and
the reasons for conducting such business at the meeting, a representation that
the shareholder is a holder of record of shares of the Company's stock entitled
to vote at such meeting and intends to appear in person or by proxy and bring
such matter before the meeting, the name and address of the shareholder
proposing such business as well as the name and address of the beneficial owner,
if any, on whose behalf the proposal is made, the class and number of shares of
the Company which are owned of record and beneficially by such shareholder,
and owned beneficially by such beneficial owner, if any, any material interest
of the shareholder and the beneficial owner, if any, on whose behalf
such proposal is made and a description of all arrangements and understandings
between the shareholder and the beneficial owner, if any, on whose behalf the
proposal is made and any other person or persons.
In the event that a shareholder attempts to bring a matter before
the meeting that was not raised in accordance with the procedures described in
Section 2-7, the presiding officer of the meeting can declare that the business
was not properly brought before the meeting and declare that such business will
not be transacted.
The right of shareholders to propose matters is limited by Section
2-7 to annual meetings. Such rights are not available with respect to special
meetings on the basis that a special meeting should be limited to the purposes
for which it was called.
The Board of Directors also approved an amendment to the By-laws
pursuant to which the former second paragraph of Section 3-1 of the By-laws has
been deleted and a new Section 3-13 of the By-laws has been adopted. Section
3-13 provides that a shareholder may nominate a director by providing a written
request to the principal executive offices of the Company addressed to the
attention of the President of the Company. Such notice must, in the case of an
annual meeting that is called for a date that is within 30 days before or after
the anniversary date of the immediately preceding annual meeting, be delivered
not less than 60 nor more than 90 days prior to such anniversary date, or, in
the case of any other annual meeting or any special meeting, not later than the
close of business on the fifth day following the earlier of the day on which
notice of the date of meeting was mailed or publicly disclosed. Notwithstanding
the foregoing, with respect to any meeting of stockholders in 1997, any such
notice will be deemed timely if such notice is received by the Company within 30
days following the date of filing of this Current Report on Form 8-K.
Pursuant to Section 3-13, each such written notice must set forth
certain
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information with respect to the nomination, including the name and address of
the nominating shareholder, the name and address of the beneficial owner, if
different than the nominating shareholder, of the shares owned of record by the
nominating shareholder, the number and class of shares owned by such nominating
shareholder and beneficial owner, a description of all arrangements and
understandings between the nominating shareholder, any beneficial owner and any
persons nominated, the name and address of any persons nominated, a
representation that the nominating shareholder is a holder of record of the
Company's shares entitled to vote at the meeting and intends to appear in person
or by proxy at the meeting to nominate such persons, such other information
regarding each nominee as would have been required to be included in a proxy
statement filed pursuant to the proxy disclosure rules of the Securities and
Exchange Commission had the nominee been nominated by the Board of Directors of
the Company, and the written consent of each nominee to such nomination. The
presiding officer of the meeting may refuse to acknowledge the nomination of any
person which such presiding officer determines is not made in compliance with
the foregoing procedure.
A copy of the By-laws of the Company as amended is being filed as
Exhibit 3.1 to this Current Report on Form 8-K. This description of the By-laws
as amended does not purport to be complete and is qualified in its entirety by
reference to the By-laws, which are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
3.1 By-laws of the Company, as amended.
4.1 Rights Agreement, dated as of March 14, 1997, by and between
the Company and the Rights Agent, which includes as Exhibit B
thereto the Form of Rights Certificate, incorporated herein by
reference to Exhibit 1 to the Company's Registration Statement
on Form 8-A, dated March 17, 1997.
20.1 Press Release of the Company, dated as of March 17, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVANTA CORP.
(Registrant)
Date: March 17, 1997 By: /s/ Gene S. Schneyer
--------------------------
Gene S. Schneyer
Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C>
3.1 By-laws of the Company, as amended.
4.1 Rights Agreement, dated as of March 14, 1997, by and between the
Company and the Rights Agent, which includes as Exhibit B thereto
the Form of Rights Certificate, incorporated herein by reference to
Exhibit 1 to the Company's Registration Statement on Form 8-A, dated
March 17, 1997.
20.1 Press Release of the Company, dated as of March 17, 1997.
</TABLE>
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EXHIBIT 3.1
BY-LAWS OF
ADVANTA CORP.
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ARTICLE I - OFFICES
Section 1-1. Registered Office and Registered Agent. The Corporation
shall maintain a registered office and registered agent within the State of
Delaware, which may be changed by the Board of Directors from time to time.
Section 1-2. Other Offices. The Corporation 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.
ARTICLE II - STOCKHOLDERS' MEETINGS
Section 2-1. Place of Stockholders' Meetings. Meetings of stockholders
may be held at such place, either within or without the State of Delaware, as
may be designated by the Board of Directors from time to time. If no such place
is designated by the Board of Directors, meetings of the stockholders shall be
held at the registered office of the Corporation in the State of Delaware.
Section 2-2. Annual Meeting. A meeting of the stockholders of the
Corporation shall be held in each calendar year on the date specified by
resolution of the Board of Directors, such resolution to be within six months
after the end of the previous fiscal year of the Company.
At such annual meeting, there shall be held an election for a Board of
Directors to serve for the term provided in the Corporation's Certificate of
Incorporation and until their respective successors are elected and qualified,
or until their earlier resignation or removal.
Unless the Board of Directors shall deem it advisable, financial
reports of the Corporation's business need not be sent to the stockholders and
need not be presented at the annual meeting. If any report is deemed advisable
by the Board of Directors, such report may contain such information as the Board
of Directors shall determine and need not be certified by a Certified Public
Accountant unless the Board of Directors shall so direct.
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Section 2-3. Special Meetings. Except as otherwise specifically
provided by law, special meetings of the stockholders may be called at any time:
(a) By a majority of the Board of Directors; or
(b) By the Chairman of the Board of Directors, or if no person
is then serving as Chairman of the Board of Directors, then by the President.
Upon the written request of any person entitled to call a special
meeting, which request shall set forth the purpose for which the meeting is
desired, it shall be the duty of the Secretary to give prompt written notice of
such meeting to be held at such time as the Secretary may fix, subject to the
provisions of Section 2-4 hereof. If the Secretary shall fail to fix such date
and give notice within ten (10) days after receipt of such request, the person
or persons making such request may do so.
Section 2-4. Notice of Meetings and Adjourned Meetings. Written notice
stating the place, date and hour of any meeting shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States Mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. Such
notice may be given in the name of the Board of Directors, Chairman of the Board
of Directors, President, Vice President, Secretary or Assistant Secretary.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. If the adjournment is for more
than thirty (30) days, of if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2-5. Quorum. Unless the Certificate of Incorporation provides
otherwise, the presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to vote shall constitute a quorum but in no even
shall a quorum consist of less than one-third (1/3) of the shares entitled to
vote at a meeting. The stockholders present at a duly organized meeting can
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum. If a meeting cannot be
organized because of the absence of a quorum, those present may, except as
otherwise provided by law, adjourn the meeting to such time and place as they
may determine. In the case of any meeting for the election of Directors, those
stockholders who attend the second of such adjourned meetings, although less
than a quorum as fixed in this Section, shall nevertheless constitute a quorum
for the purpose of electing Directors.
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Section 2-6. Voting List; Proxies. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) 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 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.
Upon the willful neglect or refusal of the Directors to produce such a
list at any meeting for the election of Directors, they shall be ineligible to
any office at such meeting.
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by proxy. All proxies shall
be executed in writing and shall be filed with the Secretary of the Corporation
not later than the day on which exercised. No proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period.
Except as otherwise specifically provided by law, all matters coming
before the meeting shall be determined by a vote by shares. All elections of
Directors shall be by written ballot unless otherwise provided in the
Certificate of Incorporation and Stockholder shall not be entitled to cumulate
their vote. Except as otherwise specifically provided by law, all other votes
may be taken by voice unless a stockholder demands that it be taken by ballot,
in which latter event the vote shall be taken by written ballot.
Section 2-7. Business at Meetings of Stockholders.
(a) Except as otherwise provided by law or in these By-Laws,
or except as permitted by the presiding officer of the meeting in the exercise
of such officer's sole discretion in any specific instance, the business which
shall be voted upon or discussed at any annual or special meeting of the
stockholders shall (i) have been specified in the written notice of the meeting
(or any supplement thereto) given by the Corporation, (ii) be brought before the
meeting at the direction of the Board of Directors, (iii) be brought before the
meeting by the presiding officer of the meeting unless a majority of the
Directors then in office object to such business being conducted at the meeting,
or (iv) in the case of an annual meeting of stockholders have been specified in
a written notice given to the Corporation by or on behalf of any stockholder who
shall have been a stockholder of record on the record date for such
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meeting and who shall continue to be entitled to vote thereat (the "Stockholder
Notice"), in accordance with all of the requirements set forth below.
(b) Each Stockholder Notice must be delivered to, or mailed
and received at, the principal executive offices of the Corporation addressed to
the attention of the President (i) in the case of an annual meeting that is
called for a date that is within 30 days before or after the anniversary date of
the immediately preceding annual meeting of stockholders, not less than 60 days
nor more than 90 days prior to such anniversary date, provided, that a proposal
submitted by a stockholder for inclusion in the Corporation's proxy statement
for an annual meeting which is appropriate for inclusion therein and otherwise
complies with the Securities Exchange Act of 1934 Rule 14a-8 (including
timeliness), shall be deemed to have also been submitted timely pursuant to
these By-laws, and (ii) in the case of an annual meeting that is called for a
date that is not within 30 days before or after the anniversary date of the
immediately preceding annual meeting, not later than the close of business on
the fifth day following the earlier of the day on which notice of the date of
the meeting was mailed or public disclosure of the meeting date (which shall
include disclosure of the meeting date given to a national securities exchange
or the National Association of Securities Dealers) was made. Each such
Stockholder Notice must set forth (A) the name and address of the stockholder
who intends to bring the business before the annual meeting ("Proposing
Stockholder"); (B) the name and address of the beneficial owner, if different
than the Proposing Stockholder, of any of the shares owned of record by the
Proposing Stockholder ("Beneficial Owner"); (C) the number of shares of each
class and series of shares of the Corporation which are owned of record and
beneficially by the Proposing Stockholder and the number which are owned
beneficially by any Beneficial Owner; (D) any interest (other than an interest
solely as a stockholder) which the Proposing Stockholder or a Beneficial Owner
has in the business being proposed by the Proposing Stockholder; (E) a
description of all arrangements and understandings between the Proposing
Stockholder and any Beneficial Owner and any other person or persons (naming
such person or persons) pursuant to which the proposal in the Stockholder Notice
is being made; (F) a description of the business which the Proposing Stockholder
seeks to bring before the meeting, the reason for doing so and, if a specific
action is to be proposed, the text of the resolution or resolutions which the
Proposing Stockholder proposes that the Corporation adopt; and (G) a
representation that the Proposing Stockholder is at the time of giving the
Stockholder Notice, was or will be on the record date for the meeting, and will
be on the meeting date a holder of record of shares of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to bring the business specified in the Stockholder Notice before the
meeting. The presiding officer of the meeting may, in such officer's sole
discretion, refuse to acknowledge any business proposed by a stockholder which
the presiding officer determines is not made in compliance with the foregoing
procedure.
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(c) Notwithstanding the foregoing, the notice required by
Subsection 2-7(b) for any meeting of stockholders in 1997, will be deemed timely
if such notice is received by the Corporation within 30 days following the date
that notice of this By-Law provision has been reflected in a filing by the
Corporation pursuant to the Securities Exchange Act of 1934.
ARTICLE III - BOARD OF DIRECTORS
Section 3-1. Number. The business and affairs of the Corporation shall
be managed by or under the direction of a Board of Directors consisting of not
less than three nor more than fifteen Directors, such Directors to be elected
pursuant to the provisions of the Company's Certificate of Incorporation.
Section 3-2. Place of Meeting. Meetings of the Board of Directors may
be held at such place either within or without the State of Delaware, as a
majority of the Directors may from time to time designate or as may be
designated in the notice calling the meeting.
Section 3-3. Regular Meetings. A regular meeting of the Board of
Directors shall be held annually, immediately following the annual meeting of
stockholders, at the place where such meeting of the stockholders is held or at
such other place, date and hour as a majority of the newly elected Directors may
designate. At such meeting the Board of Directors shall elect officers of the
Corporation. In addition to such regular meeting, the Board of Directors shall
have the power to fix, by resolution, the place, date and hour of other regular
meetings of the Board.
Section 3-4. Special Meetings. Special meetings of the Board of
Directors shall be held whenever ordered by the Chairman of the Board, by a
majority of the members of the executive committee, if any, or by a majority of
the Directors in office.
Section 3-5. Notices of Meetings of Board of Directors.
(a) Regular Meetings. No notice shall be required to be given
of any regular meeting, unless the same be held at other than the time or place
for holding such meetings as fixed in accordance with Section 3-3 of these
By-Laws, in which even one (1) day's notice shall be given of the time and place
of such meeting.
(b) Special Meetings. At least one (1) day's notice shall be
given of the time, place and purpose for which any special meeting of the Board
of Directors is to be held.
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Section 3-6. Quorum. A majority of the total number of Directors shall
constitute a quorum for the transaction of business, and the vote of a majority
of the Directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. If there is less than a quorum present, a
majority of those present may adjourn the meeting from time to time and place to
place and shall cause notice of each such adjourned meeting to be given to all
absent Directors.
Section 3-7. Informal Action by the Board of Directors.
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.
Section 3-8. Powers.
(a) General Powers. The Board of Directors shall have all
powers necessary or appropriate to the management of the business and affairs of
the Corporation, and, in addition to the power and authority conferred by these
By-Laws, may exercise all powers of the Corporation and do all such lawful acts
and things as are not by statute, these By-Laws or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.
Notwithstanding anything in these By-Laws to the contrary,
except to the extent prohibited by law, the Board of Directors shall have the
right (which, to the extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from time to time shall govern
the Board of Directors and each of its members, including without limitation,
the vote required for any action by the Board of Directors, and that from time
to time shall affect the Directors' power to manage the business and affairs of
the Company; and no By-Law shall be adopted by stockholders which shall impair
or impede the implementation of the foregoing.
(b) Specific Powers. Without limiting the general powers
conferred by the last preceding clause and the powers conferred by the
Certificate of Incorporation and By-Laws of the Corporation, it is hereby
expressly declared that the Board of Directors shall have the following powers:
(i) To confer upon any officer or officers of the
Corporation the power to choose, remove or suspend assistant officers, agents or
servants.
(ii) To appoint any person, firm or corporation to
accept and hold in trust for the Corporation any property belonging to the
Corporation or in which it is interested, and to authorize any such person, firm
or corporation to execute any documents and perform any duties that may be
requisite in relation to any such trust.
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(iii) To appoint a person or persons to vote shares
of another corporation held and owned by the Corporation.
(iv) By resolution adopted by a majority of the full
Board of Directors, to designate one (1) or more of its number to constitute an
executive committee which, to the extent provided in such resolution, shall have
and may exercise the power 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.
(v) By resolution passed by a majority of the whole
Board of Directors, to designate one (1) or more additional committees, each to
consist of one (1) or more Directors, to have such duties, powers and authority
as the Board of Directors shall determine. All committees of the Board of
Directors, including the executive committee, shall have the authority to adopt
their own rules of procedure. Absent the adoption of specific procedures, the
procedures applicable to the Board of Directors shall also apply to committees
thereof.
(vi) To fix the place, time and purpose of meetings
of stockholders.
(vii) To purchase or otherwise acquire for the
Corporation any property, rights or privileges which the Corporation is
authorized to acquire, at such prices, on such terms and conditions and for such
consideration as it shall from time to time see fit, and, at its discretion, to
pay any property or rights acquired by the Corporation, either wholly or partly
in money or in stocks, bonds, debentures or other securities of the Corporation.
(viii) To create, make and issue mortgages, bonds,
deeds of trust, trust agreements and negotiable or transferable instruments and
securities, secured by mortgage or otherwise, and to do every other act and
thing necessary to effectuate the same.
(ix) To appoint and remove or suspend such
subordinate officers, agents or servants, permanently or temporarily, as it may
from time to time think fit, and to determine their duties, and fix, and from
time to time change, their salaries or emoluments, and to require security in
such instances and in such amounts as it thinks fit.
(x) To determine who shall be authorized on the
Corporation's behalf to sign bills, notes, receipts, acceptances, endorsements,
checks, releases, contracts and documents.
Section 3-9. Compensation of Directors. Compensation of Directors and
reimbursement of their expenses incurred in connection with the business of the
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Corporation, if any, shall be as determined from time to time by resolution of
the Board of Directors.
Section 3-10. Removal of Directors by Stockholders. The entire Board of
Directors or any individual Director may be removed from office for cause by a
majority vote of the holders of the outstanding shares entitled to vote.
Section 3-11. Resignations. Any Director may resign at any time by
submitting his written resignation to the Corporation. Such resignation shall
take effect at the time of its receipt by the Corporation unless another time be
fixed in the resignation, in which case it shall become effective at the time so
fixed. The acceptance of a resignation shall not be required to make it
effective.
Section 3-12. Participation by Conference Telephone. Directors may
participate in regular or special meetings of the Board by telephone or similar
communications equipment by means of which all other persons at the meeting can
hear each other, and such participation shall constitute presence at the
meeting.
Section 3-13. Nominations. Notwithstanding the provisions of Section
2-7 of these By-Laws (dealing with business at meetings of stockholders),
nominations for the election of Directors may be made by the Board of Directors,
by a committee appointed by the Board of Directors with authority to do so or by
any stockholder of record entitled to vote in the election of Directors who is a
stockholder at the record date of the meeting and also on the date of the
meeting at which Directors are to be elected; provided, however, that with
respect to a nomination made by a stockholder, such stockholder must provide
timely written notice to the President of the Corporation in accordance with the
following requirements:
(a) To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive offices of the Corporation
addressed to the attention of the President (i) in the case of an annual meeting
that is called for a date that is within 30 days before or after the anniversary
date of the immediately preceding annual meeting of stockholders, not less than
60 days nor more than 90 days prior to such anniversary date, and (ii) in the
case of an annual meeting that is called for a date that is not within 30 days
before or after the anniversary date of the immediately preceding annual
meeting, or in the case of a special meeting of stockholders called for the
purpose of electing Directors, not later than the close of business on the fifth
day following the earlier of the day on which notice of the date of the meeting
was mailed or public disclosure of the meeting date (which shall include
disclosure of the meeting date given to a national securities exchange or the
National Association of Securities Dealers) was made; and
(b) Each such written notice must set forth: (i) the name and
address of the stockholder who intends to make the nomination ("Nominating
Stockholder");
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(ii) the name and address of the beneficial owner, if different than the
Nominating Stockholder, of any of the shares owned of record by the Nominating
Stockholder ("Beneficial Holder"); (iii) the number of shares of each class and
series of shares of the Corporation which are owned of record and beneficially
by the Nominating Stockholder and the number which are owned beneficially by any
Beneficial Holder; (iv) a description of all arrangements and understandings
between the Nominating Stockholder and any Beneficial Holder and any other
person or persons (naming such person or persons) pursuant to which the
nomination is being made; (v) the name and address of the person or persons to
be nominated; (vi) a representation that the Nominating Stockholder is at the
time of giving of the notice, was or will be on the record date for the meeting,
and will be on the meeting date a holder of record of shares of the Corporation
entitled to vote at such meeting, and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (vii)
such other information regarding each nominee proposed by the Nominating
Stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, by the Board of
Directors; and (viii) the written consent of each nominee to serve as a Director
of the Corporation if so elected. The presiding officer of the meeting may, in
such officer's sole discretion, refuse to acknowledge the nomination of any
person which the presiding officer determines is not made in compliance with the
foregoing procedure.
(c) Notwithstanding the foregoing, the notice required by
Subsection 3-13(b) for any meeting of stockholders in 1997, will be deemed
timely if such notice is received by the Corporation within 30 days following
the date that notice of this By-Law provision has been reflected in a filing by
the Corporation pursuant to the Securities Exchange Act of 1934.
ARTICLE IV - OFFICERS
Section 4-1. Election and Office. The Corporation shall have a Chairman
of the Board, a Chief Executive Officer, a President, a Secretary and a
Treasurer who shall be elected by the Board of Directors. The Board of Directors
may elect such additional officers as it may deem proper, including one or more
Vice Chairmen of the Board of Directors, one or more Vice Presidents, and one or
more assistant or honorary officers. Any number of offices may be held by the
same person.
Section 4-2. Term. Each officer elected by the Board of Directors shall
hold his or her office at the pleasure of the Board of Directors until a
successor to such office is elected and qualified, or until such officer's
earlier resignation or removal by the Board of Directors.
Section 4-3. Powers and Duties of the Chairman of the Board of
Directors. The Chairman of the Board of Directors (also referred to in these
By-Laws as the
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Chairman of the Board) shall preside at all meetings of Directors and shall
preside at all meetings of stockholders at which he is present. If the Chairman
of the Board is not the Chief Executive Officer, he shall, when appropriate,
represent the Board of Directors in the Board's dealings with the Chief
Executive Officer and President, recommend Board committee membership and
chairmen, and serve as chairman of the Nominating Committee. He shall have such
other powers and perform such further duties as may be assigned to him by the
Board of Directors. In the event the Chairman of the Board is not the Chief
Executive Officer and if the Chief Executive Officer suffers a physical or
mental incapacity which prevents such person from fulfilling his duties, the
Chairman of the Board shall serve as an interim Chief Executive Officer until
the Board of Directors has determined what actions to take as a result of such
incapacity.
Section 4-4. Powers and Duties of the Chief Executive Officer. The
Chief Executive Officer shall perform the usual duties and exercise the general
powers of a chief executive officer, except to the extent that the Board of
Directors determines otherwise. In the absence of the Chairman of the Board, he
shall preside at all meetings of Directors and all meetings of stockholders at
which he is present. He shall also do and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
Section 4-5. Powers and Duties of the President. Unless otherwise
determined by the Board of Directors, the President shall have the usual duties
of the chief operating officer with general supervision over and direction of
the affairs of the Corporation including the power to delegate certain of his
responsibilities hereunder. In the exercise of these duties and subject to the
limitations of the laws of the State of Delaware, these By-Laws, and the actions
of the Board of Directors, he may appoint, suspend and discharge employees and
agents. He shall also do and perform such other duties as from time to time may
be assigned to him by the Chief Executive Officer or by the Board of Directors.
If the President also holds the office of Chief Executive Officer, he may
delegate any or all of the duties of chief operating officer to one or more Vice
Presidents. The President shall have the authority, at his sole discretion, to
appoint and remove assistant officers provided that any such appointment or
removal shall be in writing and shall be filed with the minutes of meetings of
the Board of Directors.
Unless otherwise determined by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote at any meeting of the stockholders of any corporation in
which the Corporation may hold stock, and, at any such meeting, shall possess
and may exercise any and all of the rights and powers incident to the ownership
of such stock and which, as the owner thereof, the Corporation might have
possessed and exercised.
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Section 4-6. Powers and Duties of the Secretary. Unless otherwise
determined by the Board of Directors, the Secretary shall record all proceedings
of the meetings of the Corporation, the Board of Directors and all committees,
in books to be kept for that purpose, and shall attend to the giving and serving
of all notices for the Corporation. He shall have charge of the corporate seal,
the certificate books, transfer books and stock ledgers, and such other books
and papers as the Board of Directors may direct. He shall perform all other
duties ordinarily incident to the office of Secretary and shall have such other
powers and perform such other duties as may be assigned to him by the Board of
Directors.
Section 4-7. Powers and Duties of the Treasurer. Unless otherwise
determined by the Board of Directors, the Treasurer shall have charge of all the
funds and securities of the Corporation which may come into his hands. When
necessary or proper, unless otherwise ordered by the Board of Directors, he
shall endorse for collection on behalf of the Corporation checks, notes and
other obligations, and shall deposit the same to the credit of the Corporation
in such banks or depositories as the Board of Directors may designate (or as may
be designated pursuant to authority delegated by the Board of Directors) and
shall sign all receipts and vouchers for payments made to the Corporation. He
shall sign all checks made by the Corporation, except to the extent that the
Board of Directors shall authorize other officers of the Corporation to sign
such checks. He shall at all reasonable times exhibit the books and accounts of
the Corporation to any Director of the Corporation, upon application at the
office of the Corporation during business hours. He shall have such other powers
and shall perform such other duties as may be assigned to him from time to time
by the Board of Directors. He shall give such bond, if any, for the faithful
performance of his duties as shall be required by the Board of Directors and any
such bond shall remain in the custody of the President.
Section 4-8. Powers and Duties of Vice President and Assistant
Officers. Unless otherwise determined by the Board of Directors, each Vice
President and each assistant officer shall have the powers and perform the
duties of his respective superior officer. Vice Presidents and assistant
officers shall have such rank as shall be designated by the Board of Directors
and each, in order of rank, shall act for such superior officer in his absence,
or upon his disability or when so directed by such superior officer or by the
Board of Directors. Vice Presidents may be designated as having responsibility
for a specific aspect of the Corporation's affairs, in which event each such
Vice President shall be superior to the other Vice Presidents in relation to
matters within his aspect. The President shall be the superior officer of the
Vice Presidents. The Treasurer and the Secretary shall be the superior officers
of the Assistant Treasurers and Assistant Secretaries, respectively.
Section 4-9. Delegation of Office. The Board of Directors may delegate
the powers or duties of any officer of the Corporation to any other officer or
to any Director from time to time.
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Section 4-10. Vacancies. The Board of Directors shall have the power to
fill any vacancies in any office occurring from whatever reason.
Section 4-11. Resignations. Any officer may resign at any time by
submitting his written resignation to the Corporation. Such resignation shall
take effect at the time of its receipt by the Corporation, unless another time
be fixed in the resignation, in which case it shall become effective at the time
so fixed. The acceptance of a resignation shall not be required to make it
effective.
ARTICLE V - CAPITAL STOCK
Section 5-1. Stock Certificates. Shares of the Corporation shall be
represented by certificates signed by or in the name of the Corporation by (a)
the Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and (b) the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, representing the number of shares
registered in certificate form. If such certificate is countersigned (i) by a
transfer agent other than the Corporation or its employee, or (ii) by a
registrar other than the Corporation or its employee, the signatures of the
officers of the Corporation may be facsimiles. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
Section 5-2. Determination of Stockholders of Record. The Board of
Directors may fix, in advance, a record date to determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, 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. Such date shall be not more than sixty (60) nor less than
ten (10) days before the date of any such meeting, nor more than sixty (60) days
prior to any other action.
If no record date is fixed, 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.
If no record date is fixed, 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.
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A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 5-3. Transfer of Shares. Transfer of shares shall be made on
the books of the Corporation only upon surrender of the share certificate, duly
endorsed and otherwise in proper form for transfer, which certificate shall be
canceled at the time of the transfer. No transfer of shares shall be made on the
books of this Corporation if such transfer is in violation of a lawful
restriction noted conspicuously on the certificate.
Section 5-4. Lost, Stolen or Destroyed Share Certificates. The
Corporation may issue a new certificate of stock or uncertificated shares in
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of lost, stolen,
or destroyed certificate, or his legal representative to give the Corporation a
bond sufficient to indemnify it against claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
ARTICLE VI - NOTICES
Section 6-1. Contents of Notice. Whenever any notice of a meeting is
required to be given pursuant to these By-Laws or the Certificate of
Incorporation or otherwise, the notice shall specify the place, day and hour of
the meeting and, in the case of a special meeting or where otherwise required by
law, the general nature of the business to be transacted at such meeting.
Section 6-2. Method of Notice. All notices shall be given to each
person entitled thereto, either personally or by sending a copy thereof through
the mail or by telegraph, charges prepaid, to his address as it appears on the
records of the Corporation, or supplied by him to the Corporation for the
purpose of notice. If notice is sent by mail or telegraph, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States Mail or with the Telegraph office for transmission. If no address for a
stockholder appears on the books of the Corporation and such stockholder has not
supplied the Corporation with an address for the purpose of notice, notice
deposited in the United States Mail addressed to such stockholder care of
General Delivery in the city in which the principal office of the Corporation is
located shall be sufficient.
Section 6-3. Waiver of Notice. Whenever notice is required to be given
under any provision of law or of the Certificate of Incorporation or By-Laws of
the Corporation, a written waiver, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a
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person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of Directors need be specified in any
written waiver of notice unless so required in any written waiver of notice
unless so required by the Certificate of Incorporation or applicable law.
ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND
OFFICERS AND OTHER PERSONS
Section 7-1. Indemnification. The Corporation shall indemnify any
Director, officer, employee or agent of the Corporation against expenses
(including legal fees), judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement, actually and reasonably incurred by him, to the
fullest extent now or, if greater, hereafter permitted by law in connection with
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened to be brought
against him by reason of the fact that he is or was a Director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans (hereinafter an "indemnitee").
The Board of Directors, by resolution adopted in each specific
instance, may similarly indemnify any person other than a Director, officer,
employee or agent of the Corporation for liabilities incurred by him in
connection with services rendered by him for or at the request of the
Corporation, its parent or any of its subsidiaries.
The provisions of this Section shall be applicable to all actions,
suits or proceedings commenced after its adoptions, whether such arise out of
acts or omissions which occurred prior to subsequent to such adoption and shall
continue as to a person who has ceased to be a Director, officer, employee or
agent or to render services for or at the request of the Corporation or, as the
case may be, its parent or subsidiaries, and shall inure to the benefit of the
heirs, executors and administrators of such a person. The rights to
indemnification provided for herein shall not be deemed exclusive of any other
rights to which any Director, officer, employee or agent of the Corporation may
be entitled under these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a Director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
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Section 7-2. Advances. Expenses incurred by any officer or Director of
the Corporation or any of its wholly-owned subsidiaries in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking, by or on behalf of such
Director or officer, to repay such amount if it shall ultimately be determined
(by final judicial decision from which there is no further right to appeal) that
he is not entitled to be indemnified by the Corporation. Such expenses incurred
by other employees and agents may be paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.
Section 7-3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another corporation partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify hi
against such liability under law.
Section 7-4. Right of Indemnitee to Bring Suit. If a claim under
Section 7-1 or Section 7-2 is not paid in full by the Corporation within sixty
days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met the applicable standard of conduct set forth in the Delaware General
Corporation Law. 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 suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee 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 indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right hereunder, or by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
burden of
15
<PAGE> 16
proving that the indemnitee is not entitled to be indemnified or to such
advancement of expenses under this Article or otherwise shall be on the
Corporation.
ARTICLE VIII - SEAL
The form of the seal of the Corporation, called the corporate seal of
the Corporation, shall be as impressed adjacent hereto.
ARTICLE IX - FISCAL YEAR
The Board of Directors shall have the power by resolution to fix the
fiscal year of the Corporation. If the Board of Directors shall fail to do so,
the President shall fix the fiscal year.
ARTICLE X - AMENDMENTS
The original or other By-Laws may be adopted, amended or repealed by
the stockholders entitled to vote thereon at any regular or special meeting or,
if the Certificate of Incorporation so provides, by the Board of Directors. The
fact that such power has been so conferred upon the Board of Directors shall not
divest the stockholders of the power nor limit their power to adopt, amend or
repeal By-Laws.
ARTICLE XI - INTERPRETATION OF BY-LAWS
All words, terms and provisions of these By-Laws shall be interpreted
and defined by and in accordance with the General Corporation Law of the State
of Delaware, as amended, and as amended from time to time hereafter.
16
<PAGE> 1
EXHIBIT 20.1
NEWS RELEASE
[ADVANTA LOGO] ADVANTA
CORPORATION
Welsh & McKean Roads
P.O. Box 844
Spring House, PA 19477-0844
For further information please contact:
Madeline Hopkins
Investor Relations (215) 444-5335
Phyllis Hoffman
Corporate Communications (215) 444-4499
James Fingeroth or Roy Winnick
Kekst and Company (212) 593-2655
FOR IMMEDIATE RELEASE
ADVANTA CORPORATION TO EXPLORE STRATEGIC ALTERNATIVES
TO MAXIMIZE SHAREHOLDER VALUE;
PROVIDES FINANCIAL OUTLOOK FOR 1997
--RETAINS BT WOLFENSOHN TO ASSIST IN EXPLORATION PROCESS--
Spring House, PA.--March 17, 1997--Advanta Corporation (NASDAQ: ADVNB, ADVNA)
today announced that its Board of Directors and senior management have
commenced a thorough and systematic review of its business strategy, growth
prospects and operating environment aimed at maximizing the Company's value for
its shareholders and other constituents.
Advanta said it has retained the firm of BT Wolfensohn to assist it in the
process, and to explore all strategic alternatives that build upon the historic
strength and success of the Company as a whole and of its business units,
including its mortgage financing, leasing and insurance operations as well as
its core credit card business. There can be no assurance that the Company will
elect to pursue any of the strategic actions it may consider.
-more-
<PAGE> 2
2
Advanta also reported that, in light of the foregoing, Alex W. "Pete" Hart, the
Company's Chief Executive Officer, has assumed the additional responsibilities
of David A. Brooks, the Company's Chief Operating Officer, who has resigned.
The nature and responsibilities of the job of Chief Operating Officer are now
very different from what was contemplated when Mr. Brooks joined the Company
two months ago.
Separately, Advanta announced that it expects to report 1997 results well below
previous expectations. For the first quarter, the Company currently expects to
report a loss in the area of $20 million, or approximately $0.44 cents per
share, compared to earnings of $41 million, or $0.91 per share, in the first
quarter of 1996. Advanta said that the interruption in its historical pattern
of strong financial results reflects a number of factors, including continuing
increases in consumer bankruptcies and charge-offs and lower receivable balances
than originally anticipated in its credit card business. The Company emphasized
that its mortgage financing, leasing and insurance businesses continue to
perform very well.
The Company said that it currently expects to report a net profit for full-year
1997, with estimated earnings for the full year of approximately $1.50 per
share. In 1996, Advanta earned $3.89 per share.
Dennis Alter, Chairman of the Board of Advanta Corporation, said, "Since Advanta
was formed 46 years ago, we have successfully pursued a business strategy that
has created significant value for our shareholders, customers and employees.
Today, the credit card industry is undergoing structural change. Taking that
change into consideration, we believe we can best build value by actively
exploring all available strategic opportunities.
"We expect that the process we have launched will lead to the identification of
a number of possible strategic options, one or more of which we may elect to
pursue based on their potential to enable us to more effectively and profitably
serve our customers, grow our revenues and earnings, and maximize shareholder
value," Mr. Alter said.
Advanta said it is pursuing a number of steps to return the Company to its
historical levels of financial performance by increasing revenue and stemming
credit card losses. These steps include:
- - More aggressively repricing certain segments of the Company's credit
card portfolio to match better the risk profiles of particular customer
segments.
- - Bringing the Company's credit card fees, some of which are below the
industry average, more into line with current industry norms.
-more-
<PAGE> 3
3
- -- Improving the Company's collection process by further customizing collection
methods.
- -- Reducing the introductory-rate period applied to certain new cardholders.
- -- Tightening underwriting standards further to improve the credit quality of
the receivables portfolio.
- -- More quickly identifying and intervening on potentially troubled accounts by
means of advanced computer-based behavior prediction programs.
- -- Developing new retention marketing programs to build upon existing
relationships with high-credit-quality cardholders.
- -- Continuing to develop additional products that offer customers added value,
rather than relying solely on a low price.
Mr. Hart said, "In 1996, Advanta achieved its eighth consecutive year of
increased earnings and its sixth consecutive year of meeting or exceeding a
return on equity of 25%. During the past five years, Advanta's net income has
grown at a compound annual rate of 47% to $176 million in 1996. We have grown
our customer base to nearly 6 million cardholders from 2 million over the same
period, and are now the ninth-largest card issuer in the country based on
outstanding balances. Our mortgage, leasing and insurance business units
continue to perform well. Our commitment to building shareholder value, and our
success in doing so over many years, are clear. Going forward, we will maintain
that commitment, building upon the many strengths of our organization including
its talented employees, its marketing skills, its strategic alliances and its
millions of customers."
The Company also announced that its Board of Directors has adopted a
Shareholder Rights Plan in which rights will be distributed as a dividend at
the rate of one Class A Right for each share of Class A Common Stock and one
Class B Right for each share of Class B Common Stock of the Company held by
shareholders of record as of the close of business on April 11, 1997. The
rights will expire on April 11, 2007. If any shareholder acquires beneficial
ownership of 15% or more of either the outstanding Class A Common Stock or the
total common stock, all shareholders, other than the acquiror, will have the
right to purchase $300 of stock for a purchase price of $150. Depending on the
circumstances, the stock to be purchased may be a new Series A Junior
Participating Preferred Stock, common stock of the class then held by the
rightholder or common stock of an entity that acquires a significant portion of
the Company's business.
The Rights Plan is designed to help ensure Advanta shareholders' ability to
realize the full value of their investment in the Company. It aims to deter
coercive takeover tactics including the accumulation of shares in the open
market or through private
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<PAGE> 4
4
transactions and to prevent an acquiror from gaining control of the Company
under circumstances the Board considers inappropriate. The Rights Plan was not
adopted in response to any takeover attempt.
With nearly six million customers, over $19 billion in managed assets and more
than 3,500 employees, Advanta is a consumer financial services enterprise that
proudly serves consumers and small businesses through high-quality, innovative
offerings of credit cards, mortgages, leases, insurance and deposit products.
This Press Release contains forward-looking statements, including but not
limited to projections of future earnings, that are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. The most significant among these risks and uncertainties are: (1) the
Company's managed net interest margin, which in turn is affected by the
Company's success in originating new credit card accounts, the receivables
volume and initial pricing of new accounts, the impact of repricing existing
accounts and account attrition, the mix of account types and interest rate
fluctuations; (2) the level of delinquencies and charge-offs; and (3) the level
of expenses. Earnings also may be affected by factors that affect consumer debt,
competitive pressures and the ratings on debt of the Company and its
subsidiaries. Additional risks that may affect the Company's future performance
are detailed in the Company's filings with the Securities and Exchange
Commission, including its most recent Annual Report on Form 10-K and its
Quarterly Reports on Form 10-Q.
# # #
The attached Advanta Corporation Statistical Supplement and other information
are part of this release.
Attachment
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<PAGE> 5
ADVANTA CORPORATION
STATISTICAL SUPPLEMENT
(dollars in millions except earnings per share data)
THE AMOUNTS STATED FOR THE CURRENT FISCAL QUARTER ENDING MARCH 31, 1997 ARE
ESTIMATES BASED ON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT, AND ARE
SUBJECT TO ADJUSTMENT AFTER THE BOOKS ARE CLOSED FOLLOWING THE QUARTER END.
MANAGEMENT BELIEVES THAT THE RESULTS WILL BE WITHIN THE STATED RANGES, BUT SUCH
RESULTS CANNOT BE ASSURED.
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
---------------------- -----------------------------------
MARCH 31, 1997 DECEMBER 31, MARCH 31,
EARNINGS ESTIMATED RANGE 1996 1996
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Net revenues $180 - $195 $241 $188
Net interest revenues 25 - 30 22 17
Noninterest revenues* 155 - 165 219 171
Provision for credit losses 55 - 60 30 15
Operating expenses 150 - 155 144 110
Pretax income (loss) (26) - (28) 67 62
Net income (loss)*+ (19) - (21) 45 41
Earnings (loss) per common shares*+ (0.42) - (0.46) 1.00 0.91
<CAPTION>
KEY RATIOS (ANNUALIZED)
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Return on average assets (1.0)% - (1.5)% 3.2% 3.4%
Return on avg common equity (10.0) - (12.0) 23.7 25.8
Equity/owned assets 15.0 - 17.0 17.1 14.3
Equity/managed assets 4.2 - 5.0 5.0 4.4
As a % of average managed receivables+
Net revenues 4.0 - 5.0 6.0 5.8
Operating expenses 3.3 - 3.6 3.1 2.8
Managed net interest margin 7.0 - 7.5 6.9 6.2
<CAPTION>
AVERAGE MANAGED RECEIVABLES
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Credit cards $12,400 - $12,500 $12,771 $10,557
Personal finance loans 2,900 - 2,950 2,468 1,851
Business loans 865 - 875 766 445
Other loans 20 - 25 18 10
------- ------- ------- -------
Total average managed receivables $16,185 - $16,350 $16,022 $12,863
Total average serviced receivables $20,650 - $20,850 $18,915 $13,639
<CAPTION>
CHARGE-OFF INFORMATION (MANAGED BASIS)
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Credit Card
- -Amount $205 - $210 $145 $84
- -% of receivables+ 6.6% - 7.0% 4.6% 3.2%
Total
- -Amount $214 - $220 $155 $90
- -% of receivables+ 5.2% - 5.6% 3.9% 2.8%
<CAPTION>
DELINQUENCY RATIOS
(TOTAL LOANS 30 DAYS OR MORE DELINQUENT)
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Credit Card 5.2% - 5.6% 5.0% 2.7%
Total 5.7% - 6.1% 5.4% 3.2%
<CAPTION>
RESERVE FOR CREDIT LOSSES (OWNED BASIS)
- ------------------------------------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Total $100 - $105 $89 $57
</TABLE>
*THESE AMOUNTS ASSUME COMPLETION OF A SECURITIZATION TRANSACTION LATER IN MARCH.
IF THE TRANSACTION DOES NOT CLOSE BEFORE THE QUARTER END, IT IS EXPECTED TO
CLOSE EARLY IN APRIL.
+SOME OF THE AMOUNTS IN THE COLUMNS RELATING TO THE QUARTER ENDING MARCH 31,
1997 INTERRELATE WITH OTHERS, AND INCREASES IN SOME ITEMS WILL NECESSARILY
CAUSE DECREASES IN OTHERS. ACCORDINGLY, THE AMOUNTS SHOWN FOR "NET INCOME
(LOSS)" ARE NOT INTENDED TO BE A SUMMATION OF THE PRECEDING FIGURES. THE
AMOUNTS SHOWN FOR "EARNINGS (LOSS) PER COMMON SHARE" ARE BASED ON "NET INCOME
LOSS)" AMOUNTS IN THE RESPECTIVE COLUMNS. SIMILARLY, CERTAIN RATIOS ARE NOT
INTENDED TO BE AN EXACT PERCENTAGE OF THE REVENUE OR EXPENSE AMOUNTS SHOWN IN
THE RESPECTIVE COLUMNS.
<PAGE> 6
ADVANTA CORPORATION
OTHER INFORMATION FOR FULL YEAR 1997
(dollars in billions)
[S] [C]
VOLUMES
Ending Receivables (12/31/97)
Credit Cards $13.5 to $14.5
Total $19.0 to $20.0
MANAGED NET INTEREST MARGIN 8.0% to 9.0%
NET CHARGE-OFF RATIO
Credit Cards 6.5% to 7.5%
Total 5.0% to 6.0%
Note: The net charge-off ratio is assumed to increase
throughout the year.
OPERATING EXPENSE RATIO 3.0% to 3.5%
(Excluding amortization of credit card DAC)
NOTE: THE ABOVE INFORMATION REFLECTS THE COMPANY'S GOOD-FAITH ESTIMATES OF
CERTAIN PRELIMINARY PROJECTED RESULTS FOR 1997. THIS INFORMATION IS
SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, AS DESCRIBED IN THE
ACCOMPANYING PRESS RELEASE.
