-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L60EBSZdqTZMka+Yzp+RQiJvsZQtMnjXXo1C04IBvdGWHqs1ailpWf8RHAx+sZ/F fGPtWqCQ5cJrD33BWA1hoQ== 0001067312-99-000154.txt : 19990517 0001067312-99-000154.hdr.sgml : 19990517 ACCESSION NUMBER: 0001067312-99-000154 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALASSIS COMMUNICATIONS INC CENTRAL INDEX KEY: 0000883293 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 382760940 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10991 FILM NUMBER: 99624623 BUSINESS ADDRESS: STREET 1: 19975 VICTOR PARKWAY CITY: LIVONIA STATE: MI ZIP: 48152 BUSINESS PHONE: 3135913000 MAIL ADDRESS: STREET 1: 19975 VICTOR PARKWAY CITY: LIVONIA STATE: MI ZIP: 48152 10-Q 1 FORM 10-Q UNITED STATES 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 March 31, 1999 Transition Report pursuant to Section 13 or 15(d) of the Securities --- Exchange Act of 1934 Commission File Number: 1-10991 VALASSIS COMMUNICATIONS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 38-2760940 (State or Other Jurisdiction of (IRS Employer Identification Number) Incorporation or Organization) 19975 Victor Parkway Livonia, Michigan 48152 (address of principal executive offices) Registrant's Telephone Number: (734) 591-3000 _______________________________________________ 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 -------- ------- As of May 5, 1999, there were 57,059,600 shares of the Registrant's Common Stock outstanding, after giving effect to the 3 for 2 stock split issued on May 12, 1999 to shareholders of record on April 16, 1999. Part I - Financial Information Item 1. Financial Statements VALASSIS COMMUNICATIONS, INC. Condensed Consolidated Balance Sheets (dollars in thousands)
March 31, December 31, Assets 1999 1998 --------------- -------------- (unaudited) Current assets: Cash and cash equivalents $9,570 $6,939 Accounts receivable (less allowance for doubtful accounts of $1,980 at March 31, 1999 and $1,354 at December 31, 1998) 103,189 95,430 Inventories: Raw materials 10,849 11,817 Work in progress 12,417 20,051 Prepaid expenses and other 6,150 5,817 Deferred income taxes 1,790 1,790 Refundable income taxes --- 1,215 ------------- ------------- Total current assets 143,965 143,059 -------------- ------------- Property, plant and equipment, at cost: Land and buildings 21,756 21,456 Machinery and equipment 115,124 114,912 Office furniture and equipment 20,906 20,143 Automobiles 956 1,025 Leasehold improvements 1,048 1,022 -------------- -------------- 159,790 158,558 Less accumulated depreciation and amortization (113,618) (112,200) -------------- -------------- Net property, plant and equipment 46,172 46,358 -------------- -------------- Intangible assets: Goodwill 68,594 68,594 Other intangibles 85,387 85,387 -------------- --------------- 153,981 153,981 Less accumulated amortization (114,106) (112,806) --------------- --------------- Net intangible assets 39,875 41,175 ---------------- --------------- Other assets (primarily debt issuance costs) 2,598 1,422 ---------------- --------------- Total assets $232,610 $232,014 ================ ================
2 VALASSIS COMMUNICATIONS, INC. Condensed Consolidated Balance Sheets, Continued (dollars in thousands, except per share data)
March 31, December 31, Liabilities and Stockholders' Deficit 1999 1998 ---------------- ------------------ (unaudited) (note) Current liabilities: Accounts payable $69,938 $69,064 Accrued interest 5,876 4,542 Accrued expenses 20,680 26,345 Income paxes payable 19,225 --- Progress billings 49,466 58,615 ---------------- ------------------ Total current liabilities 165,185 158,566 ---------------- ------------------ Long-term debt 319,429 340,461 Deferred income taxes 1,511 1,511 Commitments and contingencies Stockholders' deficit: Common stock of $.01 par value. Authorized 100,000,000 627 629 shares; issued 62,732,604 at March 31, 1999 and 62,854,360 at December 31, 1998; outstanding 57,048,266 at March 31, 1999 and 57,589,322 at December 31, 1998 Additional paid-in capital 71,962 69,416 Accumulated deficit (132,046) (165,937) Foreign currency translations (283) (298) Treasury stock, at cost (5,684,338 shares at March 31, 1999 and 5,265,038 shares at December 31, 1998) (193,775) (172,334) ---------------- ------------------ Total stockholders' deficit (253,515) (268,524) ---------------- ------------------ Total liabilities and stockholders' deficit $232,610 $232,014 ================ ==================
NOTE: The balance sheet at December 31, 1998 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to condensed consolidated financial statements. 3 VALASSIS COMMUNICATIONS, INC. Condensed Consolidated Statements of Income (dollars in thousands, except per share data) (unaudited)
Quarter Ended March 31, March 31, 1999 1998 ---------------- ----------------- Revenues: Net sales $221,906 $204,951 Other 299 732 ---------------- ----------------- Total revenues 222,205 205,683 ---------------- ----------------- Costs and expenses: Cost of products sold 138,421 133,902 Selling, general and administrative 20,203 18,453 Amortization of intangible assets 1,299 2,024 Interest 7,391 9,007 ---------------- ----------------- Total costs and expenses 167,314 163,386 ---------------- ----------------- Earnings before income taxes 54,891 42,297 Income taxes 21,000 16,250 ---------------- ----------------- Net earnings $33,891 $26,047 ================ ================= Net earnings per common share, basic $ .59 $ .43 ================ ================= Net earnings per common share, diluted $ .58 $ .43 ================ ================= Shares used in computing net earnings per share, basic 57,118,800 60,170,219 ================ ================= Shares used in computing net earnings per share, diluted 58,244,948 60,834,840 ================ =================
See accompanying notes to condensed consolidated financial statements. 4 VALASSIS COMMUNICATIONS, INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
Quarter Ended ----------------------------------------- MARCH 31, MARCH 31, 1999 1998 ----------------- ------------------ Cash flows from operating activities: Net earnings $33,891 $26,047 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,304 3,939 Provision for losses on accounts receivable 225 225 Minority interest --- (3) (Gain)/loss on sale of property, plant and equipment (65) 6 Stock-based compensation charge 823 1,551 Changes in assets and liabilities which increase (decrease) cash flow: Accounts receivable (7,984) (18,573) Inventories 8,602 2,337 Prepaid expenses and other 1,013 (3,494) Other assets (176) 105 Accounts payable 874 17,375 Accrued expenses and interest (4,331) (7,896) Income taxes 20,440 14,915 Progress billings (9,149) (14,961) ----------------- ------------------ Total adjustments 13,576 (4,474) ----------------- ------------------ Net cash provided by operating activities 47,467 21,573 ----------------- ------------------ Cash flows from investing activities: Additions to property, plant and equipment (1,864) (5,770) Investment in Merge L.L.C. (1,000) --- Proceeds from sale of property, plant and equipment 110 --- Other 16 (121) ----------------- ------------------ Net cash used in investing activities (2,738) (5,891) ----------------- ------------------ Cash flows from financing activities: Repayment of long-term debt (108,380) (4,184) Proceeds from the issuance of common stock 375 19,750 Borrowings of long-term debt 100,348 --- Net borrowings (payments) under revolving line of credit (13,000) --- Repurchase of common stock (21,441) (56,166) ----------------- ------------------ Net cash used in financing activities (42,098) (40,600) ----------------- ------------------ Net increase/(decrease) in cash 2,631 (24,918) Cash at beginning of period 6,939 35,437 ----------------- ------------------ Cash at end of period $ 9,570 $10,519 ================= ================== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 6,057 $ 5,559 Cash paid during the period for income taxes $ 560 $ 1,335 Non-cash financing activities: Stock issued under stock-based compensation plan $ 2,169 $ 2,338
See accompanying notes to condensed consolidated financial statements. 5 VALASSIS COMMUNICATIONS, INC. Notes to Condensed Consolidated Financial Statements 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the information presented. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of results to be expected for the fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Certain amounts for 1998 have been reclassified to conform to current period classifications. 2. Contingencies On February 24, 1999, the Company commenced litigation against The News Corporation Limited ("News Corp") and News America Incorporated ("News America") in the State of Michigan Circuit Court for the County of Wayne. The Complaint seeks $150 million in compenstory damages, $300 million in punitive damages and injunctive relief based on allegations of tortious interference with prospective contractual relations and aiding and abetting a breach of fiduciary duty. The principal factual allegation is that Arthur Andersen LLP ("Arthur Andersen"), with the inducement of News Corp and News America, repudiated a joint venture agreement with the Company relating to the development of a new product. On April 7, 1999, Arthur Andersen rejected alternative dispute resolution and filed a declaratory judgment action in the Chancery Division of the Cook County, Illinois Circuit Court. This action asks the Illinois Court to make a determination as to whether the Company and Arthur Andersen had a contract. The Company has filed a motion to dismiss this Illinois action. On April 12, 1999, the Company amended its lawsuit against News Corp and News America to add Arthur Andersen as a defendant. News Corp and News America filed a motion to dismiss the case against News Corp and News America for lack of jurisdiction. On May 7, 1999, the Court found that Michigan jurisdiction was proper and denied their motion. The time for defendants to answer or move with respect to the Complaint has not yet expired. The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. 3. Supplemental Benefit Plan The Company established a Supplemental Benefit Plan (the "Plan") in 1998. The Plan covers management employees who are designated by the Company's Compensation/Stock Option Committee. Participating employees earn credited service for each year of continuous service with the Company. The annual amount of supplemental benefit is calculated by multiplying a participant's years of credited service by one and one-half percent of the participant's average annual base pay while employed by the Company 36 months immediately preceding retirement or other termination of employment. The amount of supplemental benefit provided by the Plan is payable semi-annually for a period of ten years, commencing upon retirement, death or other termination of employment. Supplemental benefits are provided on a non-contributing basis. Expense associated with the cost of future benefits under the Plan for the quarter ended March 31, 1999 totaled approximately $148,000. 4. Subsequent Event On April 1, 1999, the Board of Directors approved a three-for-two split of the Company's Common Stock, effected in the form of a 50% stock dividend, issued May 12, 1999, to stockholders of record as of April 16, 1999. Accordingly, all common share and per common share data have been restated to reflect this stock split. The stock split was accomplished through the issuance of 16,481,134 new shares and the use of 2,536,462 shares of Treasury Stock. 6 5. Segment Reporting The Company has two reportable segments, cooperative free-standing inserts (FSIs) and Valassis Impact Promotions (VIP). FSIs are four-color booklets containing promotions from multiple advertisers distributed through Sunday newspapers. VIP offers its customers individualized specialty print promotion products in customized formats. These reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different marketing strategies and caters to a different customer base. Assets are not allocated to reportable segments and are not used to assess the performance of a segment. Intersegment sales are accounted for at cost.
(in millions) Three Months Ended March 31 - ------------- ----------------------------------------------------- FSI VIP All Others* Total 1999 ---------- ---------- -------------- --------- ---- Revenues from external customers $167.7 $34.0 $20.3 $222.0 Intersegment revenues 2.2 --- --- 2.2 Depreciation/amortization 2.8 0.5 --- 3.3 Segment profit 50.9 3.1 0.7 54.7 1998 ---- Revenues from external customers $156.8 $29.9 $18.3 $205.0 Intersegment revenues 1.8 --- --- 1.8 Depreciation/amortization 3.6 0.3 --- 3.9 Segment profit 38.5 2.3 0.8 41.6
* Segments below the quantitative thresholds are primarily attributable to four segments of the Company. Those segments include a product sampling business, a sales promotion company in Canada, a run-of-press business, and a promotion security service. None of these segments has met any of the quantitative thresholds for determining reportable segments. Reconciliations to consolidated financial statement totals are as follows: Three Months Ended March 31, --------------------------------- 1999 1998 --------------- -------------- Profit for reportable segments $54.0 $40.8 Profit for other segments 0.7 0.8 Unallocated amounts: Interest income 0.2 0.7 --------------- -------------- Earnings before taxes $54.9 $42.3 --------------- -------------- Domestic and foreign revenues for each of the three-month periods ended March 31 were as follows: 1999 1998 ------- -------- United States $216.4 $200.2 Canada 5.8 5.5 ------- -------- Total $222.2 $205.7 ======= ======== 7 6. Earnings Per Share Earnings per common share ("EPS") data were computed as follows:
Three Months Ended March 31, ----------------------------- 1999 1998 ------------- ------------ (in thousands except for per share amounts) Net Earnings $33,891 $26,047 ============= ============ Basic EPS: Weighted average common shares outstanding 57,119 60,170 ============= ============ Earnings per common share - basic $ 0.59 $ 0.43 ============= ============ Diluted EPS: Weighted average common shares outstanding 57,119 60,170 Weighted average shares purchased on exercise of dilutive options 4,364 2,616 Shares purchased with proceeds of options (3,267) (1,962) Shares contingently issuable 29 11 ------------- ------------ Shares applicable to diluted earnings 58,245 60,835 ============= ============ Earnings per common share - diluted $ 0.58 $ 0.43 ============= ============
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such factors include, among others, the following: a new competitor in the Company's core free-standing insert business and consequent price war; new technology that would make free-standing inserts less attractive; a shift in customer preference for different promotional materials, promotional strategies or coupon delivery methods, including in-store advertising systems and other forms of coupon delivery; the inability of material third parties upon which the Company relies to be Year 2000 compliant in a timely manner; an increase in the Company's paper costs; or general business and economic conditions. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Results of Operations Total revenues increased 8.0% from $205.7 million for the first quarter of 1998 to $222.2 million for the first quarter of 1999. Free-standing insert (FSI) revenues were up 7.0% from $156.8 million for the quarter ended March 31, 1998 to $167.7 million for the same quarter of 1999. This increase is the result of continued industry page growth and moderate price increases, despite one less FSI publishing date during the first quarter of 1999 than in 1998. Retail Services revenues, which include Valassis Impact Promotions (VIP) and the newly- developed Customer Attainment and Retention System (CARS), were up 16% to $34.8 million compared to $29.9 million in the prior-year period. This increase is a result of continued strong demand from VIP's traditional customer base of food service companies. Gross profit margin was 37.7% in the first quarter of 1999, up from 34.9% in the first quarter of 1998. This was primarily the result of the continued decline in the Company's three major cost components, paper, media and printing on a per unit basis. The Company recently negotiated multi-year contracts with several major suppliers of coated groundwood paper designed to stabilize paper costs. The contracts, which stipulate pricing collars preventing the price of paper from going up or down more than 6-10% in any 12-month period, represent over 75% of the Company's paper requirements. Selling, general and administrative expenses increased from $18.5 million in the first quarter of 1998 to $20.2 million in the first quarter of 1999. This is primarily the result of higher incentive plan costs as a result of stronger sales and profits in the first quarter of 1999 as compared to the same period in 1998, as well as costs associated with new business development. As a result of the Company's recently completed multi-phased debt-restructuring plan, interest expense was down for the quarter ended March 31, 1999. The debt- restructuring plan included the addition of a $160 million unsecured bank facility, a ratings upgrade by both Moody's and S&P, the repurchase of $125.1 million of the Company's senior notes due 2003, and the issuance of $100 million in senior notes due 2009. 9 Net earnings were $33.9 million for the first quarter of 1999 versus $26.0 million for the same period last year. These improved results were primarily the result of strong FSI sales. Financial Condition, Liquidity and Sources of Capital The Company's liquidity requirements arise mainly from its working capital needs, primarily accounts receivable, inventory and debt service requirements. The Company does not offer financing to its customers. FSI customers are billed for 75% of each order eight weeks in advance of the publication date and are billed for the balance immediately prior to the publication date. The Company inventories its work in progress at cost while it accrues progress billings as a current liability at full sales value. Although the Company receives considerable payments from its customers prior to publication of promotions, revenue is recognized only upon publication dates. Therefore, the progress billings on the balance sheet include any profits in the related receivables and accordingly, the Company can operate with low, or even negative, working capital. Cash and cash equivalents totaled $9.6 million at March 31, 1999 versus $10.5 million at March 31, 1998. This was the result of cash provided by operating activities of $47.5 million, and cash used in investing activities and financing activities of $2.7 million and $42.1 million, respectively, in the first quarter of 1999. Cash flow from operating activities increased from $21.6 million at March 31, 1998 to $47.5 million at March 31, 1999 as a result of increased earnings and other positive working capital changes. During the first quarter of 1999, the Company retired $107 million in debt due March 1999 using amounts borrowed under its $160 million Revolving Credit Facility and $17 million of existing cash. As of March 31, 1999 the Company's debt has been reduced to $319 million, which consists of $90 million under its Revolving Credit Facility, $100 million of its 6-5/8% Senior Notes due 2009 and $129 million of its 9.55% Senior Notes due 2003. The Company intends to use cash generated by operations to meet interest and principal repayment obligations, for general corporate purposes, to reduce its indebtedness and from time to time to repurchase stock through the Company's stock repurchase program. As of March 31, 1999, the Company had authorization to repurchase an additional 1.8 million shares of its common stock under its existing share repurchase program. Management believes that the Company will generate sufficient funds from operations and will have sufficient lines of credit available to meet currently anticipated liquidity needs, including interest and required payments of indebtedness. Capital Expenditures - The Company operates three printing facilities. Capital expenditures were $1.9 million for the three month period ended March 31, 1999. Management expects future capital expenditure requirements of approximately $10 million to $15 million over each of the next three to five years to meet increased capacity needs and to replace or rebuild equipment as required. It is expected that equipment will be purchased using funds provided by operations. 10 Year 2000 Compliance The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than 2000. This problem could force computers to either shut down or generate erroneous data or information. In response to the Year 2000 issue, the Company has implemented a multi-faceted project plan, which covers both IT and non-IT systems. This plan encompasses three areas: (1) program modifications; (2) implementing new financial software upgrades; and (3) testing readiness of vendors and customers. Phases associated with the project plan are: identification and ranking of components of the Company's systems and equipment and those of its suppliers that may be vulnerable to Year 2000 problems; assessment of those components; remediation or replacement of non-compliant systems and components; testing of systems and components following remediation; and the development of contingency plans. With regard to program modification and implementing new software upgrades, the Company has completed its plan and has all critical systems Year 2000 compliant. With regard to readiness of vendors and customers, the Company is currently in the assessment phase and will have testing plans completed by June 30, 1999. The Company's plans include the development of a full contingency plan. The Company believes that by June 30, 1999, it will be able to fully determine its most likely worst case scenarios and will have its contingency plans in place. Potential sources of risk include the inability of suppliers (principally paper suppliers) to be Year 2000 compliant in a timely manner, which could result in delays in product deliveries from such suppliers, the disruption of the distribution of the Company's products to the consumer, and disruption of the Company's own production facilities as a result of general failure of necessary infrastructure such as electricity supply. The Company estimates the total costs related to the implementation of the program modification plan and the financial software upgrade plan to be approximately $400,000 and $300,000, respectively, which will be funded through operating cash flows and expensed as incurred. To date, expenses have totaled approximately $300,000 for program modifications and $30,000 for financial software upgrades. It is not possible to quantify the aggregate cost to the Company with respect to vendors, service providers and customers who fail to become Year 2000 compliant. This is a Year 2000 Readiness Disclosure Statement within the meaning of the Year 2000 Information and Readiness Disclosure Act (P.L. 105-271). 11 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K a. Exhibits The following exhibits are included herein: (3)(ii) By-Laws (27) Financial Data Schedule b. Form 8-K The Company filed a report on Form 8-K, dated January 12, 1999, announcing the completion of a debt-restructuring plan. 12 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 14, 1999 Valassis Communications, Inc. (Registrant) By: /s/Robert L. Recchia ---------------------------------------- Robert L. Recchia V.P. of Finance - Chief Financial Officer Signing on behalf of the Registrant and as principal financial officer. 13 EX-3.(II) 2 BY-LAWS EFFECTIVE MARCH 22, 1999 AMENDED AND RESTATED BY-LAWS OF VALASSIS COMMUNICATIONS, INC. (the "Corporation") ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation shall be located in Wilmington, Delaware. SECTION 2. Other Offices. The Corporation may also have offices at such other places as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II Meetinqs of Stockholders SECTION 1. Annual Meetings. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at such date and time, within or without the State of Delaware, as the Board of Directors shall determine. SECTION 2. Special Meeting. Special meetings of stockholders for the transaction of such business as may properly come before the meeting may be called by order of the Board of Directors, the Chairman, the President, the Secretary or any Assistant Secretary and shall be called by any such officer at the request in writing of stockholders holding together at least a majority of all the shares of the Corporation issued and outstanding and entitled to vote at the meeting, and shall be held at such date and time, within or without the State of Delaware, as may be specified by such order. SECTION 3. Notice. Written notice of all meetings of stockholders shall be given to each stockholder of record who is entitled to vote at such meetings, stating the place, date, and time of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided by law, a copy of the notice of any meeting shall be given, personally, by mail or by telecopy, not less than ten days nor more than sixty days before the date of the meeting, and directed to each stockholder of record at his record address. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States mails. If a meeting is -2- adjourned to another time, not more than thirty days thereafter, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless, after adjournment, a new record date is fixed for the adjourned meeting. SECTION 4. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, 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 days prior to the meeting, either at a place within the city or other municipality or community 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 where the meeting is to be held and during the whole time of the meeting, and may be inspected by any stockholder who is present. SECTION 5. Proxy Representation. Every stockholder may authorize another person or persons to act -3- for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder granting such proxy or by his attorney-in- fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. 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. SECTION 6. Quorum; Adjourments. Except as otherwise provided by law, a quorum for the transaction of business at any meeting of stock holders shall consist of the holders of record of a majority of the shares of the capital stock of the Corporation, issued and outstanding, entitled to vote at the meeting, present in person or by proxy. In the absence of a quorum at any meeting or any adjournment thereof, the holders of record of a majority of the shares present in person or by proxy and entitled to vote at such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. -4- SECTION 7. Conduct of Meeting. Meetings of stockholders shall be presided over by the Chairman, or in his absence, a chairman chosen by a plurality of the directors, or, if not so chosen, by the stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corporation shall act as secretary of every meeting, but if the Secretary is not present, the presiding officer of the meeting shall appoint any person present to act as secretary of the meeting. SECTION 8. Voting. At each meeting of stockholders, each stockholder entitled to vote any shares on any matter to be voted upon at such meeting shall be entitled to one vote on such matter for each such share. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast, except as otherwise provided by law. Voting by ballot shall not be required for the election of directors or any other corporate action, except as otherwise provided by law. SECTION 9. Written Consent of Shareholders Without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without -5- a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken and the date of signature, shall be signed by the holders of outstanding stock having no less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and delivered within 60 days of signing to the Corporation either at its registered office in Delaware, its principal place of business or to the officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III Directors SECTION 1. Functions and Definition. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors. The use of the phrase "whole Board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. -6- SECTION 2. Qualifications and Number. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the whole Board shall not be less than one, nor more than twelve. The number of directors may be modified by resolution of the Board of Directors, but in no event shall the number of directors be less than one. SECTION 3. Election and Term. The initial Board of Directors shall be elected by the Incorporator and shall hold office until the first annual meeting of stockholders or until their successors are elected and qualified or until their earlier resignation or removal. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. At each meeting of the stockholders for the election of directors, provided a quorum is present, the directors shall be elected by a plurality of the votes validly cast in such election. SECTION 4. Annual Meeting. Following each annual election of directors, the newly elected Board shall meet for the purpose of the election of officers and the transaction -7- of such other business as may properly come before the meeting. SECTION 5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors shall from time to time by resolution determine. SECTION 6. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the direction of the Chairman, President, any Vice President, the Secretary, or any Assistant Secretary, and shall be called by any such officer at the request of any three directors or at the request in writing of stockholders owning more than 40% of the outstanding capital stock of the Corporation or by any three directors of the Corporation. SECTION 7. Place. Meetings of the Board of Directors may be held at any place within or without the State of Delaware. SECTION 8. Notice. A notice of the place, date and time of each regular meeting of the Board of Directors shall be given to each director by mailing the same not less than seven and not more than twenty-eight days before the meeting, or by telegraphing, telexing, telecopying or telephoning the same or by delivering the same personally not less than four and not more than fourteen days before the meeting, at the residence address of each director or at his -8- usual place of business. Special meetings of the Board of Directors may be called on 24 hours' notice, if notice is given to each director personally by telephone, by telecopier or by telegram, or on five days' notice if notice is mailed to each director in the United States or, if such notice is sent outside the United States, by overnight courier (next or two-day delivery guaranteed), to each director addressed to him at the residence address of each director or at his usual place of business. SECTION 9. Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, at all meetings of the Board of Directors, a majority of the entire Board 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. 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. SECTION 10. Organization. At all meetings of the Board of Directors, the Chairman, or in his absence a director chosen by a plurality of the directors present at such meeting shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board of -9- Directors when present, and, in his absence, the presiding officer may appoint any person to act as secretary. SECTION 11. Resignation and Removal of Directors. Any director may resign at any time, and such resignation shall take effect upon receipt thereof by the Chairman, President or Secretary, unless otherwise specified in the resignation. Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares of stock outstanding and entitled to vote for the election of directors. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the stockholders entitled to vote for the election of the director so removed. If such stockholders do not fill such vacancy at such meeting (or in the written instrument effecting such removal, if such removal was effected by consent without a meeting), such vacancy may be filled in the manner provided in Section 12 of these By-Laws. SECTION 12. Vacancies. Unless otherwise provided in the Certificate of Incorporation or in these By-Laws, vacancies among the directors, whether caused by resignation, death, disqualification, removal, an increase in the authorized number of directors or otherwise, may be filled by a resolution duly adopted by a majority of the directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold -10- office until his successor has been elected and qualified or until his earlier death, resignation or removal. Any such vacancy or newly created directorship may also be filled at any time by vote of the stockholders. SECTION 13. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors or a committee thereof may be taken without a meeting if all members of the Board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or committee shall be filed with the minutes of the proceedings of the Board or committee. SECTION 14. Telephone, etc. Meetings. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. SECTION 15. Reliance. A board or committee member shall be fully protected in relying in good faith upon the records of the corporation and upon information, opinions, reports, or statements presented to the corporation by its officers and employees, board committees, or any other person -11- as to matters the board or committee member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care. SECTION 16. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation 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 of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their 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 of Directors 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 (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the -12- stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders, or (iii) the contract or transaction is fair as to the Corporation 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. ARTICLE IV Committees SECTION 1. Executive Committee. The Board of Directors, by a resolution passed by a vote of a majority of the whole Board, may appoint an Executive Committee of one or more directors which, except as otherwise provided by the Board of Directors, shall have and exercise all the powers of the Board of Directors in the management of the property, business and affairs of the Corporation, including the power and authority to issue stock, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that the Executive Committee shall not have any power or authority to: -13- (a) declare cash dividends, (b) amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), (c) adopt an agreement of merger or consolidation, (d) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, or (e) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution. The Board of Directors shall appoint the Chairman of the Executive Committee and may designate one or more directors as alternate members of the Executive Committee, who may replace any absent or disqualified member at any meeting of the Executive Committee. Vacancies on the Executive -14- Committee shall be filled by the Board of Directors in the same manner as original appointments to such Committee. SECTION 2. Other Committees. From time to time the Board of Directors by a resolution adopted by a majority of the whole Board may appoint any other committee or committees of one or more directors for any purpose or purposes, to the extent lawful, which shall have such powers as shall be determined and specified by the Board of Directors in the resolution of appointment, except that no committee shall have the power or authority to take the actions set forth in paragraphs (a), (b), (c) or (d) of Section 1 of Article IV above. SECTION 3. Procedures Applicable to All Committees. Each committee shall fix its own rules of procedure, and shall meet where and as provided by such rules or by resolution of the Board of Directors. The presence of a majority of the then appointed members of a committee shall constitute a quorum for the transaction of business by that committee, and in every case where a quorum is present the affirmative vote of a majority of the members of the committee present shall be the act of the committee. Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee, shall consent to such action in writing and such writing or writings are filed with the -15- minutes of the proceedings of the Committee. Each committee shall keep minutes of its proceedings, and any action taken by a committee shall be reported to the Board of Directors at its meeting next succeeding such action. SECTION 4. Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. SECTION 5. Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. SECTION 6. Termination of Committee Membership. In the event any person shall cease to be a director of the Corporation, such person shall simultaneously therewith cease to be a member of any committee appointed by the Board of Directors. Any member (and any alternate member) of any -16- Committee may be removed at any time, either for or without cause, by resolution adopted by the Board of Directors. ARTICLE V Officers SECTION 1. Executive Officers. The executive officers of the Corporation shall be a President, a Treasurer and a Secretary, all of whom shall be elected annually by the Board of Directors. The Board of Directors, in its discretion, may choose any one or more Vice Presidents. The Board of Directors, in its discretion, may choose a Chairman of the Board (who must be a director), who need not be a shareholder. Unless otherwise provided in the resolution of election, each officer shall hold office until the next annual election of directors and until his successor shall have been elected and qualified or until his earlier resignation or removal. Any number of offices may be held by the same person unless otherwise prohibited by law. SECTION 2. Other Officers. The Board of Directors may appoint one or more Assistant Secretaries or Assistant Treasurers as it may deem necessary or advisable, for such term as the Board of Directors shall fix in such appointment, who shall have such authority and perform such duties as may from time to time be prescribed by the Board. -17- SECTION 3. Resignation and Removal. Any officer may resign his office at any time and such resignation shall take effect upon receipt thereof by the Chairman, the President or the Board of Directors, unless otherwise specified in the resignation. All officers, agents and employees of the Corporation shall be subject to removal, with or without cause, at any time by a resolution of the Board. The power to remove agents and employees, other than officers or agents elected or appointed by the Board of Directors, may be delegated as the Board of Directors shall determine. SECTION 4. The Chairman. The Chairman, if there be one, shall preside at all meetings of the stockholders and directors at which he is present. He shall have the same authority as the President to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. The Chairman shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 5. The President. The President shall, subject to the control of the Board of Directors and, if -18- there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall be the Chief Executive Officer of the Corporation. He shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the President. The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors. SECTION 6. The Vice Presidents. Each Vice President, if there be any, shall perform such duties and exercise such powers as may be assigned to him from time to time by a resolution of a majority of the Board of Directors. In the absence of the President, the duties of the President shall be performed and his powers may be exercised by any such Vice President as shall be designated by the President, -19- or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President. SECTION 7. The Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the following powers and duties: (a) The Treasurer shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation. (b) He shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected by the Board of Directors, the Chairman, the President or a Vice President. (c) He shall cause the moneys of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed. (d) He shall render to the Board of Directors or the President, whenever requested, a statement of the -20- financial condition of the Corporation and of all his transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so. (e) He shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation. (f) He may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors. (g) He shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President. (h) In the absence of the President and any Vice Presidents, the duties of the President shall be performed by the Treasurer. SECTION 8. The Secretary. The Secretary shall have the following powers and duties: -21- (a) The Secretary shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose and shall be entitled to attend all meetings of the Board of Directors. (b) The Secretary shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law. (c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, the Secretary shall furnish a copy of such resolution to the members of such Committee. (d) The Secretary shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he may attest the same. (e) The Secretary shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation or these By-Laws. -22- (f) The Secretary shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record. (g) The Secretary shall sign (unless the Treasurer, an Assistant Treasurer or Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors. (h) The Secretary shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By- Laws or as may be assigned to him from time to time by the Board of Directors, or the President. ARTICLE VI Stock SECTION 1. Certificates of Stock, Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may -23- provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws. The Corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Board of Directors may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on -24- account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. SECTION 2. Stock Transfers. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation. SECTION 3. Record Date for Stockholders. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent or dissent from any corporate action in writing without a meeting, or for the purpose of determining the stockholders entitled to receive payment of -25- any dividend or other distribution or the 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 date as the record date for any such determination of stockholders, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote of 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 4. Dividends. The Board of Directors shall have the right, subject to any applicable provisions of law and the Certificate of Incorporation, to declare dividends to the Corporation's stockholders in any amount whatsoever out of those moneys legally available under applicable state law. SECTION 5. Registered Stockholders. Prior to due surrender of a certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares -26- represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so. ARTICLE VII Waiver of Notice Any person may waive any notice required to be given by law, in the Certificate of Incorporation or under these By-Laws (i) by attendance in person, or by proxy if a stockholder, at any meeting, except when such 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, or (ii) by a writing signed by the person or persons entitled to said notice, whether before or after the time stated in said notice, which waiver shall be deemed equivalent to such -27- 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. ARTICLE VIII General Provisions SECTION 1. Contracts. The Chairman, President, any Vice President, the Secretary or Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 2. Sale, Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the Chairman, President, or any Vice President, the Secretary or the Treasurer or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may -28- make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment. SECTION 3. Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, the Chairman, President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock. Such Officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. SECTION 4. Corporate Seal. The seal of the Corporation shall be circular in form and contain the name of the Corporation and the words "Corporate Seal" and "Delaware," which seal shall be in charge of the Secretary to be used as directed by the Board of Directors. SECTION 5. Fiscal Year. The fiscal year of the Corporation shall be fixed, and shall be subject to change, -29- by the Board of Directors. Unless otherwise fixed by the Board of Directors, the fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation's first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31. ARTICLE IX Exculpation and Indemnification SECTION 1. Exculpation. No person who is or was a director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director unless, and only to the extent that, such director is liable (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 General Corporation Law of the State of Delaware or any amendment thereto or successor provision thereto, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to, repeal or adoption of any provision of the Certificate of Incorporation inconsistent with this Article shall apply to or have any effect on the liability of any -30- director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal, or adoption of an inconsistent provision. If the General Corporation Law of the State of Delaware hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended General Corporation Law of the State of Delaware. SECTION 2. Who May Be Indemnified. (a) Actions, Suits and Proceedings Other Than by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted -31- in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) Actions or Suits By or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he -32- reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) Indemnification for Expenses. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) or (b), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Determination of Entitlement to Indemnification. Any indemnification of a director or officer of the Corporation under paragraph (a) or (b) hereof (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination -33- that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraph (a) or (b) of this section. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Good Faith Defined. For purposes of any determination under Sections 2(a), 2(b) or 2(d) of this Article IX, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected -34- with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 2(e) shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 2(a) or 2(b) of this Article IX, as the case may be. (f) Advance of Expenses. Expenses incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. (g) Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of -35- the Corporation under paragraph (a) or (b) or advance of costs, charges and expenses to a director or officer under paragraph (f) hereof, shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the Corporation that the director or officer is or is not entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction. Such person's costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under paragraph (f) hereof where the required undertaking, if any, has been received by the Corporation) that the claimant has not, met the standard of conduct set forth in paragraph (a) or (b), but the burden of proving such -36- defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraph (a) or (b), nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. SECTION 3. Indemnification Not Exclusive Right. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any by-law, 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. The provisions of this Article IX shall not be deemed to preclude the indemnification of any person who is not specified in Sections 2(a) and 2(b) of this Article IX but whom the Corporation has the power or -37- obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. SECTION 4. Insurance. The Corporation shall have power to 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 him against such liability under the provisions of this Article. SECTION 5. "Corporation" Defined for Indemnification Purposes. For purposes of this Article, references to "the Corporation" shall include (in addition to the Corporation and any resulting corporation) any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or -38- agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. SECTION 6. Other Definitions for Indemnification Purposes. For purposes of this Article, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. SECTION 7. Survival. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall continue as to a person who has ceased to -39- be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE X Amendments The Board of Directors shall have power to adopt, amend or repeal By-Laws other than those contained in Article IX of these By-Laws. By-Laws adopted by the Board of Directors may be repealed or changed, and new By-Laws made, by the stockholders, and the stockholders may prescribe that any By-Law made by them shall not be altered, amended or repealed by the Board of Directors. -40- EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet at March 31, 1999 (unaudited) and the consolidated statement of income for the three months ended March 31, 1999 (unaudited) and is qualified in its entirety by reference to such financial statements.
3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 9,570 0 105,169 1,980 23,266 143,965 159,790 113,618 232,610 165,185 319,429 0 0 627 (254,142) 232,610 221,906 222,205 138,421 159,698 0 225 7,391 54,891 21,000 33,891 0 0 0 33,891 0.59 0.58
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