-----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, TfNdUXqM9WEQ7Jc/AfAKn1+99JPGgjqRz/CTvR6wfQO7Jhqx/exL2jbcdIBhEjtu mGyD1CfbZV/gtZiG39VE0g== 0000821189-01-500013.txt : 20010510 0000821189-01-500013.hdr.sgml : 20010510 ACCESSION NUMBER: 0000821189-01-500013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EOG RESOURCES INC CENTRAL INDEX KEY: 0000821189 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 470684736 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09743 FILM NUMBER: 1626532 BUSINESS ADDRESS: STREET 1: 1200 SMITH ST STREET 2: SUITE 300 CITY: HOUSTON STATE: TX ZIP: 77002-7361 BUSINESS PHONE: 7136517000 MAIL ADDRESS: STREET 1: 1200 SMITH STREET CITY: HOUSTON STATE: TX ZIP: 77002-7361 FORMER COMPANY: FORMER CONFORMED NAME: ENRON OIL & GAS CO DATE OF NAME CHANGE: 19920703 10-Q 1 form10q1stqtr.txt 1ST QUARTER 2001 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------------- Form 10-Q ------------------------- [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-9743 EOG RESOURCES, INC. (Exact name of registrant as specified in its charter) Delaware 47-0684736 (State or other (I.R.S. Employer jurisdiction Identification No.) of incorporation or organization) 1200 Smith Street, Suite 300, Houston, Texas 77002-7361 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: 713-651-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 25, 2001. Title of each class Number of shares ------------------- ---------------- Common Stock, $.01 par value 115,951,347 2 EOG RESOURCES, INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page No. -------- ITEM 1. Financial Statements Consolidated Statements of Income - Three Months Ended March 31, 2001 and 2000................................................... 3 Consolidated Balance Sheets - March 31, 2001 and December 31, 2000............................................................ 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 2001 and 2000............................................... 5 Notes to Consolidated Financial Statements........................ 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 8 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings.......................................... 12 ITEM 6. Exhibits and Reports on Form 8-K........................... 12 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EOG RESOURCES, INC. CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Amounts) (Unaudited) Three Months Ended March 31, --------------------- 2001 2000 ---------- ---------- NET OPERATING REVENUES Natural Gas $ 521,477 $ 186,200 Crude Oil, Condensate and Natural Gas Liquids 75,194 73,067 Gains on Sales of Reserves and Related Assets and Other, Net 582 629 --------- --------- TOTAL 597,253 259,896 OPERATING EXPENSES Lease and Well 42,574 33,739 Exploration Costs 20,265 12,945 Dry Hole Costs 15,684 5,761 Impairments 15,764 8,402 Depreciation, Depletion and Amortization 93,961 84,137 General and Administrative 17,949 16,287 Taxes Other Than Income 37,032 18,415 --------- --------- TOTAL 243,229 179,686 --------- --------- OPERATING INCOME 354,024 80,210 OTHER INCOME (EXPENSE), NET (639) 17 --------- --------- INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES 353,385 80,227 INTEREST EXPENSE, NET 13,289 14,568 --------- --------- INCOME BEFORE INCOME TAXES 340,096 65,659 INCOME TAX PROVISION 124,849 24,169 --------- --------- NET INCOME 215,247 41,490 PREFERRED STOCK DIVIDENDS (2,721) (2,654) --------- --------- NET INCOME AVAILABLE TO COMMON $ 212,526 $ 38,836 ========= ========= NET INCOME PER SHARE AVAILABLE TO COMMON Basic $ 1.83 $ 0.33 ========= ========= Diluted $ 1.79 $ 0.33 ========= ========= AVERAGE NUMBER OF COMMON SHARES Basic 116,384 117,827 ========= ========= Diluted 118,952 118,273 ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
4 PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) EOG RESOURCES, INC. CONSOLIDATED BALANCE SHEETS (In Thousands) March 31, December 31, 2001 2000 - --------------------------------------------------------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 30,849 $ 20,152 Accounts Receivable 286,778 342,579 Inventories 20,307 16,623 Other 20,981 15,073 ----------- ----------- TOTAL 358,915 394,427 OIL AND GAS PROPERTIES (SUCCESSFUL EFFORTS METHOD) 5,251,407 5,122,728 Less: Accumulated Depreciation, Depletion and Amortization (2,681,866) (2,597,721) ----------- ----------- Net Oil and Gas Properties 2,569,541 2,525,007 OTHER ASSETS 83,824 81,381 ----------- ----------- TOTAL ASSETS $ 3,012,280 $ 3,000,815 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 241,402 $ 246,030 Accrued Taxes Payable 128,371 78,838 Dividends Payable 5,081 4,525 Other 31,227 40,285 ----------- ----------- TOTAL 406,081 369,678 LONG-TERM DEBT 644,871 859,000 OTHER LIABILITIES 56,546 51,133 DEFERRED INCOME TAXES 372,508 340,079 SHAREHOLDERS' EQUITY Preferred Stock, $.01 Par, 10,000,000 Shares Authorized: Series B, 100,000 Shares Issued, Cumulative, $100,000,000 Liquidation Preference 97,939 97,879 Series D, 500 Shares Issued, Cumulative, $50,000,000 Liquidation Preference 49,330 49,285 Common Stock, $.01 Par, 320,000,000 Shares Authorized; 124,730,000 Shares Issued 201,247 201,247 Additional Paid In Capital 9,687 4,221 Unearned Compensation (10,051) (3,756) Accumulated Other Comprehensive Income (48,377) (31,756) Retained Earnings 1,508,953 1,301,067 Common Stock Held in Treasury, 8,491,430 shares at March 31, 2001 and 7,825,708 shares at December 31, 2000 (276,454) (237,262) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 1,532,274 1,380,925 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,012,280 $ 3,000,815 =========== =========== The accompanying notes are an integral part of these consolidated financial statements.
5 PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) EOG RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended March 31, - ------------------------------------------------------------------------------------------------------- 2001 2000 - ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of Net Income to Net Operating Cash Inflows: Net Income $ 215,247 $ 41,490 Items Not Requiring Cash Depreciation, Depletion and Amortization 93,961 84,137 Impairments 15,764 8,402 Deferred Income Taxes 34,452 17,045 Other, Net 5,393 826 Exploration Costs 20,265 12,945 Dry Hole Costs 15,684 5,761 Gains on Sales of Reserves and Related Assets and Other, Net 316 1,571 Tax Benefits From Stock Options Exercised 5,246 239 Other, Net (3,233) (2,129) Changes in Components of Working Capital and Other Liabilities Accounts Receivable 55,824 (30,410) Inventories (3,684) 1,862 Accounts Payable (4,897) 20,289 Accrued Taxes Payable 49,533 (529) Other Liabilities 2,135 3,924 Other, Net (14,966) 4,600 Changes in Components of Working Capital Associated with Investing and Financing Activities (7,833) 5,059 --------- --------- NET OPERATING CASH INFLOWS 479,207 175,082 INVESTING CASH FLOWS Additions to Oil and Gas Properties (169,443) (75,944) Exploration Costs (20,265) (12,945) Dry Hole Costs (15,684) (5,761) Proceeds from Sales of Reserves and Related Assets 1,419 20,621 Changes in Components of Working Capital Associated with Investing Activities 7,813 (5,266) Other, Net (5,873) (2,864) --------- --------- NET INVESTING CASH OUTFLOWS (202,033) (82,159) FINANCING CASH FLOWS Long-Term Debt (214,129) (49,386) Dividends Paid (6,701) (6,330) Treasury Stock Purchased (55,590) (30,253) Proceeds from Sales of Treasury Stock 9,987 854 Other, Net (44) 714 --------- --------- NET FINANCING CASH OUTFLOWS (266,477) (84,401) --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 10,697 8,522 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,152 24,836 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,849 $ 33,358 ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
6 PART I. FINANCIAL INFORMATION (Continued) ITEM 1. FINANCIAL STATEMENTS (Continued) EOG RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.The consolidated financial statements of EOG Resources, Inc. and subsidiaries ("EOG") included herein have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. However, management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in EOG's 2000 Annual Report to Shareholders. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial statements to conform with the current presentation. Beginning first quarter of 2001, the "Impairment of Unproved Oil and Gas Properties" caption on the Consolidated Statements of Income was renamed "Impairments" to include the impairment loss of long-lived assets as described in Statement of Financial Accounting Standards No. 121 -- "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed of" ("SFAS 121 Impairments"). As a result, EOG reclassified all prior periods to reflect such SFAS 121 Impairments in Impairments, instead of Depreciation, Depletion and Amortization ("DD&A") as previously reported. SFAS 121 Impairments reclassified from DD&A to Impairments were $0.4 million for the first quarter of 2000. As more fully discussed in Notes 1 and 12 to the consolidated financial statements included in EOG's 2000 Annual Report to Shareholders, EOG engages in price risk management activities from time to time. Derivative financial instruments (primarily price swaps and costless collars) are utilized selectively to hedge the impact of market fluctuations on natural gas and crude oil market prices. EOG adopted on January 1, 2001 Statement of Financial Accounting Standards ("SFAS") No. 133 -- "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and 138 ("SFAS 133"). SFAS 133 requires that changes in the derivative's fair value be recognized currently in earnings using the mark-to-market accounting method unless specific hedge accounting criteria are met. The adoption of SFAS 133 did not have a material impact on EOG's financial statements. During the first quarter of 2001, EOG elected not to designate any of its price risk management activities as hedges, and accordingly, accounted for them using the mark-to-market accounting method. The application of the mark-to-market accounting method during the first quarter of 2001 did not have a material impact on EOG's financial statements. 2.The following table sets forth the computation of basic and diluted earnings from net income available to common (in thousands, except per share amounts): Quarter Ended March 31, ---------------------- 2001 2000 ---------- ---------- Numerator for basic and diluted earnings per share - Net income available to common $212,526 $ 38,836 ======== ======== Denominator for basic earnings per share - Weighted average shares 116,384 117,827 Potential dilutive common shares - Stock options 2,342 394 Restricted stock and units 226 52 -------- -------- Denominator for diluted earnings per share - Adjusted weighted average shares 118,952 118,273 ======== ======== Net income per share of common stock Basic $ 1.83 $ 0.33 ======== ======== Diluted $ 1.79 $ 0.33 ======== ========
7 PART I. FINANCIAL INFORMATION (Continued) ITEM 1. FINANCIAL STATEMENTS (Continued) EOG RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3.The following table presents the components of EOG's comprehensive income: Three Months Ended March 31, --------------------- 2001 2000 ---------- --------- (In Thousands) Net Income $215,247 $ 41,490 Other Comprehensive Income Unrealized Gain on Available-for-Sale Security, net of tax of $180 in 2001 334 - Foreign Currency Translation Adjustment (16,955) (2,099) -------- -------- Comprehensive Income $198,626 $ 39,391 ======== ======== - ---------------------------------------------------------------------------------
4.Selected financial information about operating segments is reported below for the three-month periods ended March 31, 2001 and 2000: Three Months Ended March 31, -------------------- 2001 2000 -------- --------- (In Thousands) NET OPERATING REVENUES United States $503,989 $206,249 Canada 74,530 32,755 Trinidad 18,708 20,883 Other 26 9 -------- -------- TOTAL $597,253 $259,896 ======== ======== OPERATING INCOME (LOSS) United States $300,847 $ 59,792 Canada 52,905 14,126 Trinidad 5,985 7,031 Other (5,713) (739) -------- -------- TOTAL 354,024 80,210 RECONCILING ITEMS Other Income (Expense), Net (639) 17 Interest Expense, Net 13,289 14,568 -------- -------- INCOME BEFORE INCOME TAXES $340,096 $ 65,659 ======== ======== - -------------------------------------------------------------------------
5.As reported in EOG's 2000 Annual Report to Shareholders, two stockholders of EOG filed separate lawsuits purportedly on behalf of EOG against Enron Corp. and directors of EOG, alleging that Enron Corp. and directors of EOG breached their fiduciary duties of good faith and loyalty in approving the Share Exchange transaction in the third quarter of 1999. The lawsuits have been consolidated and seek to temporarily and permanently enjoin the Share Exchange transaction and seek to rescind the transaction or to receive monetary damages and costs and expenses, including reasonable attorneys' and experts' fees. EOG, Enron Corp. and directors of EOG believe the lawsuits are without merit and intend to vigorously contest them. During the first quarter of 2001, EOG favorably resolved a disagreement over the timing of the conversion of a 5% overriding royalty interest held by a third party in EOG's Trinidad SECC block to a 15% working interest. There are various other suits and claims against EOG that have arisen in the ordinary course of business. However, management does not believe these suits and claims will individually or in the aggregate have a material adverse effect on the financial condition or results of operations of EOG. EOG has been named as a potentially responsible party in certain Comprehensive Environmental Response Compensation and Liability Act proceedings. However, management does not believe that any potential assessments resulting from such proceedings will individually or in the aggregate have a materially adverse effect on the financial condition or results of operations of EOG. 8 PART I. FINANCIAL INFORMATION (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EOG RESOURCES, INC. The following review of operations for the three-month periods ended March 31, 2001 and 2000 should be read in conjunction with the consolidated financial statements of EOG Resources, Inc. and subsidiaries ("EOG") and Notes thereto. Results of Operations Three Months Ended March 31, 2001 vs. Three Months Ended March 31, 2000 EOG generated first quarter net income available to common of $213 million compared to net income of $39 million for the first quarter of 2000. Net operating revenues were $597 million compared to $260 million for the first quarter of 2000. Following is an explanation of the variances causing this increase. Wellhead volume and price statistics are summarized below: - ------------------------------------------------------------------------ 2001 2000 - ------------------------------------------------------------------------ Natural Gas Volumes (MMcf per day)(1) United States 704 656 Canada 117 132 ------ ------ North America 821 788 Trinidad 120 128 ------ ------ TOTAL 941 916 ====== ====== Average Natural Gas Prices ($/Mcf)(2) United States $ 6.97 $ 2.53 Canada 6.60 2.17 North America Composite 6.91 2.47 Trinidad 1.22 1.17 COMPOSITE 6.19 2.29 Crude Oil/Condensate Volumes (MBbl per day)(1) United States 23.0 20.7 Canada 1.7 2.3 ------ ------ North America 24.7 23.0 Trinidad 2.2 2.9 ------ ------ TOTAL 26.9 25.9 ====== ====== Average Crude Oil/Condensate Prices ($/Bbl)(2) United States $28.09 $28.14 Canada 25.25 26.83 North America Composite 27.89 28.01 Trinidad 28.84 27.85 COMPOSITE 27.97 27.99 Natural Gas Liquids Volumes (MBbl per day)(1) United States 3.0 4.3 Canada 0.5 0.8 ------ ------ TOTAL 3.5 5.1 ====== ====== Average Natural Gas Liquids Prices ($/Bbl) (2) United States $23.95 $20.64 Canada 23.46 13.64 COMPOSITE 23.88 19.58 Natural Gas Equivalent Volumes (MMcfe per day)(3) United States 860 805 Canada 131 151 ------ ------ North America 991 956 Trinidad 132 145 ------ ------ TOTAL 1,123 1,101 ====== ====== Total Bcfe(3)Deliveries 101 100 - ---------------------------------------------------------------------------- (1) Million cubic feet per day or thousand barrels per day, as applicable. (2) Dollars per thousand cubic feet or per barrel, as applicable. (3) Million cubic feet equivalent per day or billion cubic feet equivalent, as applicable.
9 PART I. FINANCIAL INFORMATION (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) EOG RESOURCES, INC. Wellhead revenues increased 125% to $599 million in the first quarter of 2001 compared to $266 million in the first quarter of 2000, primarily due to higher average wellhead prices worldwide for natural gas and natural gas liquids. Average wellhead natural gas prices were up by 170%, increasing net operating revenues by $330 million. Average wellhead crude oil and condensate prices were basically flat with those a year ago. First quarter 2001, U.S. wellhead natural gas deliveries were approximately 7% higher than the comparable period in 2000. The increase in volumes is primarily due to increased production in the Midland, Offshore and Tyler divisions. Combined with reduced production in Trinidad, due to takes above the take or pay contracted volume by the Trinidadian government in the first quarter of 2000, and decreased production in the Canada division, due to plant curtailment in the first quarter of 2001, the overall natural gas production growth was approximately 3% higher than the comparable period in 2000, increasing net operating revenues by $3 million. Wellhead crude oil and condensate deliveries were approximately 4% higher than the prior year period, increasing net operating revenues by $2 million. The increase is primarily due to increased U.S. crude oil production from the Denver, Midland and Oklahoma City divisions, partially offset by decreased crude oil production from the Canada and International divisions. Natural gas liquids decreased net operating revenues by $2 million primarily due to a decrease in deliveries of 31%, partially offset by an increase in prices of 22% compared to a year ago. Operating expenses of $243 million for the first quarter of 2001 were approximately $64 million higher than the first quarter of 2000. Taxes other than income were $19 million higher due to increased wellhead revenues in North America. Depreciation, depletion and amortization ("DD&A") increased $10 million primarily due to increased production volumes and increased per unit DD&A rates in certain North America locations. Lease and well expenses were $9 million higher than the comparable period in 2000 primarily due to an industry-wide increase in costs and increased North America production activities to maximize the volumes delivered at higher product prices. Exploration expenses of $20 million and dry hole expenses of $16 million increased $7 million and $10 million, respectively, primarily due to increased North America and international exploratory drilling activities. Impairments, which includes writedowns of unproved leases and losses from reduction of carrying values of certain long-lived assets as a result of future cash flow analysis,increased $7 million compared to the comparable period in 2000. The per unit operating costs of EOG for lease and well, DD&A, general and administrative ("G&A") expenses, interest expense, and taxes other than income averaged $2.03 per Mcfe during the first quarter of 2001 compared to $1.67 per Mcfe during the first quarter of 2000. The increase is primarily due to a higher per unit rate of DD&A, lease and well, G&A expense and taxes other than income partially offset by a lower per unit rate of interest expense. Income tax provision for the first quarter of 2001 was $125 million (effective tax rate of 36.7%) compared to $24 million (effective tax rate of 36.8%) for the comparable period of 2000, primarily due to higher pre-tax income. 10 PART I. FINANCIAL INFORMATION (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) EOG RESOURCES, INC. Capital Resources and Liquidity EOG's primary sources of cash during the three months ended March 31, 2001 included funds generated from operations, proceeds from sales of reserves and related assets and proceeds from sales of treasury stock. Primary cash outflows included funds used in operations, exploration and development expenditures, repayments of debt, dividends and common stock repurchases. Net operating cash flows of $479 million for the first three months of 2001 increased approximately $304 million as compared to the first three months of 2000 primarily reflecting higher operating revenues, partially offset by higher cash operating expenses. Net investing cash outflows of approximately $202 million for the first three months of 2001 increased by $120 million versus the comparable prior year period due primarily to higher exploration and development expenditures and lower proceeds from sales of reserves and related assets. Changes in Components of Working Capital Associated with Investing Activities included changes in accounts payable associated with the accrual of exploration and development expenditures and changes in inventories which represent materials and equipment used in drilling and related activities. Exploration and development expenditures for the first three months of 2001 and 2000 are as follows (in millions): ----------------------------------------------------------- 2001 2000 ----------------------------------------------------------- United States $173 $ 74 Canada 12 11 ---- ---- North America 185 85 Trinidad 14 9 Other 6 1 ---- ---- TOTAL $205 $ 95 ==== ==== ----------------------------------------------------------- Exploration and development expenditures of $205 million for the first three months of 2001 were $110 million higher than the prior year period due primarily to increased development and exploratory activities. The level of exploration and development expenditures will vary in future periods depending on energy market conditions and other related economic factors. EOG has significant flexibility with respect to financing alternatives and the ability to adjust its exploration and development expenditure budget as circumstances warrant. There are no material continuing commitments associated with expenditure plans. Cash used by financing activities was $266 million for the first three months of 2001 compared to $84 million for the comparable prior year period. Financing activities for 2001 included repayment of debt of $214 million, repurchases of EOG's common stock of $56 million, proceeds from sales of treasury stock of $10 million and cash dividend payment of $7 million. On February 13, 2001, EOG announced a 14% increase in the annual dividend rate from $.14 per share to $.16 per share beginning with dividends payable after April 19, 2001. Based upon existing economic and market conditions, management believes net operating cash flow and available financing alternatives will be sufficient to fund net investing and other cash requirements of EOG for the foreseeable future. At March 31, 2001, EOG had outstanding swap contracts covering notional volumes of approximately 1.0 million barrels of crude oil and condensate for the period April 2001 to December 2001 at an average price of $26.89 per barrel. EOG elected not to designate these crude oil swap contracts as a hedge of its crude oil production, and accordingly, is accounting for these swap contracts under mark-to-market accounting. At March 31, 2001, the fair value of these oil price swap contracts was $0.5 million. 11 PART I. FINANCIAL INFORMATION - (Concluded) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Concluded) EOG RESOURCES, INC. At March 31, 2001, EOG also had outstanding swap contracts covering notional volumes of 100,000 million British thermal units of natural gas per day ("MMBtu/d") for the months of April and May 2001 at an average price of $5.16 per MMBtu. EOG is accounting for these swap contracts under mark-to-market accounting. At March 31, 2001, the fair value of these natural gas price swap contracts was negative $0.4 million. During the period of April 30, 2001 to May 2, 2001, EOG entered into price swap agreements covering notional volumes of 200,000 MMBtu/d for the month of June 2001 at an average price of $4.61 per MMBtu. EOG will account for these swap contracts under mark-to-market accounting. During the period of April 30, 2001 to May 2, 2001, EOG also entered into price collars that set a floor price of $4.40 per MMBtu and ceiling prices that average $6.15 per MMBtu covering notional volumes of 200,000 MMBtu/d for the period July 2001 to November 2001 at an average premium of $0.15 per MMBtu. EOG will account for these swap contracts under mark-to-market accounting. Information Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts, including, among others, statements regarding EOG's future financial position, business strategy, budgets, reserve information, projected levels of production, projected costs and plans and objectives of management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "strategy," "intend," "plan," "target" and "believe" or the negative of those terms or other variations of them or by comparable terminology to identify its forward-looking statements. In particular, statements, express or implied, concerning future operating results or the ability to increase reserves or to generate income or cash flows are forward- looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes its expectations reflected in forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will be achieved. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, among others: timing and extent of changes in commodity prices for crude oil, natural gas and related products and interest rates; extent of EOG's success in discovering, developing, marketing and producing reserves and in acquiring oil and gas properties; political developments around the world; and financial market conditions. In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements might not occur. EOG undertakes no obligations to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. 12 PART II. OTHER INFORMATION EOG RESOURCES, INC. ITEM 1. Legal Proceedings See Part 1, Item 1, Note 5 to Consolidated Financial Statements, which is incorporated herein by reference. ITEM 5. Other Information On May 8, 2001, the Board of Directors further amended the By-laws of EOG to (i) delete the requirement that the annual meeting of shareholders occur within 13 months of the prior annual meeting, (ii) provide that directors be elected by a majority of the votes of the shares of EOG present in person or represented by proxy at a shareholders meeting and entitled to vote on the election of directors, (iii) require that at least three-fifths of the members of the Board of Directors be independent directors, as that term is defined in the amendments to the By-laws, (iv) provide that a majority of the total number of directors, at least half of whom are independent directors, shall constitute a quorum for the transaction of business of the Board of Directors, and (v) increase the mandatory retirement age for incumbent directors serving EOG as of September 7, 1999, to 76 years of age. The foregoing description of the amendments to the By-laws does not purport to be complete and is qualified in its entirety by reference to the By-laws, as amended and restated effective as of May 8, 2001, which is attached as an exhibit hereto and incorporated herein by reference. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 3.1 - By-Laws of EOG Resources, Inc., as amended and restated effective as of May 8, 2001. Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends (b) Reports on Form 8-K Current Report on Form 8-K filed on February 7, 2001, to provide estimate for the first quarter and full year 2001 in Item 9 - Regulation FD Disclosure. Current Report on Form 8-K filed on February 23, 2001, to report certain crude oil and natural gas price swap contracts and natural gas physical contracts in Item 5 - Other Events. Current Report on Form 8-K filed on February 27, 2001, to present management's discussion and analysis of financial condition and results of operations for 2000, financial statements for 2000, and related exhibits in Item 7 - Financial Statements and Exhibits. 13 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. EOG RESOURCES, INC. (Registrant) Date: May 8, 2001 By /S/ T. K. DRIGGERS ----------------------------- T. K. Driggers Vice President, Accounting and Land Administration (Principal Accounting Officer) 14 Exhibit 12 EOG RESOURCES, INC. Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends (In Thousands) (Unaudited) Year Ended December 31, Three Months Ended -------------------------------------------------- March 31, 2001 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------ EARNINGS AVAILABLE FOR FIXED CHARGES: Net Income $215,247 $396,931 $569,094 $ 56,171 $121,970 $140,008 Less: Capitalized Interest Expense (2,047) (6,708) (10,594) (12,711) (13,706) (9,136) Add: Fixed Charges 15,336 67,714 72,413 61,290 41,423 21,997 Income Tax Provision 124,849 236,626 (1,382) 4,111 41,500 50,954 -------- -------- -------- -------- -------- -------- EARNINGS AVAILABLE $353,385 $694,563 $629,531 $108,861 $191,187 $203,823 ======== ======== ======== ======== ======== ======== FIXED CHARGES: Interest Expense $ 13,289 $ 61,006 $ 61,819 $ 48,463 $ 27,369 $ 12,370 Capitalized Interest 2,047 6,708 10,594 12,711 13,706 9,136 Rental Expense Representative of Interest Factor - - - 116 348 491 -------- -------- -------- -------- -------- -------- TOTAL FIXED CHARGES 15,336 67,714 72,413 61,290 41,423 21,997 Preferred Dividends on a Pre-tax Basis 4,299 17,602 660 - - - -------- -------- -------- -------- -------- -------- TOTAL FIXED CHARGES AND PREFERRED DIVIDENDS $ 19,635 $ 85,316 $ 73,073 $ 61,290 $ 41,423 $ 21,997 ======== ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 23.04 10.26 8.69 1.78 4.62 9.27 RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS 18.00 8.14 8.62 1.78 4.62 9.27
EX-3.1 2 exhibit3-1.txt AMENDED BY-LAWS OF EOG RESOURCES, INC. EXHIBIT 3.1 BYLAWS OF EOG RESOURCES, INC. A Delaware Corporation Date of Adoption: August 23, 1989 As Amended: December 12, 1990, February 8, 1994, January 19, 1996, February 13, 1997, May 5, 1998, September 7, 1999, February 14, 2000, May 8, 2001. i BYLAWS Table of Contents Page Article I. Offices Section 1. Registered Office 1 Section 2. Offices 1 Section 3. Books and Records 1 Article II. Stockholders Section 1. Place of Meetings 1 Section 2. Quorum; Adjournment of Meetings 1 Section 3. Annual Meetings 2 Section 4. Special Meeting 2 Section 5. Record Date 2 Section 6. Notice of Meetings 3 Section 7. Stockholder List 3 Section 8. Proxies 3 Section 9. Voting; Elections; Inspectors 4 Section 10. Conduct of Meetings 4 Section 11. Treasury Stock 5 Section 12. Business to Be Brought Before the Annual Meeting 5 Section 13. Record Date for Action by Written Consent 6 Section 14. Inspectors of Written Consent 6 Section 15. Effectiveness of Written Consent 7 Article III. Board of Directors Section 1. Power; Number; Term of Office 7 Section 2. Quorum; Voting 7 Section 3. Place of Meetings; Order of Business 7 Section 4. First Meeting 8 Section 5. Regular Meetings 8 Section 6. Special Meetings 8 Section 7. Nomination of Directors 8 Section 8. Removal 9 Section 9. Vacancies; Increases in the Number of Directors 9 Section 10. Compensation 9 Section 11. Action Without a Meeting; Telephone Conference Meeting 10 ii Section 12. Approval or Ratification of Acts or Contracts by Stockholders 10 Section 13. Retirement 10 Section 14. Independent Directors 10 Article IV. Committees Section 1. Executive Committee 11 Section 2. Audit Committee 12 Section 3. Other Committees 12 Section 4. Procedure; Meetings; Quorum 12 Section 5. Substitution and Removal of Members; Vacancies 12 Article V. Officers Section 1. Number, Titles and Term of Office 13 Section 2. Powers and Duties of the Chairman of the Board 13 Section 3. Powers and Duties of the President, President-North American Operations, and President- International Operations 13 Section 4. Powers and Duties of the Vice Chairman of the Board 14 Section 5. Vice Presidents 14 Section 6. General Counsel 14 Section 7. Secretary 15 Section 8. Deputy Corporate Secretary and Assistant Secretaries 15 Section 9. Treasurer 15 Section 10. Assistant Treasurers 15 Section 11. Action with Respect to Securities of Other Corporations 15 Section 12. Delegation 16 Article VI. Capital Stock Section 1. Certificates of Stock 16 Section 2. Transfer of Shares 16 Section 3. Ownership of Shares 17 Section 4. Regulations Regarding Certificates 17 Section 5. Lost or Destroyed Certificates 17 Article VII. Miscellaneous Provisions Section 1. Fiscal Year 17 iii Section 2. Corporate Seal 17 Section 3. Notice and Waiver of Notice 17 Section 4. Facsimile Signatures 18 Section 5. Reliance upon Books, Reports and Records 18 Section 6. Application of Bylaws 18 Article VIII. Amendments 19 1 BYLAWS OF EOG RESOURCES, INC. Article I Offices Section 1. Registered Office. The registered office of the Corporation required by the General Corporation Law of the State of Delaware to be maintained in the State of Delaware shall be the registered office named in the original Certificate of Incorporation of the Corporation, or such other office as may be designated from time to time by the Board of Directors in the manner provided by law. Section 2. Offices. The Corporation may also have offices at such other places both within and without the state of incorporation of the Corporation as the Board of Directors may from time to time determine or the business of the Corporation may require. Section 3. Books and Records. The books and records of the Corporation may be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors. Article II Stockholders Section 1. Place of Meetings. All meetings of the stockholders shall be held at the principal office of the Corporation, or at such other place within or without the state of incorporation of the Corporation as shall be specified or fixed in the notices or waivers of notice thereof. Section 2. Quorum; Adjournment of Meetings. Unless otherwise required by law or provided in the Certificate of Incorporation or these Bylaws, (i) the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business, (ii) the affirmative vote of the holders of a majority of such stock so present or represented at any meeting of stockholders at which a quorum is present shall constitute the act of the stockholders, and (iii) where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class. The stockholders present at a duly organized meeting may continue 2 to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, subject to the provisions of clauses (ii) and (iii) above. Directors shall be elected by a majority of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Notwithstanding the other provisions of the Certificate of Incorporation or these Bylaws, the chairman of the meeting or the holders of a majority of the issued and outstanding stock, present in person or represented by proxy and entitled to vote thereat, at any meeting of stockholders, whether or not a quorum is present, shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at such meeting. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally called. Section 3. Annual Meetings. An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place (within or without the state of incorporation of the Corporation), on such date, and at such time as the Board of Directors shall fix and set forth in the notice of the meeting. Section 4. Special Meeting. Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation with respect to such series of preferred stock, special meetings of the stockholders may be called only by the Chairman of the Board or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies. Section 5. Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors of the Corporation may fix a date as the record date for any such determination of stockholders, which record date shall not precede the date on which the resolutions fixing the record date are adopted and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting of stockholders, nor more than sixty (60) days prior to any other action. If the Board of Directors does not fix a record date for any meeting of the stockholders, the record date for determining stockholders entitled to notice of or to vote at such meeting shall be at the close of business on the day next preceding the day on which 3 notice is given, or, if in accordance with Article VII, Section 3 of these Bylaws notice is waived, at the close of business on the day next preceding the day on which the meeting is held. 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. 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 6. Notice of Meetings. Written notice of the place, date and hour of all meetings, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by or at the direction of the Chairman of the Board, the President, the Vice Chairman of the Board, the Secretary or the other person(s) calling the meeting to each stockholder entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting. Such notice may be delivered either personally or by mail. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Section 7. Stockholder List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in the name of such stockholder, 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 so specified, at the place where the meeting is to be held. The stockholder list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 8. Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy. Proxies for use at any meeting of stockholders shall be filed with the Secretary, or such other officer as the Board of Directors may from time to time determine by resolution, before or at the time of the meeting. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting, who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. No proxy shall be valid after three (3) years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power. Should a proxy designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at 4 which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of such portion of the shares as is equal to the reciprocal of the fraction equal to the number of proxies representing such shares divided by the total number of shares represented by such proxies. Section 9. Voting; Elections; Inspectors. Unless otherwise required by law or provided in the Certificate of Incorporation, each stockholder shall on each matter submitted to a vote at a meeting of stockholders have one vote for each share of stock entitled to vote which is registered in his name on the record date for the meeting. For the purposes hereof, each election to fill a directorship shall constitute a separate matter. Shares registered in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the bylaws (or comparable instrument) of such corporation may prescribe, or in the absence of such provision, as the Board of Directors (or comparable body) of such corporation may determine. Shares registered in the name of a deceased person may be voted by the executor or administrator of such person's estate, either in person or by proxy. All voting, except as required by the Certificate of Incorporation or where otherwise required by law, may be by a voice vote; provided, however, upon request of the chairman of the meeting or upon demand therefor by stockholders holding a majority of the issued and outstanding stock present in person or by proxy at any meeting a stock vote shall be taken. Every stock vote shall be taken by written ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. All elections of directors shall be by written ballots, unless otherwise provided in the Certificate of Incorporation. At any meeting at which a vote is taken by written ballots, the chairman of the meeting may appoint one or more inspectors, each of whom shall subscribe an oath or affirmation to execute faithfully the duties of inspector at such meeting with strict impartiality and according to the best of such inspector's ability. Such inspector shall receive the written ballots, count the votes and make and sign a certificate of the result thereof. The chairman of the meeting may appoint any person to serve as inspector, except no candidate for the office of director shall be appointed as an inspector. Unless otherwise provided in the Certificate of Incorporation, cumulative voting for the election of directors shall be prohibited. Section 10. Conduct of Meetings. The meetings of the stockholders shall be presided over by the Chairman of the Board, or if the Chairman of the Board is not present, by the President, or if the President is not present, by the Vice Chairman of the Board, or if neither the Chairman of the Board, the President nor the Vice Chairman of the Board is present, by a chairman elected at the meeting. The Secretary of the Corporation, if present, shall act as secretary of such meetings, or if the Secretary is not present, the 5 Deputy Corporate Secretary or an Assistant Secretary shall so act; if neither the Secretary or the Deputy Corporate Secretary or an Assistant Secretary is present, then a secretary shall be appointed by the chairman of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to the chairman in order. Section 11. Treasury Stock. The Corporation shall not vote, directly or indirectly, shares of its own stock owned by it and such shares shall not be counted for quorum purposes. Nothing in this Section 11 shall be construed as limiting the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Section 12. Business to Be Brought Before the Annual Meeting. To be properly brought before the annual meeting of stockholders, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 12 of Article II, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 12 of Article II. In addition to any other applicable requirements, for business to be brought before an annual meeting by a stockholder of the Corporation, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 days prior to the anniversary date of the proxy statement for the preceding annual meeting of stockholders of the Corporation. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (iii) the acquisition date, the class and the number of shares of voting stock of the Corporation which are owned beneficially by the stockholder, (iv) any material interest of the stockholder in such business, and (v) a representation that the stockholder intends to appear in person or by proxy at the meeting to bring the proposed business before the meeting. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 12. The chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 12 of Article II, and if the chairman should so determine, the chairman shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 6 Notwithstanding the foregoing provisions of this Section 12 of Article II, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 12. Section 13. Record Date for Action by Written Consent. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board of Directors pursuant to the first sentence of this Section 13). If no record date has been fixed by the Board of Directors pursuant to the first sentence of this Section 13 or otherwise within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or to any officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. Section 14. Inspectors of Written Consent. In the event of the delivery, in the manner provided by Section 13, to the Corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the Corporation shall engage independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the Corporation that the consents delivered to the Corporation in accordance with Section 13 represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this Section 14 shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to contest the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without 7 limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation). Section 15. Effectiveness of Written Consent. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated written consent received in accordance with Section 13, a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in Section 13. Article III Board of Directors Section 1. Power; Number; Term of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, and subject to the restrictions imposed by law or the Certificate of Incorporation, the Board of Directors may exercise all the powers of the Corporation. The number of directors which shall constitute the whole Board of Directors shall be determined from time to time by the Board of Directors (provided that no decrease in the number of directors which would have the effect of shortening the term of an incumbent director may be made by the Board of Directors). If the Board of Directors makes no such determination, the number of directors shall be three. Each director shall hold office for the term for which such director is elected, and until such Director's successor shall have been elected and qualified or until such Director's earlier death, resignation or removal. Unless otherwise provided in the Certificate of Incorporation, directors need not be stockholders nor residents of the state of incorporation of the Corporation. Section 2. Quorum; Voting. Unless otherwise provided in the Certificate of Incorporation, a majority of the total number of directors, at least half of whom are Independent Directors as defined in Section 14 below, shall constitute a quorum for the transaction of business of the Board of Directors 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. Section 3. Place of Meetings; Order of Business. The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by law, in such place or places, within or without the state of incorporation of the Corporation, as the Board of Directors may from time to time determine. At all meetings of the Board of Directors business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board, or in the Chairman of the Board's absence by the President (should the President be a director), or in the President's absence by the Vice Chairman of the Board, or by the Board of Directors. 8 Section 4. First Meeting. Each newly elected Board of Directors may hold its first meeting for the purpose of organization and the transaction of business, if a quorum is present, immediately after and at the same place as the annual meeting of the stockholders. Notice of such meeting shall not be required. At the first meeting of the Board of Directors in each year at which a quorum shall be present, held next after the annual meeting of stockholders, the Board of Directors shall elect the officers of the Corporation. Section 5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by the Chairman of the Board or, in the absence of the Chairman of the Board, by the President (should the President be a director), or in the President's absence, by the Vice Chairman of the Board. Notice of such regular meetings shall not be required. Section 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President (should the President be a director) or the Vice Chairman of the Board or, on the written request of any two directors, by the Secretary, in each case on at least twenty-four (24) hours personal, written, telegraphic, cable or wireless notice to each director. Such notice, or any waiver thereof pursuant to Article VII, Section 3 hereof, need not state the purpose or purposes of such meeting, except as may otherwise be required by law or provided for in the Certificate of Incorporation or these Bylaws. Meetings may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in writing. Section 7. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 7 of Article III, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 7 of Article III. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (i) with respect to an election to be held at the annual meeting of the stockholders of the Corporation, not less than 120 days prior to the anniversary date of the proxy statement for the immediately preceding annual meeting of stockholders of the Corporation, and (ii) with respect to an election to be held at a special meeting of stockholders of the Corporation for the election of directors, not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to the person that is required to be disclosed in solicitations for proxies for election of directors, or is otherwise required, 9 pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including the written consent of such person to be named in the proxy statement as a nominee and to serve as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder, and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. In the event that a person is validly designated as nominee to the Board and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee. No person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 7 of Article III and in compliance with Section 14 of Article III. The chairman of the meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures and requirements prescribed by the Bylaws, and if the chairman should so determine, the chairman shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 7 of Article III, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 7 of Article III. Section 8. Removal. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Section 9. Vacancies; Increases in the Number of Directors. Unless otherwise provided in the Certificate of Incorporation, subject to the requirements set forth in Section 14 of this Article III, vacancies existing on the Board of Directors for any reason and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director; and any director so chosen shall hold office until the next annual election and until such Director's successor shall have been elected and qualified, or until such Director's earlier death, resignation or removal. Section 10. Compensation. Directors and members of standing committees may receive such compensation as the Board of Directors from time to time shall determine to be appropriate, and shall be reimbursed for all reasonable expenses incurred in attending and returning from meetings of the Board of Directors. 10 Section 11. Action Without a Meeting; Telephone Conference Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors, or any committee designated by the Board of Directors, may be taken without a meeting if all members of the Board of Directors 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 of Directors or committee. Such consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any document or instrument filed with the Secretary of State of the state of incorporation of the Corporation. Unless otherwise restricted by the Certificate of Incorporation, subject to the requirement for notice of meetings, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in a meeting of such Board of Directors or committee, as the case may be, by means of a conference telephone connection or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 12. Approval or Ratification of Acts or Contracts by Stockholders. The Board of Directors in its discretion may submit any act or contract for approval or ratification at any annual meeting of the stockholders, or at any special meeting of the stockholders called for the purpose of considering any such act or contract, and any act or contract that shall be approved or be ratified by the vote of the stockholders holding a majority of the issued and outstanding shares of stock of the Corporation entitled to vote and present in person or by proxy at such meeting (provided that a quorum is present) shall be as valid and as binding upon the Corporation and upon all the stockholders as if it has been approved or ratified by every stockholder of the Corporation. Section 13. Retirement. No incumbent Director serving the Corporation as of September 7, 1999, shall be eligible to stand for re-election as a Director of the Corporation after attaining the age of 76 years, and no Director first elected subsequent to September 7, 1999, shall be eligible to stand for re-election as a Director of the Corporation after having attained the age of 72 years. Section 14. Independent Directors. The Board of Directors has determined that the following requirements in respect of the qualifications of the Corporation's directors and the composition of the Board of Directors are desirable for and in the best interests of the Corporation and its stockholders: (a) At least three-fifths of the individuals elected to the Board of Directors at the Corporation's annual meeting of stockholders shall consist of individuals who, upon election, would be Independent Directors. 11 (b) In the event one or more directors are elected or appointed other than by action of the stockholders at an annual meeting of stockholders, at least three-fifths of all directors holding office immediately thereafter shall be Independent Directors. (c) For purposes of this Section 14, the term "Independent Director" shall mean a director who: (i) is not and has not been employed by the Corporation as an executive officer of the Corporation within the three years immediately prior to his election or appointment to the Board of Directors; (ii) is not the direct or indirect beneficial owner of more than 5% of the outstanding shares of stock of the Corporation entitled to vote in the election of directors ("Voting Stock"), or an affiliate or representative of, or a party to a contract, arrangement or understanding with, such beneficial owner or an affiliate thereof, excluding any direct or indirect beneficial owner which has beneficially owned more than 5% of the outstanding Voting Stock continuously during the two years immediately prior to the relevant election or appointment to the Board of Directors; (iii) is not (and is not affiliated with a corporation or a firm that is) a significant advisor or consultant to the Corporation or any of its subsidiaries; (iv) is not affiliated with a significant customer or supplier of the Corporation or any of its subsidiaries; (v) does not have a personal services contract with the Corporation or any of its subsidiaries; (vi) is not affiliated with a tax-exempt entity that receives significant contributions from the Corporation or any of its subsidiaries; and (vii) is not a spouse, parent, sibling or child of any person described by (i) through (vi). (d) The Board of Directors shall have the exclusive right and power to interpret and apply the provisions of this Section 14, including, without limitation, the adoption of written definitions of terms used in and guidelines for the application of this Section 14 (any such definitions and guidelines shall be filed with the Secretary of the Corporation, and such definitions and guidelines as may prevail shall be made available to any stockholder upon written request), and any such definitions or guidelines and any other interpretation or application of the provisions of this Section 14 made in good faith shall be binding and conclusive upon all holders of equity securities of the Corporation. (e) Information regarding a nominee for director provided by a stockholder pursuant to Section 7 of this Article III shall include such information as may be necessary to enable the Board of Directors to make an informed determination as to whether such nominee, if elected, would be an Independent Director as defined in this Section 14. Article IV Committees Section 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate an Executive Committee consisting of one or more of the directors of the Corporation, one of whom shall be designated chairman of the Executive Committee. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may 12 exercise all the powers of the Board of Directors, including the power to 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 the power or authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution of the Corporation, amending, altering or repealing these Bylaws or adopting new bylaws for the Corporation or otherwise acting where action by the Board of Directors is specified by the Delaware General Corporation Law. The Executive Committee shall also have, and may exercise, all the powers of the Board of Directors, except as aforesaid, whenever a quorum of the Board of Directors shall fail to be present at any meeting of the Board. Section 2. Audit Committee. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate an Audit Committee consisting of one or more of the directors of the Corporation, one of whom shall be designated chairman of the Audit Committee. The Audit Committee shall have and may exercise such powers and authority as provided in the resolution creating it and as determined from time to time by the Board of Directors. Section 3. Other Committees. The Board of Directors may, by resolution passed from time to time by a majority of the whole Board of Directors, designate such other committees as it shall see fit consisting of one or more of the directors of the Corporation, one of whom shall be designated chairman of each such committee. Any such committee shall have and may exercise such powers and authority as provided in the resolution creating it and as determined from time to time by the Board of Directors. Section 4. Procedure; Meetings; Quorum. Any committee designated pursuant to this Article IV shall keep regular minutes of its actions and proceedings in a book provided for that purpose and report the same to the Board of Directors at its meeting next succeeding such action, shall fix its own rules or procedures, and shall meet at such times and at such place or places as may be provided by such rules, or by such committee or the Board of Directors. Should a committee fail to fix its own rules, the provisions of these Bylaws, pertaining to the calling of meetings and conduct of business by the Board of Directors, shall apply as nearly as may be. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, except as provided in Section 5 of this Article IV, and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution. Section 5. Substitution and Removal of Members; Vacancies. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. The Board of Directors shall 13 have the power at any time to remove any member(s) of a committee and to appoint other directors in lieu of the person(s) so removed and shall also have the power to fill vacancies in a committee. Article V Officers Section 1. Number, Titles and Term of Office. The officers of the Corporation shall be a Chairman of the Board, a President, a President-North American Operations, one or more Presidents- International Operations, one or more Vice Presidents (any one or more of whom may be designated Executive Vice President or Senior Vice President), a General Counsel, a Treasurer, a Secretary and such other officers as the Board of Directors may from time to time elect or appoint (including, but not limited to, a Vice Chairman of the Board, a Deputy Corporate Secretary, one or more Assistant Secretaries and one or more Assistant Treasurers). Each officer shall hold office until such officer's successor shall be duly elected and shall qualify or until such officer's death or until such officer shall resign or shall have been removed. Any number of offices may be held by the same person, unless the Certificate of Incorporation provides otherwise. Except for the Chairman of the Board and the Vice Chairman of the Board, no officer need be a director. Section 2. Powers and Duties of the Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation. Subject to the control of the Board of Directors and the Executive Committee (if any), the Chairman of the Board shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the Chairman of the Board by the Board of Directors. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. Section 3. Powers and Duties of the President, President- North American Operations, and President-International Operations. (a) Unless the Board of Directors otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation; and, unless the Board of Directors otherwise determines, the President shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all meetings of the stockholders and (should the President be a director) of the Board of Directors; and the President shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the President by the Board of Directors or the Chairman of the Board. 14 (b) Unless the Board of Directors otherwise determines, the President-North American Operations shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation pertaining to the Corporation's North American operations; and the President-North American Operations shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the President-North American Operations by the Board of Directors or the Chairman of the Board. (c) Unless the Board of Directors otherwise determines, each President-International Operations shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation pertaining to the Corporation's international operations; and each President-International Operations shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to each President-International Operations by the Board of Directors or the Chairman of the Board. Section 4. Powers and Duties of the Vice Chairman of the Board. The Board of Directors may assign areas of responsibility to the Vice Chairman of the Board, and, in such event, and subject to the overall direction of the Chairman of the Board and Board of Directors, the Vice Chairman of the Board shall be responsible for supervising the management of the affairs of the Corporation and its subsidiaries within the area or areas assigned and shall monitor and review on behalf of the Board of Directors all functions within the corresponding area or areas of the Corporation and each such subsidiary of the Corporation. In the absence of the President, or in the event of the President's inability or refusal to act, the VIceVice Chairman of the Board shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. Further, the Vice Chairman of the Board shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the Vice Chairman of the Board by the Board of Directors or the Chairman of the Board. Section 5. Vice Presidents. Each Vice President shall at all times possess power to sign all certificates, contracts and other instruments of the Corporation, except as otherwise limited in writing by the Chairman of the Board, the President or the Vice Chairman of the Board or of the Corporation. Each Vice President shall have such other powers and duties as from time to time may be assigned to such Vice President by the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board. Section 6. General Counsel. The General Counsel shall act as chief legal advisor to the Corporation. The General Counsel may have one or more staff attorneys and assistants, and may retain other attorneys to conduct the legal affairs and litigation of the Corporation under the General Counsel's supervision. 15 Section 7. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors, committees of the Board of Directors and the stockholders, in books provided for that purpose; shall attend to the giving and serving of all notices; may in the name of the Corporation affix the seal of the Corporation to all contracts of the Corporation and attest the affixation of the seal of the Corporation thereto; may sign with the other appointed officers all certificates for shares of capital stock of the Corporation; shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection of any director upon application at the office of the Corporation during business hours; shall have such other powers and duties as designated in these Bylaws and as from time to time may be assigned to the Secretary by the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board; and shall in general perform all acts incident to the office of Secretary, subject to the control of the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board. Section 8. Deputy Corporate Secretary and Assistant Secretaries. The Deputy Corporate Secretary and each Assistant Secretary shall have the usual powers and duties pertaining to such offices, together with such other powers and duties as designated in these Bylaws and as from time to time may be assigned to the Deputy Corporate Secretary or an Assistant Secretary by the Board of Directors, the Chairman of the Board, the President, the Vice Chairman of the Board, or the Secretary. The Deputy Corporate Secretary shall exercise the powers of the Secretary during that officer's absence or inability or refusal to act. Section 9. Treasurer. The Treasurer shall have responsibility for the custody and control of all the funds and securities of the Corporation, and shall have such other powers and duties as designated in these Bylaws and as from time to time may be assigned to the Treasurer by the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board. The Treasurer shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors, the Chairman of the Board, the President and the Vice Chairman of the Board; and the Treasurer shall, if required by the Board of Directors, give such bond for the faithful discharge of the Treasurer's duties in such form as the Board of Directors may require. Section 10. Assistant Treasurers. Each Assistant Treasurer shall have the usual powers and duties pertaining to such office, together with such other powers and duties as designated in these Bylaws and as from time to time may be assigned to each Assistant Treasurer by the Board of Directors, the Chairman of the Board, the President, the Vice Chairman of the Board, or the Treasurer. The Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability or refusal to act. Section 11. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board, together with the Secretary, the Deputy Corporate Secretary or any Assistant Secretary shall have power to vote and otherwise act on behalf 16 of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. Section 12. Delegation. For any reason that the Board of Directors may deem sufficient, the Board of Directors may, except where otherwise provided by statute, delegate the powers or duties of any officer to any other person, and may authorize any officer to delegate specified duties of such officer to any other person. Any such delegation or authorization by the Board shall be effected from time to time by resolution of the Board of Directors. Article VI Capital Stock Section 1. Certificates of Stock. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with that required by law and the Certificate of Incorporation, as shall be approved by the Board of Directors. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board, President, Vice Chairman of the Board or a Vice President and the Secretary, Deputy Corporate Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation representing the number of shares (and, if the stock of the Corporation shall be divided into classes or series, certifying the class and series of such shares) owned by such stockholder which are registered in certified form; provided, however, that any of or all the signatures on the certificate may be facsimile. The stock record books and the blank stock certificate books shall be kept by the Secretary, or at the office of such transfer agent or transfer agents as the Board of Directors may from time to time determine. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature or signatures shall have been placed upon any such certificate or certificates shall have ceased to be such officer, transfer agent or registrar before such certificate is issued by the Corporation, such certificate may nevertheless be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The stock certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and number of shares. Section 2. Transfer of Shares. The shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives upon surrender and cancellation of certificates for a like number of shares. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of 17 the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 3. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the state of incorporation of the Corporation. Section 4. Regulations Regarding Certificates. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation. Section 5. Lost or Destroyed Certificates. The Board of Directors may determine the conditions upon which the Corporation may issue a new certificate of stock in place of a certificate theretofore issued by it which is alleged to have been lost, stolen or destroyed and may require the owner of such certificate or such owner's legal representative to give bond, with surety sufficient to indemnify the Corporation and each transfer agent and registrar against any and all losses or claims which may arise by reason of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in the place of the one so lost, stolen or destroyed. Article VII Miscellaneous Provisions Section 1. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January of each year. Section 2. Corporate Seal. The corporate seal shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of its incorporation, which seal shall be in the charge of the Secretary and shall be affixed to certificates of stock, debentures, bonds, and other documents, in accordance with the direction of the Board of Directors or a committee thereof, and as may be required by law; however, the Secretary may, if the Secretary deems it expedient, have a facsimile of the corporate seal inscribed on any such certificates of stock, debentures, bonds, contracts or other documents. Duplicates of the seal may be kept for use by the Deputy Corporate Secretary or any Assistant Secretary. Section 3. Notice and Waiver of Notice. Whenever any notice is required to be given by law, the Certificate of Incorporation or under the provisions of these Bylaws, said notice shall be deemed to be sufficient if given (i) by telegraphic, cable or wireless transmission (including by telecopy or facsimile transmission) or (ii) by deposit of the same in a post office box or by delivery to an overnight courier service company in a sealed 18 prepaid wrapper addressed to the person entitled thereto at such person's post office address, as it appears on the records of the Corporation, and such notice shall be deemed to have been given on the day of such transmission or mailing or delivery to courier, as the case may be. Whenever notice is required to be given by law, the Certificate of Incorporation or under any of the provisions of these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person, including without limitation a director, 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 by the Certificate of Incorporation or these Bylaws. Section 4. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors. Section 5. Reliance upon Books, Reports and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors, shall, in the performance of such person's duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinion, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. Section 6. Application of Bylaws. In the event that any provisions of these Bylaws is or may be in conflict with any law of the United States, of the state of incorporation of the Corporation or of any other governmental body or power having jurisdiction over this Corporation, or over the subject matter to which such provision of these Bylaws applies, or may apply, such provision of these Bylaws shall be inoperative to the extent only that the operation thereof unavoidably conflicts with such law, and shall in all other respects be in full force and effect. 19 Article VIII Amendments The Board of Directors shall have the power to adopt, amend and repeal from time to time Bylaws of the Corporation, subject to the right of the stockholders entitled to vote with respect thereto to amend or repeal such Bylaws as adopted or amended by the Board of Directors. -----END PRIVACY-ENHANCED MESSAGE-----