-----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, RQRWEWW/KH4XKY56dSV+T3KNqhDtyfcZkdyMJ4Ev41xuLFBDy//LFN6Q0MbsxJFl hlNOttHfAFHhw8R/ttDwHg== 0000950144-99-001906.txt : 19990217 0000950144-99-001906.hdr.sgml : 19990217 ACCESSION NUMBER: 0000950144-99-001906 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENSORMATIC ELECTRONICS CORP CENTRAL INDEX KEY: 0000088974 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 341024665 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10739 FILM NUMBER: 99542085 BUSINESS ADDRESS: STREET 1: 951 YAMATO ROAD CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5619897000 MAIL ADDRESS: STREET 1: 951 YAMATO ROAD CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: JKR CORP DATE OF NAME CHANGE: 19730607 10-Q 1 SENSORMATIC FORM 10-Q FOR 12/31/1998 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ( X ) QUARTERLY REPORT ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 1998 Commission File No. 1-10739 ---------------------- --------- SENSORMATIC ELECTRONICS CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter)
Delaware 34-1024665 - --------------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number) organization)
951 Yamato Road, Boca Raton, Florida 33431-0700 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (561) 989-7000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Same - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 . ------ ------- The Registrant had outstanding 75,318,853 shares of Common Stock (par value $.01 per share) as of January 30, 1999. 2 SENSORMATIC ELECTRONICS CORPORATION INDEX FORM 10-Q SIX MONTHS ENDED DECEMBER 31, 1998
Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets................................................. 2 Consolidated Condensed Statements of Operations..................................... 3 Consolidated Condensed Statements of Cash Flows....................................... 4 Notes to Consolidated Condensed Financial Statements.................................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................... 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk......................................................................... 17 PART II. OTHER INFORMATION Item 1. Legal Proceedings......................................................................... 18 Item 2. Changes in Securities and Use of Proceeds................................................. 19 Item 4. Submission of Matters to a Vote of Security Holders....................................... 20 Item 6. Exhibits and Reports on Form 8-K.......................................................... 21 Signatures .......................................................................................... 22
3 SENSORMATIC ELECTRONICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In millions, except par value amounts)
(Unaudited) December 31, June 30, 1998 1998 ------------ --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 107.4 $ 127.0 Customer receivables 324.9 326.2 Inventories, net 194.7 203.6 Current portion of deferred income taxes 36.4 36.2 Other current assets 56.9 43.7 ---------- ---------- TOTAL CURRENT ASSETS 720.3 736.7 Customer receivables - noncurrent 114.7 132.5 Revenue equipment, net 78.7 69.2 Property, plant and equipment, net 137.9 137.2 Costs in excess of net assets acquired, net 464.0 465.5 Deferred income taxes 150.5 152.3 Patents and other assets, net 121.8 109.0 ---------- ---------- TOTAL ASSETS $ 1,787.9 $ 1,802.4 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $ 21.3 $ 33.5 Accounts payable and accrued liabilities 112.6 118.5 Other current liabilities and deferred income taxes 189.8 192.1 ---------- ---------- TOTAL CURRENT LIABILITIES 323.7 344.1 Long-term debt 504.9 515.2 Other noncurrent liabilities and deferred income taxes 45.6 45.5 ---------- ---------- TOTAL LIABILITIES 874.2 904.8 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 10.0 shares authorized -- -- 6 1/2% Convertible Preferred Stock, 0.7 shares outstanding 166.7 166.7 Common stock, $.01 par value, 125.0 shares authorized, 74.9 and 74.4 shares outstanding at December 31, 1998 and June 30, 1998, respectively 739.4 733.7 Retained earnings 104.0 103.9 Treasury stock at cost and other, 1.7 shares at December 31, 1998 and June 30, 1998 (11.2) (11.7) Accumulated other comprehensive income (85.2) (95.0) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 913.7 897.6 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,787.9 $ 1,802.4 ========== ==========
The accompanying notes are an integral part of these financial statements. 2 4 SENSORMATIC ELECTRONICS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In millions, except per share amounts)
Three Months Six Months Ended December 31, Ended December 31, -------------------------- ------------------------ 1998 1997 1998 1997 ---------- ---------- -------- --------- Revenues: Sales $ 202.9 $ 206.4 $ 390.8 $ 410.9 Rentals 11.3 12.7 22.3 25.2 Installation, maintenance and other 36.2 24.6 64.5 53.0 ---------- --------- -------- --------- Total revenues 250.4 243.7 477.6 489.1 ---------- --------- -------- --------- Cost of Sales: Costs of sales 141.9 125.3 268.4 257.2 Depreciation on revenue equipment 5.5 4.9 10.7 9.8 ---------- --------- -------- --------- Total cost of sales 147.4 130.2 279.1 267.0 ---------- --------- -------- --------- Gross margin 103.0 113.5 198.5 222.1 Operating expenses: Selling, general and administrative 73.1 76.7 145.2 169.6 Provision for doubtful accounts 5.2 5.3 9.9 10.2 Restructuring charges -- -- -- 29.2 Research, development and engineering 6.4 6.9 13.5 13.4 Amortization of intangible assets 5.5 5.4 10.8 10.6 ---------- --------- -------- --------- Total operating costs and expenses 90.2 94.3 179.4 233.0 ---------- --------- -------- --------- Operating income (loss) 12.8 19.2 19.1 (10.9) ---------- --------- -------- --------- Other (expenses) income: Interest income 4.0 3.4 8.0 7.0 Interest expense (11.6) (13.4) (22.6) (25.7) Litigation recoveries/(settlement) 6.3 -- 6.3 (53.0) Other, net (0.6) (1.2) (1.7) (3.1) ---------- --------- -------- --------- Total other (expenses) income (1.9) (11.2) (10.0) (74.8) ---------- --------- -------- --------- Income (loss) before income taxes 10.9 8.0 9.1 (85.7) Provision (benefit) for income taxes 3.6 2.6 3.2 (25.2) ---------- --------- -------- --------- Net income (loss) $ 7.3 $ 5.4 $ 5.9 $ (60.5) ========== ========= ======== ========= Basic and diluted earnings (loss) per common share $ 0.10 $ 0.07 $ 0.08 $ (0.82) ========== ========= ======== ========= Number of shares used in computation of basic earnings (loss) per share 75.2 74.2 75.0 74.1 ========== ========= ======== ========= Number of shares used in computation of diluted earnings (loss) per share 75.2 74.4 75.0 74.3 ========== ========= ======== =========
The accompanying notes are an integral part of these financial statements. 3 5 SENSORMATIC ELECTRONICS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In millions)
(Unaudited) Six Months Ended December 31, ------------------------ 1998 1997 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 5.9 $ (60.5) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 33.4 33.7 Restructuring charges/(payments), net (3.9) 24.1 Litigation settlement charge -- 53.0 Net changes in operating assets and liabilities, net of effects of acquisitions and divestitures: Decrease/(increase) in receivables and sales-type leases 23.3 (39.4) Decrease/(increase) in inventories 10.0 (10.4) Increase in current and deferred income taxes relating to restructuring and litigation charges -- (24.7) Other operating assets and liabilities, net (23.0) (28.6) ------- ------- Net cash provided by (used in) operating activities 45.7 (52.8) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (13.3) (15.0) Proceeds from sale of business, net -- 7.4 Increase in revenue equipment, net of deletions (19.3) (16.4) Additional investment in acquisitions (11.3) (10.2) Other, net 0.5 2.2 ------- ------- Net cash used in investing activities (43.4) (32.0) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Bank borrowings/(payments) and other debt (23.5) 77.3 Other, net 1.6 1.6 ------- ------- Net cash (used in) provided by financing activities (21.9) 78.9 ------- ------- Net decrease in cash (19.6) (5.9) Cash and cash equivalents at beginning of the year 127.0 21.7 ------- ------- Cash and cash equivalents at end of the period $ 107.4 $ 15.8 ======= =======
The accompanying notes are an integral part of these financial statements. 4 6 SENSORMATIC ELECTRONICS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Dollars in Millions) a) Basis of Presentation The consolidated condensed financial statements include the accounts of Sensormatic Electronics Corporation and its subsidiaries (the "Company"). The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended December 31, 1998 are not necessarily indicative of the results that may be expected for the year ending June 30, 1999. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 1998. b) Reclassifications Certain amounts in the prior period's consolidated condensed financial statements have been reclassified to conform to the fiscal 1998 year-end presentation. c) Restructuring The following table sets forth the details and the activity of the restructuring charge reserves as of December 31, 1998:
Accrual Accrual Balance at Balance at June 30, December 1998 Utilization 31, 1998 ------------------ Cash Non-cash ------------------------------------------------------------------------------------------------- Product rationalization, related equipment charges and other $ 1.7 $ -- $ (1.1) $ 0.6 Closure of facilities and related costs 15.1 (1.4) (0.1) 13.6 Employee termination and related costs 10.5 (2.2) -- 8.3 Non-core business divestitures 18.8 (0.3) (0.1) 18.4 ------------------------------------------------------------------------------------------------- Total $ 46.1 $ (3.9) $ (1.3) $ 40.9 -------------------------------------------------------------------------------------------------
The total aggregate cash outlay related to the fiscal 1996, 1997 and 1998 restructuring charges, net of expected proceeds from the divestiture of non-core businesses, was estimated to be approximately $63.3. As of December 31, 1998, the remaining accrual balance relates primarily to expected cash payments the Company will pay over time after the restructuring activity occurs. The restructuring activity is expected to be substantially complete by June 30, 1999, or shortly thereafter, and the Company believes the provisions recorded are adequate to cover the costs associated with these plans. 5 7 d) Customer Receivables Amounts due to the Company in the form of accounts receivable (which are generally due within 90 days), deferred receivables (which are generally due within one year), installment receivables (which have periodic payments over a term of five years, generally) and net investment in sales-type leases (which have periodic payments over lease terms of five to six years, principally) at December 31, and June 30, 1998 are summarized as follows :
December 31 June 30 ----------- -------- Trade accounts receivable due in 1 year $ 309.4 $ 303.9 Allowance for doubtful accounts (36.6) (33.2) --------- -------- Total trade accounts receivable, net $ 272.8 $ 270.7 ========= ======== Deferred receivables $ 6.3 $ 4.9 Installment receivables 32.5 38.8 Allowance for doubtful accounts (4.8) (5.6) Unearned interest and maintenance (11.3) (14.5) --------- -------- Total deferred and installment receivables, net 22.7 23.6 Less: Amounts due in 1 year, net (17.4) (19.0) --------- -------- Total noncurrent deferred and installment receivables, net $ 5.3 $ 4.6 ========= ======== Sales-type leases-minimum lease payments receivable $ 197.0 $ 225.1 Allowance for uncollectible minimum lease payments (17.9) (20.3) Unearned interest and maintenance (35.0) (40.4) --------- -------- Total sales-type leases, net 144.1 164.4 Less: Amounts due in 1 year, net (34.7) (36.5) --------- -------- Total noncurrent sales-type leases, net $ 109.4 $ 127.9 ========= ======== Total customer receivables $ 439.6 $ 458.7 Less: Amounts due in 1 year, net 324.9 326.2 --------- -------- Total noncurrent customer receivables $ 114.7 $ 132.5 ========= ========
6 8 e) Inventory Inventories are summarized as follows:
December 31, 1998 June 30, 1998 ----------------- ------------- Finished goods $ 160.7 $ 165.4 Parts 51.0 56.3 Work-in-process 14.9 14.7 -------- -------- 226.6 236.4 Less allowance for excess and obsolete inventory (31.9) (32.8) -------- -------- Total inventories, net $ 194.7 $ 203.6 ======== ========
f) Benefit Plans In June 1998 the Company's Board of Directors approved a Supplemental Employee Retirement Plan ("SERP") for vice president level employees and officers. Selected vice presidents and officers who participated in the other Sensormatic retirement plans (Senior Executive Defined Contribution Retirement Plan, Key Executive Supplemental Retirement Plan and Salary Continuation Plan) and who elect to participate in the new SERP will be paid a benefit equal to the higher of what they would receive under the formula set forth in the SERP or under the former plan. The new SERP for vice presidents and officers is effective July 15, 1998. Additionally, in August 1998 the Company's Board of Directors approved a Supplemental Employee Retirement Plan for director level employees. Selected director level employees who participated in the Company's Key Executive Supplemental Retirement Plan and who elect to participate in the new SERP for director level employees will be paid a benefit equal to the higher of what they would receive under the formula set forth in the SERP or the former Plan. The SERP for director level employees was effective as of January 1, 1999. The Company does not anticipate a material impact on the financial statements as a result of the adoption of these plans. g) Accounts Receivable Financing Effective January 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", and accordingly, subsequent to the adoption of SFAS No. 125, only receivables sold or transferred under financing agreements which meet the criteria for off-balance sheet treatment as defined by SFAS No. 125 are recognized as sales. All other transfers of receivables are treated as financing transactions. See Note 4 of Notes to Consolidated Financial Statements in the Company's 1998 Annual Report on Form 10-K for additional discussion on the Company's accounts receivable financing program. The uncollected principal balance of receivables and sales-type leases sold prior to January 1, 1997, under then existing agreements, which are subject to varying amounts of recourse totaled 7 9 $100.8 at December 31, 1998. Loss reserves have been provided for receivables and sales-type lease receivables sold and are included in accrued liabilities. h) Earnings Per Share All earnings per share amounts for all periods have been presented in accordance with the requirements of SFAS No. 128. There was no material change to the Company's previously reported calculation of primary and fully diluted earnings per share under APB No. 15 as a result of the adoption of SFAS No. 128. The following table sets forth the computation of basic and diluted earnings per share under SFAS No. 128:
Three Months ended Six Months ended December 31, December 31, ------------ ------------ 1998 1997 1998 1997 ---- ---- ---- ---- NUMERATOR: Net Income $ 7.3 $ 5.4 $ 5.9 $ (60.5) ===== ===== ===== ======== DENOMINATOR: Basic EPS - weighted average shares 75.2 74.2 75.0 74.1 Dilutive effect: Stock options 0.0 0.2 0.0 0.2 ----- ----- ----- -------- Diluted EPS - weighted average shares 75.2 74.4 75.0 74.3 ===== ===== ===== ======== Basic earnings per share $0.10 $0.07 $0.08 $ (0.82) ===== ===== ===== ======== Diluted earnings per share $0.10 $0.07 $0.08 -- (a) ===== ===== ===== ========
(a) Excluded as result is anti-dilutive. i) Comprehensive Income As of July 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income". The adoption of this Statement had no impact on the Company's net income or stockholders' equity. SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components. SFAS No. 130 requires foreign currency translation adjustments to be included in other comprehensive income. Prior to the adoption of SFAS No. 130, the Company reported such adjustments in a separate component of stockholders' equity. For the three months ended December 31, 1998 and December 31, 1997, comprehensive income was $5.3 and $3.4, respectively. For the six months ended December 31, 1998 and December 31, 1997, comprehensive income was $15.6 and $(71.6), respectively. At December 31, 1998 and June 30, 1998, accumulated other comprehensive income was $(85.2) and $(95.0), respectively. 8 10 j) Divestitures In September 1997, the Company sold its U.S. commercial/industrial direct sales and service business. The Company also agreed in such transaction to sell its monitoring business, which sale was consummated in October 1997. The revenues of these operations prior to the divestiture date and included in the Company's Consolidated Condensed Statement of Operations for the six months ended December 31, 1997 were $11.4. k) Subsequent Event The Company has a 51% interest in a Brazilian joint venture with fiscal 1998 revenues of approximately $30 million. Subsequent to December 31, 1998, the Brazilian currency ("Real") lost value significantly against the U.S. Dollar. As of February 10, 1999, the Real has been devalued approximately 35% against the U.S. Dollar as compared to December 31, 1998. The Company estimates that the change in exchange rates would not have had a material impact on the Consolidated Balance Sheet as of December 31, 1998 nor the Statements of Operations for the three and six months ended December 31, 1998. l) Litigation and other matters During the first six months of fiscal 1996, a number of class actions were filed in federal court by alleged shareholders of the Company following announcements by the Company that, among other things, its earnings for the quarter and year ended June 30, 1995, would be substantially below expectations and, in the later actions or complaint amendments, that the scope of the Company's year-end audit for the fiscal year ended 1995 had been expanded and that results for the third quarter of fiscal 1995 were being restated. These actions were consolidated. The consolidated complaint alleged, among other things, that the Company and certain of its current and former directors, officers and employees, as well as the Company's auditors, violated certain Federal securities laws. The Company has settled the above-referenced consolidated class action. The settlement agreement, requiring payment by the Company of approximately $53.5, was approved by the Court and has been fully performed by the Company. The Company has recovered a portion of the settlement amount and related expenses from its primary directors and officers liability insurance policy, which had a policy limit of $10.0, and has also been paid $10.0 by one of its two excess directors and officers liability insurers. A pretax charge of $53.0, with an after-tax effect of $37.1, was recorded by the Company for payments made in connection with this settlement in the first quarter of fiscal 1998. During the third quarter of fiscal 1998, the Company also recorded a net estimated insurance recovery of $7.3 ($5.6 after-tax). During the second quarter of fiscal 1999, the Company recorded an insurance recovery of $6.3 ($4.4 after-tax) received pursuant to a settlement agreement reached with the other excess liability insurer. 9 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company's consolidated condensed financial statements present a consolidation of its worldwide operations. This discussion supplements the detailed information presented in the Consolidated Condensed Financial Statements and Notes thereto (which should be read in conjunction with the financial statements and related notes contained in the Company's 1998 Annual Report on Form 10-K) and is intended to assist the reader in understanding the financial results and condition of the Company. RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1997 The following discussion of operating results excludes the effects of restructuring and net litigation charges recorded in fiscal 1998, which are discussed in Note 2 and Item 7, respectively, in the Company's 1998 Annual Report on Form 10-K. Revenues Revenues of $250.4 for the second quarter of fiscal 1999 increased 2.7% compared with revenues of $243.7 for the same period in fiscal 1998. Revenues of $477.6 for the six months ended December 31, 1998 decreased 2.4% compared with revenues of $489.1 for the same period in fiscal 1998. The increase in second quarter revenues, as compared with the same period in fiscal 1998, was due to increases in the Company's North American Retail unit partially offset by decreases in the Company's Europe, International and C/I Worldwide business units. The second quarter and first six months of fiscal 1998 included revenues of $1.8 and $17.4, respectively, from subsequently divested businesses, the largest of which was the U.S. commercial/industrial direct sales and service business which was sold in September 1997. Excluding the effects of these non-core businesses, fiscal 1999 revenues increased approximately 3.5% for the second quarter and 1.2% for the first six months, as compared with the same periods in fiscal 1998. For the second quarter and first six months of fiscal 1999, North America Retail revenues increased 18.9% and 17.6%, respectively, as compared with the same periods for fiscal 1998. The increase in revenues was attributable to continued large orders and shipments of electronic article surveillance equipment to major retail chains. Europe Retail revenues decreased 1.6% and 5.9% for the second quarter and first six months of fiscal 1999, respectively, as compared with the same periods for fiscal 1998. The decrease in Europe Retail revenues continues to be driven by an emphasis on more outright sales rather than sales-type lease revenue and continued pricing pressure on electromagnetic systems. Second quarter revenues reflect improvements in the Company's United Kingdom, Scandinavia and Eastern Europe businesses offset by reductions in France. International Retail revenues, which include Latin America and Asia Pacific, decreased 3.4% and 10.2% for the second quarter and first six months of fiscal 1999, respectively, as compared with the same periods of fiscal 1998. The overall decrease in International Retail revenues reflects the unfavorable economic conditions in the retail market and weakening currencies which continue to exist in most of the Asian and Latin American countries. 10 12 Revenues generated by C/I Worldwide decreased 11% and 21.5% in the second quarter and first six months of fiscal 1999, respectively, as compared with the same periods of fiscal 1998. Excluding the effect on revenues of divested non-core businesses, C/I Worldwide revenues decreased 8.1% and 7.9% in the second quarter and the first six months of fiscal 1999, respectively, as compared with the same periods of fiscal 1998. While C/I revenues in North America and Europe indirect were up 5% and 10%, respectively, in the second quarter of fiscal 1999 as compared with the same period of fiscal 1998, overall revenue declines were due principally to worldwide price competition and continued declines in Asia and Latin America resulting from reduced direct business and economic conditions existing in those areas. In light of the lack of revenue growth, during the second quarter of fiscal 1999, steps were taken by the Company to reduce costs and more tightly focus sales and marketing activities around the Company's C/I product offerings. Gross Margins, Operating Expenses and Operating Income Gross margins on revenues were 41.1% and 41.6% for the three and six month periods ended December 31, 1998, respectively, compared with 46.5% and 45.4% for the comparable periods of the prior year. The decrease in margins was partially due to continued volume discounts on major orders in North America Retail, a higher mix of service revenues at lower margins than product margins and, in Europe Retail, a lower level of sales-type lease revenue which historically has had margins higher than the Company's overall margin. Additionally, continued price competition in the market for electromagnetic systems sold in Europe Retail and global pricing pressure in the market for multiplexers contributed to the decrease in margins. The Company expects margins to improve in upcoming quarters due to improvements in revenue levels and mix, enhanced service profitability and additional expense reductions. Selling, general and administrative expenses, as a percentage of total revenues, was 29.2% and 30.4% for the second quarter and first six months of fiscal 1999, respectively, as compared with 31.5% and 34.7% for the comparable periods in fiscal 1998. The decrease in expenses as a percentage of revenues for the second quarter and first six months of fiscal 1999, as compared with the comparable periods of the prior year, reflects the Company's continued effort to implement the headcount and facilities reductions associated with its previously announced restructuring plans and the effect of the cost reductions resulting from an extensive review performed by the Company, beginning in fiscal year 1996, to realign its business. Ongoing cost containment and rationalization efforts are expected to generate lower levels and ratios of selling, general and administrative expense in relation to revenues in the second half of fiscal 1999 as the Company completes the cost reductions outlined in its restructuring plans and further reduces expenses in the current fiscal year. Included in selling, general and administrative expenses for the first six months of fiscal 1998 are incremental charges of $10.8, or 2.2% of revenues, for certain employee separation and contract resolution costs. Provision for doubtful accounts, as a percentage of total revenues, was 2.1% in the second quarter and first six months of fiscal 1999, as compared with 2.2% and 2.1% for the same periods in fiscal 1998. Research, development and engineering expenses were 2.5% of revenue in the three months ended December 31, 1998 as compared with 2.8% for the same period in fiscal 1998. For the first six months of fiscal 1999, research, development and engineering expenses were 2.8% of revenue as compared with 2.7% for the same period in fiscal 1998. 11 13 Operating income decreased from $19.2 in the second quarter of fiscal 1998 to $12.8 in the second quarter of fiscal 1999. Before restructuring, operating income increased from $18.3 for the first six months of fiscal 1998 to $19.1 for the comparable period in fiscal 1999. The impact of the incremental charges discussed under selling, general and administrative expenses above, and $3.0 of additional incremental charges included in cost of sales, was to reduce operating income by $13.8 million in the first six months of fiscal 1998. Other (Expenses) Income and Taxes Net interest and other expenses of $8.2 and $16.3 for the second quarter and first six months of fiscal 1999, respectively, reflected a decrease of $3.0 and $5.5, respectively, over the comparable periods of fiscal 1998, excluding litigation settlement charges in the first quarter of fiscal 1998 and insurance recoveries during the second quarter of fiscal 1999. These decreases are primarily due to the decrease in interest expense and improved cash flow from reductions in working capital. Lower debt levels resulted primarily from the use of a portion of the proceeds from the Company's April 1998 preferred stock offering to repay the outstanding balance under the Company's revolving credit line. The second quarter fiscal 1999 insurance recovery of $6.3 ($4.4 after-tax) is related to a settlement agreement reached with one of the Company's insurance carriers related to the shareholder litigation settled in the first quarter of fiscal 1998. The provision for income taxes for the second quarter and first six months of fiscal 1999 and the second quarter of fiscal 1998 is based on an estimated effective annual consolidated tax provision rate of 30.0%. The benefit for income taxes for the first six months of fiscal 1998 is based on an estimated effective annual consolidated tax benefit rate of 30.0%. The tax benefit for the first six months of fiscal 1998 related primarily to the restructuring and litigation charges recorded during the first quarter. The Company reported net income of $7.3, or $0.10 per share, and $5.9, or $0.08 per share, for the second quarter and first six months of fiscal 1999, respectively, as compared with net income of $5.4, or $0.07 per share, for the second quarter of fiscal 1998 and a net loss of $60.5, or $0.82 per share, for the first six months of fiscal 1998. Excluding restructuring and litigation charges and associated insurance recoveries, the Company reported net income of $2.9, or $0.04 per share, and $1.5, or $0.02 per share, for the second quarter and first six months of fiscal 1999, respectively, as compared with net income of $5.4, or $0.07 per share, for the second quarter of fiscal 1998 and a net loss of $3.0, or $0.04 per share, for the first six months of fiscal 1998. The foregoing net loss includes the effect of the incremental charges of $13.8 discussed under operating income, above, which had a negative after-tax impact of $9.7 or $0.13 per share. LIQUIDITY AND CAPITAL RESOURCES During the first six months of fiscal 1999, cash and cash equivalents decreased $19.6 primarily due to the repayment of debt and expenditures related to revenue equipment, offset by reductions in receivables. For the six month period ended December 31, 1998, cash flow provided by operating activities was $45.7 compared with cash used in operations for the six month period ended December 31, 1997 of $52.8. The improvement in operating cash flow in the six month period ended December 31, 1998 was primarily a result of reduced levels of receivables and inventories in fiscal 1999, as compared with increases in inventory and receivables in the comparable period in fiscal 1998. Included in operating cash flow in the six 12 14 month period ended December 31, 1998 is an insurance recovery of $6.3 ($4.4 after-tax) related to a settlement agreement reached with one of the Company's insurance carriers related to the shareholder litigation settled in the first quarter of fiscal 1998. In the first six months of fiscal 1999, the Company used $43.4 of cash in investing activities, compared with $32.0 in the first six months of fiscal 1998. The fiscal 1998 amount included $7.4 million of net proceeds from the sale of a non-core business. For the six month period ended December 31, 1998, $21.9 of cash was used for financing activities as compared with cash being generated of $78.9 as a result of financing activities during the six month period ended December 31, 1997. The principal use of cash in financing activities during the first six months of fiscal 1999 was to repay approximately $23.5 of debt. The Company's percentage of total debt to total capital was 36.5% at December 31, 1998 as compared with 37.9% at June 30, 1998. Certain of the Company's financial agreements currently prohibit the payment of cash dividends, as well as the purchase of Company securities, until certain profit levels are achieved and reflected in the Company's annual audited financial statements. Under these provisions, it is unlikely that the Company would be able to pay cash dividends until after the preparation of its audited financial statements for fiscal year 2000 at the earliest. The Company intends to pay any dividends declared on the Convertible Preferred Stock with shares of Common Stock prior to the time it is able to pay such cash dividends. The Company issued approximately 414,532 shares of common stock in payment of the January 4, 1999 dividend on the Preferred Stock. The Company uses the U.S. dollar as its reporting currency for financial statement purposes. The Company conducts business in numerous countries around the world through its international subsidiaries which use local currencies to denominate their transactions, and is, therefore, subject to certain risks associated with fluctuating foreign currencies. See Note k to the Consolidated Condensed Financial Statements for a further discussion of the recent developments regarding the Brazilian currency. The resulting changes in the financial statements do not indicate any underlying changes in the financial position of the international subsidiaries but merely reflect the adjustment in the carrying value of the net assets of these subsidiaries at the current U.S. dollar exchange rate. Due to the long-term nature of the Company's investment in these subsidiaries, the translation adjustments resulting from these exchange rate fluctuations are excluded from the results of operations and are recorded in a separate component of consolidated stockholders' equity. The $9.8 decrease in currency translation adjustments at December 31, 1998 compared to June 30, 1998, which is reflected in the balance sheet caption "Accumulated other comprehensive income", resulted primarily from the translation of the balance sheets denominated in French francs and Belgian francs, reflecting the weakening of the U.S. dollar relative to such currencies at December 31, 1998. The Company monitors its currency exposures but does not hedge its translation exposures due to the high economic costs of such a program and the long-term nature of its investment in its international subsidiaries. The Company requires significant cash flow to meet its debt service and other continuing obligations. As of December 31, 1998, the Company had $526.2 million of total indebtedness outstanding. The Company's expected principal liquidity requirements are working capital, financing of customer equipment purchases, investments in revenue equipment and capital expenditures and interest on the Senior Notes. At December 31, 1998, the Company's principal 13 15 sources of liquidity are (i) cash on hand, (ii) cash flow from operations, (iii) borrowings under the $250.0 million Revolving Credit Facility, of which none was utilized, and (iv) receivable securitization facilities. The Company believes that cash flow from operations, together with borrowings under the Revolving Credit Facility, will be sufficient to meet its liquidity needs for the foreseeable future. YEAR 2000 UPDATE Year 2000 Many computer applications, processor chips embedded in many products and computers and operating systems that are not Year 2000 compliant are unable to distinguish between the calendar year 1900 and the calendar year 2000. The Year 2000 Issue creates potential risks for the Company, including potential problems in the Company's products as well as in the Information Technology ("IT") and non-IT systems that the Company uses in its business operations. The Company may also be exposed to risks from third parties with whom the Company interacts who fail to adequately address their Year 2000 Issues. The Company has recognized the need to ensure that its business operations will not be adversely affected by the upcoming calendar year 2000 and is cognizant of the time sensitive nature of the Year 2000 problem. In 1996, the Company began a project to implement a global enterprise resource planning system. The Company has completed this implementation at all manufacturing locations and many of the sales and service subsidiaries around the world. This project continues to address the Company's key non-compliant IT systems. Scheduled implementation dates for those remaining locations are as follows: Mexico July 1, 1999 North America July 1, 1999 United Kingdom September 6, 1999 The Company's State of Readiness The Company centralized its focus on addressing the Year 2000 Issue by establishing a Year 2000 Program Management Office in order to implement a consistent approach to minimizing Year 2000 risks across the Company worldwide. The Company also assigned Project Teams in each Business Unit. The Program Management Office and the Project Teams are assisted by specialists and consultants. The Company's key dates relative to its program focusing on IT and non-IT systems that the Company uses in its business operations are as follows: Inventory and assessment completed March 31, 1999 All Critical components in testing May 31, 1999 Critical components Year 2000 compliant August 31, 1999 Address non-critical components September 30, 1999 The Company has substantially completed testing of its manufactured products. To aid in communication with the Company's customers and suppliers, the Company has developed an Internet Web site that identifies the current Year 2000 status for each of the Company's products. A survey of the Company's suppliers and service providers has begun to insure they are working on this effort and will remain viable suppliers through and after January 1, 2000. The process of evaluating the Year 2000 status of the Company's principal suppliers and service providers will be on-going through the remainder of the calendar year. 14 16 The Costs to Address the Company's Year 2000 Issues The cost of implementing the enterprise resource planning system is estimated at $40.0 million. In addition to the enterprise resource planning system, the Company estimates approximately $1.0 million for the cost associated with the Company's Year 2000 project. Remediation efforts are not currently expected to be significant, however, this can not be assured until after the inventory and assessment is completed. Should significant remediation efforts be required, the project cost would exceed $1.0. The Risks of the Company's Year 2000 Issues The Company presently believes that the Year 2000 issue will not cause material operational problems for the Company. However, if the Company is not successful in identifying all material Year 2000 problems, or its assessment and remediation of identified Year 2000 problems is not completed in a timely manner, there may be an interruption in, or failure of, certain normal business activities or operations. This risk includes unforeseen delays in the implementation of the Company's enterprise resource planning system. Such interruptions, failures or delays in implementing the enterprise resource planning system could have a material adverse impact on the Company's consolidated results of operations and financial condition, or on its relationships with customers, suppliers or others. The Company's Contingency Plans The Company expects to have developed by June 30, 1999, or shortly thereafter, a comprehensive contingency plan to address situations that may result if the Company or any of the third parties upon which the Company is dependent is unable to achieve Year 2000 readiness. The Company's Year 2000 compliance program is ongoing and its ultimate scope, as well as the consideration of contingency plans, will continue to be evaluated as new information becomes available. Year 2000 Forward-Looking Statements The foregoing Year 2000 discussion contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including without limitation, anticipated costs and the dates by which the Company expects to complete certain actions, are based on management's best current estimates, which were derived utilizing numerous assumptions about future events, including the continued availability of certain resources, representations received from third parties and other factors. However, there can be no guarantee that these estimates will be achieved, and actual results could differ materially from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the ability to identify and remediate all relevant IT and non-IT systems, results of Year 2000 testing, adequate resolution of Year 2000 Issues by businesses and other third parties who are service providers, suppliers or customers of the Company, unanticipated system costs, the adequacy of and ability to develop and implement contingency plans and similar uncertainties. The "forward-looking statements" made in the foregoing Year 2000 discussion speak only as of the date on which such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. 15 17 INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS Except for historical matters, the matters discussed in this Form 10-Q are forward-looking statements which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following factors could cause actual results to differ materially from historical results or those anticipated: 1) changes in international operations 2) exchange rate risk 3) market conditions for the Company's products 4) the Company's ability to provide innovative and cost-effective solutions 5) development risks 6) competition and 7) changes in the economic climate. 16 18 Item 3. Quantitative and Qualitative Disclosures about Market Risk See the Company's 1998 Annual Report on Form 10-K (Item 7A). There has been no material change in this information. 17 19 PART II. OTHER INFORMATION Item 1. Legal Proceedings In connection with the settlement of the Federal Insurance Company ("Federal") action referred to in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 ("Form 10-K"), the Company and Federal have entered into a final settlement agreement and the $6.3 million payable by Federal thereunder in settlement of its insurance obligations has been received by the Company. In addition, reference is made to Item 3 of Part I of the Form 10-K. 18 20 Item 2. Changes in Securities and Use of Proceeds Pursuant to the terms of the Preferred Stock, the Company issued approximately 414,532 shares of common stock in payment of the dividend payable, and certain liquidated damages under the registration agreement, on January 4, 1999. (Registration of these shares is not required because no additional consideration was paid therefor.) 19 21 Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders of the Company was held on November 20, 1998. The following business was transacted: Three company directors were voted on for re-election. The re-election of James Lineberger and John Ray was voted on by 89% of the outstanding shares with 97% of those voting for both nominees and 3% voting against. The re-election of Thomas Buffett was voted on by 89% of the outstanding shares with 95% of those voting for the nominee and 5% voting against. All three were re-elected for a three year term expiring in the year 2001. A proposal to approve the Company's 1999 Stock Incentive Plan, which provides 3.65 million additional shares available for grant, was voted on by 75% of the outstanding shares with 71% of those voting in favor of the proposal and 29% voting against. The proposal was approved. Additionally, there were 320,471 abstention votes. A proposal to amend the Company's Directors Stock Option Plan to increase the total number of shares that may be issued under the plan by 350,000 shares was voted on by 75% of the outstanding shares with 72% of those voting in favor of the proposal and 28% voting against. The proposal was approved. Additionally, there were 380,089 abstention votes. A stockholder proposal by the New York City Teachers' Retirement System (NYCTRS) that shareholders request the Company's Board of Directors to reinstate the rights of shareholders to take action by written consent and to call special meeting was voted on by 67% of the outstanding shares with 56% of those voting in favor of the proposal and 44% voting against. The proposal was approved. Additionally, there were 6,290,018 abstention votes. After review and consideration of the proposal and the results of the vote, the Board of Directors approved amendments to the By-Laws of the Company which, among other things, provide for the calling of special meetings of stockholders at the request of stockholders. The By-Laws of the Company, as amended, are filed as an exhibit to this Form 10-Q. 20 22 Item 6. Exhibits and Reports on Form 8-K a) Exhibits 3) By-Laws of the Company 27) Financial Data Schedule (for SEC use only). b) Reports on Form 8-K: There were no reports on Form 8-K filed during the three - month period ended December 31, 1998. 21 23 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 hereunto duly authorized. SENSORMATIC ELECTRONICS CORPORATION By /S/ Garrett E. Pierce ------------------------------ Garrett E. Pierce Senior Vice President, Chief Administrative Officer and Chief Financial Officer (Principal Financial Officer) Date: February 16, 1999 22 EX-3 2 BY-LAWS ARTICLE 1 1 As amended through February 12, 1999 SENSORMATIC ELECTRONICS CORPORATION BY-LAWS ARTICLE I OFFICES Section 1. REGISTERED OFFICE. The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware, and the registered agent of the Corporation shall be The Prentice-Hall Corporation System, Inc., whose address is 229 South State Street, Dover, Delaware. Section 2. OTHER OFFICES. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. ANNUAL MEETING. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the first Friday of November in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding day not a legal holiday, or on such other date as may be fixed from time to time by resolution of the Board of Directors, and at the principal office of the Corporation or at such other place within or without the State of Delaware as shall be designated by the Board of Directors. The Board of Directors may change the date and/or place of any scheduled annual meeting, either before or after notice of such meeting has been given. Section 2. SPECIAL MEETING. A special meeting of the stockholders may be called at any time by the Chairman of the Board, the President of the Corporation or the majority of the Board of Directors, and shall be called following the written request of stockholders holding of record in the aggregate at least thirty-three and one-third percent(33 1/3%) of the issued and outstanding shares of stock of the Corporation entitled to vote at such meeting. Such special meeting shall be held for such purpose or purposes, at such time, and at such place within or without the State of Delaware, as may be determined by the Chairman of the Board or the President, respectively, in the case of meetings called by the Chairman of the Board or the President, 2 or by resolution of the Board, in the case of meetings called by the Board. Any special meeting called at the request of the stockholders pursuant hereto shall be held for the purpose or purposes described in the request therefor and for such other purpose or purposes as may be determined by the Board of Directors, on a date, not more than 90 days following receipt by the Secretary of the Corporation of such request and confirmation reasonably satisfactory to the Board that such request meets the requirements of this Section, and at such time and at such place as may be determined by the Board. Notwithstanding anything contained herein to the contrary, if the annual meeting of stockholders would occur within such 90-day period or within 30 days following the expiration of such 90-day period, the Board of Directors may determine to include the purpose or purposes requested by stockholders hereunder with the business to be conducted at such annual meeting. The purpose or purposes of any proposed special meeting shall be set forth in the notice of such meeting. The business transacted at any such special meeting shall be limited to such purpose or purposes as are set forth in the notice thereof. Subject to the requirements of this Section and applicable law, the date, time and/or place of any scheduled special meeting of the stockholders may subsequently be changed, either before or after notice of such meeting has been given, by the Chairman of the Board or the President of the Corporation or the majority of the Board of Directors. Section 3. NOTICE OF MEETINGS. Notice of the place, date and time of the holding of each annual and special meeting of the stockholders (and of any change in such place, date and/or time) and the purpose or purposes thereof shall be given personally or by mail in a postage prepaid envelope to each stockholder entitled to vote at such meeting, not less than ten nor more than sixty days before the date of such meeting, and, if mailed, it shall be directed to such stockholder at his address as it appears on the records of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address. Any such notice for any meeting other than the annual meeting of stockholders shall indicate that such meeting is being called at the direction of the Chairman of the Board, the President, a majority of the Board of Directors, or at the request of stockholders in accordance with Section 2 of this Article II, as applicable. Notice of any meeting shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy. Unless the Board shall fix a new record date for an -2- 3 adjourned meeting, notice of such adjourned meeting need not be given if the time and place to which the meeting shall be adjourned were announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 4. QUORUM. At all meetings of the stockholders, the holders of one-third of the shares of stock of the Corporation issued and outstanding and entitled to vote and present in person or by proxy shall constitute a quorum for the transaction of any business, except as otherwise required by law or the Certificate of Incorporation in respect of the vote that shall be required for a specified action. In the absence of a quorum, the holders of a majority of the shares of stock present in person or by proxy and entitled to vote, or the Chairman of the Board, the President or any officer of the Corporation authorized by the Board, may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. Section 5. ORGANIZATION. At each meeting of the stockholders, the Chief Executive Officer or, in his absence or inability to act, such officer or other person designated by the Board of Directors, or, in the absence or inability to act of such designee, such other person chosen by a majority of those stockholders present or represented, shall act as chairman of the meeting. The Secretary, or, in his absence or inability to act, an Assistant Secretary or any other officer appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes thereof. The meeting may be adjourned from time to time by the chairman of the meeting or, at the direction of the Board, by any officer. Section 6. ORDER OF BUSINESS. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting. Section 7. VOTING. Except as otherwise provided by statute or the Certificate of Incorporation, each holder of record of shares of stock of the Corporation having voting power shall be entitled at each meeting of the stockholders to one vote for every share of such stock standing in his name on the record of stockholders of the Corporation (a) on the date fixed by the Board of Directors as the record date for the determination of -3- 4 the stockholders who shall be entitled to notice of and to vote at such meeting; or (b) if such record date shall not have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given; or (c) if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated in the order of business for so delivering such proxies. No proxy shall be valid after the expiration of three years from the date thereof, unless the proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where an irrevocable proxy is permitted by law. Except as otherwise required by law, the rules and regulations of any exchange on which the stock of the Corporation is traded, the Certificate of Incorporation or these By-Laws, any corporate action to be taken by vote of the stockholders shall be authorized by a majority of the total votes cast at a meeting of stockholders by the holders of shares present in person or represented by proxy and entitled to vote on such action. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by written ballot. On a vote by written ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. Section 8. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger of the Corporation shall prepare and make or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 9. INSPECTORS. The Board of Directors may, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If -4- 5 inspectors shall not be so appointed or if any of them shall fail to appear or act, the chairman of the meeting may, and on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting or any stockholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors need not be stockholders. Section 10. NO ACTION BY CONSENT. No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting and the power of stockholders to consent in writing to the taking of any action is specifically denied. Section 11. NOTICE OF STOCKHOLDER BUSINESS. At an annual meeting of stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors or by the Chairman of the Board or the President of the Corporation or (c) otherwise properly brought before the meeting by a stockholder entitled to vote at such meeting. For business to be properly brought before an annual meeting by a stockholder, 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 received by the Secretary at the principal office of the Corporation not less than seventy-five (75) days nor more than 120 days prior to the meeting; provided, however, that in the event that less than ninety (90) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth (15th) day following -5- 6 the day on which such notice of the date of the meeting was mailed or such public disclosure was made. As used in this Section 11 and in paragraph B of Section 2 of Article III of these By-Laws, the phrase "notice or prior public disclosure of the date of the meeting" shall mean notice or prior public disclosure of the date on which the meeting is originally scheduled to be called to order, whether or not such notice is given, without limitation, by press release, filing with the Securities and Exchange Commission or inclusion in any quarterly, annual or other report or material mailed to stockholders, and shall not refer to notice or prior public disclosure of any date to which such meeting may be adjourned. A stockholder's notice to the Secretary shall set forth, as to each matter the stockholder proposes to bring before the annual meeting, (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's stock transfer books, of the stockholder proposing such business, (c) the class and number of shares of capital stock of the Corporation which are beneficially owned (such term being used in this Section 11 and in paragraph B of Section 2 of Article III of these By-Laws with the meaning ascribed to such term in Rule 13d-3 of the rules under the Securities Exchange Act of 1934, as amended, as such Rule was in effect on July 1, 1990) by the stockholder and (d) any material interest of the stockholder in such business, and shall otherwise comply with the requirements of Rule 14a-8 under Regulation 14A of the Securities Exchange Act of 1934, as amended, whether or not such requirements are then applicable. Notwithstanding any other provision of these By-Laws, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 11. If the presiding officer of an annual meeting determines and declares that business was not properly brought before the meeting in accordance with this Section 11, any such business shall not be transacted. ARTICLE III BOARD OF DIRECTORS Section 1. GENERAL POWERS. The property, business and affairs of the Corporation shall be managed by the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute, the Certificate of Incorporation or these By-Laws directed or required to be exercised or done by the stockholders. -6- 7 Section 2. A. NUMBER, CLASSIFICATION, TERM OF OFFICE, QUALIFICATIONS AND ELECTION. The Board of Directors shall initially consist of six directors. Thereafter, the number of directors of the Corporation shall be determined by resolution approved by at least a majority of the then authorized number of directors, but shall not be more than fifteen nor less than five. The Board of Directors shall be divided into three classes as nearly equal in number as possible, with the term of office of one class expiring each year. The terms of office of the directors elected at the annual meeting of stockholders in 1977 and initially classified shall be as follows: directors of the first class shall hold office for a term expiring at the next succeeding annual meeting; directors of the second class shall hold office for a term expiring at the second succeeding annual meeting; and directors of the third class shall hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of stockholders after the annual meeting in 1977, directors elected to succeed the class of directors whose terms expire at such annual meeting shall be elected to hold office for a term expiring at the third succeeding annual meeting after their election. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as possible. Subject to the foregoing, the respective classes for which directors shall be selected or chosen shall be determined by resolution approved by at least a majority of the then authorized number of directors. Each director shall hold office for the specified term and until his successor shall be duly elected and qualified, or until his death, or until he shall have resigned or he shall have been removed, as hereinafter provided in these By-Laws, or as otherwise provided by statute or by the Certificate of Incorporation. All the directors shall be of full age. Directors need not be stockholders. Except as otherwise required by statute, the Certificate of Incorporation or these By-Laws, directors to be elected at each annual meeting of stockholders shall be elected by a plurality of the votes cast at the meeting by the holders of shares present in person or represented by proxy and entitled to vote for the election of directors. B. NOMINATION OF DIRECTORS. Only persons who are nominated in accordance with the procedures set forth in this paragraph B shall be eligible for election as a director at any meeting of stockholders for the election of directors (an "Election Meeting"). Nominations of candidates for election to the Board of Directors of the Corporation at an Election Meeting may be made only by or at the direction of the Board of Directors or by a stockholder entitled to vote at such Election Meeting. All such nominations, except those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in -7- 8 writing to the Secretary of the Corporation of the stockholder's intention to make such nomination. To be timely, any such notice must be received by the Secretary at the principal office of the Corporation not less than seventy-five (75) nor more than 120 days prior to the date of the Election Meeting; provided, however, that in the event that less than ninety (90) days' notice or prior public disclosure (as described in Section 11 of Article II) of the date of the Election Meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the fifteenth (15th) day following the day on which such notice of the date of the Election Meeting was mailed or such public disclosure was made. Such stockholder's notice with respect to a proposed nomination shall set forth (a) as to each person whom the stockholder proposes to nominate as a candidate for election to the Board of Directors (i) the name, age, business address and residence address and the principal occupation or employment of such person, (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person, (iii) such other information concerning such person as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such person and (iv) a signed consent of such person to serve as a Director of the Corporation, if elected, and (b) as to the stockholder giving the notice (i) the name and address of such stockholder, as they appear in the Corporation's stock transfer books and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such stockholder. In the event that a person is validly designated as a nominee in accordance with the procedures specified above 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; provided, however, that in the case of persons not nominated by the Board of Directors, such a substitution may be made only if notice as provided above in this paragraph B is received at the principal office of the Corporation not later than the later of (x) thirty (30) days prior to the date of the Election Meeting or (y) five (5) days after the stockholder proposing the original nominee first learned that such original nominee has become unable or unwilling to stand for election. If the presiding officer of an Election Meeting determines and declares that a Director nomination was not made in accordance with the foregoing procedures, such nomination shall be void and shall be disregarded for all purposes. Section 3. ANNUAL MEETING. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of the stockholders, on the -8- 9 same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. Such meeting may be held at any other time or place (within or without the State of Delaware) which shall be specified in a notice thereof given as hereinafter provided in Section 6 of this Article III, or in a waiver of notice thereof. Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such times and places within or without the State of Delaware as the Board of Directors may from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board of Directors need not be given except as otherwise required by statute or these By-Laws. Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the President or any two directors of the Corporation and shall be held at such time and at such place within or without the State of Delaware as shall be specified in the notice of meeting or waiver thereof. Section 6. NOTICE OF MEETINGS. Notice of each special meeting of the Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 6, in which notice shall be stated the time and place of the meeting. Notice of each such meeting shall be delivered to each director, either personally (including by courier) or by telephone, telex, telegraph, or facsimile transmission at least twenty-four hours before the time at which such meeting is to be held, or shall be mailed to each director by first-class mail postage prepaid, addressed to him at his residence or usual place of business, at least three days before the day on which such meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting without objecting, at the beginning of such meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise specifically required by these By-Laws, a notice or waiver of notice of any regular or special meeting of the Board of Directors need not state the purpose or purposes of such meeting. Section 7. QUORUM AND MANNER OF ACTING. Except as provided in Section 5 of Article IX of these By-Laws, a majority of the directors shall be present in person at any meeting of the -9- 10 Board of Directors in order to constitute a quorum for the transaction of business at such meeting, and, except as otherwise expressly required by statute or the Certificate of Incorporation, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of the directors present thereat, or if no director be present, the Secretary, may adjourn such meeting to another time and place, or such meeting, unless it be the annual meeting of the Board of Directors, need not be held. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Except as provided in Section 11 of this Article III, Article IV and Section 4 of Article IX of these By-Laws and as otherwise specifically authorized by resolution of the Board of Directors, the directors shall act only as a Board of Directors and the individual directors shall have no power as such. Section 8. A. ORGANIZATION OF MEETINGS. At each meeting of the Board of Directors, the Chairman of the Board, or, in his absence or inability to act, the President, or, in his absence or inability to act, another director chosen by a majority of the directors present, shall act as chairman of the meeting and preside thereat. The minutes of the meeting shall be recorded by any officer of the Corporation present and designated by the chairman. B. CHAIRMAN OF THE BOARD. The Board of Directors, by action of a majority of the entire Board, shall from time to time designate a Chairman of the Board, who shall serve at the discretion of the Board and who shall, if present, preside at all meetings of the Board of Directors and perform such other duties as may from time to time be assigned to him by the Board of Directors. The Board of Directors may designate the Chairman of the Board as an officer of the Corporation and, if so designated, the Chairman of the Board shall, in addition, have such powers, and perform such duties, as are incidental to the office of Chairman of the Board and as otherwise may be assigned to him by the Board of Directors. Section 9. RESIGNATIONS. Any director of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. -10- 11 Section 10. REMOVAL OF DIRECTORS. Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, any director may be removed, but only for cause, at any time, by the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote for the election of directors of the Company at a meeting of the stockholders called and held for that purpose. Section 11. VACANCIES. Except as otherwise required by statute or by the Certificate of Incorporation, during the intervals between annual meetings of stockholders, any vacancies and any newly-created directorships resulting from an increase in the authorized number of directors shall be filled by a majority vote of the directors then in office, whether or not a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until their successors shall be duly elected and qualified, unless sooner displaced. If there are no directors in office, then a special meeting of stockholders for the election of directors may be called and held in the manner provided by statute. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. Section 12. COMPENSATION. The Board of Directors or a committee of the Board designated by it shall have authority to fix the compensation, including without limitation fees and reimbursement of expenses, of directors for services to the Corporation in any capacity; provided, however, that no such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 13. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 14. PARTICIPATION IN MEETINGS BY TELEPHONE AND OTHER EQUIPMENT. Members of the Board of Directors or of any committee thereof may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and par- -11- 12 ticipation in a meeting pursuant to this Section shall constitute presence in person at such meeting. ARTICLE IV EXECUTIVE AND OTHER COMMITTEES Section 1. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may, by a resolution passed by a majority of the whole Board, designate an Executive Committee, to consist of three or more directors of the Corporation, and one or more other committees, each such other committee to consist of one or more of the directors of the Corporation. 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 the committee. In the absence or disqualification of any member of the Executive Committee or such other committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Executive Committee, while the Board of Directors is not in session, shall have and may exercise, and any such other committee to the extent provided in the resolution of the Board of Directors, shall have and may exercise, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority 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, or amending the By-Laws of the Corporation; and, unless the resolution or By-Laws expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Each committee shall keep written minutes of its proceedings and shall report such minutes to the Board of Directors when required. All such proceedings shall be subject to revision or alteration by the Board of Directors; provided, however, that rights of third parties shall not be prejudiced by such revision or alteration. The Board of Directors, by action of a majority of the entire Board, may at any time fill vacancies in, change the membership of, or dissolve any such committee. -12- 13 Section 2. EXECUTIVE COMMITTEE: GENERAL. Regular meetings of the Executive Committee shall be held at such times and places, within or without the State of Delaware, as a majority of such Committee may from time to time by resolution determine. Special meetings of the Executive Committee may be called at the request of any member thereof and may be held at such times and places, within or without the State of Delaware, as such Committee may from time to time by resolution determine or as shall be specified in the respective notices or waivers of notice thereof. Notice of regular meetings of such Committee need not be given except as otherwise required by statute or these By-Laws. Notice of each special meeting of such Committee shall be given to each member of such Committee, unless waived or not required, as provided in Section 6 of Article III of these By-Laws. Subject to the provisions of this Article IV, the Executive Committee, by resolution of a majority of such Committee, shall fix its own rules of procedure. A majority of the Executive Committee shall be present in person at any meeting of the Executive Committee in order to constitute a quorum for the transaction of business at such meeting, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the Executive Committee. The members of the Executive Committee shall act only as a committee, and the individual members shall have no power as such. Section 3. OTHER COMMITTEES: GENERAL. A majority of any committee may fix its rules of procedure, determine its action, and fix the time and place, within or without the State of Delaware, of its meetings, unless the Board of Directors shall otherwise by resolution provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 6 of Article III of these By-Laws. Nothing in this Article IV shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board. ARTICLE V OFFICERS Section 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation shall be a President, a Vice President and Controller, one or more other Vice Presidents, a Secretary, a Treasurer and, if designated as an officer by the Board of Directors, the Chairman of the Board. Any two or more offices may be held by the same person. Such officers shall be elected from time to time by the Board of Directors, each to hold office -13- 14 until the meeting of the Board following the next annual meeting of the stockholders, or until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned or until he shall have been removed, as hereinafter provided in these By-Laws. The Board of Directors shall designate a Chief Executive Officer, may designate a Chief Financial Officer, and may, from time to time, appoint such other officers (including one or more Assistant Treasurers and Assistant Secretaries) and such agents as it may deem necessary or desirable for the business of the Corporation. The Board of Directors may from time to time authorize any principal officer or committee to appoint, and to prescribe the authority and duties of, any such subordinate officers or agents. Each of such other officers and agents shall have such authority, perform such duties, and hold office for such period, as are provided in these By-Laws or as may be prescribed by the Board of Directors or by the principal officer or committee appointing such officer or agent. Section 2. RESIGNATIONS. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3. REMOVAL. Any officer or agent of the Corporation may be removed, either with or without cause, at any time, by the vote of the majority of the entire Board of Directors at any meeting of the Board, or, except in the case of an officer or agent elected or appointed by the Board, by any principal officer or committee upon whom such power of removal may be conferred by the Board. Section 4. VACANCIES. A vacancy in any office, whether arising from death, resignation, disqualification, removal or any other cause, may be filled for the unexpired portion of the term of the office which shall be vacant, in the manner prescribed in these By-Laws for the regular election or appointment to such office. Section 5. PRESIDENT. The President shall, in the absence or inability to act of the Chairman of the Board, preside at all meetings of the Board of Directors. In general, the President shall have such other powers and perform such other duties as may usually pertain to the office of President, or as from time to time may be assigned to him by the Board of -14- 15 Directors or the Chief Executive Officer, if the President is not the Chief Executive Officer. Unless otherwise directed by the Board of Directors, when there is no Chairman of the Board, or in the absence or inability to act of the Chairman of the Board, the President shall perform all the duties and functions and exercise all the powers of the Chairman of the Board. Section 6. CHIEF EXECUTIVE OFFICER. The President shall be the Chief Executive Officer of the Corporation, unless the Board of Directors has designated the Chairman of the Board an officer of the Corporation, in which case the Board may designate either the Chairman of the Board or the President the Chief Executive Officer of the Corporation. The officer so designated shall have, in addition to the powers and duties applicable to the office set forth in these By-laws, general and active supervision and direction over the business and affairs of the Corporation and over its several officers, agents and employees, subject, however, to the control of the Board of Directors. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect and, in general, the Chief Executive Officer shall have such other powers and perform such other duties as may be incidental to the position of Chief Executive Officer or as from time to time may be assigned to him by the Board of Directors. Section 7. CHIEF FINANCIAL OFFICER. The Chief Financial Officer, if designated, shall supervise and direct the Vice President and Controller and the Treasurer in the performance of their duties set forth in these By-laws and, in general, shall have such other powers and perform such other duties as may be incidental to the position of Chief Financial Officer or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. Section 8. VICE PRESIDENT AND CONTROLLER. The Vice President and Controller shall: (a) have control of all books of account of the Corporation; (b) keep true and accurate records of all property owned by the Corporation, of its debts and of its revenues and expenses; (c) render to the Chairman of the Board, the President, the Board or any committee thereof, whenever required, an account of the financial condition of the Corporation; and (d) in general, have such other powers and perform such other duties as usually pertain to the office of Vice -15- 16 President and Controller or as from time to time may be assigned to him by the Board of Directors, the Chief Executive Officer, or, if designated, the Chief Financial Officer. Section 9. OTHER VICE PRESIDENTS. Each other Vice President, including any Executive Vice President or Senior Vice President, if appointed, shall have such powers and perform such duties as usually pertain to his designated office or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. Section 10. TREASURER. The Treasurer shall: (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (c) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation; (d) disburse funds of the Corporation, taking proper vouchers therefor; (e) cause all moneys and other valuables to be deposited to the credit of the Corporation in such depositaries as may be designated by the Board of Directors, the Executive Committee or, if designated, the Finance Committee of the Board; (f) supervise the investment of the Corporation's funds as ordered or authorized by the Board of Directors, taking proper vouchers therefor; (g) render to the Chairman of the Board, the President, the Board or any committee thereof, whenever required, an account of his transactions as Treasurer; and (h) in general, have such other powers and perform such other duties as from time to time may be assigned to him by the Board of Directors, the Chief Executive Officer or, if designated, the Chief Financial Officer. Section 11. ASSISTANT TREASURERS. Each Assistant Treasurer shall have such powers and perform such duties as usually pertain to his office or as from time to time may be assigned to him by the Board of Directors, the Chief Executive Officer or the Treasurer. Section 12. SECRETARY. The Secretary shall: -16- 17 (a) keep, or cause to be kept, in one or more books provided for the purpose, the minutes of all meetings of the Board of Directors, of the committees of the Board and of the stockholders; (b) see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; (c) be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and (e) in general, have such other powers and perform such other duties as usually pertain to the office of Secretary or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. Section 13. ASSISTANT SECRETARIES. At the request of the Secretary or in case of his absence or inability to act, the Assistant Secretary, or if there be more than one, the Assistant Secretary designated by the Board of Directors or, in the absence of such designation, by the President, shall perform all the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. In general, each Assistant Secretary shall have such other powers and perform such other duties as from time to time may be assigned to him by the Board of Directors, the Chief Executive Officer or the Secretary. Section 14. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board of Directors, any officer of the Corporation shall give a bond for the faithful performance of his duties, for such term and in such amount and with such surety or sureties as the Board may require. Section 15. COMPENSATION. The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors or a committee of the Board designated by it, and no officer of the Corporation shall be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation. -17- 18 ARTICLE VI CHECKS, DRAFTS, BANK ACCOUNTS, ETC. Section 1. CHECKS, DRAFTS, ETC. All checks, drafts, bills of exchange or other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation shall be signed in the name and on behalf of the Corporation by such person or persons and in such manner as shall from time to time be authorized by the Board of Directors. Section 2. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may from time to time designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board of Directors. For the purpose of deposit and for the purpose of collection for the account of the Corporation, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by any officer or agent of the Corporation. Section 3. GENERAL AND SPECIAL BANK ACCOUNTS. The Board of Directors may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositaries as the Board may designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board of Directors. The Board of Directors may make such special rules and regulations with respect to such bank accounts, not inconsistent with provisions of these By-Laws, as it may deem expedient. Section 4. PROXIES IN RESPECT OF SECURITIES OF OTHER CORPORATIONS. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, if designated an officer of the Corporation, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation in the name and on behalf of the Corporation to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing in the name of the Corporation as such holder to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such -18- 19 votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. ARTICLE VII SHARES AND THEIR TRANSFER - EXAMINATION OF BOOKS Section 1. STOCK CERTIFICATES. Every holder of stock of the Corporation shall be entitled to have a certificate, in such form as shall be approved by the Board of Directors, certifying the number and class of shares of stock of the Corporation owned by him. The certificates representing shares of the respective classes of stock shall be numbered in order of their issue and shall be signed in the name of the Corporation by the Chairman of the Board, if designated an officer of the Corporation, or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, and sealed with the seal of the Corporation (which seal may be a facsimile, engraved or printed). Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Section 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and records of the Corporation may be kept at such places, within or without the State of Delaware, as the Board of Directors may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or agent designated by the Board of Directors. Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the -19- 20 record of stockholders as the owner of such share or shares for all purposes, including without limitation the rights to receive dividends or other distributions and to vote as such owner, and the Corporation may hold any such stockholder of record liable for calls and assessments and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person, whether or not it shall have express or other notice thereof. Whenever any transfers of shares shall be made for collateral security and not absolutely, and both the transferor and transferee request the Corporation to do so, such fact shall be stated in the entry of the transfer. Section 4. REGULATIONS. The Board of Directors may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more transfer clerks and one or more registrars and may require all certificates for shares of stock to bear the signature or signatures of any of them. Section 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of such certificate, and the Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost, stolen or destroyed or which shall have been mutilated, and the Board of Directors may, in its discretion, require such owner or his legal representatives to give the Corporation and/or any agent of the Corporation designated by it a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board in its absolute discretion shall determine, to indemnify the Corporation and/or such agent against any claim that may be made against it on account of the alleged loss theft, or destruction of any such certificate, or the issuance of a new certificate. Anything herein to the contrary notwithstanding, the Board of Directors, in its absolute discretion, may refuse to issue any such new certificate, except pursuant to legal proceedings under the laws of the State of Delaware. Section 6. STOCKHOLDER'S RIGHT OF INSPECTION. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours of business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records, and to -20- 21 make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in the State of Delaware or at its principal place of business. Section 7. FIXING OF RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE VIII DIVIDENDS Subject to the provisions of the Certificate of Incorporation relating thereto, if any, dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Subject to the provisions of the Certificate of Incorporation, dividends may be paid in cash, in property or in shares of the capital stock of the Corporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose or purposes as the Board of Directors shall determine to be in the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. -21- 22 ARTICLE IX INDEMNIFICATION Section 1. RIGHT TO INDEMNIFICATION. The Corporation shall, to the fullest extent permitted by applicable law as then in effect, indemnify any person (the "Indemnitee") who was or is involved in any manner (including, without limitation, as a party or a witness) or was or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor)(a "Proceeding") by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to any employee benefit plan), whether the basis of any such Proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, against all expenses, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such Proceeding. The right to indemnification conferred in this Article IX shall include the right to receive payment in advance of any expenses incurred by the Indemnitee in connection with such Proceeding, consistent with applicable law as then in effect. All right to indemnification conferred in this Article IX, including such right to advance payments and the evidentiary, procedural and other provisions of this Article IX, shall be a contract right. The Corporation may, by action of its Board of Directors, provide indemnification for employees, agents, attorneys and representatives of the Corporation with up to the same scope and extent as provided for officers and directors. Section 2. INSURANCE, CONTRACTS AND FUNDING. The Corporation may purchase and maintain insurance to protect itself and any person who is, was or may become an officer, director, employee, agent, attorney or representative of the Corporation or, at the request of the Corporation, an officer, director, employee, agent, attorney or representative of another corporation or entity, against any expense, liability or loss asserted against him or incurred by him in connection with any Proceeding in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such expense, liability or loss under the provisions of this Article IX or otherwise. The Corporation may -22- 23 enter into contracts with any director, officer, employee, agent, attorney or representative of the Corporation, or any person serving as such at the request of the Corporation for another corporation or entity, in furtherance of the provisions of Article TENTH of the Certificate of Incorporation or this Article IX and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification of any person entitled thereto. Section 3. INDEMNIFICATION; NOT EXCLUSIVE RIGHT. The right of indemnification provided in this Article IX shall not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled under any provision of the Certificate of Incorporation, By-Laws or agreement or otherwise. The provisions of this Article IX shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnity under this Article IX and shall be applicable to all Proceedings, whether arising from acts or omissions occurring before or after the adoption of this Article IX. No amendment or repeal of any provision of this Article IX shall remove, abridge or adversely affect any right of indemnification or any other benefits of the Indemnitee under the provisions of this Article IX with respect to any Proceeding involving any act or omission which occurred prior to such amendment. Section 4. ADVANCEMENT OF EXPENSES; PROCEDURES; PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS; REMEDIES. In furtherance, but not in limitation, of the provisions of the Certificate of Incorporation or the foregoing provisions of this Article IX, the following procedures, presumptions and remedies shall apply with respect to advancement of expenses and the right to indemnification under the Certificate of Incorporation or this Article IX: (a) ADVANCEMENT OF EXPENSES. All reasonable expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding shall be advanced to the Indemnitee by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements reasonably shall evidence the expenses incurred by the Indemnitee and, if required by law at the time of such advance, shall include or be accompanied by an undertaking by or on behalf of the Indemnitee to repay the amounts advanced if it should ultimately be determined that the Indemnitee is not entitled to be indemnified against such expense pursuant to this Article IX. -23- 24 (b) PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (i) To obtain indemnification, an Indemnitee shall submit to the President or Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification (the "Supporting Documentation"). The determination of the Indemnitee's entitlement to indemnification shall be made not later than 60 days after receipt by the Corporation of the written request for indemnification together with the Supporting Documentation. The President or Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification. (ii) The Indemnitee's entitlement to indemnification shall be determined in one of the following ways: (A) by a majority vote of the Disinterested Directors (as hereinafter defined) (or the Disinterested Director, if only one); (B) by a written opinion of Independent Counsel (as hereinafter defined) if (x) a Change in Control (as hereinafter defined) shall have occurred and the Indemnitee so requests or (y) there is no Disinterested Director or a majority of the Disinterested Directors (or the Disinterested Director, if only one) so directs; (C) by the stockholders of the Corporation (but only if a majority of the Disinterested Directors (or the Disinterested Director, if only one) determines that the issue of entitlement to indemnification should be submitted to the stockholders for their determination); or (D) as provided in Section 4(c) of this Article IX. (iii) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b)(ii) of this Article IX, a majority of the Disinterested Directors (or the Disinterested Director, if only one) shall select the Independent Counsel, but only an Independent Counsel to which the Indemnitee does not reasonably object; provided, however, that if a Change in Control shall have occurred, the Indemnitee shall select such Independent Counsel, but only an Independent Counsel to which the Board of Directors does not reasonably object. (c) PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. Except as otherwise expressly provided in this Article IX, the Indemnitee shall be presumed to be entitled to indemnification upon submission of a request for indemnification together with -24- 25 the Supporting Documentation in accordance with Section 4(b)(i) of this Article IX, and thereafter the Corporation shall have the burden of proof to overcome that presumption in reaching a contrary determination. In any event, if the person or persons empowered under Section 4(b) of this Article IX to determine entitlement to indemnification shall not have been appointed or shall not have made a determination within 60 days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the Indemnitee shall be deemed to be entitled to indemnification. With regard to the right to indemnification for expenses, if and to the extent that the Indemnitee has been successful on the merits or otherwise in any Proceeding, or if and to the extent that the Indemnitee was not a party to the Proceeding or if a Proceeding was terminated without a determination of liability on the part of the Indemnitee with respect to any claim, issue or matter therein or without any payments in settlement or compromise being made by the Indemnitee with respect to a claim, issue or matter therein, the Indemnitee shall be deemed to be entitled to indemnification, which entitlement shall not be diminished by any determination which may be made pursuant to Sections (4)(b)(ii)(A), (B) or (C). In either case, the Indemnitee shall be entitled to such indemnification, unless (A) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (B) such indemnification is prohibited by law, in either case as finally determined by adjudication or, at the Indemnitee's sole option, arbitration (as provided in Section 4(d)(i) of this Article IX). The termination of any Proceeding described in Section 1 of this Article IX; or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, adversely affect the right of the Indemnitee to indemnification or create any presumption with respect to any standard of conduct or belief or any other matter which might form a basis for a determination that the Indemnitee is not entitled to indemnification. (d) REMEDIES OF INDEMNITEE. (i) In the event that a determination is made pursuant to Section 4(b) of this Article IX that the Indemnitee is not entitled to indemnification under this Article IX, (A) the Indemnitee shall be entitled to seek an adjudication of his entitlement to such indemnification either, at the Indemnitee's sole option, in (x) an appropriate court of the State of Delaware or any other court of competent jurisdiction or (y) an arbitration to be conducted by three arbitrators (or, if the dispute involves less than $100,000, by a single arbitrator) pursuant to the rules of the American Arbitration Association; (B) any such judicial -25- 26 proceedings or arbitration shall be DE NOVO and the Indemnitee shall not be prejudiced by reason of such adverse determination; and (C) in any such judicial proceeding or arbitration the Corporation shall have the burden of proof that the Indemnitee is not entitled to indemnification under this Article IX. (ii) If a determination shall have been made or deemed to have been made, pursuant to Section 4(b) or (c) of this Article IX, that the Indemnitee is entitled to indemnification, the Corporation shall be obligated to pay the amounts constituting such indemnification within five days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination, unless (A) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (B) such indemnification is prohibited by law, in either case as finally determined by adjudication or, at the Indemnitee's sole option, arbitration (as provided in Section 4(d)(i) of this Article IX). In the event that (C) advancement of expenses is not timely made pursuant to Section 4(a) of this Article IX or (D) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to Section 4(b) or (c) of this Article IX, the Indemnitee shall be entitled to seek judicial enforcement of the Corporation's obligation to pay to the Indemnitee such advancement of expenses or indemnification. Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the State of Delaware or any other court of competent jurisdiction, contesting the right of the Indemnitee to receive indemnification hereunder due to the occurrence of an event described in subclause (A) or (B) of this clause (ii) (a "Disqualifying Event"), provided, however, that if the Indemnitee shall elect, at his sole option, that such dispute shall be determined by arbitration (as provided in Section 4(d)(i) of this Article IX), the Corporation shall proceed by such arbitration. In any such enforcement or other proceeding or action in which whether a Disqualifying Event has occurred is an issue, the Corporation shall have the burden of proving the occurrence of such Disqualifying Event. (iii) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 4(d) that the procedures and presumptions of this Article IX are not valid, binding and enforceable and shall stipulate in any such court or before -26- 27 any such arbitrator or arbitrators that the Corporation is bound by all the provisions of this Article IX. (iv) In the event that the Indemnitee, pursuant to this Article IX, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Article IX, or is otherwise involved in any adjudication or arbitration with respect to his right to indemnification, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any expenses actually and reasonably incurred by him if the Indemnitee prevails in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be prorated accordingly. (e) DEFINITIONS. For purposes of this Section 4: (i) "Change in Control" means a change in control of the Corporation of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act"), as such Item was in effect on July 1, 1990, whether or not the Corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Corporation representing 20 percent or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such acquisition; (B) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (C) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of -27- 28 such period) cease for any reason to constitute at least a majority of the Board of Directors. (ii) "Disinterested Director" means a director of the Corporation who is not or was not a material party to the Proceeding in respect of which indemnification is sought by the Indemnitee. (iii) "Independent Counsel" means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent: (A) the Corporation or the Indemnitee in any matter or (B) any other party to the Proceeding giving rise to a claim for indemnification under this Article IX. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing under the law of the State of Delaware, would have a conflict of interest in representing either the Corporation or the Indemnitee in an action to determine the Indemnitee's rights under this Article IX. Section 5. ACTS OF DISINTERESTED DIRECTORS. Disinterested Directors considering or acting on any indemnification matter under this Article IX or otherwise may consider or take action as the Board of Directors or may consider or take action as a committee or individually or otherwise. In the event Disinterested Directors consider or take action as the Board of Directors, one-third of the total number of directors shall constitute a quorum. Section 6. SEVERABILITY. If any provision or provisions of this Article IX shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (I) the validity, legality and enforceability of the remaining provisions of this Article IX (including, without limitation, all portions of any paragraph of this Article IX containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article IX (including, without limitation, all portions of any paragraph of this Article IX containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. -28- 29 ARTICLE X FISCAL YEAR The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. ARTICLE XI SEAL The Board of Directors shall provide a corporate seal, which shall be circular in form and bear the name of the Corporation and the words and figures denoting its organization under the laws of the State of Delaware and the year thereof. ARTICLE XII AMENDMENTS These By-Laws may be amended or repealed, or new By-Laws may be adopted, except as provided in Section 3 of Article IX of these By-Laws, (a) at any annual or special meeting of the stockholders, by a majority of the total votes of the stockholders or when stockholders are entitled to vote by class, by a majority of the appropriate class, present in person or represented by proxy and entitled to vote on such action; provided, however, that the notice of such meeting shall have been given as provided in these By-Laws, which notice shall mention that amendment or repeal of these By-Laws or the adoption of new By-Laws is one of the purposes of such meeting, or (b) by the Board of Directors at any meeting thereof; provided, however, that notice of such meeting shall have been given as provided in these By-Laws, which notice shall mention that amendment or repeal of the By-Laws or the adoption of new By-Laws is one of the purposes of such meeting; provided, further, that By-Laws adopted by the Board of Directors may be amended or repealed by the stockholders as hereinabove provided; provided, further, that the stockholders may limit the power of the Board of Directors to make, amend, alter or repeal the By-Laws of the Company. Notwithstanding the foregoing, the provisions of these By-Laws with respect to the number, classification, term of office, qualifications, election and removal of directors and the filling of vacancies and newly created directorships, and the amendment thereof, that is, Sections 2, 10 and 11 of Article III and this Article XII, may be amended or repealed or new By-Laws affecting such provisions may be adopted only with the unanimous approval of the entire Board of Directors or by the affirmative vote of -29- 30 the holders of at least 80% of the outstanding shares of stock of the Corporation entitled to vote in elections of directors (except that if such proposed amendment or repeal or adoption of new By-Laws shall be submitted to the stockholders with the unanimous recommendation of the entire Board of Directors, such provisions may be amended or repealed or such new By-Laws may be adopted by the affirmative vote of the holders of a majority of such stock), and amendment of these By-Laws is further subject to the requirements of the Certificate of Incorporation. -30- EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 107 0 499 59 195 720 255 117 1,788 324 526 0 167 739 8 1,788 391 478 279 458 10 0 23 9 3 6 0 0 0 6 .08 .08
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