Annual Report — Small Business — Form 10-KSB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 33 136K
2: EX-3.2 By-Laws of Mediware Information Systems, Inc. 16 60K
5: EX-10.15 Stock Opion Agreement 14 30K
6: EX-10.16.1 Form of Note 6 23K
7: EX-10.16.2 Form of Warrant 7 23K
3: EX-10.3.3 Amended and Restated Secured Promissory Note 17 55K
4: EX-10.7 Employment Letter 6 24K
8: EX-21 Subsidiaries of Registrant 1 4K
9: EX-23 Consent of Independent Auditors 1 6K
10: EX-24 Power of Attorney 1 8K
11: EX-27 Art. 5 FDS for Year End 10-Ksb 2 7K
EX-3.2 — By-Laws of Mediware Information Systems, Inc.
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Exhibit 3.2
BY-LAWS
OF
MEDIWARE INFORMATION SYSTEMS, INC.
(Restated as of October 15, 1996)
ARTICLE I
OFFICES
The offices of the Corporation shall be located in the town of
Melville, Suffolk County, and the State of New York. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the
shareholders of the Corporation shall be held on the fourth Wednesday of April
or, if it be a legal holiday, then on the next succeeding day not a legal
holiday, for the purpose of electing directors and transacting such other
business as may properly come before the meeting.
Section 2. Special Meetings. Special meetings of the
shareholders may be called at any time by the Board of Directors or by the
President, and shall be called by the President or the Secretary at the written
request of the holders of ten percent (10%) of the shares then outstanding and
entitled to vote thereat, or as otherwise required under the provisions of the
Business Corporation Law.
Section 3. Place of Meetings. All meetings of shareholders
shall be held at the principal office of the Corporation, or at such other
places within or without the State of New York as shall be designated in the
notices or waivers of notice of such meetings.
Section 4. Notice of Meetings. (a) Written notice of each
meeting of shareholders, whether annual or special, stating the time when and
place where it is to be held, shall be served either personally or by mail, not
less than ten nor more than fifty days before the meeting, upon each shareholder
of record entitled to vote at such meeting, and to any other shareholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for
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their shares pursuant to the Business Corporation Law, the notice of such
meeting shall include a statement of that purpose and to that effect. If mailed,
such notice shall be directed to each such shareholder at his address, as it
appears on the records of the shareholders of the Corporation, unless he shall
have previously filed with the Secretary of the Corporation a written request
that notices intended for him be mailed to some other address, in which case, it
shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any shareholder
who attends such meeting, in person or by proxy, or to any shareholder who, in
person or by proxy, submits a signed waiver of notice either before or after
such meeting. Notice of any adjourned meeting of shareholders need not be given,
unless otherwise required by statute.
Section 5. Quorum. (a) Except as otherwise provided herein,
or by statute, or in the Certificate of Incorporation (such Certificate and any
amendments thereof being hereinafter collectively referred to as the
"Certificate of Incorporation"), at all meetings of shareholders of the
Corporation, the presence at the commencement of such meetings in person or by
proxy of shareholders holding of record a majority of the total number of shares
of the Corporation then issued and outstanding and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. The withdrawal of any shareholder after the commencement of a meeting
shall have no effect on the existence of a quorum after a quorum has been
established at such meeting.
(b) Despite the absence of a quorum at any annual or special
meeting of shareholders, the shareholders, by a majority of the votes cast by
the holders of shares entitled to vote thereon, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called
if a quorum had been present.
Section 6. Voting. (a) Except as otherwise provided by
statute or by the Certificate of Incorporation, any corporate action, other than
the election of directors, to be taken by vote of the shareholders, shall be
authorized by a majority of votes cast at a meeting of shareholders by the
holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the
Certificate of Incorporation, at each meeting of shareholders, each holder of
record of stock of the Corporation entitled to vote thereat shall be entitled to
one vote for each share of stock registered in his name on the books of the
Corporation.
(c) Each shareholder entitled to vote or to express consent
or dissent without a meeting, may do so by proxy; provided, however, that the
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instrument authorizing such proxy to act shall have been executed in writing by
the shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting.
(d) Any resolution in writing, signed by all of the
shareholders entitled to vote thereon, shall be and constitute action by such
shareholders to the effect therein expressed, with the same force and effect as
if the same had been duly passed by unanimous vote at a duly called meeting of
shareholders.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Number, Election and Term of Office. (a) The
business of the Corporation shall be managed under the direction of its Board of
Directors, which shall consist of not less than nine Directors. The Directors of
the Corporation shall be divided into three classes, designated Class I, Class
II and Class III. All classes shall be as nearly equal in number as possible,
but each class shall consist of at least three Direc- tors.
(b) The terms of office of the Directors initially classified
shall be as follows: at the annual meeting of shareholders on January 17, 1992,
Class I Directors shall be elected for a one-year term expiring at the next
succeeding annual meeting of shareholders, Class II Directors for a two-year
term expiring at the second succeeding annual meeting of shareholders and Class
III Directors for a three-year term expiring at the third succeeding annual
meeting of shareholders. At each annual meeting of shareholders after the
January 17, 1992 annual meeting, Directors so classified who are elected to
replace those whose terms expire at each such annual meeting shall be elected to
hold office for a three-year term until the third succeeding annual meeting
following such Director's election. Each Director so classified shall hold
office until the annual meeting at which his term expires and until his
successor has been elected and qualified.
Section 2. Duties and Powers. The Board of Directors shall be
responsible for the control and management of the affairs, property and
interests of the Corporation, and may exercise all powers of the Corporation,
except as are in the Certificate of Incorporation or by statute expressly
conferred upon or reserved to the shareholders.
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Section 3. Annual and Regular Meetings; Notice. (a) A regular
annual meeting of the Board of Directors shall be held immediately following the
annual meeting of the shareholders, at the place of such annual meeting of
shareholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of Directors,
and may fix the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors
shall not be required to be given and, if given, need not specify the purpose of
the meeting; provided, however, that in case the Board of Directors shall fix or
change the time or place of any regular meeting, notice of such action shall be
given to each director who shall not have been present at the meeting at which
such action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4. Special Meetings; Notice. (a) Special meetings of
the Board of Directors shall be held whenever called by the President or by one
of the directors, at such time and place as may be specified in the respective
notices or waivers of notice thereof.
(b) Notice of special meetings shall be mailed directly to
each director, addressed to him at his residence or usual place of business, at
least two (2) days before the day on which the meeting is to be held, or shall
be sent to him at such place by telegram, radio or cable, or shall be delivered
to him personally or given to him orally, not later than the day before the day
on which the meeting is to be held. A notice, or waiver of notice, except as
required by Section 8 of this Article III, need not specify the purpose of the
meeting.
(c) Notice of any special meeting shall not be required to be
given to any director who shall attend such meeting without protesting prior
thereto or at its commencement, the lack of notice to him, or who submits a
signed waiver of notice, whether before or after the meeting.
Section 5. Chairman. At all meetings of the Board of
Directors, the Chairman of the Board, if any and if present, shall preside. If
there shall be no Chairman, or he shall be absent, then the President shall
preside, and in his absence, a Chairman chosen by the directors shall preside.
Section 6. Quorum and Adjournments. (a) At all meetings of
the Board of Directors, the presence of a majority of the entire Board shall be
necessary and sufficient to constitute a quorum for the transaction of business,
except as otherwise provided by law, by the Certificate of Incorporation, or by
these By-Laws.
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(b) A majority of the directors present at the time and place
of any regular or special meeting, although less than a quorum, may adjourn the
same from time to time without notice.
Section 7. Manner of Acting. (a) At all meetings of the Board
of Directors, each director present shall have one vote, irrespective of the
number of shares of stock, if any, which he may hold.
(b) Except as otherwise provided by statute, by the
Certificate of Incorporation, or by these By-Laws, the action 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.
Section 8. Vacancies. Newly created directorships resulting
from an increase in the number of Directors and vacancies occurring on the Board
of Directors for any reason may be filled by vote of the Directors (including a
majority of Directors then in office if less than a quorum exists), provided,
however, that if the number of Directors is changed, (i) any newly created
directorships or any decrease in directorships shall be apportioned by the Board
among the classes so as to make all classes as nearly equal as possible, and
(ii) when the number of Directors is increased by the Board and any newly
created directorships are filled by the Board, there shall be no classification
of the additional Directors until the next annual meeting of shareholders. Any
Director elected by the Board to fill a newly created directorship shall hold
office until the next annual meeting of shareholders and until his successor,
classified in accordance with Section 1 of this Article III, has been elected
and qualified. Any Director elected to fill a vacancy of an existing
directorship shall hold office for the remainder of the term of that
directorship. No decrease in the number of Directors constituting the Board
shall shorten the term of any incumbent Director.
Section 9. Resignation. Any director may resign at any time by
giving written notice to the Board of Directors, the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
such officer, and the acceptance of such resignation shall not be necessary to
make it effective.
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 Corporation at a meeting of the shareholders called
and held for that purpose. Directors may also be removed,
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but only for cause, by a majority vote of the entire Board of Directors.
Section 11. Salary. No stated salary shall be paid to
directors, as such, for their services, but by resolution of the Board of
Directors a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board; provided, however,
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 12. Committees. The Board of Directors, by resolution
adopted by a majority of the entire Board, may from time to time designate from
among its members an executive committee and such other committees, and
alternate members thereof, as they may deem desirable, each consisting of three
or more members, with such powers and authority (to the extent permitted by law)
as may be provided in such resolution. Each such committee shall serve at the
pleasure of the Board.
Section 13. Meetings by Conference Telephone. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE IV
OFFICERS
Section 1. Number, Qualifications, Election and Term of
Office. (a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, and such other officers, including a Chairman of the
Board of Directors, and one or more Vice Presidents, as the Board of Directors
may from time to time deem advisable. Any officer other than the Chairman of the
Board of Directors may be, but is not required to be, a director of the
Corporation. Any two or more offices, except the offices of the President and
Secretary, may be held by the same person.
(b) The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board following the
annual meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of
the Board of Directors next succeeding his election, and until his successor
shall have been elected and qualified, or until his death, resignation or
removal.
Section 2. Resignation. Any officer may resign at any
time by giving written notice of such resignation to the Board of
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Directors, or to the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or by such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 3. Removal. Any officer may be removed, either with
or without cause, and a successor elected by the Board at any time.
Section 4. Vacancies. A vacancy in any office by reason of
death, resignation, inability to act, disqualification, or any other cause, may
at any time be filled for the unexpired portion of the term by the Board of
Directors.
Section 5. Duties of Officers. Officers of the Corporation
shall, unless otherwise provided by the Board of Directors, each have such
powers and duties as generally pertain to their respective offices as well as
such powers and duties as may be set forth in these By-Laws, or may from time to
time be specifically conferred or imposed by the Board of Directors. The
President shall be the chief executive officer of the Corporation.
Section 6. Sureties and Bonds. In case the Board of Directors
shall so require, any officer, employee or agent of the Corporation shall
execute to the Corporation a bond in such sum, and with such surety or sureties
as the Board of Directors may direct, conditioned upon the faithful performance
of his duties to the Corporation, including responsibility for negligence and
for the accounting for all property, funds or securities of the Corporation
which may come into his hands.
Section 7. Shares of Other Corporations. Whenever the
Corporation is the holder of shares of any other corporation, any right or power
of the Corporation as such shareholder (including the attendance, acting and
voting at shareholders' meetings and execution of waivers, consents, proxies or
other instruments) may be exercised on behalf of the Corporation by the
President, any Vice President, or such other person as the Board of Directors
may authorize.
ARTICLE V
SHARES OF STOCK
Section 1. Certificate of Stock. (a) The certificates
representing shares of the Corporation shall be in such form as shall be adopted
by the Board of Directors, and shall be numbered and registered in the order
issued. They shall bear the holder's name and the number of shares, and shall be
signed by (i) the Chairman of the Board or the President or a Vice President,
and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant
Treasurer, and may bear the corporate seal.
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(b) No certificate representing shares shall be issued until
the full amount of consideration therefor has been paid, except as otherwise
permitted by law.
(c) The Board of Directors may authorize the issuance of
certificates for fractions of a share which shall entitle the holder to exercise
voting rights, receive dividends and participate in liquidating distributions,
in proportion to the fractional holdings; or it may authorize the payment in
cash of the fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2. Lost or Destroyed Certificates. The holder of any
certificate representing shares of the Corporation shall immediately notify the
Corporation of any loss or destruction of the certificate representing the same.
The Corporation may issue a new certificate in the place of any certificate
theretofore issued by it, alleged to have been lost or destroyed. On production
of such evidence of loss or destruction as the Board of Directors in its
discretion may require, the Board of Directors may, in its discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the Corporation a bond in such sum as the Board may direct, and with such
surety or sureties as may be satisfactory to the Board, to indemnify the
Corporation against any claim, loss, liability or damage it may suffer on
account of the issuance of the new certificate. A new certificate may be issued
without requiring any such evidence or bond when, in the judgment of the Board
of Directors, it is proper so to do.
Section 3. Transfers of Shares. (a) Transfers of shares of the
Corporation shall be made on the share records of the Corporation only by the
holder of record thereof, in person or by his duly authorized attorney, upon
surrender for cancellation of the certificate or certificates representing such
shares, with an assignment or power of transfer endorsed thereon or delivered
therewith, duly executed, with such proof of the authenticity of the signature
and of authority to transfer and of payment of transfer taxes as the Corporation
or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or other
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claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4. Record Date. In lieu of closing the share records
of the Corporation, the Board of Directors may fix, in advance, a date not
exceeding fifty days, nor less than ten days, as the record date for the
determination of shareholders entitled to receive notice of, or to vote at, any
meeting of shareholders, or to consent to any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividends, or allotment of any rights, or for the purpose of any other action.
If no record date is fixed, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any other purpose shall be at the
close of business on the day on which the resolution of the directors relating
thereto is adopted. When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided
for herein, such determination shall apply to any adjournment thereof, unless
the directors fix a new record date for the adjourned meeting.
ARTICLE VI
DIVIDENDS
Subject to applicable law, dividends may be declared and paid
out of any funds available therefor, as often, in such amounts, and at such time
or times as the Board of Directors may determine.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board
of Directors from time to time, subject to applicable law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be
approved from time to time by the Board of Directors.
By-Laws-9
ARTICLE IX
AMENDMENTS
Section 1. By Shareholders. All by-laws of the Corporation
shall be subject to alteration or repeal, and new ByLaws may be made, by a
majority vote of the shareholders at the time entitled to vote in the election
of directors.
Section 2. By Directors. The Board of Directors shall have
power to make, adopt, alter, amend and repeal, from time to time, By-Laws of the
Corporation; provided, however, that the shareholders entitled to vote with
respect thereto as in this Article IX above-provided may alter, amend or repeal
By-Laws made by the Board of Directors, except that the Board of Directors shall
have no power to change the quorum for meetings of shareholders. If any By-Law
regulating an impending election of directors is adopted, amended or repealed by
the Board of Directors, there shall be set forth in the notice of the next
meeting of shareholders for the election of directors, the By-Law so adopted,
amended or repealed, together with a concise statement of the changes made.
Section 3. Certain Amendments. Notwithstanding anything in
this Article IX to the contrary, the provisions of these By-Laws with respect to
the number, classification, term of office, quorum for meetings, qualifications,
election and removal of directors and the filling of vacancies and newly created
directorships, and the amendment thereof, that is, Sections 1, 6, 8 and 10 of
Article III and this Article IX, may be amended or repealed or new By-Laws
affecting such provisions may be adopted only by the unanimous resolution of the
entire Board of Directors or by the affirmative vote of the holders of at least
80% of the outstanding shares of stock of the Corporation entitled to vote for
the election of directors (except that if such proposed amendment or repeal or
adoption of new By-Laws shall be submitted to the shareholders 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 the outstanding shares, and except that if
such proposed amendment or repeal or adoption shall not take effect for a period
of three years from the date of such action, 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 or by the majority vote of the entire Board
of Directors).
ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right of Indemnification. The Corporation shall
indemnify to the fullest extent permitted by the Business Corporation Law any
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person (an "indemnitee") made, or threatened to be made, a party to an action or
proceeding, whether civil or criminal, including an action by or in the right of
the Corporation or any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise (a "Proceeding"), which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein.
The right of indemnification conferred by this By-law shall
not be deemed exclusive of any other rights to which an indemnitee may be
entitled, whether provided by law or contained in the Certificate of
Incorporation or By-laws, or a resolution of shareholders, a resolution of
directors, or an agreement providing for such indemnification or otherwise.
Section 2. Deleted as of April 16, 1990.
Section 3. Advancement of Expenses. All reasonable expenses
incurred by or on behalf of the indemnitee in connection with any Proceeding
shall be advanced from time to time to the indemnitee by the Corporation
promptly after the receipt by the Corporation of a statement from the indemnitee
requesting such advance, whether prior to or after final disposition of such
Proceeding. The advancement or reimbursement of expenses to an indemnitee shall
be made within 20 days after the receipt by the Corporation of a request
therefor from the indemnitee. Such request shall reasonably evidence the
expenses incurred or about to be 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 expenses or to retain the sums so advanced.
Section 4. Insurance Contracts and Funding. The Corporation
may purchase and maintain insurance to protect itself and any person who is, or
may become, an officer, director, employee, agent, attorney, trustee or
representative (any of the foregoing being herein referred to as a
"Representative") of the Corporation or, at the request of the Corporation, a
Representative of another corporation or entity, against any expenses, 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 expenses,
liability or loss under the provisions of this By-law or otherwise. The
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Corporation may enter into contracts with any Representatives of the
Corporation, or any person serving as such at the request of the Corporation for
an other corporation or entity, in furtherance of the provisions of this By-law.
Such contracts shall be deemed specifically approved and authorized by the
shareholders of the Corporation and not subject to invalidity by reason of any
interested directors. The Corporation 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 5. Severability; Statutory Alternative. If any
provisions or provisions of this By-law shall be held to be invalid, illegal or
unenforceable for any reason whatsoever (a) the validity, legality and
enforceability of all of the remaining provisions of this By-law shall not in
any way be affected or impaired thereby; and (b), to the fullest extent
possible, the remaining provisions of this By-law shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable. In the event that the indemnitee elects, as an alternative to the
procedures specified in this By-law, to follow one of the procedures authorized
by applicable corporate law or statute to enforce his right to indemnification
and notifies the Corporation of his election, the Corporation agrees to follow
the procedure so elected by the indemnitee. If in accordance with the preceding
sentence, the procedure therefor contemplated herein or the procedure elected by
the indemnitee in any specific circumstances (or such election by the
indemnitee) shall be invalid or ineffective in bringing about a valid and
binding determination of the entitlement of the indemnitee to indemnification,
the most nearly comparable procedure authorized by applicable corporate law or
statute shall be followed by the Corporation and the indemnitee.
Section 6. Procedure for Determination of Entitlement to
Indemnification. (a) To obtain indemnification (except with respect to the
advancement of expenses), 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 extend the indemnitee is entitled to
indemnification (the "Supporting Documentation"). The Secretary of the
Corporation shall promptly advise the Board of Directors in writing that the
indemnitee has requested indemnification. 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 and Supporting Documentation.
(b) The indemnitee's entitlement to indemnification shall be
determined in one of the following ways: (i) by a majority vote of the
Disinterested Directors (as hereinafter defined) (which term shall mean the
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Disinterested Director, if there is only one); (ii) by a written opinion of the
Independent Counsel (as hereinafter defined) if (x) a majority of the
Disinterested Directors so directs; (y) there is no Disinterested Director; or
(z) a Change of Control (as hereinafter defined) shall have occurred and the
indemnitee so requests, in which case the Disinterested Directors shall be
deemed to have so directed; (iii) by the shareholders of the Corporation (but
only if a majority of the Disinterested Directors determines that the issue of
entitlement of indemnification should be submitted to the shareholders for their
determination); or (iv) as provided in Section 7 of this By-law.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b) of
this By-law, a majority of the Disinterested Directors shall select the
Independent Counsel, but only an Independent Counsel to which the indemnitee
does not reasonably object; provided, however, that if a Change of 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.
(d) To the extent required by law or statute, the Corporation
shall notify shareholders or any other persons of expenses or other amounts paid
by way of indemnification in a timely manner.
Section 7. Presumptions and Effect of Certain Proceedings.
Except as otherwise expressly provided in this Bylaw, the indemnitee shall be
presumed to be entitled to indemnification upon submission of a request for
indemnification together with the Supporting Documentation, and thereafter in
any determination or review of any determination, and in any arbitration,
proceeding or adjudication, 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 6(b) of this By-law 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. 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 8 of this
By-law). The termination of any Proceeding, 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
By-Laws-13
for a determination that the indemnitee is not entitled to indemnification. With
regard to the right to indemnification for expenses, (a) if and to the extent
that the indemnitee has been successful on the merits or otherwise in any
Proceeding, or (b) 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, or (c) if and
to the extent that the indemnitee was not a party to the Proceeding, the
indemnitee shall be deemed to be entitled to indemnification, which entitlement
shall not be defeated or diminished by any determination which may be made
pursuant to clauses (i), (ii) or (iii) of Section 6(b). The indemnitee shall be
presumptively entitled to indemnification in all respects for any act, omission
or conduct taken or occurring which (whether by condition or otherwise) is
required, authorized or approved by any order issued or other action by any
commission or governmental body pursuant to any federal statute or state statute
regulating the Corporation.
Section 8. Remedies of Indemnitee. (a) In the event that a
determination is made pursuant to Section 6 of this By-law that the indemnitee
is not entitled to indemnification under this By-law, (i) the indemnitee shall
be entitled to seek an adjudication of his entitlement to such indemnification
either, at the indemnitee's sole option, in an appropriate court of the State of
New York or any other court of competent jurisdiction or, to the extent
consistent with law, 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; (ii) any such judicial Proceeding
or arbitration shall be de novo and the indemnitee shall not be prejudiced by
reason of such adverse determination; and (iii) 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 By-law.
(b) If a determination shall have been made or deemed to have
been made, pursuant to Sections 6 or 7 of this Bylaw, 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 (i) the indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (ii) 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 8 (a) of
this By-law). In the event that advancement of expenses is not timely made by
the Corporation pursuant to this By-law or payment of indemnification has been
made or deemed to have been made pursuant to Section 6 or 7 of this By-law, the
By-Laws-14
indemnitee shall be entitled to seek judicial enforcement of the Corporation's
obligations to pay to the indemnitee such advancement of expense of
indemnification. Notwithstanding the foregoing, the Corporation may bring an
action, in an appropriate court in the State of New York or any other court of
competent jurisdiction, contesting the right of the indemnitee to receive
indemnification hereunder due to an occurrence or circumstance described in
subclause (i) of this Section or a prohibition of law (both of which are herein
referred to as a "Disqualifying Circumstance"). In either instance, if the
indemnitee shall elect, at his sole option, that such dispute shall be
determined by arbitration (as provided in Section 8(a) of this By-law), the
indemnitee and the Corporation shall submit the controversy to arbitration. In
any such enforcement action or other proceeding, whether brought by the
indemnitee or the Corporation, the indemnitee shall be entitled to
indemnification unless the Corporation can satisfy the burden or proof that
indemnification is prohibited by reason of a Disqualifying Circumstance.
(c) The Corporation shall be precluded from asserting in any
judicial Proceeding or arbitration commenced pursuant to this Section 8 that the
procedures and presumptions of this By-law are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
or arbitrators that the Corporation is bound by all the provisions of this
By-law.
(d) In the event that the indemnitee, pursuant to this
By-law, seeks a judicial adjudication of or an award in arbitration to enforce
his rights under, or to recover damages for breach of, this By-law, 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 and such expenses as are allowed by a court
or arbitration or otherwise on an interim basis. 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.
Section 9. Definitions. For purposes of indemnification
under this By-law or otherwise:
(a) A "Change in Control" shall be deemed to have
occurred if (i) any "person", as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (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% or more of the combined voting
power of the Corporation's then outstanding securities without the prior
By-Laws-15
approval of at least two-thirds of the members of the Board of Directors in
office immediately prior to such acquisition; (ii) 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 (iii) 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 shareholders was
approved by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors.
(b) 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.
(c) "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 (i) the Corporation or the indemnitee in any matter
or (ii) any other party to the Proceeding giving rise to a claim for
indemnification under this By-law. 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
New York, 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 By-law.
Section 10. Amendments. Article X of the By-Laws may be
amended by action of the Board of Directors, without action of the shareholders,
but only in a manner consistent with the policy of the Company set forth in the
Certificate of Incorporation to indemnify its directors and officers to the
fullest extent permitted by law and in order to further implement such policy.
By-Laws-16
Dates Referenced Herein and Documents Incorporated by Reference
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