AMENDED AND RESTATED
BYLAWS
OF
KORN/FERRY INTERNATIONAL,
a California corporation
I N D E X
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ARTICLE I. Offices 1
Section 1. PRINCIPAL EXECUTIVE OFFICE............................ 1
Section 2. OTHER OFFICES......................................... 1
ARTICLE II. Shareholders................................................. 1
Section 1. PLACE OF MEETINGS..................................... 1
Section 2. ANNUAL MEETINGS....................................... 1
Section 3. BUSINESS WHICH MAY BE CONDUCTED AT ANNUAL MEETINGS.... 1
Section 4. SPECIAL MEETINGS...................................... 2
Section 5. NOTICE OF ANNUAL OR SPECIAL MEETINGS.................. 3
Section 6. QUORUM -- REQUIRED VOTES.............................. 3
Section 7. ADJOURNED MEETINGS AND NOTICE THEREOF................. 4
Section 8. VOTING................................................ 4
Section 9. RECORD DATE........................................... 6
Section 10. CONSENT OF ABSENTEES.................................. 6
Section 11. PROXIES............................................... 7
Section 12. INSPECTORS OF ELECTION................................ 7
Section 13. CONDUCT OF MEETING.................................... 7
ARTICLE III. Directors.................................................... 8
Section 1. POWERS................................................ 8
Section 2. NUMBER OF DIRECTORS................................... 9
Section 3. NOMINATION, ELECTION, QUALIFICATION AND
TERM OF OFFICE ....................................... 9
Section 4. VACANCIES.............................................. 10
Section 5. PLACE OF MEETING...................................... 11
Section 6. REGULAR MEETINGS..................................... 11
Section 7. SPECIAL MEETINGS...................................... 11
Section 8. QUORUM................................................ 12
Section 9. PARTICIPATION IN MEETINGS BY COMMUNICATIONS
EQUIPMENT............................................ 12
Section 10. WAIVER OF NOTICE...................................... 12
Section 11. ADJOURNMENT........................................... 12
Section 12. FEES AND COMPENSATION................................. 13
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Section 13. ACTION WITHOUT MEETING................................ 13
Section 14. RIGHTS OF INSPECTION.................................. 13
Section 15. COMMITTEES............................................ 13
Section 16. STANDING COMMITTEES................................... 14
ARTICLE IV. Officers..................................................... 15
Section 1. OFFICERS.............................................. 15
Section 2. ELECTION OR APPOINTMENT............................... 15
Section 3. ELECTED SENIOR OFFICERS............................... 16
Section 4. REMOVAL AND RESIGNATION............................... 17
Section 5. VACANCIES............................................. 17
ARTICLE V. Other Provisions.............................................. 17
Section 1. INSPECTION OF CORPORATE RECORDS....................... 17
Section 2. INSPECTION OF BYLAWS.................................. 17
Section 3. ENDORSEMENT OF DOCUMENTS; CONTRACTS................... 18
Section 4. CERTIFICATES OF STOCK................................. 18
Section 5. REPRESENTATION OF SHARES OF OTHER CORPORATIONS........ 19
Section 6. STOCK PURCHASE PLANS.................................. 19
Section 7. ELECTION OF FISCAL YEAR............................... 19
Section 8. CONSTRUCTION AND DEFINITIONS.......................... 19
Section 9. AMENDMENTS............................................ 19
Section 10. ANNUAL REPORT TO SHAREHOLDERS......................... 20
ARTICLE VI. Indemnification.............................................. 20
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS............. 20
Section 2. INDEMNIFICATION OF CERTAIN EMPLOYEES AND AGENTS....... 21
Section 3. RIGHTS OF DIRECTORS AND OFFICERS TO BRING SUIT........ 22
Section 4. SUCCESSFUL DEFENSE.................................... 22
Section 5. NON-EXCLUSIVITY OF RIGHTS............................. 22
Section 6. INSURANCE............................................. 22
Section 7. EXPENSES AS A WITNESS................................. 22
Section 8. INDEMNITY AGREEMENTS.................................. 23
Section 9. SEPARABILITY.......................................... 23
Section 10. SUBROGATION........................................... 23
Section 11. EFFECT OF REPEAL OR MODIFICATION...................... 23
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AMENDED AND RESTATED BYLAWS
for the regulation, except
as otherwise provided by statute or
its Articles of Incorporation,
of
KORN/FERRY INTERNATIONAL,
a California corporation
ARTICLE I. Offices
Section 1. PRINCIPAL EXECUTIVE OFFICE.
The corporation's principal executive office shall be fixed and
located at such place as the Board of Directors (herein called the "Board")
shall determine. The Board is granted full power and authority to change said
principal executive office from one location to another.
Section 2. OTHER OFFICES.
Branch or subordinate offices may be established at any time by the
Board at any place or places.
ARTICLE II. Shareholders.
Section 1. PLACE OF MEETINGS.
Meetings of shareholders shall be held either at the principal
executive office of the corporation or at any other place within or without the
State of California that may be designated by the Board and filed with the
Secretary.
Section 2. ANNUAL MEETINGS.
The annual meetings of shareholders shall be held on such date and at
such time as may be fixed by the Board. At such meetings, directors shall be
elected and any other proper business may be transacted.
Section 3. BUSINESS WHICH MAY BE CONDUCTED AT ANNUAL MEETINGS.
(a) Only Properly Brought Business. At an annual meeting of the
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shareholders, 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: (1) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors in accordance
with Section 6 of this Article II, (2) otherwise properly brought before
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the meeting by or at the direction of the Board of Directors in accordance with
applicable law, or (3) otherwise properly brought before an annual meeting by a
shareholder in accordance with Section 3(b) and 3(c) infra.
(b) Meaning of "Properly Brought by a Shareholder". For business to
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be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a shareholder's notice must be delivered or mailed to
and received at the principal executive offices of the corporation (i) not less
than 120 calendar days in advance of the annual meeting date, as set by the
Board of Directors, or, if the date of such meeting has not yet been set, 120
days in advance of the month and day the corporation held its annual meeting for
the previous year, (ii) if the date of the annual meeting is advanced or delayed
by more than thirty (30) days from the month and day the corporation held its
annual meeting for the previous year not less than the later of (x) 120 days
prior to such meeting, or (y) the tenth day after such shareholder first
receives notice of the date of such meeting.
(c) Shareholder's Notice. A shareholder's notice to the corporation
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must set forth as to each matter the shareholder proposes to bring before the
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the shareholder proposing such business, (iii) the classes and number of
shares of the corporation beneficially owned by the shareholder, (iv) any
material interest of the shareholder in such business, and (v) any other
information that is required to be provided by the shareholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934
Act"), in his capacity as a proponent of a shareholder proposal.
(d) Time Periods for Information in a Proxy Statement.
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Notwithstanding the foregoing, in order to include information with respect to a
shareholder proposal in the proxy statement and form of proxy for a
shareholder's meeting, the shareholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, a shareholder's
notice must be delivered or mailed to and received at the principal executive
offices of the corporation not less than 120 calendar days in advance of the
month and day the corporation mailed out its proxy statement to shareholders for
the previous year. However, if the date of the annual meeting has been changed
by more than thirty calendar days from the date contemplated at the time of the
previous year's proxy statement, a shareholder proposal shall be received by the
corporation a reasonable time before the solicitation is made by the
corporation.
(e) General. No business shall be conducted at any annual meeting
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except in accordance with the procedures set forth in this Section. The
chairman of the meeting shall, if the facts warrant, determine and declare at
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section, and, if he should so determine,
he shall so declare at the meeting that any such business not properly brought
before the meeting shall not be transacted.
Section 4. SPECIAL MEETINGS.
Special meetings of the shareholders may be called at any time by the
Board, by the Chair, by the President or by the holders of shares entitled to
cast not less than 10 percent of
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the votes at such meeting. Upon written request delivered to the Secretary by
any person (other than the Board) entitled to call a special meeting of
shareholders, the Secretary forthwith shall cause notice to be given to the
shareholders entitled to vote that a meeting will be held at a time requested by
the person or persons calling the meeting, not less than thirty-five nor more
than sixty days after the receipt of the request. If notice of a special meeting
of shareholders is not given within twenty days after the Secretary's receipt of
the request, the persons entitled to call the meeting may give the notice.
Section 5. NOTICE OF ANNUAL OR SPECIAL MEETINGS.
(a) Time Periods. Written notice of each annual or special meeting of
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shareholders shall be given not less than ten (or, if notice is sent by third-
class mail, thirty) nor more than sixty days before the date of the meeting to
each shareholder entitled to vote thereat. Such notice shall state the place,
date and hour of the meeting and (i) in the case of the annual meeting, those
matters which the Board, at the time of the mailing of the notice, intends to
present for action by the shareholders, and, subject to Section 3 of this
Article II and the provisions of applicable law, any other matters properly
brought may be presented at the meeting for action, or (ii) in the case of a
special meeting, the general nature of the matter or matters to be presented for
action by the shareholders, but, subject to the provisions of applicable law, no
other business may be presented at the special meeting for action. The notice
of any meeting at which directors are to be elected shall include the names of
nominees intended at the time of the notice to be presented by the Board for
election.
(b) Method. Notice of a shareholders' meeting shall be given: (i)
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personally in writing or orally, (ii) by first-class mail in writing, addressed
to the shareholder at the address of such shareholder appearing on the books of
the corporation or given by the shareholder to the corporation for the purpose
of notice, or, if no such address appears or is given, at the place where the
principal executive office of the corporation is located or, (iii) by
publication of a written notice at least once in a newspaper of general
circulation in the county in which the principal executive office is located.
Notice by first-class mail shall be deemed to have been given at the
time written notice is deposited in the United States mail, postage prepaid.
Any other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means to the recipient.
Notwithstanding the foregoing, whenever the corporation has
outstanding shares held of record by five hundred (500) or more persons, notice
may be given by third-class mail as provided in Sections 601(a) and 601(b) of
the California Corporations Code.
Section 6. QUORUM -- REQUIRED VOTES.
A majority of the outstanding voting shares, represented in person or
by proxy, shall constitute a quorum at any meeting of shareholders. If a quorum
is present, the act of the shareholders on any matter shall be determined by the
affirmative vote of a majority of the shares represented at the meeting and
voting on such matter at the meeting, for which the shares voting affirmatively
must also constitute at least a majority of the shares necessary to constitute a
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quorum as required by the first sentence of this Section 7, unless a greater
number of votes or voting by classes is required by law or by the Articles,
except as provided in the following sentence. The shareholders present at any
meeting of shareholders at which a quorum was previously present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, for which the act of the shareholders
on any matter (other than adjournment) shall be determined by the affirmative
vote of at least a majority of the shares necessary to constitute a quorum
required by the first sentence of this Section 7.
Section 7. ADJOURNED MEETINGS AND NOTICE THEREOF.
Any shareholders' meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the shares represented
either in person or by proxy, but in the absence of a quorum (except as provided
in Section 7 of this Article), no other business may be presented at such
meeting for action or otherwise transacted at such meeting.
It shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however, that when any shareholders' meeting is adjourned for more than 45 days,
or if after adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
Section 8. VOTING.
The shareholders entitled to notice of any meeting or to vote at any
such meeting shall be only persons in whose name shares stand on the stock
records of the corporation on the record date determined in accordance with
Section 10 of this Article.
Elections for directors shall be by ballot or proxy only. In any
election of directors, the candidates receiving the highest number of votes of
the shares entitled to be voted for them up to the number of directors to be
elected by such shares are elected.
Voting shall in all cases be subject to the provisions of Chapter 7 of
the California General Corporation Law, and to the following provisions:
(a) The shareholders of the corporation shall not have the right to
cumulate their votes for the election of directors of the corporation. This
provision shall become effective only when the corporation becomes a listed
corporation as defined within Section 301.5 of the California Corporations Code.
(b) Subject to clause (h), shares held by an administrator, executor,
guardian, conservator or custodian may be voted by such holder either in person
or by proxy, without a transfer of such shares into the holder's name; and
shares standing in the name of a trust may be voted by the trustee of such
trust, either in person or by proxy, but no trustee shall be entitled to vote
shares held by such trust without a transfer of such shares into the trust's
name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the
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transfer thereof into the receiver's name if authority to do so is contained in
the order of the court by which such receiver was appointed.
(d) Subject to the provisions of Section 705 of the California
Corporations Code and except where otherwise agreed in writing between the
parties, a shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the minor's actual age, unless a guardian of the minor's
property has been appointed and written notice of such appointment given to the
corporation.
(f) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxyholder of such other
corporation as the bylaws of such other corporation may prescribe or, in the
absence of such provision, as the Board of Directors of such other corporation
may determine or, in the absence of such determination, by the chairman of the
board, president or any vice president of such other corporation, or by any
other person authorized to do so by the chairman of the board, president or any
vice president of such other corporation. Shares which are purported to be voted
or any proxy purported to be executed in the name of a corporation (whether or
not any title of the person signing is indicated) shall be presumed to be voted
or the proxy executed in accordance with the provisions of this clause, unless
the contrary is shown.
(g) Shares of the corporation owned by its subsidiaries shall not be
entitled to vote on any matter.
(h) Shares held by the corporation in a fiduciary capacity, and shares
of the issuing corporation held in a fiduciary capacity by any subsidiary, shall
not be entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
(i) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a shareholder voting agreement or
otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all;
(iii) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
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If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this section shall be a majority or even split in interest.
Section 9. RECORD DATE.
The Board may fix, in advance, a record date for the determination of
the shareholders entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution, or any allotment of
rights, or to exercise rights in respect of any other lawful action. The record
date so fixed shall be not more than 60 days nor less than 10 days prior to the
date of the meeting nor more than 60 days prior to any other action. When a
record date is so fixed, only shareholders of record on that date are entitled
to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment or rights, or to exercise of the rights, as the case
may be, notwithstanding any transfer of shares on the books of the corporation
after the record date. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting unless the Board fixes a new record date for the adjourned
meeting. The Board shall fix a new record date if the meeting is adjourned for
more than forty-five days.
If no record date is fixed by the Board, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held. The record date for determining shareholders for any purpose other than
those set forth in this Section 10 or Section 12 of this Article shall be at the
close of business on the day on which the Board adopts the resolution relating
thereto, or the sixtieth day prior to the date of such other action, whichever
is later.
Section 10. CONSENT OF ABSENTEES.
The transactions of any meeting of shareholders, however called and
noticed, and wherever held, are as valid as though conducted at a meeting duly
held after regular call and notice, if a quorum is present either in person or
by proxy, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice, or a consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of and presence at such
meeting, except when the person objects, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not a waiver of any right to
object to the consideration of matters required by the California General
Corporation Law to be included in the notice but not so included, if such
objection is expressly made at the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of shareholders
need be specified in any written waiver of notice, consent to the holding of the
meeting or approval of the minutes thereof, except as provided in Section 601(f)
of the California Corporations Code.
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Section 11. PROXIES.
Every person entitled to vote shares has the right to do so either in
person or by one or more persons authorized by a written proxy executed by such
shareholder and filed with the Secretary. Any proxy duly executed continues in
full force and effect until revoked by the person executing it prior to the vote
pursuant thereto. Such revocation may be effected either, (i) by a writing
delivered to the Secretary of the corporation stating that the proxy is revoked,
(ii) by a subsequent proxy executed by the person executing the prior proxy
presented at the meeting, or (iii) by attendance at the meeting and voting in
person by the person executing the proxy; provided, however, that no proxy shall
be valid after the expiration of eleven months from the date of its execution
unless otherwise provided in the proxy.
A proxy or consent validly delivered to the corporation shall mean any
written authorization which is signed by the person executing the proxy, as well
as any electronic transmission (to include without limitation transmissions by
facsimile and by computer messaging systems), which is authorized by a
shareholder or the shareholder's attorney in fact, which gives another person or
persons power to vote with respect to the shares of such shareholder. A proxy or
consent may also be transmitted by an oral telephonic transmission if it is
submitted with information from which it may be determined that the proxy or
consent was authorized by the shareholder, or his or her attorney-in-fact.
Section 12. INSPECTORS OF ELECTION.
(a) Appointment of Inspectors. In advance of any meeting of
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shareholders, the Board may appoint inspectors of election to act at such
meeting and any adjournment thereof. If inspectors of election are not so
appointed, or if any persons so appointed fail to appear or refuse to act, the
chairman of any such meeting may, and on the request of any shareholder or
shareholder's proxy shall, make such appointment at the meeting. The number of
inspectors shall be either one or three. If appointed at a meeting on the
request of one or more shareholders' proxies, the majority of shares present
shall determine whether one or three inspectors are to be appointed.
(b) Duties of Inspectors. The duties of such inspectors shall be as
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prescribed by Section 707(b) of the California Corporations Code and shall
include: determining the number of shares outstanding and the voting power of
each; determining the shares represented at the meeting; determining the
existence of a quorum; determining the authenticity, validity and effect of
proxies; receiving votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining when the polls
shall close; determining the result; and doing such acts as may be proper to
conduct the election or vote with fairness to all shareholders. If there are
three inspectors, the decision, act or certificate of a majority is in all
respects the decision, act or certificate of all.
Section 13. CONDUCT OF MEETING.
The Chair shall preside at all meetings of the shareholders. The Chair
shall conduct each such meeting in a businesslike and fair manner, but shall not
be obligated to follow any technical, formal or parliamentary rules or
principles of procedure. The Chair's rulings on procedural matters shall be
conclusive and binding on all shareholders, unless at the time of a
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ruling a request for a vote is made to the shareholders holding shares entitled
to vote and which are represented in person or by proxy at the meeting, in which
case the decision of a majority of such shares shall be conclusive and binding
on all shareholders. Without limiting the generality of the foregoing, the Chair
shall have all of the powers usually vested in the chair of a meeting of
shareholders.
ARTICLE III. Directors.
Section 1. POWERS.
Subject to limitations of the Articles, of these bylaws and of the
California General Corporation Law relating to action required to be approved by
the shareholders or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the Board and it shall have the final authority in
matters of strategy and policy matters for the corporation.
The Board may delegate management duties for the operation of the
business of the corporation to those persons to whom authority is properly
delegated by the Board, including officers of the company, provided that the
business and affairs of the corporation shall be managed and all corporate
powers shall be exercised under the ultimate direction of the Board. Without
prejudice to such general powers, but subject to the same limitations, it is
hereby expressly declared that the Board shall have the following powers in
addition to the other powers enumerated in these bylaws:
(a) To select and remove all the other officers (in accordance with
the provisions of these bylaws), agents and employees of the corporation;
prescribe the powers and duties for them as may not be inconsistent with law,
the Articles or these bylaws; fix their compensation and require from them an
affidavit providing for the good faith exercise of their duties only in the best
interests of the corporation.
(b) To conduct, manage and control the affairs and business of the
corporation and to make such rules and regulations therefor not inconsistent
with law, the Articles or these bylaws, as they may deem best.
(c) To adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to alter the form of such seal and of such
certificates from time to time as they may deem best.
(d) To authorize the issuance of shares of stock of the corporation
from time to time, upon such terms and for such consideration as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered, in the corporate name,
promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidences of debt and securities therefor.
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Section 2. NUMBER OF DIRECTORS.
The authorized number of directors shall not be less than 8 nor more
than 15 until changed by the amendment of the Articles or by an amendment to
these bylaws provided, however, that after the issuance of shares, an amendment
to these bylaws specifying or changing the fixed number of directors or the
stated maximum or minimum number may only be adopted by approval of the
outstanding shares, and an amendment to these bylaws to reduce the fixed number
or the minimum number of directors to a number less than five shall be subject
to the provisions of Section 212(a) of the California Corporations Code.
Notwithstanding any provision of these bylaws to the contrary, (a)
before shares are issued, the number of Directors may be either one or two, (b)
so long as the corporation has only one shareholder, the number may be either
one or two, and (c) so long as the corporation has only two shareholders, the
number may be two. The exact number of directors shall be fixed, within the
limits specified, by resolution or by amendment of the next sentence duly
adopted either by the Board or, after shares have been issued, by the
shareholders. The exact number of directors shall be 13 until changed as
provided in this Section 2.
Section 3. NOMINATION, ELECTION, QUALIFICATION AND TERM OF OFFICE.
(a) Eligibility for Election as Director. Only persons who are
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nominated by, or at the direction of, this corporation's board of directors, or
by a shareholder who has given timely written notice to the Secretary of this
corporation in accordance with this Section 3, will be eligible for election as
directors of this corporation.
(b) Meaning of "Timely Notice" by a Shareholder. For any written
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notice to be timely, such notice must be delivered to or mailed to and received
at the principal executive offices of the corporation (i) not less than 120 days
in advance of the annual meeting date, as set by the Board of Directors, or, if
the date of such meeting has not yet been set, 120 days in advance of the month
and day the corporation held its annual meeting for the previous year, (ii) with
respect to a special meeting of shareholders for the election of directors, the
close of business on the seventh day following the date on which notice of such
meeting is first given to shareholders, and (iii) if the date of the annual
meeting is advanced or delayed by more than thirty (30) days from the month and
day the corporation held its annual meeting for the previous year not less than
the later of (x) 120 days prior to such meeting, or (y) the tenth day after such
shareholder first receives notice of the date of such meeting.
(c) Shareholder's Notice. A shareholder's notice of nomination must
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set forth: (i) the name and address of the shareholder who intends to make the
nomination and the address of the person or persons to be nominated, (ii) a
representation that such shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice, (iii) a description of all arrangements or understandings between such
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
such shareholder, (iv) such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange
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Commission had each nominee been nominated, or intended to be nominated by the
Board of Directors, and (v) the consent of each nominee to serve as a director
of the corporation if so elected. The chairman of a shareholder meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
(d) Meetings at which Directors May Be Elected. The directors shall
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be elected at each annual meeting of the shareholders, but if any such annual
meeting is not held or the directors are not elected thereat, the directors may
be elected at any special meeting of shareholders called for that purpose.
(e) Classes of Board of Directors. The corporation is hereby
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authorized to divide the board of directors of the corporation into three
classes, each class of which shall serve for a term of three years respectively.
Directors equaling one-third, or as close an approximation as possible, of the
authorized number of directors as fixed within these bylaws shall be elected at
the annual meeting of shareholders of the corporation. This provision shall
become effective only when the corporation becomes a listed corporation as
defined within Section 301.5 of the California Corporations Code.
(f) Qualified Directors. For a person to be qualified to serve as a
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director of this corporation, such person need not be an employee or shareholder
of this corporation during their directorship.
(g) Length of Term for Directors. Each qualified director shall hold
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office until the next annual meeting at which the class of which he is a member
becomes subject to re-election and until he or a successor has been elected and
qualified.
(h) Removal of Directors. Any or all directors may be removed without
--------------------
cause if such removal is approved by a majority of the outstanding shares
entitled to vote at an election of directors. A director may also be removed
without cause if such removal is approved by a majority of the Board of
Directors.
Section 4. VACANCIES.
Any director may resign, to be effective upon giving written notice to
the Chair, the President, the Secretary or the Board, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be elected to take
office when the resignation becomes effective.
Vacancies in the Board, except those existing as a result of a removal
of a director, may be filled by a majority of the remaining directors, though
less than a quorum, or by a sole remaining director, and each director so
elected shall hold office until the next annual meeting at which the class of
which he is a member becomes subject to re-election and until such director's
successor has been elected and qualified.
A vacancy or vacancies in the Board shall be deemed to exist in case
of the death, resignation or removal of any director, or if the authorized
number of directors is increased, or if the shareholders fail, at any annual or
special meeting of shareholders at which any director or
10
directors are elected, to elect the full authorized number of directors to be
voted for at that meeting.
The Board may declare vacant the office of a director who has been
declared of unsound mind by an order of court or convicted of a felony.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of the director's term
of office.
Section 5. PLACE OF MEETING.
Regular or special meetings of the Board shall be held at any place
within or without the State of California which has been designated from time to
time by the Board. In the absence of such designation, regular meetings shall
be held at the principal executive office of the corporation.
Section 6. REGULAR MEETINGS.
Following each annual meeting of shareholders, the Board shall hold a
regular meeting for the purpose of organization, election of officers and the
transaction of other business.
Other regular meetings of the Board shall be held without call on such
dates and at such times as may be fixed by the Board. Call and notice of all
regular meetings of the Board are hereby dispensed with.
Section 7. SPECIAL MEETINGS.
Special meetings of the Board for any purpose or purposes may be
called at any time by the Chair, the Chief Executive Officer, any Vice Chair,
the President, the Secretary or by any two directors.
Special meetings of the Board shall be held upon four days' written
notice or forty-eight hours' notice given personally or by telephone, including
a voice messaging system or other system or technology designed to record and
communicate messages, telegraph, facsimile, electronic mail or other electronic
means of communication. Any such notice shall be addressed or delivered to each
director at such director's address as it is shown upon the records of the
corporation or as may have been given to the corporation by the director for
purposes of notice or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the directors are
regularly held.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone or wireless, to
the recipient or to a person at the office
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of the recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
Section 8. QUORUM.
A majority of the authorized number of directors constitutes a quorum
of the Board for the transaction of business, except to adjourn as provided in
Section 11 of this Article. Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the Board, unless a greater number is required by law
or by the Articles. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
such meeting.
Section 9. PARTICIPATION IN MEETINGS BY COMMUNICATIONS EQUIPMENT.
(a) Participation by Conference Telephone. Members of the Board may
-------------------------------------
participate in a meeting through the use of conference telephones. Participation
in such a meeting shall constitute presence in person at that meeting as long as
all members participating in such meeting are able to hear one another.
(b) Participation by Electronic Video Screen Equipment or Other
-----------------------------------------------------------
Similar Communications Equipment. Members of the Board may participate in a
- --------------------------------
meeting through the use of electronic video screen equipment or other similar
communications equipment. Participation in such a meeting shall constitute
presence in person at that meeting by a Board member if all of the following
apply:
(i) each member participating in the meeting can communicate
with all of the other members concurrently;
(ii) each member is provided the means of participating in all
matters before the Board, including, without limitation, the capacity to
propose, or to interpose an objection to, a specific action to be taken by
the corporation; and
(iii) the corporation adopts and implements some means of
verifying both of the following: (x) a person participating in the meeting
is a director or other person entitled to participate in the Board meeting,
and (y) all actions of, or votes by, the Board are taken or cast only by
the directors and not by persons who are not directors.
Section 10. WAIVER OF NOTICE.
Notice of a meeting need not be given to any director who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the lack of notice to
such director. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 11. ADJOURNMENT.
A majority of the directors present, whether or not a quorum is
present, may adjourn any directors' meeting to another time and place. Notice of
the time and place of an
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adjourned meeting need not be given to absent directors if the time and place
has been fixed at the meeting adjourned, except as provided in the next
sentence. If the meeting is adjourned for more than 24 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
commencement of the adjourned meeting to the directors who were not present at
the time of the adjournment.
Section 12. FEES AND COMPENSATION.
Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement for expenses, as may be fixed or
determined by the Board. At present, it is the intention of the Company not to
compensate directors or committee members who are also employees of the Company.
Section 13. ACTION WITHOUT MEETING.
Any action required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board shall individually or collectively
consent in writing to such action. Such consent or consents shall have the same
effect as a unanimous vote of the Board and shall be filed with the minutes of
the proceedings of the Board.
Section 14. RIGHTS OF INSPECTION.
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the corporation and also of its subsidiary
corporations, domestic or foreign. Such inspection by a director may be made in
person or by agent or attorney and includes the right to copy and obtain
extracts.
Section 15. COMMITTEES.
The Board may appoint one or more committees, each consisting of two
or more directors, and delegate to such committees any of the authority of the
Board except with respect to:
(a) The approval of any action for which the California General
Corporation Law also requires shareholders' approval or approval of the
outstanding shares;
(b) The filling of vacancies in the Board or on any committee;
(c) The fixing of compensation, if any, of the directors for serving
on the Board or on any committee;
(d) The amendment or repeal of bylaws or the adoption of new bylaws;
(e) The amendment or repeal of any resolution of the Board which by
its express terms is not so amendable or repealable;
(f) A distribution to the shareholders of the corporation except at a
rate or in a periodic amount or within a price range determined by the
Board; or
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(g) The appointment of other committees of the Board or the members
thereof.
Any such committee must be designated, and the members or alternate
members thereof appointed, by resolution adopted by a majority of the authorized
number of directors and any such committee may be designated an Executive
Committee or by such other name as the Board shall specify. Alternate members
of a committee may replace any absent member at any meeting of the committee.
The Board shall have the power to prescribe the manner in which proceedings of
any such committee shall be conducted. In the absence of any such prescription,
such committee shall have the power to prescribe the manner in which its
proceedings shall be conducted. Unless the Board or such committee shall
otherwise provide, the regular and special meetings and other action of any such
committee shall be governed by the provisions of this Article applicable to
meetings and actions of the Board. Minutes shall be kept of each meeting of
each committee.
Section 16. STANDING COMMITTEES.
The Board may have the following standing committees: Audit;
Executive; Nominating; and Compensation.
(a) Audit Committee. The Audit Committee shall be responsible for
---------------
reviewing the activities of the corporation to ensure that such activities
are being conducted within the boundaries of corporate policy and
appropriate regulatory and legal requirements. The Audit Committee also
shall make recommendations to the Board after consultation with the Chief
Financial Officer as to the selection of independent public accountants to
examine the consolidated financial statements of the corporation and its
subsidiaries. The Audit Committee also shall discuss with the independent
public accountants the scope of their examination, recommend supplemental
audit reviews or audit steps as deemed desirable, and review the accounting
policies of the corporation. The Audit Committee also shall be available
to receive reports, suggestions, questions and recommendations from the
independent public accountants, the Chief Financial Officer and the General
Counsel. It also shall confer with those parties in order to assure the
sufficiency and effectiveness of the programs being followed by corporate
officers in the area of compliance with the law and conflicts of interest.
(b) Executive Committee of the Board. The Executive Committee of the
--------------------------------
Board shall have all of the authority of the Board, except with respect to
the approval of any action which requires shareholder approval under the
California General Corporation Law.
(c) Nominating Committee. The Nominating Committee shall recommend to
--------------------
the Board criteria for the selection of candidates to serve on the Board,
evaluate all proposed candidates, recommend to the Board nominees to fill
vacancies on the Board, and prior to the annual meeting of shareholders
recommend to the Board a slate of nominees for election to the Board by the
shareholders of the Corporation at the annual meeting. In carrying out its
duties, the committee shall seek possible candidates for the Board and
otherwise aid in attracting qualified candidates to the Board. The
committee shall be available to the Chair or President and other members of
the Board for
14
consultation concerning candidates for the Board. The committee shall
periodically review, assess and make recommendations to the Board with
regard to the size and composition of the Board. The committee shall have
all additional powers necessary to carry out its responsibilities and such
other duties as may be assigned by the Board from time to time.
The Nominating Committee also shall have the authority to administer a
self appraisal process by Board members and make a report thereon to the
full Board, from time to time, or as designated by the Board.
(d) Compensation Committee. The Compensation Committee shall have the
----------------------
responsibility for the compensation of the senior executives of the
Corporation including salaries and benefits. In carrying out its duties,
the committee shall review and approve overall executive compensation
programs which are market competitive for the officers of the Corporation,
and shall review the specific salaries of Executive Vice Presidents and
senior vice presidents subject to the ratification of the salary programs
established for the Chair and the Chief Executive Officer of the
Corporation by the Board acting as a whole. The committee shall also review
and make recommendations to the Board with respect to the Corporation's
overall compensation program for directors and officers, including
salaries, employee benefit plans, stock options granted, equity incentive
plans and payment of bonuses. The committee shall also have all additional
powers necessary to carry out its responsibilities and such other duties as
may be assigned by the Board from time to time.
ARTICLE IV. Officers
Section 1. OFFICERS.
The senior officers of the corporation shall be a Chair of the Board,
a President, a Chief Operating Officer, a Chief Financial Officer and a
Secretary. The corporation may also have, at the discretion of the Board, a
Chief Executive Officer, a Chief Administrative Officer, one or more Vice Chairs
of the Board, one or more Vice Presidents, one or more Assistant Secretaries,
Treasurers, Assistant Treasurers, and such other officers as may be elected or
appointed in accordance with the provisions of Section 3 of this Article.
Section 2. ELECTION OR APPOINTMENT.
The senior officers of the corporation shall be elected on an annual
basis. In addition, other officers may be elected or appointed in accordance
with the provisions of Section 5 of this Article. All officers, whether elected
or appointed, shall be chosen annually by, and shall serve at the pleasure of,
the Board, and shall hold their respective offices until their resignation,
removal or other disqualification from service, or until their respective
successors shall be elected.
The Board may elect, and may empower the Chair or the President to
appoint, such other subordinate officers as the business of the corporation may
require, each of whom shall hold office for such period and shall have such
authority and perform such duties as are provided in these bylaws or as the
Board may from time to time determine.
15
Section 3. ELECTED SENIOR OFFICERS.
The elected senior officers of the corporation shall have those
positions and those duties named below in this Section 3. Further, in each
case, the named officer also shall have the general powers and duties of
governance or management usually vested in that office and such other powers and
duties as may be prescribed by the Board.
In the case of the Chair of the Board, the Chair shall, if present,
preside at all meetings of the Board and shall preside at all meetings of the
shareholders. The Chair of the Board has the general powers and duties of
management usually vested in the office of Chair of the board of a corporation
and such other powers and duties as may be prescribed by the Board. The Chief
Executive Officer shall be the senior executive officer of the corporation. The
President has the general powers and duties of management of the corporation.
The Chief Operating Officer shall have the general powers and duties to carry
out general administrative and financial management of the corporation. The
Board also may elect one or more Vice Chairs of the Board who, in the absence of
the Chair, will assume the duties of that position.
In the absence or disability of the Chief Executive Officer, the
President, the Chief Operating Officer, the Vice Chair, or any Executive Vice
President designated by the Board, shall perform all the duties of the Chief
Executive Officer and, when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the Chief Executive Officer.
The Secretary shall keep or cause to be kept, at the principal
executive office and such other place as the Board may order, a book of minutes
of all meetings of shareholders, the Board and its committees, with the time and
place of holding, whether regular or special, and if special, how authorized,
the notice thereof given, the names of those present at Board and committee
meetings, the number of shares present or represented at shareholders' meetings,
and the proceedings thereof. The Secretary shall keep, or cause to be kept, a
copy of these bylaws of the corporation at the principal executive office or
business office in accordance with Section 213 of the California Corporations
Code.
The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, if one has been appointed, a share register, or a duplicate share
register, showing the names of the shareholders and their addresses, the number
and classes of shares held by each, the number and date of certificates issued
for the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the Board and any committees thereof required by
these bylaws or by law to be given, shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the Board.
The Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, and shall send or cause to be sent to
the shareholders of the corporation such financial statements and reports as are
by law or these bylaws required to be sent to them. The books of account shall
at all times be open to inspection by any director.
16
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board. The Chief Financial Officer
shall disburse the funds of the corporation as may be ordered by the Board,
shall render to the Chair of the Board, the President and the directors,
whenever they request it, an account of all transactions as Chief Financial
Officer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the Board.
Section 4. REMOVAL AND RESIGNATION.
Any officer elected by the Board may be removed only by the Board,
either with or without cause, at any time. In the case of an officer not
elected by the Board, such an officer may be removed by another officer upon
whom such power of removal may be conferred by the Board. Any removal shall be
without prejudice to the rights, if any, of the officer under any contract of
employment of the officer.
Any officer may resign at any time by giving written notice to the
corporation, subject to the rights of the corporation under any contract between
the corporation and the officer. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular election or appointment to such office.
ARTICLE V. Other Provisions.
Section 1. INSPECTION OF CORPORATE RECORDS.
Shareholders of the corporation shall have those rights of inspection
as to corporate records, including the record of shareholders, accounting books
and records of meetings of the proceedings of the shareholders and the Board and
committees of the Board as specified within Sections 1600 and 1601 of the
California Corporations Code.
Section 2. INSPECTION OF BYLAWS.
The corporation shall keep in its principal executive office in the
State of California, or if its principal executive office is not in such State
at its principal business office in such State, the original or a copy of these
bylaws as amended to date, which shall be open to inspection by shareholders at
all reasonable times during office hours. If the principal executive office of
the corporation is located outside the State of California and the corporation
has no principal business office in such state, it shall upon the written
request of any shareholder furnish to such shareholder a copy of these bylaws as
amended to date.
17
Section 3. ENDORSEMENT OF DOCUMENTS; CONTRACTS.
Subject to the provisions of applicable law, any note, mortgage,
evidence of indebtedness, contract, share certificate, conveyance or other
instrument in writing and any assignment or endorsements thereat executed or
entered into between the corporation and any other person, when signed by the
Chair of the Board, the Chief Executive Officer, the Chief Operating Officer,
the President, the Vice Chair, an Executive Vice President, or any senior vice
president and the Secretary, any Assistant Secretary, the Chief Financial
Officer or any Assistant Treasurer of the corporation shall be valid and binding
on the corporation in the absence of actual knowledge on the part of the other
person that the signing officers had no authority to execute the same. Any such
instruments may be signed by any other person or persons and in such manner as
from time to time shall be determined by the Board, and, unless so authorized by
the Board, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or amount.
Section 4. CERTIFICATES OF STOCK.
Every holder of shares of the corporation shall be entitled to have a
certificate signed in the name of the corporation by the Chair of the Board, the
President, the Vice Chair and by the Chief Financial Officer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all
of the signatures on the certificate may be facsimile. If 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 such person were an officer, transfer agent or
registrar at the date of issue.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board may provide; provided, however,
that on any certificate issued to represent any partly paid shares, the total
amount of the consideration to be paid therefor and the amount paid thereon
shall be stated.
Except as provided in this Section, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
cancelled at the same time. The Board may, however, if any certificate for
shares is alleged to have been lost, stolen or destroyed, authorize the issuance
of a new certificate in lieu thereof, and the corporation may require that the
corporation be given a bond or other adequate security sufficient to indemnify
it against any claim that may be made against it (including expense or
liability) on account of the alleged loss, theft or destruction of such
certificate or the issuance of such new certificate.
The Company shall not register the transfer of any securities issued
in reliance on Regulation S promulgated under the Securities Act of 1933, as
amended, unless the Company has received such assurances as it may reasonably
request that the transfer of such securities was made in accordance with the
provisions of such Regulation S.
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Section 5. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The Chair of the Board or any other officer or officers authorized by
the Board or the Chair of the Board are each authorized to vote, represent and
exercise on behalf of the corporation all rights incident to any and all shares
of any other corporation or corporations standing in the name of the
corporation. The authority herein granted may be exercised either by any such
officer in person or by any other person authorized so to do by proxy or power
of attorney duly executed by said officer.
Section 6. STOCK PURCHASE PLANS.
The corporation may adopt and carry out a stock purchase plan or
agreement or stock option plan or agreement providing for the issue and sale for
such consideration as may be fixed of its unissued shares, or of issued shares
acquired or to be acquired, to one or more of the employees or directors of the
corporation or of a subsidiary or to a trustee on their behalf and for the
payment for such shares in installments or at one time, and may provide for
aiding any such persons in paying for such shares by compensation for services
rendered, promissory notes or otherwise.
Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold under
the plan or agreement, the number of shares which may be subscribed for, the
method of payment therefor, the reservation of title until full payment
therefor, the effect of the termination of employment, an option or obligation
on the part of the corporation to repurchase the shares upon termination of
employment, restrictions upon transfer of the shares, the time limits of and
termination of the plan, and any other matters, not in violation of applicable
law, as may be included in the plan as approved or authorized by the Board or
any committee of the Board.
Section 7. ELECTION OF FISCAL YEAR.
Upon the election of the Board, the Board may authorize the change of
the current Fiscal Year of the Corporation to begin on January 1 of each year
and end on December 31 of each subsequent year.
Section 8. CONSTRUCTION AND DEFINITIONS.
Unless the context otherwise requires, the general provisions, rules
of construction and definitions contained in the General Provisions of the
California Corporations Code and in the California General Corporation Law shall
govern the construction of these bylaws.
Section 9. AMENDMENTS.
These bylaws may be amended or repealed either by approval of the
outstanding shares (as defined in Section 152 of the California Corporations
Code) or by the approval of the Board, for those amendments to the bylaws for
which approval of the Board alone is sufficient under the California
Corporations Code.
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Section 10. ANNUAL REPORT TO SHAREHOLDERS.
At any point at which the corporation has less than 100 holders of
record of its shares (determined as provided within Section 605), this
corporation expressly waives the annual report to shareholders referred to in
Section 1501 of the California Corporations Code. Notwithstanding the waiver of
such annual report by the corporation, nothing herein shall be interpreted as
prohibiting the Board from issuing voluntary annual or other periodic reports to
shareholders during such time as the corporation has less than 100 holders of
record.
ARTICLE VI. Indemnification.
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Indemnification. Each person who was or is a party or is
---------------
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, formal or informal, whether brought in the
name of the corporation or otherwise and whether of a civil, criminal,
administrative or investigative nature (hereinafter a "proceeding"), by reason
of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation, or any
predecessor 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 service with respect to employee
benefit plans, whether the basis of such proceeding is an alleged action or
inaction in an official capacity or in any other capacity while serving as a
director or officer, shall, subject to the terms of any agreement between the
corporation and such person, be indemnified and held harmless by the corporation
to the fullest extent permissible under California law and the corporation's
Articles of Incorporation, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and such indemnification shall
continue as to a person who has ceased to be a director or officer for acts or
omissions while a director or officer and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that (i) the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the corporation; and (ii) the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof) other
than a proceeding by or in the name of the corporation to procure a judgment in
its favor only if any settlement of such a proceeding is approved in writing by
the corporation. The right to indemnification conferred in this Article shall
include the right to be paid by the corporation the expenses incurred in
defending any proceeding in advance of final disposition to the fullest extent
permitted by law; provided, however, that the payment under this Article of such
expenses in advance of the final disposition of a proceeding shall be
conditioned upon the delivery to the corporation of a written request for such
advance and of an undertaking by or on behalf of the director or officer to
repay all amounts so advanced if it shall be ultimately determined that such
director or officer is not entitled to be indemnified.
(b) Loans to Officers and Directors. Pursuant to Subsection 315(b)
-------------------------------
of the California Corporations Code (the "Code"), at such time, but only during
such time, as the
20
corporation shall have outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code), the Board of Directors
shall have the sole authority to approve the loan by the corporation to, or
approve a guarantee by the corporation of obligations of up to U.S.$100,000 of,
any director or officer of the corporation or of its parent, by a vote
sufficient without counting the vote of any interested director or directors if
the Board determines that such loan or guaranty may reasonably be expected to
benefit the corporation.
(c) Indemnification for Joint and Several Liability. The corporation
-----------------------------------------------
shall indemnify any director of the corporation (pursuant to Section 317 of the
California Corporations Code, permitting indemnification of agents of the
corporation) for any damages arising from the imposition of joint and several
liability under Section 316 of the California Corporations Code upon any
director, except as prohibited by the California Corporations Code.
(d) Exclusions and Limitations. Notwithstanding the foregoing or any
--------------------------
other provision under this Article, the corporation shall not be liable under
this Article to indemnify a director or officer against expenses, liabilities or
losses incurred or suffered in connection with, or make any advances with
respect to, any proceeding against a director or officer: (i) except to the
extent that the aggregate of losses to be indemnified exceeds the amount of such
losses for which the director or officer is paid pursuant to (x) any directors'
and officers' liability insurance policy maintained by the corporation or (y)
any indemnification agreement from the corporation which provides for
indemnification otherwise than pursuant to this Article; (ii) as to which the
corporation is prohibited by applicable law from paying as an indemnity; (iii)
with respect to expenses of defense or investigation, if such expenses were or
are incurred without the corporation's consent (which consent may not be
unreasonably withheld); (iv) as to circumstances in which indemnity is expressly
prohibited by Section 317 of the General Corporation Law of California (the
"Law"); (v) brought by or in right of the corporation for breach of duty to the
corporation or its shareholders for (A) acts or omissions involving intentional
misconduct or knowing and culpable violation of law, (B) acts or omissions that
the director or officer believes or believed to be contrary to the best
interests of the corporation or its shareholders or that involve the absence of
good faith on the part of the director or officer, (C) any transaction from
which the director or officer derived an improper personal benefit, (D) acts or
omissions that show a reckless disregard for the director's or officer's duty to
the corporation or its shareholders in circumstances in which the director or
officer was aware, or should have been aware, in the ordinary course of
performing his or her duties, of a risk of serious injury to the corporation or
its shareholders, (E) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's or officer's duties
to the corporation or its shareholders, or (F) violation of the proper process
for action by the Directors of the corporation specified within Sections 310 or
316 of the Law.
Section 2. INDEMNIFICATION OF CERTAIN EMPLOYEES AND AGENTS.
A person who was or is a party or is threatened to be made a party to
or is involved in any proceeding by reason of the fact that he or she is or was
either an officer of the corporation, or an employee of senior associate title,
or is or was serving at the request of the corporation in such capacity within
another enterprise, including service with respect to employee benefit plans,
whether the basis of such action is an alleged action or inaction in an
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official capacity or in any other capacity while serving in such capacity may,
subject to the terms of any agreement between the corporation and such person,
be indemnified and held harmless by the corporation to the fullest extent
permitted by California law and the corporation's Articles of Incorporation
against all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith. The Board or a committee of the Board shall have the
discretion to indemnify all other employees of the corporation to the same
extent, for those actions taken in the course of their employment and within the
scope of their duties.
Section 3. RIGHTS OF DIRECTORS AND OFFICERS TO BRING SUIT.
If a claim under Section 1 of this Article is not paid in full by the
corporation within 60 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall also be entitled to be paid the expense of
prosecuting such claim.
Section 4. SUCCESSFUL DEFENSE.
Notwithstanding any other provision of this Article, to the extent
that a director or officer has been successful on the merits or otherwise
(including the dismissal of an action without prejudice or the settlement of
proceeding or action without admission of liability) in defense of any
proceeding referred to in Section 1 or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred in connection therewith.
Section 5. NON-EXCLUSIVITY OF RIGHTS.
The right to indemnification provided by this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, bylaw, agreement, vote of shareholders or disinterested
directors or otherwise.
Section 6. INSURANCE.
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the law.
Section 7. EXPENSES AS A WITNESS.
To the extent that any director, officer, employee or agent of the
corporation is by reason at such position, or a position with another entity at
the request of the corporation, a witness in any action, suit or proceeding, he
or she shall be indemnified against all costs and expenses actually and
reasonably incurred by him or her on his or her behalf in connection therewith.
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Section 8. INDEMNITY AGREEMENTS.
The corporation may enter into agreements with any director, officer,
employee or agent of the corporation, providing for indemnification to the
fullest extent permissible under the law and the corporation's Articles of
Incorporation.
Section 9. SEPARABILITY.
Each and every paragraph, sentence, term and provision of this Article
is separate and distinct so that if any paragraph, sentence, term or provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of any other paragraph, sentence, term or provision hereof. To the extent
required, any paragraph, sentence, term or provision of this Article may be
modified by a court of competent jurisdiction to preserve its validity and to
provide the claimant with, subject to the limitations set forth in this Article
and any agreement between the corporation and claimant, the broadest possible
indemnification permitted under applicable law.
Section 10. SUBROGATION.
In the event of payment by the corporation of a claim under Section 1
of this Article, the corporation shall be subrogated to the extent of such
payment to all of the rights of recovery of the indemnified person, who shall
execute all papers required and shall do everything that may be necessary or
appropriate to secure such rights, including the execution of such documents
necessary or appropriate to enable the corporation effectively to bring suit to
enforce such rights.
Section 11. EFFECT OF REPEAL OR MODIFICATION.
Any repeal or modification of this Article shall not adversely affect
any right of indemnification of a director or officer existing at the time of
such repeal or modification with respect to any action or omission occurring
prior to such repeal or modification.
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