<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number 0-005-51807
AUTOCYTE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 56-1995728
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
112 Orange Drive, Elon College, North Carolina 27244
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(Address of principal executive offices) (Zip Code)
910 584-0250
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
The number of shares outstanding of each of the issuer's classes of common stock
as of
Class Outstanding at November 14, 1997
----- --------------------------------
Common Stock, $.01 par value 12,479,877
<PAGE> 2
AutoCyte, Inc.
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed balance sheets--September 30, 1997 and December 31, 1996
Condensed statements of operations--Three months ended September 30,
1997 and 1996; Nine months ended September 30, 1997 and 1996
Condensed statements of cash flows--Nine months ended September 30,
1997 and 1996
Notes to condensed financial statements--September 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Autocyte, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 30,941,118 $ 9,517,274
Accounts receivable, net 720,344 761,117
Inventory 2,229,554 1,911,406
Other current assets 240,201 49,208
------------- -------------
Total current assets 34,131,217 12,239,005
Property and equipment 1,607,579 1,459,932
Goodwill 2,871,875 2,984,375
------------- -------------
Total assets $ 38,610,671 $ 16,683,312
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 286,500 $ 227,521
Accrued payroll and related benefits 118,695 117,615
Other accrued expenses 1,666,606 1,221,358
------------- -------------
Total current liabilities 2,071,801 1,566,494
Redeemable convertible preferred stock -- 9,882,000
Stockholders' equity:
Common stock, $0.01 par value;
20,650,000 and 20,500,000 shares
authorized at September 30, 1997
and December 31, 1996, respectively;
12,261,325 and 4,279,389 shares
issued and outstanding at
September 30, 1997 and
December 31, 1996, respectively 122,613 42,794
Additional paid in capital 49,113,294 7,898,956
Deferred compensation (2,958,971) (1,783,943)
Accumulated deficit (9,738,066) (922,989)
------------- ------------
Total stockholders' equity 36,538,870 5,234,818
Total liabilities and
stockholders' equity $ 38,610,671 $ 16,683,312
============= =============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 4
Autocyte, Inc.
Condensed Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------------ ----------- ----------- -----------
(1) (1)
<S> <C> <C> <C> <C>
Net sales $ 823,015 $ 327,973 $ 1,721,710 $ 1,236,957
Cost of goods sold 621,379 367,326 1,389,244 1,079,541
------------ ----------- ----------- -----------
Gross Profit 201,636 (39,353) 332,466 157,416
Operating expenses:
Research and development 1,085,081 1,113,581 3,395,563 3,042,546
Selling, general and administrative 1,508,383 1,899,343 4,621,359 4,968,178
------------ ----------- ----------- -----------
2,593,464 3,012,924 8,016,922 8,010,724
------------ ----------- ----------- -----------
Operating loss (2,391,828) (3,052,277) (7,684,456) (7,853,308)
Interest income 141,149 -- 344,808 --
Interest expense (288) -- (1,475,430) --
------------ ----------- ----------- -----------
Net loss $ (2,250,967) $(3,052,277) $(8,815,078) $(7,853,308)
============ =========== =========== ===========
Net loss per share $ (0.22) $ (0.93)
============ ===========
Weighted average shares outstanding 10,037,412 9,431,886
============ ===========
</TABLE>
See accompanying notes to condensed financial statements.
(1) Net loss per share is not disclosed for the three and nine month periods
ended September 30, 1996 since the Company's predecessor operated as a division
of a wholly owned subsidiary of Roche Holding Ltd.
<PAGE> 5
Autocyte, Inc.
Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
------------ -----------
<S> <C> <C>
Net cash used in operating activities: $ (5,839,449) $(5,142,225)
Cash flows from investing activities:
Purchases of property and equipment (577,168) (269,072)
------------ -----------
Net cash used in investing activities (577,168) (269,072)
Cash flows from financing activities:
Proceeds from initial public offering, net 27,740,461 --
Issuance of preferred stock 100,000 --
Advances from Roche -- 5,457,107
------------ -----------
Net cash provided by financing activities 27,840,461 5,457,107
Net increase in cash and cash equivalents 21,423,844 45,810
Cash and cash equivalents at beginning of period 9,517,274 9,530
------------ -----------
Cash and cash equivalents at end of period $ 30,941,118 $ 55,340
============ ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 6
Autocyte, Inc.
Notes to Condensed Financial Statements (Unaudited)
September 30, 1997
1. INITIAL PUBLIC OFFERING
On September 5, 1997, the Company completed an initial public offering of
3,100,000 shares of $0.01 par value common stock (the "Offering"). The Offering
price was $10 per common share resulting in gross offering proceeds of
$31,000,000. Proceeds to the Company, net of underwriters discount and offering
expenses were $27,945,000. Simultaneously with the Offering, the redeemable
convertible preferred stock of the Company was automatically converted into
4,881,936 shares of common stock.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The balance sheet at December 31, 1996 has been derived from the
audited financial statements at that date, but does not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The accompanying unaudited condensed financial statements reflect all
adjustments (consisting of normal, recurring accruals) which, in the opinion of
management, are necessary for a fair presentation of the results for the interim
periods presented. The results of operations for such periods are not
necessarily indicative of the results expected for the full year or for any
future period. The accompanying financial statements should be read in
conjunction with the Company's audited financial statements for the period ended
December 31, 1996, included in the Company's Registration Statement on Form S-1
(File No. 333-30227).
Information related to the three and nine month periods ended September 30, 1996
reflects the operations of the cytology and pathology automation business as
conducted by the Company's predecessor, Roche Image Analysis Systems, Inc.
("RIAS").
3. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Raw materials $ 773,108 $ 787,050
Finished goods 1,456,446 1,124,356
---------- ----------
$2,229,554 $1,911,406
========== ==========
</TABLE>
<PAGE> 7
Autocyte, Inc.
Notes to Condensed Financial Statements (Unaudited) (continued)
4. PRODUCT WARRANTY
The Company's products generally carry a one-year warranty against defects. The
Company provides for estimated warranty costs in the period the related sales
are made. As of September 30, 1997 and December 31, 1996, the warranty reserve
amounted to $202,083 and $198,813, respectively.
5. INTEREST EXPENSE
On June 27, 1997, the Company entered into a credit agreement with certain of
its stockholders, including the Company's CEO. The agreement provided the
Company with access to a credit line of up to $8,000,000 at an interest rate of
prime plus 1%. As consideration for this credit agreement, the Company issued
warrants to purchase 207,291 shares of its Common Stock at an exercise price of
$2.033 per share. The Company estimated the expense associated with the warrant
issuance to be approximately $1,475,000, all of which was expensed at the time
of issuance. The credit agreement expired upon the completion of the Company's
initial public offering in September 1997.
6. NET LOSS PER SHARE OF COMMON STOCK
Net loss per share of common stock amounts presented on the face of the
condensed statements of operations have been computed based on the weighted
average number of shares of common stock and common stock equivalents
outstanding in accordance with Accounting Principles Board Opinion No. 15 ("APB
15"). Under this guidance, options, warrants, and other potentially dilutive
securities are considered as outstanding only if their effect is dilutive (i.e.
increasing net loss per share).
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which
is required to be adopted for years ending after December 15, 1997. Under SFAS
128 the Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods where applicable. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options and warrants are to be excluded. SFAS 128 is not expected to
effect the calculation of net loss per common share for the three and nine month
periods ended September 30, 1997, since stock options and warrants are excluded
from the computation for each of these periods in accordance with APB 15.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The Company develops, manufactures and markets the only integrated automated
sample preparation and image analysis system to support cytotechnologists and
pathologists in cervical cancer screening. The Company is currently pursuing
regulatory approval of its products for sale in the United States and has begun
sales in several foreign countries. The Company's integrated system is comprised
of the AutoCyte PREP ("PREP") sample preparation system and the AutoCyte SCREEN
("SCREEN") image analysis system. PREP is a proprietary automated liquid-based
sample preparation system that produces slides with a homogeneous layer, or
"monolayer," of cervical cells. The Company believes PREP will improve
laboratory productivity and significantly reduce interpretation errors by
producing cell samples that are clearer, more uniform and easier to interpret
than conventional Pap smear samples. PREP is designed to operate both as an
independent sample preparation system and in conjunction with SCREEN as part of
an integrated diagnostic system. SCREEN is an automated image analysis system
which combines proprietary imaging technology and classification software with
off-the-shelf computer hardware to screen slides prepared using PREP. SCREEN is
designed to be an interactive support tool for the cytology professional in the
primary screening of cervical cells and may also serve quality control and
adjunctive testing purposes. By designing PREP and SCREEN to function together,
AutoCyte has developed a system that the Company believes will operate with
higher throughput and greater diagnostic sensitivity than the conventional Pap
smear test and other cervical cancer screening systems.
The Company cannot market the PREP or SCREEN systems in the United States for
use in preparing or screening monolayer slides for cervical cancer until
premarket approval applications ("PMAs") are approved by the United States Food
and Drug Administration (the "FDA"). The Company submitted a PMA for PREP to the
FDA on May 12, 1997. The FDA accepted the PREP PMA for substantive review on
June 11, 1997. In notifying the Company that the PREP PMA had been accepted for
such review, the FDA informed the Company that the PMA would not be submitted to
its Medical Devices Advisory Panel for review since information in the PMA
substantially duplicated information previously reviewed by the panel in a PMA
submitted by a different company relating to an alternative monolayer slide
preparation product. In November, the FDA contacted the Company regarding
certain issues relating to the PREP PMA. The Company is preparing a response to
questions raised by the FDA and expects to meet with the FDA to resolve these
issues in the near future. An FDA review of a PMA typically takes from one to
two years from the date the PMA is filed, but may take significantly longer if
the FDA requests additional information and any major amendments to the PMA are
filed. There can be no assurance that the FDA's review will not be as long or
longer than the typical time period for FDA review or that the PMA will be
approved at all. PREP is currently being marketed for non-cervical cytology
applications in the United States, for which FDA approval is not required. The
Company is in the process of completing clinical trials for SCREEN and
anticipates submitting a PMA for SCREEN to the FDA by early 1998.
AutoCyte was formed in October 1996 to acquire the cytology and pathology
automation business then owned by Roche Image Analysis Systems, Inc. ("RIAS"), a
wholly-owned subsidiary of Roche Holding Ltd. ("Roche"). Roche had previously
operated such business as part of Roche Biomedical Reference Laboratories, Inc.,
("RBL"), a predecessor company to Laboratory Corporation of America, Inc.
("LabCorp"), the largest clinical laboratory chain in the United States and
formerly a wholly-owned subsidiary of Roche. The business was acquired from RIAS
in November 1996 in exchange for 3.7 million shares of the Company's Common
Stock.
<PAGE> 9
The Company generates PREP revenue from both system sales and rentals. For
system sales, customers purchase the PREP instrument and make separate purchases
of related reagents and other disposables. For system rentals, the Company
places the PREP instrument at the customer's site, and customers make monthly
payments that include rent and the purchase of a minimum monthly quantity of
reagents and other disposables. The term of the PREP rentals ranges from
month-to-month to three years. For SCREEN, the Company intends to place
instruments without charge at customer locations and to charge customers on a
per test, or Fee-Per-Use ("FPU"), basis. As an important element of its business
strategy, the Company intends to seek third-party financing to support rentals
of PREP and placements of SCREEN. There can be no assurance that the Company
will be able to obtain such financing or, if so, on favorable terms. Failure to
obtain such financing could have a material adverse effect on the Company's
business, financial condition and results of operations.
Future revenues and results of operations may fluctuate significantly from
quarter to quarter and will depend upon, among other factors, the timing and
outcome of the FDA review of PREP PMA submission, the extent to which the
Company's products gain market acceptance, the timing and volume of sales and
rental orders, regulatory and reimbursement matters, progress of the SCREEN
clinical trials, introduction of alternative technologies by competitors,
pricing of competitive products, the cost and effect of promotional discounts
and marketing programs adopted by the Company.
The Company anticipates that if FDA approval is received to market PREP in the
United States for gynecological uses, its marketing and sales expenditures will
increase significantly. The Company also anticipates that research and
development expenses, both in the areas of product enhancement and new product
development, and manufacturing expenses will also increase as product
commercialization increases. The Company additionally expects to incur
compensation expense of $3.3 million as its deferred compensation balance is
amortized over the four year stock option vesting period ending in 2000
The financial results for the three and nine month periods ended September 30,
1996 are for the business of the Company as conducted by the Company's
predecessor, the cytology and pathology automation business of RIAS.
<PAGE> 10
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 (AutoCyte) and September 30, 1996
(Predecessor)
Net sales increased by 151% from $328,000 for the three months ended September
30, 1996 to $823,000 in the same period of 1997. Sales of PREP increased from
$59,000 to $336,000, and SCREEN sales increased from $0 to $115,000. Gross
profit increased from a loss of $39,000 for the three months ended September 30,
1996 to $202,000 in the same period of 1997, and gross margin increased from
negative 12% for the three months ended June 30, 1996 to 25% in the same period
of 1997. The increase in gross margin was largely attributable to a higher
percentage of the more profitable PREP and SCREEN sales relative to sales of
pathology workstation products, and better absorption of fixed costs due to
higher volume
Total operating expenses decreased by 14% from $3.0 million for the three months
ended September 30, 1996 to $2.6 million in the same period of 1997. Research
and development costs were approximately equal in the two periods. Selling,
general and administrative ("SG&A") costs decreased from $1.9 million to $1.5
million, consisting primarily of a decrease in sales and marketing expenses of
$226,000 caused by reduced sales and marketing expenditures for pathology
workstation products as a result of increased focus on cytology products, a
decrease in depreciation expense of $360,000 caused by lower asset basis, offset
by an increase in compensation expense of $216,000 caused by amortization of
equity-related deferred compensation balances.
Interest income increased from $0 for the three months ended September 30, 1996
to $141,000 for the same period of 1997 due to an increase in average cash
balances available for investment, resulting primarily from the completion of
the Company's initial public offering.
Nine Months Ended September 30, 1997 (AutoCyte) and September 30, 1996
(Predecessor)
Net sales increased by 39% from $1.2 million for the nine months ended September
30, 1996 to $1.7 million in the same period of 1997. This increase was primarily
due to higher sales of PREP products caused by sales and marketing efforts being
directed more to cytology products, rather than pathology workstation products.
Gross profit increased by 111% from $157,000 for the nine months ended September
30, 1996 to $332,000 for the same period of 1997, and gross margin increased
from 13% for the nine months ended September 30, 1996 to 19% in the same period
of 1997. The increase in gross margin was largely attributable to a higher
percentage of the more profitable PREP and SCREEN sales relative to sales of
pathology workstation products and better absorption of fixed costs due to
higher volume.
Total operating expenses remained constant at $8.0 million for the nine month
periods ended September 30, 1996 and 1997. Research and development costs
increased by 12% from $3.0 million for the nine month period ended September 30,
1996 to $3.4 million for the same period of 1997. The increase resulted from
increased clinical trial and regulatory approval costs for the PREP clinical
trials and PMA filing and the SCREEN clinical trials. SG&A costs decreased by 7%
from $5.0 million for the nine month period ended September 30, 1996 to $4.6
million for the same period of 1997 caused primarily by lower sales and
marketing expenses for pathology workstation products of $708,000 resulting from
an increased focus on cytology products, a decrease in depreciation expense of
$608,000, partially offset by equity-related compensation expense of $922,000.
During the nine months ended September 30, 1997 the Company granted options
under its 1996 Equity Incentive Plan to acquire 304,962 shares of Common Stock
at an exercise price of $0.2033 per share.
<PAGE> 11
The Company also sold to certain members of management 48,819 shares of Series A
Preferred Stock at a price of $2.048 per share. The Company recorded $1.7
million of deferred compensation expense and $432,000 of compensation expense
with respect to these transactions. The Company also recorded $490,000 of
amortization of deferred compensation expense during the period.
Interest income increased from $0 for the nine months ended September 30, 1996
to $345,000 for the same period of 1997 due to an increase in average cash
balances available for investment, resulting primarily from the completion of
the Company's initial public offering.
On June 27, 1997 the Company issued warrants to acquire 207,291 shares of Common
Stock at an exercise price of $2.033 per share as a commitment fee for a credit
agreement among the Company and certain of its principal stockholders. The
Company recorded $1.5 million of commitment fee expense with respect to this
transaction, all of which was expensed in June 1997.
LIQUIDITY AND CAPITAL RESOURCES
Since its formation on October 24, 1996, the Company's expenses have
significantly exceeded its revenues, resulting in an accumulated deficit of $9.7
million as of September 30, 1997. The Company has funded its operations
primarily through the private placement and public sale of equity securities,
resulting in net proceeds of $37.6 million, and limited product sales. As of
September 30, 1997, the Company had cash and cash equivalents of $30.9 million.
Cash and cash equivalents increased during the year primarily due to the
issuance of 3,100,000 shares of common stock in connection with the Company's
initial public offering raising aggregate net proceeds of $27.7 million.
Cash used in the Company's operations was $5.1 million for the nine months ended
September 30, 1996, versus $5.8 million used in the same period of 1997.
Negative operating cash flow in both periods was caused primarily by operating
losses. The lower negative cash flow in the period ended September 30, 1996 was
caused by a $1.4 million reduction in inventories by the predecessor company.
The Company's capital expenditures for the nine months ended September 30, 1996
were $269,000, versus $577,000 for the same period of 1997 with the increase
attributable to the purchase of PREP units for rental purposes. The Company has
no material commitments for capital expenditures.
The Company's future liquidity and capital requirements will depend upon
numerous factors, including the timing of the Company's receipt of FDA approval
of its PMA for PREP, the availability of financing for the Company's anticipated
equipment lease and rental programs, the level of placements of rental PREP
systems and FPU SCREEN systems, the resources required to further develop its
marketing and sales capabilities domestically and internationally, the resources
required to expand manufacturing capacity and the extent to which the Company's
products generate market acceptance and demand. In particular, if the FDA
approves the PREP PMA, the Company anticipates that marketing and sales
expenditures for the PREP market launch for gynecological uses in the United
States, capital expenditures associated with placements of PREP rental units,
and expenditures related to manufacturing and other administrative costs will
increase significantly. There can be no assurance that the Company will not
require additional financing or will not in the future seek to raise additional
funds through bank facilities, debt or equity offerings or other sources of
capital. Additional funding may not be available when needed or on terms
acceptable to the Company, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
<PAGE> 12
CERTAIN FACTORS WHICH MAY AFFECT FUTURE RESULTS
This report contains forward looking statements which are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company's operating results and financial condition have varied and may in the
future vary significantly depending on a number of factors. The statements
contained in this report which are not strictly historical information,
including, without limitation, statements regarding the receipt of regulatory
approvals, implementation of the Company's full-scale marketing and sales
activities, management's plans and objectives for future operations, product
plans and performance, management's assessment of market factors, as well as
statements regarding the strategy and plans of the Company, constitute forward
looking statements which involve risks and uncertainties. The following factors,
among others, could cause actual results to differ materially from those
contained in forward-looking statements made in this report and presented
elsewhere by management from time to time. These factors include the Company's
early stage of development and limited sales to date, uncertainty of FDA
approval of its principal products, uncertainty of market acceptance of the
Company's principal products, competition and technological change, history of
operating losses and uncertainty of future profitability, dependence on a
limited number of products, the possibility of future capital needs and the
uncertainty of availability of additional financing, dependence on patents,
copyrights, licenses and proprietary rights, risk of third-party claims of
infringement, extensive government regulation, dependence on third-party
reimbursement, international sales and operations risks, limited marketing and
sales resources, risk associated with product liability claims, limited number
of potential customers, limited manufacturing experience, and dependence on
single or limited-source suppliers. Such factors, among others, are described in
greater detail in the Company's Registration Statement on Form S-1 (File No.
333-30227) under the heading "Risk Factors." These factors may have a material
adverse effect upon the Company's business, results of operations and financial
conditions. Because of these and other factors, past financial performance
should not be considered an indication of future performance.
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
Not applicable.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS:
(a) Effective upon the consummation of the Company's initial public
offering (the "Offering") of shares of its common stock, par value $.01 per
share (the "Common Stock") on September 10, 1997, the Company's Certificate of
Incorporation and By-laws were each amended and restated.
The Amended and Restated Certificate of Incorporation (the "Restated
Certificate") provides the Board of Directors of the Company with the authority
to issue up to 1,000,000 shares of Preferred Stock of the Company in one or more
series and to fix the relative rights, preferences, privileges, qualifications,
limitations and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series, without further vote
or action by the stockholders of the Company. The issuance of Preferred Stock
could adversely affect the voting power of the holders of Common Stock and
restrict their rights to receive payment upon a liquidation of the Company and
could have the effect of delaying, deferring or preventing a change in control
of the Company.
The Restated Certificate contains a provision classifying the Board of
Directors into three classes with staggered three-year terms. The Restated
Certificate also includes a provision prohibiting stockholder action by written
consent except as otherwise provided by law. The Restated Certificate requires
the approval of the holders of at least 66 2/3% of the outstanding capital stock
of the Company prior to: (i) the merger of the Company into another entity, (ii)
the sale or disposition of all or substantially all of the Company's assets,
(iii) the issuance or transfer by the Company or its securities having a market
value in excess of $500,000 and (iv) engaging in any other business combination
transaction unless, in each case, such transaction has been approved by a
majority of the Board of Directors.
Provisions of the Amended and Restated By-laws (the "Restated By-laws")
and the Restated Certificate provide that the stockholders may amend the
Restated By-laws or certain provisions of the Restated Certificate only with the
vote of 66 2/3% of the Company's outstanding capital stock. The Restated By-laws
provide that nominations for directors may not be made by stockholders at any
annual or special meeting unless the stockholder intending to make a nomination
notifies the Company of its intention a specified period in advance and
furnishes certain information. The Restated By-laws also provide that special
meetings of the Company's stockholders may only be called by the President or
the Board of Directors of the Company and require advance notice of business to
be brought by a stockholder before the annual meeting.
Article NINTH of the Restated Certificate provides that a director
shall not personally be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
the elimination or limitation of liability is not permitted under the Delaware
General Corporation Law as in effect when such liability is determined.
Article TENTH of the Restated Certificate provides that the Company
shall, to the fullest extent permitted by the Delaware General Corporation Law,
as amended from time to time, indemnify each person who is or was a party or is
threatened to be made a party to any threatened, pending or completed
<PAGE> 14
action, suit or proceeding by reason of the fact that he is or was, or has
agreed to become a director or officer of the Company, or is or was serving, or
has agreed to serve, at the request of the Company, as a director, officer or
trustee of, or in a similar capacity with, another corporation, partnership,
joint venture, trust or other enterprise. Article TENTH further permits the
Board to authorize the grant of indemnification rights to other employees and
agents of the Company and such rights may be equivalent to, or greater or less
than, those set forth in Article TENTH.
The Restated By-laws provide that the Company shall, to the full extent
permitted by the Delaware General Corporation Law, as amended from time to time,
and the Restated Certificate, indemnify each person whom it may indemnify
pursuant thereto.
The Restated By-laws also provide that the Company shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or is or was serving as the
request of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such whether or not the
Company would have the power to indemnify such person against such liability
under the provisions of the General Corporation Law of Delaware.
The Restated Certificate provides that directors shall not be
personally liable to the Company or its stockholders for monetary damages or for
breach of fiduciary duty as a director, whether or not an individual continues
to be a director at the time such liability is asserted, except for liability
(i) for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the Delaware General Corporation Law or (iv) for any transaction from
which the director derives an improper personal benefit.
(b) On June 27, 1997 the Registrant issued warrants to purchase an
aggregate of 207,291 shares of Common Stock, at an exercise price of $2.033 per
share, to certain principal stockholders of the Company as a commitment fee in
connection with the establishment of a credit agreement. On October 24, 1997 all
of these warrants were exercised to purchase Common Stock. No underwriter was
engaged in connection with the foregoing issuance of warrants or the exercise
thereof. The warrants were issued in a private placement in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act") and the shares of Common Stock issuable
upon the exercise thereof were issued in reliance on Section 3(a)(9) of the
Securities Act.
(c) Use of proceeds information is provided herewith in connection with
the Offering. The Company's Registration Statement on Form S-1 was declared
effective by the Securities and Exchange Commission on September 4, 1997. The
first closing for the Offering was held on September 10, 1997 and a second
overallotment closing was held on October 10, 1997. The Offering has terminated.
In the aggregate the Company sold in its two closings 3,125,000 shares
(with an aggregate offering price to the public of $31,250,000) out of the
3,565,000 shares of Common Stock (with an aggregate offering price of
$35,650,000) registered in the Offering. The managing underwriters of the
Offering were SBC Warburg Dillon Read Inc. and UBS Securities.
In connection with the Offering the Company incurred the following
expenses through September 30, 1997: underwriting discounts and commissions of
$2,170,000 and other expenses of $1,089,539. After expenses incurred through
September 30, 1997, and not including the sale of the 25,000 shares of Common
Stock sold upon the closing of the overallotment option on October 10, 1997, the
Company's net proceeds from the Offering were $27,740,461 as of September 30,
1997.
<PAGE> 15
From September 5, 1997 (the effective date of the Company's Registration
Statement on Form S-1) through September 30, 1997, the amount of net offering
proceeds used by the Company was as follows: $83,837 for purchases of machinery
and equipment, $666,083 to fund current operations (of which $84,035 was paid to
officers of the Company), $770,608 for working capital purposes, and the
remaining $26,219,933 was invested in short-term commercial paper.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES:
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
On July 14, 1997, the stockholders of the Company, acting by a written
consent in lieu of a meeting of stockholders, approved an Amendment to the
Company's Certificate of Incorporation. The Amendment provided that each share
of Series A Convertible Preferred Stock would automatically be converted into
shares of the Company's Common Stock at the then effective Conversion Price upon
the closing of the sale of shares of Common Stock for the account of the Company
in a firm commitment underwritten public offering pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended, in which a
majority of the committee of the Board of Directors authorized to establish the
pricing terms of the public offering was composed of designees of holders of at
least a majority of the outstanding shares of Series A Preferred Stock.
The stockholders who consented to this action in writing held 5,830,941
votes out of the total of 9,161,325 votes eligible to be voted by the holders of
shares of Common Stock and Series A Convertible Preferred Stock outstanding at
the time of the written consent. The remaining votes were not voted in the
matter.
ITEM 5 OTHER INFORMATION:
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits. See exhibit index on page 17.
(b) Reports on Form 8-K. None
<PAGE> 16
AUTOCYTE, INC.
FORM 10-Q
SEPTEMBER 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AUTOCYTE, INC.
DATE: November 14, 1997 BY: /s/ William O. Green
---------------------
William O. Green
Duly Authorized Officer and
Principal Financial Officer
<PAGE> 17
EXHIBIT INDEX
Number Description
- ------ -----------
3.1 Restated Certificate of Incorporation
3.2 Amended and Restated By-laws
27 Financial Data Schedule
(for EDGAR filing purposes only)
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
AUTOCYTE, INC.
The undersigned, James B. Powell and William T. Whelan, do hereby certify:
A. They are the duly elected and acting President and Secretary,
respectively, of AutoCyte, Inc., a Delaware corporation (the "Corporation").
B. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State on October 24, 1996, and the name under which the
Corporation was originally incorporated is AutoCyte, Inc.
C. The Certificate of Incorporation, as previously amended, is further
amended and restated to read in full as follows:
FIRST: The name of the Corporation is AutoCyte, Inc.
SECOND: The address of the registered office of the Corporation in the
state of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 21,650,000 shares, consisting of:
(i) 20,650,000 shares of Common Stock, $.01 par value per share ("Common
Stock"), and (ii) 1,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. PREFERRED STOCK
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article FOURTH, to provide by resolution for the
issuance of the shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof.
<PAGE> 2
The authority of the Board with respect to each series shall include, but
shall not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of that series.
B. COMMON STOCK
The Common Stock is subject to the rights and preferences of the Preferred
Stock as hereinbefore set forth or authorized.
Subject to the provisions of any applicable law or of the By-laws of the
Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation.
- 2 -
<PAGE> 3
Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock the full amount to which they are
entitled, the holders of Common Stock shall be entitled to share ratably
according to the number of shares of Common Stock held by them, in all remaining
assets of the Corporation available for distribution to its stockholders.
C. ISSUANCE
Subject to the provisions of this Restated Certificate of Incorporation
and except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The Board of Directors shall consist of not less than three
directors, the exact number to be determined from time to time by resolution
adopted by the affirmative vote of a majority of the directors then in office.
The directors shall be divided into three classes, as nearly equal in number as
the then total number of directors constituting the entire Board of Directors
permits, with the term of office of one class expiring each year. The initial
directors of the first class shall be elected to hold office for a term expiring
at the next succeeding annual meeting, the initial directors of the second class
shall be elected to hold office for a term expiring at the second succeeding
annual meeting and the initial directors of the third class shall be elected to
hold office for a term expiring at the third succeeding annual meeting. At each
succeeding annual meeting of stockholders beginning in the first year following
the election of such staggered Board of Directors, successors to the class of
directors whose term expires at that meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in the size of such class
shall hold office for a term that shall coincide with the remaining term of that
class, but in no event will a decrease in the number of directors shorten the
term of any incumbent director. Any vacancies in the Board of Directors for any
reason, and any directorships resulting from any increase in the number of
directors, may be filled by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen. Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a class, to elect one
or more directors of the
- 3 -
<PAGE> 4
Corporation, the election, term of office and other features of such
directorships shall be governed by the terms of this Restated Certificate of
Incorporation and certificates of designation applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Article
SIXTH unless expressly provided by such terms. Subject to the foregoing, at each
annual meeting of stockholders the successors to the class of directors whose
terms shall then expire shall be elected to hold office for a term expiring at
the annual meeting for the year in which their term expires and until their
successors shall be elected and qualified, subject to prior death, resignation,
retirement or removal.
Except as otherwise determined by the Board of Directors in establishing a
series of Preferred Stock as to directors elected by holders of such series, at
any special meeting of the stockholders called at least in part for the purpose,
any director or directors may, by the affirmative vote of the holders of at
least a majority of the stock entitled to vote for the election of directors, be
removed from office for cause. The provisions of this subsection shall be the
exclusive method for the removal of directors. This Article SIXTH may not be
amended, revised or revoked, in whole or in part, except by the affirmative vote
of the holders of 66 2/3% of the voting power of the shares of all classes of
stock of the Corporation entitled to vote for the election of directors,
considered for the purposes of this Article SIXTH as one class of stock.
SEVENTH: The Board of Directors shall have the right to make, alter or
repeal the By-laws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
By-laws of the Corporation shall so provide.
NINTH: A director shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that the elimination or limitation of liability is not
permitted under the General Corporation Law of the State of Delaware as in
effect when such liability is determined. No amendment or repeal of this
provision shall deprive a director of the benefits hereof with respect to any
act or omission occurring prior to such amendment or repeal.
TENTH: The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as amended from
time to time, indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom.
- 4 -
<PAGE> 5
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article TENTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of Directors
of the Corporation.
The indemnification rights provided in this Article TENTH (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article TENTH.
ELEVENTH: (a) Except as set forth in part (b) of this Article ELEVENTH,
the affirmative vote of the holders of 66 2/3% of the shares of all classes of
stock of the Corporation entitled to vote for the election of directors,
considered for the purposes of this Article ELEVENTH as one class, shall be
required (i) for the adoption of any agreement for the merger or consolidation
of the Corporation or any Subsidiary (as hereinafter defined) with or into any
Other Corporation (as hereinafter defined), (ii) to authorize any sale, lease,
exchange, mortgage, pledge or other disposition of all or substantially all of
the assets of the Corporation or any Subsidiary to any Other Corporation, (iii)
to authorize the issuance or transfer by the Corporation of any Substantial
Amount (as hereinafter defined) of securities of the Corporation in exchange for
the securities or assets of any Other Corporation, or (iv) to engage in any
other transaction the effect of which is to combine the assets and business of
the Corporation or any Subsidiary with any Other Corporation. Such affirmative
vote shall be in addition to the vote of the holders of the stock of the
Corporation otherwise required by law, the Restated Certificate of Incorporation
of the Corporation or any agreement or contract to which the Corporation is a
party.
(b) The provisions of part (a) of this Article ELEVENTH shall
not be applicable to any transaction described therein if such transaction is
approved by a resolution of the Board of Directors of the Corporation, provided
that the directors voting in favor of such resolution include a majority of the
persons who were duly elected and acting members of the Board of Directors prior
to the time any such Other Corporation became a Beneficial Owner (as hereinafter
defined) of 5% or more of the shares of stock of the Corporation entitled to
vote for the election of directors. In considering such transaction, the Board
of Directors shall give due consideration to such factors as it deems relevant,
which may
- 5 -
<PAGE> 6
include without limitation the social and economic effects on the employees,
customers, suppliers and other constituents of the Corporation and its
Subsidiaries and on the communities in which the Corporation and its
Subsidiaries operate or are located.
(c) The Board of Directors shall have the power and duty to
determine for the purposes of this Article ELEVENTH, on the basis of information
known to such Board, if and when any Other Corporation is the Beneficial Owner
of 5% or more of the outstanding shares of stock of the Corporation entitled to
vote for the election of directors. Any such determination, if made in good
faith, shall be conclusive and binding for all purposes of this Article
ELEVENTH.
(d) As used in this Article ELEVENTH, the following terms
shall have the meanings indicated:
"Other Corporation" means any person, firm, corporation
or other entity, other than a Subsidiary of the Corporation, which is the
Beneficial Owner of 5% or more of the shares of stock of the Corporation
entitled to vote in the election of directors.
"Subsidiary" means any corporation in which the
Corporation owns, directly or indirectly, more than 50% of the voting
securities.
"Substantial Amount" means any securities of the
Corporation having a then fair market value of more than $500,000.
An Other Corporation (as defined above) shall be deemed
to be the "Beneficial Owner" of stock if such Other Corporation or any
"affiliate" or "associate" of such Other Corporation (as those terms are defined
in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934 (15
U.S.C. 78 aaa et seq.), as amended from time to time), directly or indirectly,
controls the voting of such stock or has any options, warrants, conversion or
other rights to acquire such stock.
(e) This Article ELEVENTH may not be amended, revised or
revoked, in whole or in part, except by the affirmative vote of the holders of
66 2/3% of the shares of all classes of stock of the Corporation entitled to
vote for the election of directors, considered for the purposes of this Article
ELEVENTH as one class of stock.
TWELFTH: No action required to be taken or that may be taken at any annual
or special meeting of stockholders of the Corporation may be taken by written
consent without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
This Article TWELFTH may not be amended, revised or revoked, in whole or
in part, except by the affirmative vote of the holders of 66 2/3% of the voting
power of the
- 6 -
<PAGE> 7
shares of all classes of stock of the Corporation entitled to vote for the
election of directors, considered for the purposes of this Article TWELFTH as
one class of stock.
THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
D. The foregoing Restated Certificate of Incorporation has been duly
adopted by the Board of Directors of the Corporation.
E. The foregoing Restated Certificate of Incorporation was approved by the
written consent of the holders of (i) a majority of the outstanding shares of
Common Stock and Series A Convertible Preferred Stock, voting as a single class
and (ii) a majority of the outstanding shares of Series A Convertible Preferred
Stock, voting as a separate class, in accordance with Sections 228, 242, and 245
of the Delaware General Corporation Law.
IN WITNESS WHEREOF, AutoCyte, Inc. has caused this Restated Certificate of
Incorporation to be signed by James B. Powell, its President, and attested by
Steven N. Farber, its Secretary, this 5th day of September 1997.
AUTOCYTE, INC.
By: /s/ James B. Powell
----------------------------
James B. Powell
President
ATTEST:
By: /s/ William T. Whelan
-------------------------
William T. Whelan
Secretary
- 7 -
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
AUTOCYTE, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders shall be
held at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or, if not so designated, at the
principal office of the corporation.
SECTION 2. Annual Meeting. The annual meeting of stockholders for
the election of directors and the transaction of such other business as may
properly come before the meeting shall be held on such date and at such hour and
place as the directors or an officer designated by the directors may determine.
If the annual meeting is not held on the date designated therefor, the directors
shall cause the meeting to be held as soon thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the stockholders
may be called at any time by the President or the Board of Directors.
SECTION 4. Notice of Meetings. Except where some other notice is
required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by or under the direction of the Secretary, not less than 10 nor
more than 60 days before the date fixed for such meeting, to each stockholder
entitled to vote at such meeting of record at the close of business on the day
fixed by the Board of Directors as a record date for the determination of the
stockholders entitled to vote at such meeting or, if no such date has been
fixed, of record at the close of business on the day before the day on which
notice is given. Notice shall be given personally to each stockholder or left at
his or her residence or usual place of business or mailed postage prepaid and
addressed to the stockholder at his or her address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or refusal
of the Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such notice in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such notice. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice. Notice of any meeting of the
stockholders shall be deemed to have been given to any person who may become a
stockholder of record after the
<PAGE> 2
mailing of such notice and prior to such meeting. Except as required by statute,
notice of any adjourned meeting of the stockholders shall not be required.
SECTION 5. Stockholder Nominations of Directors. Only persons who
are nominated in accordance with the following procedures shall be eligible for
election as directors at any annual or special meeting. Nominations of persons
for election as directors may be made by or at the direction of the Board of
Directors, or by any stockholder entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this Section
5. Such nominations, other than those made by or at the direction of the Board,
shall be made pursuant to timely notice in writing to the Chairman, if any, the
President, the Secretary or the Treasurer. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive offices
of the corporation not less than 50 days nor more than 75 days prior to the
meeting; provided, however, that if less than 65 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital stock
of the corporation which are beneficially owned by the person and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by such stockholder. No person shall be
eligible for election as a director at any annual or special meeting of
stockholders unless nominated in accordance with the procedures set forth
herein. Nothing in this Section 5 shall be deemed to grant stockholders the
right have such nominations included on the agenda or in the notice or proxy
materials for such meeting except as otherwise required by law.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 6. Record Date. The Board of Directors may fix in advance a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action. Such record date shall not be
more than 60 days nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action to which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before
- 2 -
<PAGE> 3
the day on which the meeting is held. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 7. Advance Notice of Stockholder-Proposed Business at Annual
Meetings. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be brought
properly before an annual meeting, business must be either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the President or the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board or (c) otherwise properly
brought before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be brought properly before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Chairman, if any, the President, the Secretary or the Treasurer. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 50 days nor
more than 75 days prior to the meeting; provided, however, that if less than 65
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 6, provided, however, that nothing in this
Section 7 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure; provided, further, that nothing in this Section 7 shall be deemed to
grant stockholders the right have such business included on the agenda or in the
notice or proxy materials for such meeting except as otherwise required by law.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 7, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 8. Voting List. The officer who has charge of the stock
ledger of the corporation shall make or have made, at least 10 days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
- 3 -
<PAGE> 4
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
SECTION 9. Quorum of Stockholders. At any meeting of the
stockholders, the holders of a majority in interest of all stock issued and
outstanding and entitled to vote upon a question to be considered at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the consideration of such question, but a smaller group may adjourn any
meeting from time to time. When a quorum is present at any meeting, a majority
of the stock represented thereat and entitled to vote shall, except where a
larger vote is required by law, by the Certificate of Incorporation, or by these
by-laws, decide any question brought before such meeting. Any election by
stockholders shall be determined by a plurality of the vote cast by the
stockholders entitled to vote at the election.
SECTION 10. Proxies and Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledger on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.
SECTION 11. Conduct of Meeting. Meetings of the stockholders shall
be presided over by one of the following officers in the order of seniority and
if present and acting: the President, a Vice President, the Chairman of the
Board, if any, the Vice Chairman of the Board, if any, or, if none of the
foregoing is in office and present and acting, a chairman to be chosen by the
stockholders. The Secretary of the corporation, if present, or an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the chairman of the meeting shall appoint
a secretary of the meeting.
ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of a Board of Directors,
who may exercise all of the
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<PAGE> 5
powers of the corporation which are not by law or the Certificate of
Incorporation required to be exercised by the stockholders. In the event of a
vacancy in the Board of Directors, the remaining directors, except as otherwise
provided by law, may exercise the powers of the full Board until the vacancy is
filled.
SECTION 2. Number, Election, Tenure and Qualification. Subject to
any restrictions contained in the Certificate of Incorporation, the number of
directors that shall constitute the Board of Directors shall be fixed by
resolution of the Board of Directors but in no event shall be less than three.
Directors shall be elected in the manner provided in the Certificate of
Incorporation by such stockholders as have the right to vote thereon. The number
of directors may be increased or decreased by action of the Board of Directors.
Directors need not be stockholders of the corporation.
SECTION 3. Enlargement of the Board. Subject to the restrictions
contained in the Certificate of Incorporation, the number of the Board of
Directors may be increased at any time, such increase to be effective
immediately, by vote of a majority of the directors then in office.
SECTION 4. Vacancies. Unless and until filled by the stockholders,
any vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director for cause, may be filled in the manner provided
in the Certificate of Incorporation. When one or more directors shall resign
from the Board, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. If at any time there are no directors in
office, then an election of directors may be held in accordance with the General
Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time upon
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the President or Secretary.
SECTION 6. Removal. Directors may be removed from office only as
provided in the Certificate of Incorporation. The vacancy or vacancies thus
created may be filled by the stockholders at the meeting held for the purpose of
removal or, if not so filled, by the directors in the manner provided in Section
4 of this Article II.
SECTION 7. Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of such absent or
disqualified member.
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<PAGE> 6
A majority of all the members of any such committee may fix its rules of
procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. The Board of Directors shall have the power to change the
members of any such committee at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these By-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
such power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending a dissolution of the corporation
or a revocation of a dissolution, or amending the By-laws of the corporation,
and, unless the resolution or these By-laws expressly so provide, no such
committee shall have the power or the authority to declare a dividend or to
authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and make such
reports as the Board of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular meetings of
the Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place either
within or without the State of Delaware at any time when called by the Chairman
of the Board of Directors, if any, the President, Treasurer, Secretary, or two
or more directors. Reasonable notice of the time and place of a special meeting
shall be given to each director unless such notice is waived by attendance or by
written waiver in the manner provided in these By-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of Directors.
No notice of any adjourned meeting of the Board of Directors shall be required.
In any case it shall be deemed sufficient notice to a director to send notice by
mail at least 72 hours, or by telegram at least 48 hours, before the meeting,
addressed to such director at his or her usual or last known business or home
address.
Directors or members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting
- 6 -
<PAGE> 7
SECTION 9. Quorum and Voting. A majority of the total number of
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote 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, except where a different vote is required or permitted by
law, by the Certificate of Incorporation, or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees for
their services and for their membership on committees, and expenses of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.
SECTION 11. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, and without notice, if a written
consent thereto is signed by all members of the Board of Directors, or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation shall consist of
a President, a Secretary, a Treasurer, and such other officers with such other
titles as the Board of Directors shall determine, including without limitation a
Chairman of the Board, a Vice Chairman of the Board, and one or more Vice
Presidents, Assistant Treasurers, or Assistant Secretaries.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the stockholders. Each officer shall
hold office until his or her successor is elected and qualified, unless a
different term is specified in the vote electing such officer, or until his or
her earlier death, resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by resolution of
the Board of Directors, no officer, other than the Chairman or Vice Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.
SECTION 4. Removal. Any officer may be removed, with or without
cause, at any time, by resolution adopted by the Board of Directors.
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<PAGE> 8
SECTION 5. Resignation. Any officer may resign by delivering a
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt or at
such later time as may be specified therein.
SECTION 6. Vacancies. The Board of Directors may at any time fill
any vacancy occurring in any office for the unexpired portion of the term and
may leave unfilled for such period as it may determine any office other than
those of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the corporation shall
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors, and shall have
such additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.
SECTION 8. President and Vice Presidents. The President shall be the
chief executive officer of the corporation, shall preside at all meetings of the
stockholders and the Board of Directors unless a Chairman or Vice Chairman of
the Board is elected by the Board, empowered to preside, and present at such
meeting, shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
In the absence of the President or in the event of his or her inability or
refusal to act, the Vice President if any (or in the event there be more than
one Vice President, the Vice Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may assign to any Vice President the title of
Executive Vice President, Senior Vice President or any other title selected by
the Board of Directors.
SECTION 9. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall maintain a stock ledger and
prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.
The Assistant Secretary if any (or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of the Secretary's inability or
refusal to act, perform the duties and exercise the powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts
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<PAGE> 9
and disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered by
the Board of Directors or the President, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or whenever they may require it, an account of all
transactions and of the financial condition of the corporation.
The Assistant Treasurer if any (or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors or if
there be no such determination, then in the order of their election) shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer.
SECTION 11. Bonded Officers. The Board of Directors may require any
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be entitled
to such salaries, compensation or reimbursement as shall be fixed or allowed
from time to time by the Board of Directors.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more certificates of stock,
signed by the Chairman or Vice Chairman of the Board of Directors or by the
President or Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying, in the aggregate, the number of shares owned by the stockholder in
the corporation. Any or all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature shall have been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
Each certificate for shares of stock which are subject to any restriction
on transfer pursuant to the Certificate of Incorporation, the By-laws,
applicable securities laws, or any agreement among any number of stockholders or
among such holders and the corporation shall have conspicuously noted on the
face or back of the certificate either the full text of the restriction or a
statement of the existence of such restriction.
SECTION 2. Transfers of Shares of Stock. Subject to the
restrictions, if any, stated or noted on the stock certificates, shares of stock
may be transferred on the books of the
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<PAGE> 10
corporation by the surrender to the corporation or its transfer agent of the
certificate representing such shares properly endorsed or accompanied by a
written assignment or power of attorney properly executed, and with such proof
of authority or the authenticity of signature as the corporation or its transfer
agent may reasonably require. The corporation shall be entitled to treat the
record holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to that stock, regardless of any transfer, pledge or other disposition of that
stock, until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-laws.
SECTION 3. Lost Certificates. A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation and
alleged to have been lost, stolen, destroyed, or mutilated, upon such terms in
conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the owner's legal representatives, to give the
corporation a bond, in such sum as they may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss,
theft, destruction or mutilation of any such certificate, or the issuance of any
such new certificate.
SECTION 4. Fractional Share Interests. The corporation may, but
shall not be required to, issue fractions of a share. If the corporation does
not issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
SECTION 5. Dividends. Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the common
stock of the corporation as and when they deem expedient.
- 10 -
<PAGE> 11
ARTICLE V
INSURANCE
SECTION 1. Indemnification. The corporation shall, to the full
extent permitted by the General Corporation Law of the State of Delaware, as
amended from time to time, the Certificate of Incorporation, and any agreement
of the Corporation, indemnify each person whom it may indemnify pursuant
thereto.
SECTION 2. Insurance. The corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such liability
under the provisions of the General Corporation Law of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated from time to
time by the Board of Directors, the fiscal year of the corporation shall begin
on the first day of January and end on the last day of December.
SECTION 2. Corporate Seal. The corporate seal shall be in such form
as shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal. The Board of Directors may authorize a duplicate seal to
be kept and used by any other officer.
SECTION 3. Certificate of Incorporation. All references in these
By-laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as in effect from time to time.
SECTION 4. Execution of Instruments. The Chairman and Vice Chairman
of the Board of Directors, if any, the President, any Vice President, and the
Treasurer shall have power to execute and deliver on behalf and in the name of
the corporation any instrument requiring the signature of an officer of the
corporation, including deeds, contracts, mortgages, bonds, notes, debentures,
checks, drafts, and other orders for the payment of money. In addition, the
Board of Directors may expressly delegate such powers to any other officer or
agent of the corporation.
SECTION 5. Voting of Securities. Except as the directors may
otherwise designate, the President or Treasurer may waive notice of, and act as,
or appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of
- 11 -
<PAGE> 12
substitution) at any meeting of stockholders or shareholders of any other
corporation or organization the securities of which may be held by this
corporation.
SECTION 6. Evidence of Authority. A certificate by the Secretary, or
an Assistant Secretary, or a temporary secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall, as to all persons who rely on the certificate in good faith,
be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for that reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the
corporation shall be kept at such places within or without the State of Delaware
as the Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. By the Board of Directors. These By-laws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of
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<PAGE> 13
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
SECTION 2. By the Stockholders. These By-laws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of the
holders of a majority of the shares of the capital stock of the corporation
issued and outstanding and entitled to vote at any regular meeting of
stockholders, or at any special meeting of stockholders provided notice of such
alteration, amendment, repeal or adoption of new by-laws shall have been stated
in the notice of such special meeting.
- 13 -
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