<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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 1-9983
OEC MEDICAL SYSTEMS, INC.
(Registrant)
Incorporated in the State of Delaware
I.R.S. Employer Identification Number 94-2538512
384 Wright Brothers Drive, Salt Lake City, Utah 84116
(Address of Principal Executive Offices)
Telephone: (801) 328-9300
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 requirements
for the past 90 days.
Yes [X] No[ ]
As of July 31, 1997, there were 13,344,787 shares of Common Stock ($.01 par
value) outstanding.
<PAGE> 2
PART I. Financial Information
ITEM 1. Financial Statements
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
FOR THE QUARTER & SIX MONTHS ENDED JUNE 30, 1997 AND
1996 (In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales
Product $ 34,570 $ 26,465 $ 62,690 $ 48,663
Service 4,310 4,129 8,504 8,114
-------- -------- -------- --------
Total net sales 38,880 30,594 71,194 56,777
-------- -------- -------- --------
Cost of sales
Product 19,783 15,491 36,417 28,693
Service 3,134 2,858 6,117 5,301
-------- -------- -------- --------
Total cost of sales 22,917 18,349 42,534 33,994
-------- -------- -------- --------
Gross margin 15,963 12,245 28,660 22,783
-------- -------- -------- --------
Operating Expenses
Research and development 2,894 2,113 5,519 4,218
Marketing and sales 6,621 5,265 11,904 9,780
Administrative, general and other 2,315 1,729 3,978 3,094
-------- -------- -------- --------
Total operating expenses 11,830 9,107 21,401 17,092
-------- -------- -------- --------
Operating income 4,133 3,138 7,259 5,691
Interest income 202 199 457 387
Interest expense (2) (1) (5) (3)
-------- -------- -------- --------
Income before income taxes 4,333 3,336 7,711 6,075
Income tax expense 1,590 -- 2,667 --
-------- -------- -------- --------
Net income $ 2,743 $ 3,336 $ 5,044 $ 6,075
======== ======== ======== ========
Net income per common and
common equivalent share: $ 0.21 $ 0.26 $ 0.39 $ 0.48
======== ======== ======== ========
Common and
common equivalent shares 13,082 12,795 13,077 12,783
</TABLE>
(more)
2
<PAGE> 3
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(In thousands)
<TABLE>
<CAPTION>
ASSETS
1997 1996
--------- ---------
<S> <C> <C>
(Unaudited)
Current Assets:
Cash and temporary cash investments $ 14,235 $ 17,103
Accounts and notes receivable, net of
allowances of $1,063 and $853, respectively 36,390 33,191
Inventories 26,589 23,868
Prepaid expenses and other current assets 2,298 1,451
Deferred income taxes 8,510 8,006
--------- ---------
Total current assets 88,022 83,619
Long-term receivables 1,163 1,627
Property and equipment, net 12,588 11,903
Cost in excess of net assets acquired, net of accumulated
amortization of $8,669 and $8,183, respectively 11,379 10,213
Deferred income taxes 2,399 3,879
Other assets, net 729 705
--------- ---------
$ 116,280 $ 111,946
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,746 $ 7,358
Accrued salaries and benefits 3,071 4,127
Accrued warranty and installation costs 1,957 1,748
Deferred income and customer deposits 5,648 5,462
Income taxes payable 211 509
Accrued legal fees and litigation settlements 4,180 4,062
Accrued distributor commissions 2,902 2,891
Other accrued liabilities 3,747 3,615
--------- ---------
Total current liabilities 30,462 29,772
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value
Authorized--2,000 shares, including 1,100 shares
of convertible preferred stock, none outstanding
Common stock, $.01 par value
Authorized--30,000 shares
Outstanding--13,311 and 13,158 shares, respectively 133 132
Capital in excess of par value 80,321 79,341
Retained earnings 14,830 9,786
Treasury stock, 942 and 801 shares at cost, respectively (9,090) (6,850)
Foreign currency translation adjustment (376) (235)
--------- ---------
Total stockholders' equity 85,818 82,174
--------- ---------
$ 116,280 $ 111,946
========= =========
</TABLE>
# # #
3
<PAGE> 4
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,044 $ 6,075
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 1,667 1,420
Bad debt expense (240) (45)
Deferred income tax expense (benefit) 976 (887)
Current tax benefit attributable to stock options exercised 486 --
Changes in current assets and liabilities, net of effects
of purchase of subsidiary:
Accounts and notes receivable, net (2,817) (6,206)
Inventories (1,996) (3,446)
Prepaid expenses and other current assets (765) (492)
Other assets, net (213) (171)
Accounts payable 364 1,966
Accrued salaries and benefits (1,056) (134)
Accrued warranty and installation costs 209 9
Deferred income and customer deposits 186 377
Income taxes payable (298) (154)
Accrued legal fees and litigation settlements 118 1
Accrued distributor commissions 11 487
Other accrued liabilities (397) 938
-------- --------
Net cash provided (used) by operating activities 1,279 (262)
INVESTING ACTIVITIES:
Increase in long-term receivables (634) (571)
Additions to property and equipment (1,744) (2,248)
Net cash acquired upon purchase of subsidiary 116 --
Other (141) (162)
-------- --------
Net cash used by investing activities (2,403) (2,918)
FINANCING ACTIVITIES:
Common stock issued under benefit plans 1,496 578
Repurchase of warrants (1,000) --
Purchases of treasury stock (2,240) (1,319)
-------- --------
Net cash used by financing activities (1,744) (741)
Net decrease in cash and short-term cash investments (2,868) (3,984)
Cash and short-term cash investments at beginning of period 17,103 16,584
-------- --------
Cash and short-term cash investments at end of period $ 14,235 $ 12,600
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 5 $ 3
Cash paid during the period for income taxes $ 1,503 $ 403
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the six months ended June 30, 1997, the Company increased its ownership
in BMS from 19.8% to 100% as follows:
Original 19.8% interest $ 190 January 1, 1997
transactions:
Cash payment 193
Options granted 274
Loans converted to equity 615
--------
Total investment 1,272
Net Liabilities acquired 380
--------
Total purchase price in excess of net liabilities acquired $ 1,652
========
</TABLE>
(See Accompanying Notes)
4
<PAGE> 5
OEC MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(unaudited)
1. Interim information is unaudited but, in the opinion of Company management,
all adjustments necessary for a fair presentation of interim results have
been included. The results for the three and six months ended June 30, 1997
and 1996, are not necessarily indicative of the results to be expected for
the entire year. These consolidated financial statements and notes should be
read in conjunction with the Company's consolidated financial statements for
the year ended December 31, 1996, filed on Form 10-K on March 27, 1997.
2. Inventories are stated at the lower of cost, utilizing the first-in/
first-out method, or market. Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996*
-------- --------
<S> <C> <C>
(In thousands)
Purchased parts and
completed subassemblies $ 12,391 $ 10,432
Work-in-process 3,322 3,097
Finished goods 1,425 2,023
Demonstration equipment 10,210 8,203
Service and repair parts 4,419 4,475
-------- --------
Total $ 31,767 $ 28,230
Less: reserves for excess and obsolete inventory (5,178) (4,362)
-------- --------
Net $26,589 $23,868
</TABLE>
* Certain prior year amounts have been reclassified to conform with the
current year's presentation.
3. In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." This standard establishes standards for computing
and presenting earnings per share (EPS). SFAS No. 128 simplifies the
approach for computing earnings per share previously found in Accounting
Principles Board Opinion (APB) Opinion No. 5. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement
for all entries with complex capital structures.
Under the new statement, basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Diluted
EPS is computed similarly to fully diluted EPS pursuant to APB Opinion
No. 15.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, with earlier application not permitted. The
computation of basic EPS under SFAS No. 128 would have resulted in net
income per common share of $0.41 for the six months ended June 30, 1997,
compared to $0.50 for the same period in 1996. Diluted EPS computed under
SFAS No. 128 would have resulted in net income per common share of $0.39 for
the six months ended June 30, 1997.
5
<PAGE> 6
OEC MEDICAL SYSTEMS, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for historical information, this discussion contains forward looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from those projected. Such risk and uncertainties include
those described in the "Risk Factors" section on page 8 of this Form 10-Q.
Results of Operations
For the second quarter and six months ended June 30, 1997, OEC Medical Systems,
Inc. had net income of $2.7 million and $5.0 million, respectively, compared
with net income of $3.3 million and $6.1 million, respectively, for the same
periods last year. The results for the six month period ended June 30, 1997
reflect tax expense of $2.7 million, as compared to the same period in 1996, in
which the Company had no tax expense. Operating income improved for the second
quarter and six months ended June 30, 1997, from $3.1 million and $5.7 million,
respectively, in 1996 to $4.1 million and $7.3 million, respectively, in 1997.
The following table sets forth OEC's operating results as a percent of net
sales:
<TABLE>
<CAPTION>
Three Months Six Months
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales
Product 88.91% 86.50% 88.06% 85.71%
Service 11.09% 13.50% 11.94% 14.29%
------ ------ ------ ------
Total net sales 100.00% 100.00% 100.00% 100.00%
Cost of sales
Product 50.88% 50.63% 51.15% 50.54%
Service 8.06% 9.34% 8.59% 9.34%
------ ------ ------ ------
Total cost of sales 58.94% 59.97% 59.74% 59.88%
Gross margin 41.06% 40.03% 40.26% 40.12%
Operating expenses:
Research and development 7.44% 6.91% 7.75% 7.43%
Marketing and sales 17.03% 17.21% 16.72% 17.23%
Administrative, general and other 5.95% 5.65% 5.59% 5.45%
------ ------ ------ ------
Total operating expenses 30.42% 29.77% 30.06% 30.11%
------ ------ ------ ------
Operating income 10.64% 10.26% 10.20% 10.01%
Net income 7.06% 10.90% 7.08% 10.70%
</TABLE>
Sales and Markets
Net product sales for the quarter and six months ended June 30, 1997, were $34.6
million and $62.7 million, respectively, compared to net product sales of $26.5
million and $48.7 million for the comparable periods of 1996. This reflects a
31% and 29% increase, respectively.
The order rate for the company's core product, the Series 9600 Digital Mobile
Imaging System, is ahead of last year, both domestically and internationally.
The increase is a result of increased sales coverage and market acceptance of
6
<PAGE> 7
the product in all regions along with growth in sales of the Series 9600 12"
image intensifier option. This system offers a wider field-of-view needed for
some existing procedures as well as new applications such as aortic stent graph
placement. Sales of the Uroview 2600 were basically flat this quarter over the
same period last year, but bookings as compared to the prior year quarter were
up significantly. Revenue from the newly introduced MINI 6600 and COMPACT 7600
C-arms contributed to the overall revenue growth as compared to the same period
last year. The 6600 is gaining market share in line with the company's
expectations, and the 7600 market acceptance has improved but, is still slightly
below company expectations. Although product sales have been improving,
continued competitive pricing pressures worldwide in all product categories are
expected to remain for the foreseeable future.
Service revenue for the quarter and six months ended June 30, 1997 was $4.3
million and $8.5 million, respectively, compared to service revenue of $4.1
million and $8.1 million for the comparable periods of 1996. Revenue growth in
service has slowed somewhat from prior years. The main reason is that
independent service organizations and the consolidation of hospitals have taken
away some of the service revenue opportunities.
Margin Analysis
OEC's gross margin expressed as a percentage of net sales increased 1.04% for
the second quarter and .13% for the six months when compared with the same
periods in 1996. Ongoing improvements in manufacturing efficiency along with the
product mix towards higher revenue type systems are the main reasons for the
increase.
Service expenses for the quarter and six months were up against last year by
$0.3 million and $.8 million, respectively. These increases are attributed to
higher labor costs, due to having to add personnel to handle the increase in
system installations as a result of increased sales and lower warranty
utilization due to increasing system reliability.
Operating Expenses
Research and development costs are up $0.8 million and $1.3 million, for the
three and six month periods, respectively, as compared to the prior year. This
reflects the Company's continuing investment in product development and
improvements such as the recently introduced Series 9600 Cardiac system and the
MINI 6600 6\4 system.
Marketing and sales expenses are up $1.4 million and $2.1 million, respectively,
for the three and six month periods compared to the prior year. This increase is
due primarily to greater commissions because of higher sales and increased costs
associated with additional sales coverage, both domestically and
internationally, to obtain the higher revenue. The Company recorded expense of
$0.4 million due to unrealized currency translation losses in the first quarter.
Expressed as a percentage of total revenue, the marketing and sales expense was
down 0.18% and .51%, respectively .
Administrative expenses are up $0.6 million and $.9 million, respectively, for
the three and six months compared to the prior year. The main reason for the
increase in the second quarter was the cost associated with the implementation
of a new computer system and associated training costs. The computer system went
live on July 1, 1997. These costs are expected to continue into the third
quarter of 1997 but at a lower level. Also there was some extra relocation
expense related to some new hires that are not expected to continue.
Income Taxes
During the second quarter and six months ended June 30, 1997, the Company
recorded $1.6 million and $2.7 million of tax expense, compared to no tax
expense in the second quarter and six months ended June 30, 1996. The reversal
of the valuation allowance for deferred tax assets in 1996 had offset the tax
provisions required for federal and state income taxes. During 1996, the company
has reversed the remaining balance of the valuation allowance for the deferred
tax assets. The company believes that it will generate enough taxable income to
fully utilize the deferred tax assets, primarily made up of tax credits, prior
to their expiration.
7
<PAGE> 8
Liquidity and Capital Resources
Cash provided by operations for the first six months of 1997 was $1.3 million,
compared to cash used of $0.3 million for the first six months of 1996. The 1997
net income was offset by use of operating cash for higher accounts receivable
and inventory increases to support additional production due to the broadened
product line and to provide more demonstration units.
A stock repurchase program covering 750,000 shares of the Company's outstanding
common stock was announced December 1994 and the authorized amount was increased
to 1,250,000 shares in January 1996. As of June 30, 1997, 1,030,083 shares have
been repurchased at a cost of $9,606,320 of which 87,983 were retired and
942,100 shares were recorded as treasury stock. Also, $1.0 million was used in
the first quarter of 1997 to buy back warrants to purchase common stock from
PaineWebber R&D Partners II, L.P.
The Company began building additions to its Salt Lake City facility in the
second quarter of 1997 and completion is expected by the first quarter of 1998.
Total expenditures for this project are estimated at $3.0 million. This building
expansion is for increased manufacturing capacity.
OEC believes that it has sufficient liquidity and anticipated cash flow to meet
its obligations in 1997. In addition, OEC continues to carry an unused $10
million line of credit.
Risk Factors
The Company's business involves risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
include: Product demand and market acceptance; the effect of general economic
conditions and foreign currency fluctuations; the impact of competitive products
and pricing; new product development and commercialization; the effect of the
continuing shift in growth from domestic to international healthcare customers,
and the impact of managed care initiatives in the United States and the ability
to increase operating margins on higher sales.
Future operating results are dependent on the Company's' ability to develop,
manufacture and market innovative products that meet customers' needs. Inherent
in this process are a number of risks that the Company must successfully manage
in order to achieve favorable operating results. The process of developing new
high technology medical products is complex and uncertain and requires
innovative designs that anticipate customer needs, technological trends and
healthcare shifts. There can be no assurance that the Company will be able to
develop and market new products on a cost-effective and timely basis, that such
products will compete favorably with products developed by others or that
technology will not be superseded by new discoveries or breakthroughs. For
example, the delay in introduction of the Series 9600 in 1994 negatively
impacted revenue and earnings for the year.
Because of the substantial length of time and expense associated with bringing
new products through development and regulatory approval to the marketplace, the
medical device industry places considerable importance on obtaining patent,
trademark, copyright and trade secret protection for new technologies, products
and processes. A loss of protection could have a material adverse effect on the
Company's business.
Major items that OEC currently purchases from others include video monitors,
X-ray tubes, image intensifiers, CCD cameras and power supplies. Some of these
parts and components are available from a limited number of single-source
manufacturers or suppliers. While the Company believes any of these
single-source items could be replaced over time, abrupt disruption in the supply
of a part for a product could have a material adverse effect on the Company's
production in cases where the existing inventory of the components is not
adequate to meet the Company's demand for the component during such disruption
and could have a material adverse effect on its financial condition and results
of operations.
The testing, marketing and sale of human healthcare products entails an inherent
risk of product liability, and there can be no assurance that product liability
claims will not be asserted against OEC. Although OEC has product liability
insurance coverage, there can be no assurance that such coverage will provide
adequate coverage against all potential claims.
8
<PAGE> 9
As a manufacturer of medical devices, OEC is subject to extensive and rigorous
governmental regulation, principally by the FDA and corresponding state and
foreign agencies. Failure to comply with FDA regulations could result in
sanctions being imposed, including restrictions on the marketing of or recall of
the affected products.
OEC's facilities and manufacturing processes have been periodically inspected by
the FDA and other agencies, but remain subject to audit from time to time. OEC
continues to devote substantial human and financial resources to regulatory
compliance and believes that it remains in substantial compliance with all
applicable federal and state regulations. Nevertheless, there can be no
assurance that the FDA or a state agency will agree with OEC's positions, or
that its GMP compliance will not be challenged at some subsequent point in time.
OEC has received approval from the FDA and foreign regulatory authorities in the
past, when required, to market its products. In general, the length of time for
all reviews and approvals, most particularly from the FDA, has been lengthening
and the review or approval process for medical devices has become substantially
more difficult and expensive. Moreover, regulatory approvals, when granted, may
contain significant limitations on the standards due to unforeseen problems. To
date, product reviews for medical imaging technologies have been obtained within
three to twelve months. There can be no assurance that OEC will be able to
obtain necessary regulatory approvals in the future, and delays in the receipt
of or failure to receive such approvals, the loss of existing approvals or
failure to comply with regulatory requirements could have a material adverse
effect on the business, financial condition and results of operation of OEC.
A portion of the Company's research and development activities, its corporate
headquarters and other critical business operations are located near a major
earthquake fault. The ultimate impact on the Company, significant suppliers and
the general infrastructure is unknown, but operating results could be materially
affected in the event of a major earthquake.
Although OEC believes that it has the product offerings and resources needed for
continuing success, future revenue and margin trends cannot be reliably
predicted and may cause the Company to adjust its operations. Factors external
to the Company can result in volatility of the Company's common stock price.
PART II. Other information.
ITEM 1. Legal proceedings
There are no significant changes in legal proceedings from the previous stated
position in the Company's annual report for 1996 on Form 10K filed with the
Securities & Exchange Commission on March 27, 1997.
9
<PAGE> 10
ITEM 6. Exhibits & Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
3.1 Certificate of Incorporation, as amended. Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 30, 1994.
3.2 By-Laws, as amended May 15, 1997 and filed herein.
4 Rights Agreement, dated as of June 20, 1988, between Diasonics,
Inc. and Bank of America NT&SA. Incorporated by reference to
Exhibit 4.3 of the Diasonics, Inc. Form 8-K, filed August 1,
1988.
10.1 Diasonics, Inc. 1979 Stock Option Plan, amended and restated as
of June 1, 1982. Incorporated by reference to Exhibit 10.6 of
the Diasonics, Inc. Registration Statement on Form S-8, filed
May 2, 1983.
10.4 Diasonics, Inc. 1990 Stock Option/Stock Purchase Plan.
Incorporated by reference to Exhibit 10.79 of the Diasonics,
Inc. Form S-8, filed on May 1, 1991.
10.5 Warrant for the Purchase of Common Shares issued to PaineWebber
R&D Partners II, L.P., as amended. Incorporated by reference to
the OEC Medical Systems, Inc. Form 10-K, filed on March 30,
1994.
10.14 Form of Option Agreement used in connection with options having
service vesting provisions. Incorporated by reference to the OEC
Medical Systems, Inc. Form 10-K, filed March 30, 1994.
10.15 Form of Option Agreement used in connection with options having
milestone provisions. Incorporated by reference to the OEC
Medical Systems, Inc. Form 10-K, filed March 30, 1994.
10.16 Form of Option Agreement used in connection with automatic
option grant program for non-employee directors. Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 30, 1994.
10.19 Note and Stock Pledge Agreement between Ruediger Naumann-Etienne
and OEC Medical Systems, Inc., dated September 5, 1995.
Incorporated by reference to the OEC Medical Systems, Inc. Form
10-K, filed April 1, 1996.
10.20 Form of Warrant Agreement used in connection with grant to
independent contractors for the purchase of common shares.
Incorporated by reference to the OEC Medical Systems, Inc. Form
10-K, filed March 27, 1997.
10.21 Agreement, dated December 17, 1996, to acquire full ownership of
Barwig Medizinische Systeme GmbH (BMS). Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 27, 1997.
10.22 Agreement dated January 10, 1997 to repurchase warrants for the
purchase of common shares issued to PaineWebber R&D Partners II,
L.P.. Incorporated by reference to the OEC Medical Systems, Inc.
Form 10-Q, filed May 13, 1997.
10
<PAGE> 11
10.23 Offer of Employment between Joseph W. Pepper and OEC Medical
Systems, Inc. dated April 21, 1997 and filed herein.
21 List of Subsidiaries, filed May 13, 1997.
27 Financial Data Schedule (FDS) for Edgar Filing.
(b) Reports on Form 8-K:
Not applicable
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OEC MEDICAL SYSTEMS, INC.
(Registrant)
By: /s/ Randy W. Zundel
---------------------------------------
Randy W. Zundel
Chief Financial Officer
(Principal Accounting Officer)
Date: July 30, 1997
12
<PAGE> 13
Exhibit Index
Exhibit
Number Description
3.1 Certificate of Incorporation, as amended. Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 30, 1994.
3.2 By-Laws, as amended May 15, 1997 and filed herein.
4 Rights Agreement, dated as of June 20, 1988, between Diasonics,
Inc. and Bank of America NT&SA. Incorporated by reference to
Exhibit 4.3 of the Diasonics, Inc. Form 8-K, filed August 1,
1988.
10.1 Diasonics, Inc. 1979 Stock Option Plan, amended and restated as
of June 1, 1982. Incorporated by reference to Exhibit 10.6 of
the Diasonics, Inc. Registration Statement on Form S-8, filed
May 2, 1983.
10.4 Diasonics, Inc. 1990 Stock Option/Stock Purchase Plan.
Incorporated by reference to Exhibit 10.79 of the Diasonics,
Inc. Form S-8, filed on May 1, 1991.
10.5 Warrant for the Purchase of Common Shares issued to PaineWebber
R&D Partners II, L.P., as amended. Incorporated by reference to
the OEC Medical Systems, Inc. Form 10-K, filed on March 30,
1994.
10.14 Form of Option Agreement used in connection with options having
service vesting provisions. Incorporated by reference to the OEC
Medical Systems, Inc. Form 10-K, filed March 30, 1994.
10.15 Form of Option Agreement used in connection with options having
milestone provisions. Incorporated by reference to the OEC
Medical Systems, Inc. Form 10-K, filed March 30, 1994.
10.16 Form of Option Agreement used in connection with automatic
option grant program for non-employee directors. Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 30, 1994.
10.19 Note and Stock Pledge Agreement between Ruediger Naumann-Etienne
and OEC Medical Systems, Inc., dated September 5, 1995.
Incorporated by reference to the OEC Medical Systems, Inc. Form
10-K, filed April 1, 1996.
10.20 Form of Warrant Agreement used in connection with grant to
independent contractors for the purchase of common shares.
Incorporated by reference to the OEC Medical Systems, Inc. Form
10-K, filed March 27, 1997.
10.21 Agreement, dated December 17, 1996, to acquire full ownership of
Barwig Medizinische Systeme GmbH (BMS). Incorporated by
reference to the OEC Medical Systems, Inc. Form 10-K, filed
March 27, 1997.
10.22 Agreement dated January 10, 1997 to repurchase warrants for the
purchase of common shares issued to PaineWebber R&D Partners II,
L.P.. Incorporated by reference to the OEC Medical Systems, Inc.
Form 10-Q, filed May 13, 1997.
27 Financial Data Schedule (FDS) for Edgar Filing.
<PAGE> 1
EXHIBIT: 3.2
RESTATED BYLAWS
OF
OEC MEDICAL SYSTEMS, INC.
(AS AMENDED MAY 15, 1997)
ARTICLE I
OFFICES
SECTION 1. The registered office shall be in the city of Wilmington,
County of New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election of
directors shall be held at such place either within or without the State of
Delaware, as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
SECTION 2. Annual meetings of stockholders, commencing with the year
1988, shall be held on the first Tuesday of the fifth calendar month following
the end of the corporation's fiscal year, if not a legal holiday, and, if a
legal holiday, then on the next secular day following, at 11:00 o'clock A.M., or
at such other date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at which the
stockholders shall elect a Board of Directors, and transact such other business
as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
1
<PAGE> 2
SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, or cause a third party to prepare and make,
at least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 5. Special meetings of the stockholders of this corporation, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the president or secretary at the
request in writing of a majority of the members of the Board of Directors, or
holders of at least 10% of the total voting power of all outstanding shares of
stock of this corporation then entitled to vote, and may not be called absent
such a request. Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 6. As soon as reasonably practicable after receipt of such a
request, written notice of a special meeting, stating the place, date (which
shall be sixty (60) days from the date of notice) and hour of the meeting and
the purpose or purposes for which meeting is called, shall be given to each
stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the
2
<PAGE> 3
adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting as provided in Section 6 of this Article II.
SECTION 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statues or of
the Certificate of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
SECTION 10. 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
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole
Board shall be that number as is determined by resolution of the Board of
Directors or by the stockholders at the annual meeting of the stockholders,
except as provided in Section 2 of this Article, and each director elected shall
hold office until his successor is elected and qualified. Directors need not be
stockholders.
SECTION 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, provided that in the event a director is removed by the stockholders,
with or without cause, as provided in the Certificate of Incorporation, the
stockholders shall be entitled to fill the vacancy created as a result of such
removal. The directors so chosen shall serve for the remainder of the term of
the vacated directorships being filled and until their successors are duly
elected and shall qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute.
SECTION 3. The business of the corporation shall be managed by or under
the direction of its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders.
3
<PAGE> 4
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
SECTION 5. The First meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of stockholders, and no
notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present. In
the event such meeting is not held at such time, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION 6. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
SECTION 7. Special meetings of the Board of Directors may be called by
the president on four (4) days' notice to each director either personally or by
telephone or telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors unless the Board consists of only one director, in which case special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of the sole director.
SECTION 8. At all meetings of the Board a majority of the directors then
in office shall constitute a quorum for the transaction of business, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by stature or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 10. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the
4
<PAGE> 5
Board of Directors or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any 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 such
participation in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
SECTION 11. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board 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 a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the Bylaws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provides,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
SECTION 12. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
5
<PAGE> 6
COMPENSATION OF DIRECTORS
SECTION 13. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
SECTION 14. Unless otherwise restricted by the Certificate of
Incorporation or Bylaws, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of sixty-six and two-thirds
percent (66-2/3%) of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of these statutes or of the
Certificate of Incorporation or of these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the same time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telephone or telegram.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. The written waiver need not specify the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
6
<PAGE> 7
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board
of Directors and shall be a president and a secretary. The Board of Directors
may elect from among its members a Chairman or two or more Chairman of the Board
and a Vice- Chairman of the Board. The Board of Directors may also choose a
treasurer and one or more vice-presidents, assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these Bylaws otherwise provide.
SECTION 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president and a secretary and may choose
a vice-president and a treasurer.
SECTION 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
SECTION 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors. The salaries of agents of the
corporation shall, unless fixed by the Board of Directors, be fixed by the
president or any vice-president of the corporation.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
SECTION 6. The chairman or Chairmen of the Board, if any, shall preside
at all meetings of the Board of Directors and of the stockholders at which he or
they shall be present. He or they shall have and may exercise such powers as
are, from time to time, assigned to him or them by the Board and as may be
provided by the law.
SECTION 7. In the absence of the Chairman of the Board, the
Vice-Chairman of the Board, if any, shall preside at all meetings of the Board
of Directors and of the stockholders at which he shall be present. He shall have
and may exercise such
7
<PAGE> 8
powers as are, from time to time, assigned to him by the Board and as may be
provided by law.
THE PRESIDENT AND VICE-PRESIDENT
SECTION 8. The president shall be the chief executive officer of the
corporation and, in the absence of the Chairman and Vice-President of the Board,
he shall preside at all meetings of the stockholders and Board of Directors; he
shall have general and active management of the business of the corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
SECTION 9. The president or any vice-president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and executing thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
SECTION 10. In the absence of the president or in the event of his
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 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
vice-presidents shall perform such other duties and have such other powers as
the president or the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
SECTION 11. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be validly prescribed by the Board of Directors
or president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
8
<PAGE> 9
SECTION 12. The assistant secretary, 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 his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of Directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
SECTION 13. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts 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.
SECTION 14. The treasurer shall disburse the funds of the corporation as
may be ordered by the Board of Directors or Chief Executive Officer, taking
proper vouchers for such disbursements, and shall render to the Chief Executive
Officer and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation.
SECTION 15. If required by the Board of Directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
SECTION 16, The assistant treasurer, or if there shall 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 inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
SECTION 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the
9
<PAGE> 10
name of the corporation by, the chairman or vice-president of the Board of
Directors, or the president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
SECTION 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it
10
<PAGE> 11
shall require and/or to give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
11
<PAGE> 12
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
SECTION 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
SECTION 6. The corporation shall indemnify its officers, directors,
employees and agents to the full extent permitted by the General Corporation Law
of Delaware except as set forth below. Without limiting the generality of the
preceding
12
<PAGE> 13
sentence, the corporation shall indemnify to the full extent permitted by, and
in the manner permissible under, the laws of the state of Delaware any person
made, or threatened to be made, a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he
is or was a director of the corporation or any predecessor of the corporation,
or served any other enterprise as a director or officer at the request of the
corporation or any predecessor of the corporation.
Expenses incurred by a director of the corporation in defending a civil
or criminal action, suit or proceeding by reason of the fact that he is or was a
director of the corporation (or was serving at the corporation's request as a
director or officer of another enterprise or corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of any undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that his is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware.
Anything in this Section 6 to the contrary notwithstanding, no indemnity
shall be paid, and no expenses shall be advanced, by the corporation if the
action, suit or proceeding with respect to which a claim for indemnity or
advancement of expenses is made arose from or is based upon any of the
following:
(a) Any attempt to acquire, or obtain voting rights with respect to, at
least fifty percent (50%) of the then-outstanding voting stock of the
corporation, whether by tender offer, proxy solicitation or otherwise, if (a)
the person otherwise entitled to indemnification or advancement of expenses
attempted to acquire or obtain voting rights with respect to such stock or was
or became a member of a group consisting of two or more persons that had agreed
(whether formally or informally and whether or not in writing) to act together
for the purpose of acquiring, obtaining voting rights with respect to, holding,
voting or disposing of such stock, and (b) such attempt to acquire or obtain
voting rights with respect to such stock was not approved by a majority of the
directors of the corporation. For purposes of determining whether any tender
offer, proxy solicitation or other transaction constituted an attempt by a
person, or a group (as described above) of which such person was or became a
member, to acquire or obtain voting rights with respect to at least fifty
percent (50%) of the then-outstanding voting stock of the corporation, there
shall be counted toward the requisite number of shares of voting stock any
shares which, immediately prior to the commencement of such tender offer, proxy
solicitation or other transaction, (x) were owned by that person or any member
of any such group, (y) that person or any member of such group had the right to
vote, or (z) that person or any member of any such group had the right to
acquire.
13
<PAGE> 14
(b) Any solicitation of proxies by the person otherwise entitled to
indemnification or advancement of expenses, or by a group of which he was or
became a member consisting of two or more persons that had agreed (whether
formally or informally and whether or not in writing) to act together for the
purpose of soliciting proxies, in opposition to any solicitation of proxies
approved by the Board of Directors.
(c) Any activities by the person otherwise entitled to indemnification
or advancement of expenses that constitute a breach of or default under any
agreement between that person and the corporation.
The foregoing provisions of this Article VII shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this Bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he is or was an
officer or employee of the corporation and to pay the expenses incurred by any
such person in defending such action, suit or proceeding in advance of the final
disposition of such action, suit, or proceeding; provided, however, that
expenses of an officer may not be advanced prior to receipt of an undertaking by
or on behalf of such officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized by relevant sections of the General Corporation Law of Delaware.
The foregoing rights of indemnification shall not be deemed exclusive of
any other rights to which any director or officer may be entitled apart from the
provisions of this Article VII.
LOANS
SECTION 7. The Board of Directors of this corporation may, without
shareholder approval, authorize loans to, or guaranty obligations of, or
otherwise assist, including, without limitation, the adoption of employee
benefit plans under which loans and guarantees may be made, any officer or other
employee of the corporation or of its subsidiary, including any officer or
employee who is a director of the corporation or its subsidiary, whenever, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the corporation.
14
<PAGE> 15
ARTICLE VIII
AMENDMENTS
SECTION 1. Except as otherwise provided in the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed or new Bylaws
may be adopted by a majority of the outstanding stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation, at any regular meeting of the stockholders or of
the Board of Directors, or at any special meeting of the stockholders or of the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new Bylaws be contained in the notice of such special meeting. If the power
to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the
Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal Bylaws.
- -END-
CERTIFICATE OF SECRETARY
I, Allan W. May, Secretary of OEC Medical Systems, Inc., a Delaware
corporation (the "Corporation"), do hereby certify that the foregoing id a true
and complete copy of the Bylaws of the corporation as amended by resolution of
the Board of Directors of the corporation on October 1, 1993, and such Bylaws
continue in effect and have not been further amended, nor repealed as of the
date hereof.
Dated as of May 15, 1997
---------------------
/S/ Allan W. May
------------------------------------
Allan W. May, Secretary
15
<PAGE> 1
Exhibit 10.23
April 21, 1997
Mr. Joseph Pepper
25 Hillcrest Avenue
Summit, NJ 07901
Dear Joe:
OEC Medical Systems, Inc. is pleased to offer you the position of President and
Chief Executive Officer effective May 15, 1997. This position reports to the
Chairman of the Board.
The salary will be $270,000 per year, paid in bi-weekly increments. In addition,
you will be eligible to participate in the Management Incentive Plan (MIP) for a
bonus at 50% of your annual base salary. For 1997 there will be no pro-rate of
your bonus as long as you begin employment by May 15, 1997.
Upon starting, you will be granted 150,000 options to purchase OEC shares.
30,000 shares will vest on your start date; the rest will vest quarterly in
equal installments over four years. The option price will be fixed at the
current market value of the stock on May 15, the date of the company's next
board meeting.
You will be elected to the Board of Directors on the date you begin employment.
If during your first year of employment, you are terminated for any reason other
than "cause", you will receive a payment in the amount of one year of your
annual base salary as a severance benefit. For a termination after this date,
any severance benefit would be based on negotiation.
You will be eligible to participate in the company's Universal Life Insurance
program for senior executives at four times your annual base salary. This
participation is subject to passing a medical exam.
<PAGE> 2
Mr. Joseph Pepper
April 21, 1997
page 2
OEC will cover medical and dental benefits for your family in line with company
policy. You will be eligible to participate in the company's 401k plan. You will
be covered by an accidental death plan. You will be entitled to four weeks
vacation a year.
As you know, we require you to relocate to the Salt Lake City area. OEC will
assist you in your relocation by providing an allowance for the transportation
of your household goods to Utah, closing costs on the purchase of a new
residence in Utah and reimbursement of the closing costs, including realtor fee,
on the sale of your current residence. OEC will also cover the expense of
temporary housing in Utah and travel expenses for you and your wife as needed.
The expenses incurred by your relocation should be submitted to Human Resources
on a separate expense report with receipts.
The attached sheet "Attachment A" is part of this agreement.
In keeping with Federal and State laws, please be advised that any expenses paid
by OEC associated with your relocation will be reported as income.
We look forward to having you join OEC Medical Systems, Inc. and to provide the
leadership to help us achieve our exciting growth potential. Please indicate
your formal acceptance of our offer by signing the enclosed copy of this letter
and returning it to me as soon as possible.
Sincerely,
OEC MEDICAL SYSTEMS, INC.
/S/ Ruediger Naumann- Etienne
Ruediger Naumann-Etienne
Chairman of the Board
I, /S/ Joseph W. Pepper , accept this offer April 23, 1997
---------------------------- ---------------------------
<PAGE> 3
"ATTACHMENT A"
OEC MEDICAL SYSTEMS CEO
TERM SHEET FOR JOE PEPPER
Title: President and Chief Executive Officer
Salary: $270,000 per year
Bonus: 50% of base salary at 100% of plan. Upside
potential of 75% of base at 125% of plan.
Performance under plan reduces bonus to 25% of base
at 75% of plan. Bonus discretionary below that
level. For 1997 there will be no pro-rata as long
as you start by May 15, 1997.
Stock Options: Options to purchase 150,000 shares of OEC Stock.
30,000 will vest on your start date. The rest will
vest quarterly in equal installments over four
years. Additional options to be granted annually in
line with company performance and subject to
shareholder approval of future option plans.
Life Insurance: Universal life insurance at four times annual
salary
Board Seat: CEO to be elected to the Board of Directors
Relocation: The company will reimburse the following costs:
Closing costs on your house in New Jersey,
transport of your household to Utah, closing costs
on the purchase of a new residence in Utah,
temporary housing in Utah, travel expenses for you
and your wife as needed during the relocation.
Severance: One year salary if terminated for any reason other
than "cause" during the first year. Negotiable
thereafter. Note: no other OEC employee has a
severance agreement.
Benefits: Medical and dental benefits for employee and family
401k plan. Contribution limit $9,500. Company
matching of 75% on the first $4,000 contribution
Vacation of four weeks per year Accidental death
policy
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE COMPANY'S 2nd QUARTER 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,235
<SECURITIES> 0
<RECEIVABLES> 37,435
<ALLOWANCES> 1,063
<INVENTORY> 26,589
<CURRENT-ASSETS> 88,022
<PP&E> 27,033
<DEPRECIATION> 14,445
<TOTAL-ASSETS> 116,280
<CURRENT-LIABILITIES> 30,462
<BONDS> 0
0
0
<COMMON> 132
<OTHER-SE> 85,805
<TOTAL-LIABILITY-AND-EQUITY> 116,280
<SALES> 62,690
<TOTAL-REVENUES> 71,194
<CGS> 36,417
<TOTAL-COSTS> 42,534
<OTHER-EXPENSES> 21,401
<LOSS-PROVISION> (240)
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 7,711
<INCOME-TAX> 2,667
<INCOME-CONTINUING> 5,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,044
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.39
</TABLE>
