<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
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 #0-4829-03
NABI
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 59-1212264
- --------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
</TABLE>
5800 Park of Commerce Boulevard N.W., Boca Raton, FL 33487
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (561) 989-5800
---------------------------
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, and (2) has been subject to such filing requirements
for the past 90 days.
YES (X) NO ( )
The number of shares outstanding of registrant's common stock at August 10, 1999
was 34,940,366 shares.
<PAGE> 2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
NABI
================================================================================
INDEX
-----
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. FINANCIAL STATEMENTS..............................................................................3
Consolidated Balance Sheets, June 30, 1999 and December 31, 1998..........................................3
Consolidated Statements of Operations for the three-month and six-month periods ended
June 30, 1999 and 1998...............................................................................4
Consolidated Statements of Cash Flows for the six-month periods ended
June 30, 1999 and 1998...............................................................................5
Notes to Consolidated Financial Statements................................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................................................9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............................................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................................14
</TABLE>
2
<PAGE> 3
NABI(R)
PART I Financial Information
Item 1 Financial Statements
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
----------------------------
DOLLARS IN THOUSANDS 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,112 $ 1,016
Trade accounts receivable, net 31,911 40,029
Inventories, net 32,969 38,203
Prepaid expenses and other assets 3,757 6,227
--------- ---------
TOTAL CURRENT ASSETS 69,749 85,475
PROPERTY AND EQUIPMENT, NET 102,174 99,018
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 13,600 16,165
Intangible assets, net 6,432 7,032
Other, net 10,250 10,610
--------- ---------
TOTAL ASSETS $ 202,205 $ 218,300
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 12,716 $ 14,964
Accrued expenses 24,156 28,466
Notes payable 5,279 81
--------- ---------
TOTAL CURRENT LIABILITIES 42,151 43,511
NOTES PAYABLE 103,273 117,963
OTHER 2,287 2,637
--------- ---------
TOTAL LIABILITIES 147,711 164,111
--------- ---------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $.10 per share:
5,000 shares authorized; no shares outstanding -- --
Common stock, par value $.10 per share: 75,000 shares authorized;
34,938 and 34,903 shares issued and outstanding, respectively 3,494 3,490
Capital in excess of par value 137,971 137,911
Accumulated deficit (86,196) (86,734)
Accumulated other comprehensive loss (775) (478)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 54,494 54,189
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 202,205 $ 218,300
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE> 4
NABI(R)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 62,198 $ 61,178 $ 120,221 $ 119,792
COSTS AND EXPENSES:
Costs of products sold 42,669 43,542 87,898 88,131
Selling, general and administrative expense 8,513 8,178 14,996 16,173
Research and development expense 3,868 5,621 7,061 10,388
Royalty expense 3,914 3,118 6,091 5,863
Other operating expense, principally
freight and amortization 487 577 978 1,159
--------- --------- --------- ---------
OPERATING INCOME (LOSS) 2,747 142 3,197 (1,922)
INTEREST INCOME 54 3 60 12
INTEREST EXPENSE (980) (1,401) (2,291) (3,177)
OTHER, NET (13) 187 (54) 47
--------- --------- --------- ---------
INCOME (LOSS) BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 1,808 (1,069) 912 (5,040)
BENEFIT (PROVISION) FOR INCOME TAXES (756) 552 (374) 2,605
--------- --------- --------- ---------
NET INCOME (LOSS) $ 1,052 ($ 517) $ 538 ($ 2,435)
========= ========= ========= =========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 0.03 ($ 0.01) $ 0.02 ($ 0.07)
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE> 5
NABI(R)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
DOLLARS IN THOUSANDS 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 538 ($ 2,435)
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization 5,272 5,640
Provision for doubtful accounts (10) (75)
Deferred income taxes 374 (2,605)
Other 65 136
Change in assets and liabilities:
Decrease (increase) in trade accounts receivable 8,128 2,544
Decrease (increase) in inventories 5,234 6,835
Decrease (increase) in prepaid expenses and other assets 341 5,178
Decrease (increase) in other assets (242) 79
Increase (decrease) in accounts payable and accrued liabilities (2,846) (5,194)
-------- --------
Total adjustments 16,316 12,538
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,854 10,103
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of antibody centers 2,518 --
Capital expenditures (9,804) (9,227)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (7,286) (9,227)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Repayments under line of credit, net (9,690) (6,646)
Borrowings under term loan -- 5,000
Other debt 198 (938)
Proceeds from the exercise of options 20 113
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (9,472) (2,471)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 96 (1,595)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,016 3,397
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,112 $ 1,802
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE> 6
NABI
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 GENERAL
Nabi(R) (the "Company") is a fully-integrated biopharmaceutical company that
develops and commercializes pharmaceutical products used for the prevention and
treatment of infectious and autoimmune diseases and supplies specialty and
non-specific antibody products to pharmaceutical companies worldwide.
The consolidated financial statements include the accounts of Nabi and its
subsidiaries. All significant intercompany accounts and transactions were
eliminated during the consolidation. These statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in Nabi's Annual Report to Stockholders for the year ended December 31,
1998.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly Nabi's consolidated
financial position at June 30, 1999 and the consolidated results of its
operations for the three and six month periods ended June 30, 1999 and 1998. The
interim results of operations are not necessarily indicative of the results that
may occur for the fiscal year.
NOTE 2 INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market, are
as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
------------------------------------------
DOLLARS IN THOUSANDS 1999 1998
---------------------------------------------------------------------------
<S> <C> <C>
Finished goods $31,904 $36,975
Work in process 944 1,964
Raw materials 3,230 3,772
------------------ --------------------
36,078 42,711
Less: reserves (3,109) (4,508)
------------------ --------------------
TOTAL $32,969 $38,203
================== ====================
</TABLE>
NOTE 3 NON-RECURRING CHARGES
During the fourth quarter of 1998, Nabi recorded a non-recurring charge that
included $13.2 million related to a strategic plan to sharpen the Company's
focus. The plan commenced during late 1998 and will be substantially completed
during 1999.
6
<PAGE> 7
A summary of the Company's restructuring activity for the first six months of
1999 is presented below:
DOLLARS IN THOUSANDS
----------------------------------------------------------------------
Balance at December 31, 1998 $ 13,214
Activity during 1999:
Termination benefit payments (585)
Non-cash write-downs of fixed and intangible assets (4,295)
Non-cancelable lease obligation payments
and other cash outflows (145)
--------
BALANCE AT JUNE 30, 1999 $ 8,189
========
NOTE 4 EARNINGS PER SHARE
The following is a reconciliation between basic and diluted earnings per share
for the three and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------------------- ----------------------------------------
Effect of Effect of
Dilutive Dilutive
Securities: Securities:
Stock Stock
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Basic EPS Options Diluted EPS Basic EPS Options Diluted EPS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999
Net income (loss) $1,052 -- $ 1,052 $ 538 -- $ 538
Shares 34,926 316 35,242 34,916 243 35,159
Per share $0.03 -- $ 0.03 $ 0.02 -- $ 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
1998
Net income (loss) ($517) -- ($ 517) ($ 2,435) -- ($ 2,435)
Shares 34,889 -- 34,889 34,870 -- 34,870
Per share ($0.01) -- ($ 0.01) ($ 0.07) -- ($ 0.07)
====================================================================================================================================
</TABLE>
NOTE 5 COMPREHENSIVE INCOME
The components of comprehensive income for the three and six months ended June
30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $1,052 ($517) $538 ($2,435)
Foreign currency translation
gain (loss) (155) 35 (297) (9)
------------------ ---------------- ------------------ ---------------
COMPREHENSIVE INCOME (LOSS) $897 ($482) $241 ($2,444)
================== ================ ================== ===============
</TABLE>
7
<PAGE> 8
NOTE 6 INDUSTRY SEGMENT INFORMATION
The following table presents information related to Nabi's two operating
business segments for the three and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Sales
Antibody products $43,988 $45,618 $90,469 $91,580
Pharmaceutical products 18,210 15,560 29,752 28,212
---------------- --------------- ---------------- --------------
TOTAL 62,198 61,178 120,221 119,792
================ =============== ================ ==============
Operating income (loss)
Antibody products 1,504 (230) 2,220 (1,316)
Pharmaceutical products 1,243 372 977 (606)
---------------- --------------- ---------------- --------------
TOTAL $2,747 $142 $3,197 ($1,922)
================ ================ ================ ================
</TABLE>
The following summary reconciles reportable segment operating profit (loss) to
income (loss) before benefit (provision) for income taxes:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
INCOME (LOSS) BEFORE BENEFIT
(PROVISION) FOR INCOME TAXES:
Reportable segment
operating income (loss) $2,747 $142 $3,197 ($1,922)
Unallocated interest expense (980) (1,401) (2,291) (3,177)
Unallocated other income
and expense, net 41 190 6 59
---------------- ---------------- ---------------- ----------------
Consolidated income (loss)
before benefit (provision)
for income taxes $1,808 ($1,069) $912 ($5,040)
================ ================ ================ ================
</TABLE>
NOTE 7 RECLASSIFICATIONS
Certain items in the consolidated financial statements for the 1998 period have
been reclassified for comparative purposes.
8
<PAGE> 9
ITEM 2
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the major factors contributing to
Nabi's financial condition and results of operations for the three and six month
periods ended June 30, 1999 and 1998. The discussion and analysis should be read
in conjunction with the condensed consolidated financial statements and notes
thereto. All dollar amounts are expressed in thousands, except per share
amounts.
RESULTS OF OPERATIONS
The following table sets forth Nabi's results of operations expressed as a
percentage of sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES 100.0 % 100.0 % 100.0 % 100.0 %
Costs of products sold 68.6 % 71.2 % 73.1 % 73.6 %
------------- ------------ ------------ -------------
GROSS PROFIT MARGIN 31.4 % 28.8 % 26.9 % 26.4 %
Selling, general and administrative expense 13.7 % 13.4 % 12.5 % 13.5 %
Research and development expense 6.2 % 9.2 % 5.9 % 8.7 %
Royalty expense 6.3 % 5.1 % 5.1 % 4.9 %
Other operating expense, principally
freight and amortization 0.8 % 0.9 % 0.7 % 0.9 %
------------- ------------ ------------ -------------
OPERATING INCOME (LOSS) 4.4 % 0.2 % 2.7 % (1.6)%
Interest income 0.1 % 0.0 % 0.0 % 0.0 %
Interest expense (1.6)% (2.2)% (1.9)% (2.6)%
Other, net (0.0)% 0.3 % (0.0)% 0.0 %
------------- ------------ ------------ -------------
Income (loss) before benefit (provision)
for income taxes 2.9 % (1.7)% 0.8 % (4.2)%
Benefit (provision) for income taxes (1.2)% 0.9 % (0.3)% 2.2 %
------------- ------------ ------------ -------------
NET INCOME (LOSS) 1.7 % (0.8)% 0.5 % (2.0)%
============= ============ ============ =============
</TABLE>
Information concerning Nabi's sales by operating segments for the respective
periods, is set forth in the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------
SEGMENT 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Antibody products:
- Non-specific antibodies $29,868 48.0% $32,686 53.4%
- Specialty antibodies 14,120 22.7% 12,932 21.1%
------------- ------------- ------------- --------------
43,988 70.7% 45,618 74.6%
Pharmaceutical products 18,210 29.3% 15,560 25.4%
------------- ------------- ------------- --------------
TOTAL $62,198 100.0% $61,178 100.0%
============= ============= ============= ==============
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------
SEGMENT 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Antibody products:
- Non-specific antibodies $61,962 51.5% $66,694 55.7%
- Specialty antibodies 28,507 23.7% 24,886 20.8%
------------- ------------- ------------- --------------
90,469 75.2% 91,580 76.5%
Pharmaceutical products 29,752 24.8% 28,212 23.5%
------------- ------------- ------------- --------------
TOTAL $120,221 100.0% $119,792 100.0%
============= ============= ============= ==============
</TABLE>
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
SALES. Sales for the second quarter of 1999 increased by $1 million to $62.2
million, compared to $61.2 million for the second quarter of 1998.
Pharmaceutical sales increased 17% from the 1998 second quarter. This increase
reflected increased sales of existing products, WinRho SDF(TM) and Autoplex(R)T,
and sales of ALOPRIM(TM), a new pharmaceutical product that Nabi in-licensed and
launched at the end of the second quarter in 1999. Total antibody sales
decreased by $1.6 million from the 1998 second quarter. Consistent with the
Company's objectives for 1999 to shift revenues toward specialty products and
improve antibody margins, specialty antibody product sales increased almost 10%,
reflecting higher volumes for most products, including tetanus, anti-CMV and
rabies products, which more than offset the cessation of anti-RSV product sales.
Non-specific antibody sales decreased 9% from the comparable 1998 period due to
lower production, reflecting in part the effect of the sale of six antibody
collection centers in April 1999.
GROSS PROFIT MARGIN. Gross profit and related margin for the second quarter of
1999 was $ 19.5 million, a record level of 31.4% of sales, compared to $17.6
million, or 28.8% of sales, in the second quarter of 1998. The gains in gross
profit and related margin reflects the Company's success in improving sales mix
toward higher-margin specialty antibody products and pharmaceutical products. In
addition, the 1999 results reflect management's efforts to manage costs and
optimize production in the antibody business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense was $8.5 million, or 13.7% of sales, for the second quarter of 1999
compared to $8.2 million, or 13.4% of sales, in the second quarter of 1998. This
increase resulted from higher sales and marketing expenses associated with
increasing pharmaceutical product sales, the launch of Nabi-HB(TM), and
increased system costs related to Year 2000 readiness. This increase was
partially offset by a reduction in other general and administrative expenses for
the 1999 quarter.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $3.9
million, or 6.2% of sales, for the second quarter of 1999 compared to $5.6
million, or 9.2% of sales, in the second quarter of 1998. Nabi incurred
significant expenditures during 1998 related to the advancement of clinical
trials for Nabi-HB(TM) which was approved by the FDA in March 1999. In 1999,
Nabi has reduced pre-clinical product development activities and has focused its
ongoing research and development efforts to support currently marketed products
and those in later stages of development. At the same time, the Company is
actively seeking corporate and government partners to fund the significant cost
of further development for the products in its research and development
pipeline.
ROYALTY EXPENSE. Royalty expense was $3.9 million, or 6.3% of sales, in the
second quarter of 1999, compared to $3.1 million, or 5.0% of sales, in the
second quarter of 1998. The increase is attributable to higher sales of
pharmaceutical products and Nabi-HB(TM) royalties payable to the New York Blood
Center based on the reformulated product.
INTEREST EXPENSE. Interest expense for the second quarter of 1999 was $1
million, or 1.6% of sales, compared to $1.4 million, or 2.2% of sales, in the
second quarter of 1998. The decrease is primarily
10
<PAGE> 11
attributable to higher amounts of interest capitalized during the 1999 second
quarter. Capitalized interest relating primarily to construction of Nabi's
biopharmaceutical manufacturing facility in Boca Raton, Florida was
approximately $1.2 million in the 1999 second quarter as compared to $0.8
million during the 1998 period.
OTHER FACTORS. Provision for income taxes was $0.8 million, recorded at an
effective rate of 41.8%, in the second quarter of 1999 compared to a $0.6
million benefit, or an effective rate of 52%, in the second quarter of 1998. The
41.8% effective tax rate for the second quarter of 1999 differs from the
statutory rate of 35% primarily due to foreign income, non-deductible goodwill
and state income taxes.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
SALES. Sales for the first half of 1999 increased by $0.4 million to $120.2
million compared to $119.8 million for the first half of 1998. The increase
resulted primarily from a 15% increase in sales of specialty antibody products,
reflecting higher volumes for most products, including hepatitis B, tetanus,
anti-CMV, rabies and anti-D products, partially offset by the cessation of
anti-RSV product sales. Non-specific antibody sales decreased by $4.7 million
due to lower production in 1999. This is in part due to the impact of the sale
of six centers in April 1999 and, the Company believes, low unemployment levels
which has made it difficult to attract potential donors. Pharmaceutical product
sales increased by $1.5 million primarily due to increased sales of Autoplex(R)T
and sales of ALOPRIM(TM), a new pharmaceutical product that Nabi in-licensed and
launched at the end of the second quarter in 1999.
GROSS PROFIT MARGIN. Gross profit and related margin for the first half of 1999
was $32.3 million, or 26.9% of sales, compared to $31.7 million, or 26.4% of
sales, in the first half of 1998. The $0.7 million increase in gross profit and
related margin resulted from an improved sales mix of higher-margin specialty
antibody products and pharmaceutical products. In addition, the 1999 results
reflect management's efforts to manage costs and optimize production in the
antibody business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense was $15 million, or 12.5% of sales, for the first half of 1999 compared
to $16.2 million, or 13.5% of sales, in the first half of 1998. This $1.2
million decrease reflects the impact of higher general and administrative
expense in 1998 due to costs associated with reorganizational measures initiated
in the first half of 1998. This reduction was partially offset by increased
sales and marketing expenses in 1999 associated with increased pharmaceutical
product sales, the launch of Nabi-HB(TM), and increased system costs related to
Year 2000 readiness.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $7.1
million, or 5.9% of sales, for the first half of 1999, compared to $10.4
million, or 8.7% of sales, in the first half of 1998. Nabi incurred significant
expenditures during 1998 related to the advancement of clinical trials for
Nabi-HB(TM) which was approved by the FDA in March 1999. In 1999, Nabi has
reduced pre-clinical product development activities and has focused its ongoing
research and development efforts to support currently marketed products and
those in later stages of development. At the same time, the Company is actively
seeking corporate and government partners to fund the significant cost of
further development for the products in its research and development pipeline.
ROYALTY EXPENSE. Royalty expense for the first half of 1999 was $6.1 million, or
5.1% of sales, compared to $5.9 million, or 4.9% of sales, in the first half of
1998. The increase is attributable to higher sales of pharmaceutical products
and Nabi-HB(TM) royalties payable to the New York Blood Center based on the
reformulated product.
INTEREST EXPENSE. Interest expense for the first half of 1999 was $2.3 million,
or 1.9% of sales, compared to $3.2 million, or 2.6% of sales, in the first half
of 1998. The decrease is primarily attributable to higher
11
<PAGE> 12
amounts of interest capitalized during the first half of 1999. Capitalized
interest relating primarily to construction of Nabi's biopharmaceutical
manufacturing facility in Boca Raton, Florida was approximately $2.3 million
during the first six months of 1999 as compared to $1.6 million during the 1998
period.
OTHER FACTORS. Provision for income taxes was $0.4 million or an effective rate
of 41%, in the first half of 1999 compared to a $2.6 million benefit, or an
effective rate of 52%, in the first half of 1998. The 41% effective tax rate for
1999 differs from the statutory rate of 35% primarily due to foreign income,
non-deductible goodwill and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, Nabi's credit agreement provided for a $45 million revolving
credit facility subject to certain borrowing base restrictions as defined in the
agreement which matures in September 2002, and a $5.0 million term loan due in
March 2000. Borrowings under the agreement totaled $27.8 million and additional
availability was approximately $8 million at June 30, 1999. The credit agreement
is secured by substantially all of Nabi's assets, requires the maintenance of
certain financial covenants and prohibits the payment of dividends.
As of June 30, 1999, Nabi's current assets exceeded current liabilities by $27.6
million as compared to a net working capital position of $42 million at December
31, 1998. Cash and cash equivalents at June 30, 1999 were $1.1 million compared
to $1 million at December 31, 1998. The primary source of cash during 1999 was
operations, including a reduction of trade receivables and inventories. Net cash
provided by operating activities was $16.9 million representing an improvement
of $6.8 million from the comparable 1998 six months. The primary uses of cash
during the first half of 1999 were capital expenditures, principally associated
with the Company's manufacturing facility in Boca Raton, Florida, and a $9.7
million reduction of borrowings under the revolving credit agreement.
Projected capital expenditures for the remainder of 1999 include costs
associated with the Boca Raton manufacturing facility, including capitalized
interest, development of information systems and related expenditures, and
antibody collection center renovations. Nabi believes that cash flow from
operations and its available bank credit facilities will be sufficient to meet
its anticipated cash requirements for 1999. The Company is also in the process
of seeking additional cash to fund the development of its pharmaceutical product
pipeline from strategic alliances and additional funding from new or existing
credit facilities.
YEAR 2000
Nabi continues to assess the potential impact of the Year 2000 computer
processing issue on its management and information systems. Key financial and
operational systems have been evaluated for Year 2000 compliance. During 1998, a
cross-functional team was established to identify and address Year 2000 issues
for other information systems, equipment, other business systems and external
supplier and customer relationships.
The Company's program to address Year 2000 readiness has four overlapping
phases. Phase I, the identification and assessment of systems, equipment and
business relationships associated with Nabi's business critical processes, has
been completed. For these business critical processes, the Company is focusing
its efforts on Phase II, the testing of Year 2000 readiness for the associated
internal systems and equipment and the inquiry/audit of Year 2000 readiness for
external suppliers and customers, Phase III, the renovation or replacement of
the associated systems, equipment or business relationships that will not be
Year 2000 ready, including re-testing as required, and Phase IV, contingency
planning to mitigate the potential effect of issues which may be so deeply
embedded in the identified business critical processes that they are beyond the
Company's ability to identify and control.
12
<PAGE> 13
As indicated above, Nabi has completed its initial assessment phase of
addressing Year 2000 issues. For its business critical processes, the Company is
currently testing systems and equipment, and is concurrently renovating or
replacing any systems or equipment as needed. In addition, Nabi has initiated
communications with any associated key external suppliers and customers and is
assessing the responses received. Nabi's goal is to complete all significant
required testing of changes to systems, equipment or processes and contingency
planning by the end of the third quarter of 1999.
The Company will utilize both internal and external resources in its Year 2000
efforts. The additional cost to achieve Year 2000 readiness is currently
estimated at $3 to $5 million dollars, including expense and capital
expenditures, not all of which are incremental to the Company's operations.
These expenditures will primarily be incurred during 1999 and will be funded by
a combination of operating cash flows, bank credit facilities, and operating and
capital lease agreements. Approximately 25% of Nabi's 1999 information
technology planned expenditures will be directly attributable to Year 2000
remediation efforts. Year 2000 related expenditures were approximately $620,000
in the second quarter of 1999.
The Company's efforts in these areas are ongoing. As of June 1999, based on the
work completed to date, Nabi believes that the software, equipment and other
systems related to its business critical processes are Year 2000 ready or that
it will be able to renovate or replace, in a timely manner, any element, which
if not Year 2000 ready could be expected to have a significant, adverse effect
on Nabi's ability to deliver products or services. However, there can be no
assurance that the Company's efforts will be successful. If they are not, the
Company's operations or financial condition may be materially and adversely
affected.
FACTORS TO BE CONSIDERED
The parts of this Quarterly Report on Form 10-Q captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Legal Proceedings" contain certain forward-looking statements which involve
risks and uncertainties. Readers should refer to a discussion under "Factors to
be Considered" contained in Nabi's Annual Report on Form 10-K for the year ended
December 31, 1998 concerning certain factors that could cause Nabi's actual
results to differ materially from the results anticipated in such
forward-looking statements. Said discussion is hereby incorporated by reference
into this Quarterly Report.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nabi is a party to litigation in the ordinary course of business. In addition,
Nabi is a co-defendant with various other parties in several suits filed in the
U.S. by, or on behalf of, individuals who claim to have been infected with HIV
as a result of either using HIV-contaminated products made by the defendants
other than Nabi or having familial relations with those so infected. Nabi does
not believe that any such litigation will have a material adverse effect on its
business, financial position or results of operations.
13
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were approved at Nabi's annual stockholders' meeting,
which was held on May 28, 1999:
a) Election of the following to the Board of Directors:
<TABLE>
<CAPTION>
VOTES
----------------------------------------------------
FOR WITHHELD
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
David L. Castaldi 31,441,424 358,444
Joseph C. Cook, Jr. 31,463,924 335,944
George W. Ebright 31,433,799 366,069
David J. Gury 31,405,880 393,988
Richard A. Harvey, Jr. 31,454,319 345,549
Linda Jenckes 31,457,077 342,791
David A. Thompson 31,438,974 360,894
</TABLE>
b) Approval of the Stock Plan for Non-Employee Directors, as amended:
<TABLE>
<CAPTION>
VOTES
- ------------------------------------------------------------------------
For Against Abstain
- ----------------------- --------------------- --------------------------
<S> <C> <C> <C>
30,700,809 908,195 190,864
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit
10.23 Amended and Restated By-Laws of Nabi dated
May 28, 1999
27 Financial Data Schedule (for S.E.C. use only)
b. Reports on Form 8-K:
None
14
<PAGE> 15
NABI(R)
- --------------------------------------------------------------------------------
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.
NABI(R)
Date: August 11, 1999 By: /s/ Thomas H. Mclain
---------------------------------------
THOMAS H. MCLAIN
Senior Vice President, Corporate Services and
Chief Financial Officer
15
<PAGE> 1
EXHIBIT 10.23
================================================================================
AMENDED AND RESTATED
BY-LAWS OF NABI
AS AMENDED THROUGH
MAY 28, 1999
<PAGE> 2
NABI(R)
- --------------------------------------------------------------------------------
5800 PARK OF COMMERCE BOULEVARD, N.W.
BOCA RATON, FL 33487
AMENDED AND RESTATED
BY-LAWS OF
NABI
AS AMENDED THROUGH
MAY 28, 1999
ARTICLE I
OFFICES
The registered office shall be in the City of Dover, County of Kent,
State of Delaware, and the name of the resident agent in charge thereof is The
United States Corporation Company.
The corporation may also have offices at such other places within or
without the State of Delaware as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders for any
purpose shall be held at such place, within or without the State of Delaware, as
shall be designated by the Board of Directors or the Chairman of the Board and
stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING. An annual meeting of the stockholders of the
corporation, for the election of Directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held on such date and at such time as shall be fixed from time
to time by the Board of Directors and stated in the notice of the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called by the Chairman of the Board or by order of the Board of Directors,
and, subject to the procedures set forth in this Section 3, shall be called by
the Chairman of the Board or by the Secretary at the request in writing of
stockholders owning shares of the capital stock of the corporation which
represent a majority of the votes entitled to be cast at such meeting. Upon
request in writing sent by registered mail to the Chairman of the Board by any
stockholder or stockholders entitled to call a special meeting of stockholders
pursuant to this Section 3 (which request shall state the purpose or purposes of
the proposed meeting), the Board of Directors shall determine a place and time
for such meeting, which time shall be not less than ninety (90) nor more than
one hundred (100) days after the receipt and determination of the validity of
such request, and a record date for the determination of stockholders entitled
to vote at such meeting in the manner set forth in Section 8 of this Article II.
Business transacted at any special meeting shall be confined to the purpose or
purposes stated in the notice of such meeting.
SECTION 4. NOTICE OF MEETING. Notice of the time and place of holding
each annual meeting and each special meeting of stockholders shall be given by
the Secretary, not less than ten nor more than
<PAGE> 3
sixty days before the meeting, to each stockholder of record entitled to vote at
such meeting. Notices of all meetings of stockholders shall state the purposes
for which the meetings are held.
SECTION 5. LIST OF STOCKHOLDERS. 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,
shall be prepared by the Secretary, who shall have charge of the stock ledger.
Such list shall be open for said ten days to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, either
at a place specified in the notice of the meeting (which place shall be within
the city where the meeting is to be held) or, if no such other place has been so
specified, at the place where the meeting is to be held. Such 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 present at the meeting.
SECTION 6. QUORUM. At any meeting of stockholders, the holders of
issued and outstanding shares of capital stock which represent a majority of the
votes entitled to be cast thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business. 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 the power to adjourn the meeting from time to time until a
quorum shall be present or represented. Unless the adjournment is for more than
thirty days or a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken. 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 called.
SECTION 7. VOTING. At any meeting of the stockholders, every
stockholder having the right to vote shall be entitled to vote in person, or by
proxy appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than eleven months prior to said meeting. When a quorum
is present at any meeting, the holders of shares of stock present in person or
represented by proxy, which shares represent a majority of votes cast on any
question before the meeting, shall decide the question unless the question is
one upon which by express provision of law or of the certificate of
incorporation or of these by-laws a different vote is required, in which case
such express provision shall govern and control the decision of such question.
SECTION 8. FIXING OF RECORD DATE. (a) 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 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 other than stockholder action by
written consent, the Board of Directors may fix a record date, which shall not
precede the date such record date is fixed and shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any such other action. 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 next preceding the day
on which notice is given. The record date for any other purpose other than
stockholder action by written consent shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. 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.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing the record date. If
no
2
<PAGE> 4
record date has been fixed by the Board of Directors within 10 days of the date
on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
SECTION 9. NOMINATION OF DIRECTORS. Only persons who are nominated in
accordance with the procedures set forth in the By-laws shall be eligible to
serve as Directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 9, who shall be entitled to vote for the election
of directors at the meeting and who complies with the notice procedures set
forth in this Section 9. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the corporation. 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 90 days; provided, however, that in the
event that less than 100 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 10th day
following the day on which such notice of the date of the meeting 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 reelection as a
Director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a Director if elected);
and (b) as to the stockholder giving the notice (i) the name and address, as
they appear on the corporation's books, of such stockholder and (ii) the class
and number of shares of the corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a Director shall furnish to the Secretary
of the corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
to serve as a Director of the corporation unless nominated in accordance with
the procedures set forth in this 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 procedures prescribed by the By-laws, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. Notwithstanding the foregoing provisions of
this Section 9, a stockholder shall also comply with all applicable requirements
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder with respect to the matters set forth in this Section.
SECTION 10. NOTICE OF BUSINESS. At any meeting of the stockholders,
only such business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board of Directors or (b) by any
stockholder of the corporation who is a stockholder of record at the time of
giving of the notice provided for in this Section 10, who shall be entitled to
vote at such meeting and who complies with the notice procedures set forth in
this Section 10. For business to be properly brought before a stockholder
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 90 days prior to the meeting; provided,
however, that in the event that less than 100 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 received no later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (a) a brief
3
<PAGE> 5
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the corporation which are
beneficially owned by the stockholder and (d) any material interest in the
stockholder in such business. Notwithstanding anything in the By-laws to the
contrary, no business shall be conducted at a stockholder meeting except in
accordance with the procedures set forth in this Section 10. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting and in accordance with the
provisions of the By-laws, 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. Notwithstanding the foregoing provisions of this Section 10,
a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Section.
ARTICLE III
DIRECTORS
SECTION 1. DIRECTORS AND THEIR TERMS OF OFFICE. There shall be a Board
of Directors consisting of not less than three nor more than fifteen persons,
the exact number of Directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the number of Directors required at
the time to constitute a full board as fixed in or determined pursuant to these
by-laws as then in effect. The Directors shall, except as otherwise provided in
Section 3 of this Article, be elected at the annual meeting or at any meeting of
the stockholders held in lieu of such annual meeting, which meeting, for the
purposes of these by-laws, shall be deemed the annual meeting, and each Director
so elected shall hold office until his successor is elected and qualified. A
Director need not be a stockholder. Within the limits above specified, the
number of Directors may at any time be increased or decreased by vote of the
Directors at any meeting of the Directors provided that no decrease in the
number of Directors shall affect the term of any Director in office.
SECTION 2. POWERS OF DIRECTORS. The affairs, property and business of
the corporation shall be managed by the Board of Directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by law or by the certificate of incorporation or these by-laws directed or
required to be exercised or done by the stockholders.
SECTION 3. VACANCIES. If any vacancies occur in the Board of Directors
caused by death, resignation, retirement, disqualification or removal from
office of any Directors or otherwise, or any new Directorship is created by any
increase in the authorized number of Directors, Directors to fill the vacancy or
vacancies or to fill the newly created Directorship may be elected solely by a
majority vote of the Directors then in office, whether or not a quorum, at any
meeting of the Board and the Directors so chosen shall hold office until their
successors, if any, are duly elected and qualified.
SECTION 4. ANNUAL MEETING OF DIRECTORS. The first meeting of each newly
elected board may be held without notice immediately after an annual meeting of
stockholders (or a special meeting of stockholders held in lieu of an annual
meeting) at the same place as that at which such meeting of stockholders was
held; or such first meeting may be held at such place (within or without the
State of Delaware) and time as shall be fixed by the consent in writing of all
the Directors, or may be called in the manner hereinafter provided with respect
to the call of special meetings.
SECTION 5. REGULAR MEETINGS OF DIRECTORS. Regular meetings of the Board
of Directors may be held at such times and at such place or places (within or
without the State of Delaware) as the Board of Directors may from item to time
prescribe. No notice need be given of any regular meeting and a notice, if
given, need not specify the purposes thereof.
SECTION 6. SPECIAL MEETINGS OF DIRECTORS. Special meetings of the Board
of Directors may be called at any time by or under the authority of the Chairman
of the Board and shall be called by him or by the Secretary on written request
of any two Directors or, if they fail to do so, by two Directors in the name
4
<PAGE> 6
of the Secretary, to be held in each instance at such place (within or without
the State of Delaware) as the person calling the meeting may designate in the
call thereof. Notice of each special meeting of the Board of Directors, stating
the time and place thereof, shall be given to each Director by the Secretary,
not less than twenty-four hours before the meeting. Such notice need not specify
the purposes of the meeting.
SECTION 7. QUORUM; VOTING. At any meeting of the Board of Directors a
majority of the number of Directors required to constitute a full Board, as
fixed in or determined pursuant to these by-laws as then in effect, shall
constitute a quorum for the transaction of business, but if a quorum shall not
be present at any meeting 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. Except as otherwise provided by
law or by the certificate of incorporation or by the by-laws, the affirmative
vote of at least a majority of the Directors present at a meeting at which there
is a quorum shall be the act of the Board of Directors.
SECTION 8. MEETINGS BY TELEPHONE. Members of the Board of Directors or
of any committee thereof may participate in meetings of the Board of Directors
or of such committee by means of conference telephone or similar communications
equipment by means of which all person participating in the meeting can hear
each other, and such participation shall constitute presence in person at such
meeting.
SECTION 9. ACTION WITHOUT MEETING. Unless otherwise restricted by the
certificate of incorporation, 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 of Directors or of such 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 of Directors or of such
committee.
SECTION 10. COMPENSATION. By resolution of the Board of Directors, the
Directors, as such, may receive stated salaries for their services, and may be
allowed a fixed sum and expenses of attendance, if any, for attendance at each
regular or special meeting of the Board. Members of committees may also be
allowed a fixed sum and expenses of attendance, if any, for attending committee
meetings. Nothing herein contained shall preclude any Director from serving the
corporation in any other capacity and receiving compensation for such services.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
The Board of Directors, by the affirmative vote of a majority of the
number of Directors required at the time to constitute a full board as fixed in
or determined pursuant to these by-laws as then in effect, may designate two or
more of its members to constitute an Executive Committee, which committee shall,
when the Board of Directors is not in session, have and may exercise, to the
extent provided by resolution of the Board of Directors, from time to time, all
the powers of the Board of Directors (including all action which may be taken by
the Board of Directors as by law, by the certificate of incorporation or by the
by-laws provided) insofar as such powers may be lawfully delegated, and may have
power to authorize the seal of the corporation to be affixed to all papers which
may require it.
The Board of Directors, by the affirmative vote of a majority of the
number of Directors required at the time to constitute a full board as fixed in
or determined pursuant to these by-laws as then in effect, may also appoint
other committees, the members of which may, but need not, be Directors, the
number composing such committees, not less than two, and the powers (to be
advisory only if all the members are not Directors) conferred upon them to be
determined by resolution of the Board of Directors.
No committee shall have 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
5
<PAGE> 7
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the by-laws; and unless the resolution shall expressly
so provide, no committee shall have the power or authority to declare a dividend
or to authorize the issuance of stock.
Vacancies in the membership of committees shall be filled by the Board
of Directors at a regular meeting or at a special meeting.
At any meeting of any committee a majority of the whole committee shall
constitute a quorum and except as otherwise provided by statute or by the
certificate of incorporation or by the by-laws the affirmative vote of at least
a majority of the members present at a meeting at which there is a quorum shall
be the act of the committee.
The Secretary of the corporation, or in his absence, an Assistant
Secretary, or other person designated by a committee, shall act as secretary of
such committee.
The Executive Committee and each of the other committees, except as
otherwise provided by resolution of the Board of Directors, shall fix the time
and place of its meetings within or without the State of Delaware, shall adopt
its own rules and procedure, and shall keep a record of its acts and proceedings
and report the same from time to time to the Board of Directors.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS AND THEIR ELECTION, TERM OF OFFICE AND VACANCIES.
The officers of the corporation shall be a Chairman of the Board, a President, a
Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries,
Assistant Treasurers and other officers as the Board of Directors may from time
to time determine and elect or appoint. All officers shall be elected annually
by the Board of Directors at their first meeting following the annual meeting of
stockholders or any special meeting held in lieu thereof and shall hold office
until their successors are duly elected and qualified. The Chairman of the Board
must be a Director. All other officers may, but need not be, members of the
Board of Directors. Two or more offices may be held by the same person. Any
officer elected by the Board of Directors may be removed at any time by the
Board of Directors. If any vacancy shall occur among the officers, it shall be
filled by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the chief executive officer of the corporation with full control and
responsibility for management decisions, subject to the supervision and control
of the Board of Directors and such limitations as the Board of Directors may
from time to time impose. The Chairman of the Board when present shall preside
at all meetings of the stockholders and of the Directors. It shall be his duty
and he shall have the power to see that all orders and resolutions of the Board
are carried into effect. The Chairman of the Board shall perform such additional
duties and have such additional powers as the Directors shall designate. In the
absence or disability of the Chairman of the Board, his powers and duties shall
be performed by such officer of the corporation as the Board shall designate.
SECTION 3. PRESIDENT. The President shall be the chief operating
officer of the corporation with full control and responsibility for the
operations of the corporation. The President, as soon as reasonably possible
after the close of each fiscal year, shall submit to the Board a report of the
operations of the corporation for such year and a statement of its affairs and
shall from time to time report to the Board all matters within his knowledge
which the interests of the corporation may require to be brought to its notice.
The President shall perform such duties and have such powers additional to the
foregoing as the Board shall designate.
SECTION 4. VICE PRESIDENTS. In the absence or disability of the
President, his powers and duties shall be performed by the Vice President, if
only one, or, if more than one, by the one designated for the
6
<PAGE> 8
purpose by the Board. Each Vice President shall have such other powers and
perform such other duties as the Board shall from time to time designate.
SECTION 5. TREASURER. The Treasurer 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 depositaries as shall be designated by the
Board or in the absence of such designation in such depositaries as he shall
from time to time deem proper. He shall disburse the funds of the corporation as
shall be ordered by the Board, taking proper vouchers for such disbursements. He
shall promptly render to the President and to the Board such statements of his
transactions and accounts as the President and Board respectively may from time
to time require. The Treasurer shall perform such duties and have such powers
additional to the foregoing as the Board may designate.
SECTION 6. ASSISTANT TREASURERS. In the absence or disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if only one, or if more than one, by the one designated for the purpose by the
Board Each Assistant Treasurer shall have such other powers and perform such
other duties as the Board shall from time to time designate.
SECTION 7. THE SECRETARY. The Secretary shall issue notices of all
meetings of stockholders and Directors and of the executive and other committees
where notices of such meetings are required by law or these by-laws. He shall
keep the minutes of meetings of stockholders and of the Board of Directors and
of the executive and other committees, respectively, unless such committees
appoint their own respective secretaries and be responsible for the custody
thereof. Unless the Board shall appoint a transfer agent and/or registrar, the
Secretary shall be charged with the duty of keeping, or causing to be kept,
accurate records of all stock outstanding, stock certificates issued and stock
transfers. He shall sign such instruments as require his signature and shall
perform such other duties and shall have such powers as the Board of Directors
shall designate from time to time, in all cases subject to the control of the
Board of Directors. The Secretary shall have custody of the corporate seal,
shall affix and attest such seal on all documents whose execution under seal is
duly authorized. In his absence at any meeting, an Assistant Secretary or the
Secretary pro tempore shall perform his duties thereat.
SECTION 8. ASSISTANT SECRETARIES. In the absence or disability of the
Secretary, his powers and duties shall be performed by the Assistant Secretary,
if only one, or, if more than one, by the one designated for the purpose by the
Board. Each Assistant Secretary shall have such powers and perform such other
duties as the Board shall from time to time designate.
SECTION 9. Salaries. The salaries of officers, agents and employees
shall be fixed from time to time by or under authority from the Board of
Directors.
ARTICLE VI
RESIGNATIONS AND REMOVALS
SECTION 1. OFFICERS, AGENTS. EMPLOYEES AND MEMBERS OF COMMITTEES. Any
officer, agent or employee of the corporation may resign at any time by giving
written notice to the Board of Directors or to th e Chairman of the Board or to
the Secretary of the corporation; and any member of any committee may resign by
giving written notice either as aforesaid or to the committee of which he is a
member or to the chairman thereof. Any such resignation shall take effect at the
time specified therein, or if the time be not specified, upon receipt thereof,
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective. The Board of Directors may at any
time, with or without cause, remove from office or discharge or terminate the
employment of any officer, agent, employee or member of any committee.
SECTION 2. DIRECTORS. Any Director of the corporation may resign at any
time by giving written notice to the Board of Directors or to the Chairman of
the Board or to the Secretary of the corporation. Any such resignation shall
take effect at the time specified therein, or if the time be not specified, upon
7
<PAGE> 9
receipt thereof; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. When one or more
Directors shall resign from the Board of Directors, effective at a future date,
a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective and
each Director so chosen shall hold office as provided in these by-laws in the
filling of other vacancies. The stockholders of the corporation entitled to vote
upon the election of Directors may, at any time, remove from office any one or
more Directors only with cause, and his successor or their successors shall be
elected by the remaining Directors as provided in these By-laws in the filling
of other vacancies. A Director may be removed for cause only after reasonable
notice and opportunity to be heard before the body proposing to remove him.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The corporation shall indemnify, to the fullest extent
permitted by the General Corporation Law of the State of Delaware as presently
in effect or as hereafter amended:
(a) Subject to the provisions of Section 10, any 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 and whether external or internal to the corporation (other than by
action by or in the right of the corporation) by reason of the fact that he is
or was a Director or officer of the corporation, or is or was serving at the
request of the corporation as a Director or officer of another corporation,
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 in connection with such suit, action or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was lawful.
(b) Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a Director or officer of the corporation, or is or was serving at
the request of the corporation as a Director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 2. The Board of Directors, in its discretion, may authorize the
corporation to indemnify to the fullest extent permitted by the General
Corporation Law of the State of Delaware (as presently in effect or as hereafter
amended):
(a) Subject to the provisions of Section 10, any 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 (other than an action by or in the right of the corporation) by
reason of the fact that he is or was an employee or agent of the corporation, or
is or was serving at the
8
<PAGE> 10
request of the corporation as an employee or agent of 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 in connection with such suit, action or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was an employee or agent of the corporation, or is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. Any indemnification under this Article VII (unless required
by law or ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections l and 2 of this
Article VII. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders of the
corporation.
SECTION 4. Expenses incurred by a Director or officer in defending a
civil or criminal action, suit or proceeding shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the Director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article VII. Any advance
under this Section 4 shall be made promptly, and in any event within ninety
days, upon the written request of the person seeking the advance.
SECTION 5. The indemnification and advancement of expenses provided by,
or granted pursuant to, the other Sections of this Article VII shall not be
deemed exclusive of any other rights to which any person, whether or not
entitled to be indemnified under this Article VII, may be entitled under any
statute, by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. Each person who is or becomes a
Director or officer as described in Section 1 shall be deemed to have served or
to have continued to serve in such capacity in reliance upon the indemnity
provided for in this Article VII. All rights to indemnification under this
Article VII shall be deemed to be provided by a contract between the corporation
and the person who serves as a Director or officer of the corporation at any
time while these by-laws and other relevant provisions of the General
Corporation Law of the State of Delaware and other applicable law, if any, are
in effect. Any repeal or modification thereof shall not affect any rights or
obligations then existing.
SECTION 6. The Board of Directors may at any time and from time to time
cause the corporation 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,
9
<PAGE> 11
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware (as
presently in effect or hereafter amended), the Certificate of Incorporation of
the corporation or these By-laws.
SECTION 7. The corporation's indemnification under Sections 1 and 2 of
this Article VII 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, shall be reduced by any
amounts such person receives as indemnification (i) under any policy of
insurance purchased and maintained on his behalf by the corporation, (ii) from
such other corporation, partnership, joint venture, trust or other enterprise,
or (iii) under any other applicable indemnification provision.
SECTION 8. In the discretion of the Board of Directors of the
corporation, for the purposes of this Article VII, references to "the
corporation" may also include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its Directors or officers, so that any person who is or was a Director
or officer of such constituent corporation, or is or was serving at the request
of such constituent corporation as a Director or officer of another corporation,
partnership, joint venture, trust or other enterprise, would stand in the same
position under the provisions of this Article VII with respect to the resulting
or surviving corporation as he would have with respect to such other constituent
corporation if its separate existence had continued.
SECTION 9. In addition to and without limiting the foregoing provisions
of this Article VII and except to the extent otherwise required by law, any
person seeking indemnification under or pursuant to Section 1 of this Article
VII shall be deemed and presumed to have met the applicable standard of conduct
set forth in Section l unless the contrary shall be established.
SECTION 10. (a) In addition to and without limiting the foregoing
provisions of this Article VII and except to the extent otherwise required by
law, (a) it shall be a condition of the corporation's obligation to indemnify
under Sections l(a) and 2(a) of this Article VII (in addition to any other
condition in these By-laws or by law provided or imposed) that the person
asserting, or proposing to assert, the right to be indemnified, promptly after
receipt of notice of commencement of any action, suit or proceeding in respect
of which a claim for indemnification is or is to be made against the
corporation, notify the corporation of the commencement of such action, suit or
proceeding, including therewith a copy of all papers served and the name of
counsel retained or to be retained by such person in connection with such
action, suit or proceeding, and thereafter to keep the corporation timely and
fully apprised of all developments and proceedings in connection with such
action, suit or proceeding or as the corporation shall request, and (b) the fees
and expenses of any counsel retained by a person asserting, or proposing to
assert, the right to be indemnified under Section l(a) or 2(a) of this Article
VII shall be at the expense of such person unless the counsel retained shall
have been approved by the corporation in writing.
(b) If a claim for indemnification or advancement of expenses under
this Article VII is not paid in full by the corporation within 90 days after a
written claim therefor has been received by the corporation, the claimant may at
any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expenses of prosecuting such claim.
SECTION 11. For purposes of this Article VII, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service by a Director or officer of the corporation which
imposes duties on, or involves services by, such person with respect to any
employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the
10
<PAGE> 12
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the corporation" as
referred to in this Article VII.
SECTION 12. To the extent that a Director, officer, agent or employee
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 or in Section 2, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 13. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article VII shall continue as to a person who
has ceased to be a Director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 14. If any term or provision of this Article VII or the
application thereof to any person, property or circumstance shall to any extent
be invalid or unenforceable, the remainder of this Article VII or the
application of such term or provision to persons, property or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term and provision of this Article VII shall be valid
and enforced to the fullest extent permitted by law.
ARTICLE VIII
CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates representing in the aggregate the share owned by him
and certifying the number and class thereof, which shall be in such form as this
Board shall adopt. Each certificate of stock shall be signed by the Chairman of
the Board or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary. Any of or all
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate has ceased to be such officer, transfer agent or
registrar before the certificate is issued, such certificate may nevertheless be
issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
SECTION 2. TRANSFER OF STOCK. Shares of stock shall be transferable on
the books of the corporation pursuant to applicable law and such rules and
regulations as the Board of Directors shall from time to time prescribe.
SECTION 3. HOLDERS OF RECORD. Prior to due presentment for registration
of transfer the corporation may treat the holder of record of a share of its
stock as the complete owner thereof exclusively entitled to vote, to receive
notifications and otherwise entitled to all the rights and powers of a complete
owner thereof, notwithstanding notice to the contrary.
SECTION 4. TRANSFER AGENT AND REGISTRAR. The Board of Directors may at
any time appoint a transfer agent or agents and/or registrar or registrars for
the transfer and/or registration of shares of stock.
SECTION 5. LOST, STOLEN, DESTROYED OR MUTILATED STOCK CERTIFICATES. The
Board of Directors may direct a new stock certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, destroyed or mutilated, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, destroyed or mutilated. 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, destroyed or mutilated certificate or certificates, or his legal
representative, to (a) advertise the same in such manner as it shall require
and/or (b) 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, destroyed or mutilated and/or (c)
comply with any other reasonable requirements prescribed by the Board.
11
<PAGE> 13
ARTICLE IX
SECURITIES OF OTHER CORPORATIONS
Subject to any limitations that may be imposed by the Board of
Directors, the Chairman of the Board, the President or any person or persons
authorized by the Board may in the name and on behalf of the corporation (i)
act, or appoint any other person or persons (with or without powers of
substitution) to act in the name and on behalf of the corporation (as proxy or
otherwise), at any meeting of the holders of stock or other securities of any
corporation or other organization, securities of which shall be held by this
corporation, or (ii) express consent or dissent, as a holder of such securities,
to corporate or other action by such other corporation or organization.
ARTICLE X
CHECKS, NOTES, DRAFTS AND OTHER INSTRUMENTS
Checks, notes, drafts and other instruments for the payment of money
drawn or endorsed in the name of the corporation may be signed by any officer or
officers or person or persons authorized by the Board of Directors to sign the
same. No officer or person shall sign any such instrument as aforesaid unless
authorized by the Board to do so.
ARTICLE XI
DIVIDENDS AND RESERVES
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation may, subject to any provisions of the certificate of incorporation,
be declared pursuant to law by the Board of Directors. Dividends may be paid in
cash, in property or in shares of the capital stock.
SECTION 2. RESERVES. Before payment of any dividend there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
thinks proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose 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.
ARTICLE XII
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors may
from time to time prescribe and the same may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE XIII
FISCAL YEAR
The fiscal year of the corporation shall end on the 31st day of
December of each year.
12
<PAGE> 14
ARTICLE XIV
BOOKS AND RECORDS
The books, accounts and records of the corporation, except as may be
otherwise required by the laws of the State of Delaware, may be kept outside of
the State of Delaware, at such place or places as the Board of Directors may
from time to time appoint. Except as may otherwise be provided by law, the Board
of Directors shall determine whether and to what extent the books, accounts,
records and documents of the corporation, or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any book, account, record or document of the corporation, except as
conferred by law or by resolution of the stockholders or Board of Directors.
ARTICLE XV
NOTICES
SECTION 1. MANNER OF GIVING OF NOTICE. Whenever the provisions of a
law, the certificate of incorporation, the by-laws or rules of a committee
require notice to be given to any Director, officer, stockholder or member of a
committee, they shall not be construed to mean personal notice; such notice may
be given by telegram or by depositing such notice in a post office or letter
box, in a postpaid, sealed wrapper, addressed to such Director, officer,
stockholder or member of a committee at his address as the same appears in the
books or records of the corporation (unless he shall have filed with the
Secretary a written request that notice intended for him be sent to some other
address, in which case it shall be sent to the address designated in the most
recent such request); and the time when such telegram shall be transmitted or
notice deposited shall be deemed to be the time of the giving of such notice.
SECTION 2. WAIVER OF NOTICE. Whenever notice is required by law, the
certificate of incorporation, the by-laws, or as otherwise provided by law, a
written waiver thereof, signed by the person entitled to notice, shall be deemed
equivalent to notice, whether signed before or after the time required for such
notice. 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. Neither 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 need be
specified in any written waiver of notice.
ARTICLE XVI
SEPARABILITY
If any term or provision of the by-laws, or the application thereof to
any person or circumstance or period of time, shall to any extent be invalid or
unenforceable, the remainder of the by-laws, or the application of such term or
provision to persons or circumstances or periods of time other than those as to
which it is invalid or unenforceable, shall not be affected thereby and each
term and provision of the by-laws shall be valid and enforced to the fullest
extent permitted by law.
ARTICLE XVII
AMENDMENTS
The by-laws may be made, altered or repealed by the stockholders or, if
such power is conferred by the certificate of incorporation, by the Board of
Directors except that any by-law made by the stockholders may be altered or
repealed only by the stockholders if such by-law expressly so provides.
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 1,112
<SECURITIES> 0
<RECEIVABLES> 31,911<F1>
<ALLOWANCES> 0
<INVENTORY> 32,969<F1>
<CURRENT-ASSETS> 69,749
<PP&E> 102,174<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 202,205
<CURRENT-LIABILITIES> 42,151
<BONDS> 103,273
0
0
<COMMON> 3,494
<OTHER-SE> 137,196
<TOTAL-LIABILITY-AND-EQUITY> 54,494
<SALES> 120,221
<TOTAL-REVENUES> 120,221
<CGS> 87,898
<TOTAL-COSTS> 87,898
<OTHER-EXPENSES> 29,126
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 2,291
<INCOME-PRETAX> 912
<INCOME-TAX> 374
<INCOME-CONTINUING> 538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
<FN>
<F1>RECEIVABLES, INVENTORY & PP&E REPRESENT NET AMOUNTS.
<F2>LOSS PROVISION INCLUDED IN OTHER EXPENSES.
</FN>
</TABLE>
