<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 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 number 0-12992
SYNTHETECH, INC.
(Exact name of registrant as specified in its charter)
Oregon 84-0845771
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1290 Industrial Way, Albany, Oregon 97321
(Address of Principal Executive Offices) (Zip Code)
(541) 967-6575
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No_____
The number of shares of the registrant's common stock,
$.001 par value, outstanding as of August 9, 1999 was
14,254,630.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYNTHETECH, INC.
BALANCE SHEETS
-------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(unaudited)
June 30, March 31,
1999 1999
- --------------------------- --------- ---------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 7,736,000 $ 7,470,000
Accounts receivable, less
allowance for doubtful accounts
of $15,000 for 1999 and 1998 2,470,000 3,414,000
Inventories 3,376,000 3,359,000
Prepaid expenses 287,000 284,000
Deferred income taxes 133,000 133,000
Other current assets 17,000 5,000
---------- ----------
TOTAL CURRENT ASSETS 14,019,000 14,665,000
PROPERTY, PLANT AND EQUIPMENT,
at cost, net 12,010,000 11,561,000
OTHER ASSETS 4,000 4,000
------------ ------------
TOTAL ASSETS $ 26,033,000 $ 26,230,000
============ ============
See Notes To Financial Statements.
</TABLE>
<PAGE> 3
SYNTHETECH, INC.
BALANCE SHEETS
-------------------------
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
(unaudited)
June 30, March 31,
1999 1999
- ------------------------------------ ---------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current portion of note payable $ 15,000 $ 15,000
Accounts payable 440,000 1,543,000
Accrued compensation 147,000 375,000
Deferred revenue 44,000 44,000
Accrued income taxes 681,000 561,000
Other accrued liabilities 10,000 17,000
--------- ---------
TOTAL CURRENT LIABILITIES 1,337,000 2,555,000
DEFERRED INCOME TAXES 496,000 496,000
NOTE PAYABLE, net of current portion 148,000 152,000
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
authorized 100,000,000 shares;
issued and outstanding, 14,255,000
and 14,252,000 shares 14,000 14,000
Paid-in capital 8,750,000 8,740,000
Deferred compensation (66,000) (76,000)
Retained earnings 15,354,000 14,349,000
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 24,052,000 23,027,000
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 26,033,000 $ 26,230,000
============ ============
See Notes To Financial Statements.
</TABLE>
<PAGE> 4
SYNTHETECH, INC.
STATEMENTS OF INCOME
--------------------------------
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
For The Three Month Period Ended June 30 1999 1998
- ---------------------------------------- ----- -----
REVENUES $ 4,636,000 $ 4,128,000
COST OF SALES 2,629,000 2,535,000
--------- ---------
GROSS PROFIT 2,007,000 1,593,000
RESEARCH AND DEVELOPMENT 127,000 81,000
SELLING, GENERAL AND ADMINISTRATIVE 343,000 355,000
------- -------
OPERATING EXPENSE 470,000 436,000
--------- ---------
OPERATING INCOME 1,537,000 1,157,000
OTHER INCOME, net 87,000 63,000
INTEREST EXPENSE (3,000) (4,000)
--------- ---------
INCOME BEFORE INCOME TAXES 1,621,000 1,216,000
PROVISION FOR INCOME TAXES 616,000 462,000
----------- -----------
NET INCOME $ 1,005,000 $ 754,000
=========== ===========
BASIC EARNINGS PER SHARE $0.07 $0.05
===== =====
DILUTED EARNINGS PER SHARE $0.07 $0.05
===== =====
See Notes To Financial Statements.
</TABLE>
<PAGE> 5
SYNTHETECH, INC.
STATEMENTS OF CASH FLOWS
----------------------------------
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
For The Three Month Period Ended June 30 1999 1998
- ---------------------------------------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,005,000 $ 754,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, amortization and other 386,000 219,000
Amortization of deferred compensaton 13,000 29,000
(Increase) decrease in assets:
Accounts receivable, net 944,000 (296,000)
Inventories (17,000) (688,000)
Prepaid expenses (3,000) 80,000
Other assets (12,000) 19,000
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (1,218,000) 734,000
Deferred revenue - 134,000
--------- -------
Net cash provided by operating activities 1,098,000 985,000
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment purchases (835,000) (419,000)
-------- --------
Net cash used in investing activities (835,000) (419,000)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term
debt obligations (4,000) (3,000)
Proceeds from stock option exercises
and disqualifying dispositions 7,000 1,000
----- ------
Net cash provided by (used in)
financing activities 3,000 (2,000)
------- -------
NET INCREASE IN CASH AND CASH EQIVALENTS 266,000 564,000
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 7,470,000 4,976,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,736,000 $ 5,540,000
=========== ===========
NON-CASH INVESTING ACTIVITIES:
Issuance of stock options at below fair value $ 4,000 $ 38,000
Mature shares exchanged for the exercise
of stock options $ - $ 231,000
See Notes To Financial Statements.
</TABLE>
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
NOTE A. GENERAL AND BUSINESS
The summary financial statements included herein have been
prepared, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although Synthetech
management believes that the disclosures are adequate to make
the information presented not misleading. It is suggested
that these summary financial statements be read in conjunction
with the financial statements and the notes thereto included
in Synthetech's fiscal 1999 Form 10-K.
Interim financial statements are by necessity somewhat
tentative; judgments are used to estimate quarterly amounts
for items that are normally determinable only on an annual
basis. For example, provision for income taxes is an estimate
of the annual liability pro-rated over the quarters of the
fiscal year based on estimates of annual income. Further, all
inventory quantities are verified by physically counting the
units on hand at least once a year. Normally, selected
inventories are counted at the end of each quarter. For those
inventories not counted at the end of the quarter, quantities
are determined using measured sales and production data for
the period.
The interim period information included herein reflects all
adjustments which are, in the opinion of Synthetech
management, necessary for a fair statement of the results of
the respective interim periods. Results of operations for
interim periods are not necessarily indicative of results to
be expected for an entire year.
NOTE B. STATEMENTS OF CASH FLOWS
Supplemental cash flow disclosures for the three
month period ended June 30:
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Paid
---------
1999 1998
---- ----
Income Taxes $ 490,000 $ 15,000
Interest $ 4,000 $ 4,000
</TABLE>
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE C. EARNINGS PER SHARE
Basic earnings per share (EPS) are computed by dividing net
income by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per
share are computed by dividing net income by the weighted
average number of shares of common stock and common stock
equivalents outstanding during the period, calculated using
the treasury stock method as defined in SFAS No. 128. The
following is a reconciliation of the shares used to calculate
basic earnings per share and diluted earnings per share:
<TABLE>
<CAPTION>
<S> <C> <C>
For The Three Months Ended June 30 1999 1998
---------------------------------- ---- ----
Weighted average shares outstanding
for Basic EPS 14,252,108 14,159,981
Dilutive effect of Common stock
options issuable under treasury
stock method 67,494 108,781
---------- ----------
Weighted average common and common
equivalent shares outstanding for
diluted EPS 14,319,602 14,268,762
========== ==========
</TABLE>
The following common stock equivalents were excluded from the
earnings per share computation because their effect would have
been anti-dilutive:
<TABLE>
<CAPTION>
<S> <C> <C>
For The Three Months Ended June 30 1999 1998
---------------------------------- ---- ----
Common stock options outstanding 523,800 466,800
</TABLE>
NEW ACCOUNTING PRONOUNCEMENT
In June 1999, the FASB issued Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 137"). SFAS 137 is
an amendment to Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging
Activities". SFAS 137 establishes accounting and reporting
standards for all derivative instruments. SFAS 137 is
effective for fiscal years beginning after June 15, 2000.
Synthetech does not currently have any derivative instruments
and, accordingly, does not expect the adoption of SFAS 137 to
have an impact on its financial position or results of
operations.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage of revenues represented by each item included in
the Statements of Income.
Percentage of Revenues
-------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
For The Three Month Period Ended June 30 1999 1998
- ---------------------------------------- ------ ------
Revenues 100.0 % 100.0 %
Cost of sales 56.7 % 61.4 %
------ ------
Gross Profit 43.3 % 38.6 %
Research and Development 2.7 % 2.0 %
Selling, General and Administration 7.4 % 8.6 %
------ ------
Operating expense 10.1 % 10.6 %
------ ------
Operating Income 33.2 % 28.0 %
Other Income, net 1.9 % 1.5 %
Interest Expense (0.1)% (0.1)%
------ ------
Income Before Income Taxes 35.0 % 29.4 %
Provision For Income Taxes 13.3 % 11.2 %
------ ------
Net Income 21.7 % 18.2 %
====== ======
</TABLE>
Revenues
- --------
Revenues increased by 12% to $4.64 million in the first
quarter of fiscal 2000 from $4.13 million in the first quarter
of fiscal 1999. International sales, mainly to Mexico and
Europe, were $3.00 million in the first quarter of fiscal 2000
as compared to $1.26 million for the first quarter of fiscal
1999, representing a 138% increase. International sales, like
all Company revenues, are subject to significant quarterly
fluctuations.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
The increase in revenues for the first quarter of fiscal 2000
over the same period of fiscal 1999 principally reflected the
$2.75 million revenue contribution from a large-scale order
for a marketed drug compared to its $2.22 million contribution
to revenues last fiscal year. With the final $400,000
shipment of this large-scale order occurring in July, 1999,
the Company expects that the results for the second quarter of
fiscal 2000 will be lower than the first quarter fiscal 2000
results. Nevertheless, Synthetech continues to be an active
supplier of a diverse set of PBBs, including several novel
PBBs for a handful of projects advancing through clinical
trials. While it is difficult to predict the timing or extent
of the business opportunities associated with this handful of
projects, they have the potential to generate significant
future revenue. (See "Industry Factors" below.)
Gross Profit
- ------------
Gross profit was $2.01 million or 43% of revenues in the first
quarter of fiscal 2000 as compared to $1.59 million or 39% of
revenues in the first quarter of fiscal 1999. The increase in
gross profit margin for the first quarter of fiscal 2000
primarily reflects manufacturing and process improvements
associated with the large-scale order. These results
demonstrate the Company's ability to generate ongoing
operating efficiencies and lower variable costs over the life
cycle of a large-scale project.
Operating Expenses
- ------------------
Research and development (R&D) expense increased to $127,000
in the first quarter of fiscal 2000 from $81,000 in the first
quarter of fiscal 1999. As a percentage of revenues, the
first quarter of fiscal 2000 was nearly 3% compared to 2% for
the first quarter of fiscal 1999. The increase in R&D expense
primarily reflected increases in staffing and associated
expenses. Selling, general and administrative (SG&A) expense
was $343,000 in the first quarter of fiscal 2000 compared to
$355,000 in the first quarter of fiscal 1999, or 7% and 9% as
a percentage of revenues, respectively. In both periods
operating expenses were approximately 10% as a percentage of
revenues.
Operating Income
- ----------------
Operating income increased to $1.54 million in the first
quarter of fiscal 2000 compared with $1.16 million in the
first quarter of fiscal 1999. As a percent of revenues, the
first quarter of fiscal 2000 was 33% compared to 28% of
revenues for the same period of fiscal 1999.
Other Income
- ------------
The net other income of $87,000 and $63,000 in the first
quarter of fiscal 2000 and fiscal 1999, respectively,
primarily reflected interest earnings.
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Net Income
- ----------
For the first quarter of fiscal 2000 the Company earned $1.62
million before income taxes. A provision for income taxes of
$616,000 resulted in net income of $1.01 million. The
Company's effective tax rate was 38% for the first quarter of
fiscal 2000 and the first quarter of fiscal 1999.
INDUSTRY FACTORS
The market for PBBs is driven by the market for synthetically
manufactured peptide, peptidomimetic small molecule and other
drugs in which they are incorporated. The drug development
process for these drugs is dictated by the marketplace, drug
companies and the regulatory environment. The Company has no
control over the pace of these drug development efforts, which
drugs get selected for clinical trials, which drugs are
approved by the FDA and, even if approved, the ultimate market
potential of such drugs.
The three stages of the drug development process include: R&D
or discovery stage, clinical trial stage and marketed drug
stage. Synthetech's customers can spend years researching and
developing new drugs, taking only a small percentage to
clinical trials and fewer yet to commercial market. A
substantial amount of the activity continues to occur at the
earlier stages of research and development and clinical
trials. The market for peptide and peptidomimetic small
molecule drugs is still very early in development.
Recurring sales of PBBs for development programs is sporadic
at best. The high cancellation rate for drug development
programs results in a significant likelihood that there will
be no subsequent or "follow-on" PBB sales for any particular
drug development program. Accordingly, the level of purchasing
by the Company's customers for specific drug development
programs varies substantially from quarter to quarter and the
Company cannot rely on any one customer as a constant source
of revenue.
The size of the PBB orders for marketed drugs can be
substantially larger than those for the discovery or clinical
trial stages. Sales of PBBs for marketed drugs can also
provide an opportunity for continuing longer-term sales. While
not subject to the same high cancellation rate faced by
discovery and clinical trial stage drug development programs,
the demand for the approved drugs, however, remains subject to
many uncertainties, including, without limitation, the drug
price, the drug side effects and the existence of other
competing drugs. These factors, which are outside of the
control of the Company, will affect the level of demand for
the drug itself and, therefore, the demand for PBBs. Also,
industry cost pressures can cause pharmaceutical companies to
explore and, as was the case with one of the fiscal 1999 large-
scale orders, ultimately adopt alternative manufacturing
processes which do not include the Company's PBBs as an
intermediate. Finally, with the longer-term, larger-scale
orders, the Company expects increased competition to supply
these PBBs.
Accordingly, these industry factors create an inability for
the Company to predict future demand beyond its current order
base. Until the Company develops a stable baseload of demand,
the Company is likely to continue to experience significant
fluctuations in its quarterly results.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had working capital of $12.68
million compared to $12.11 million at March 31, 1999. The
Company's cash and cash equivalents at June 30, 1999 totaled
$7.74 million. The Company does not invest in derivative
securities. In addition, the Company had a $1 million
unsecured bank line of credit of which there was no amount
outstanding at June 30, 1999.
The decrease in accounts receivable to $2.47 million at June
30, 1999 from $3.41 million at March 31, 1999 reflected the
timing of shipments during the quarter. The decrease in
accounts payable to $440,000 at June 30, 1999 from $1.54
million at March 31, 1999 reflected reduced expenditure
commitments related to the second-phase of the plant expansion
and reduced raw material purchases. The decrease in accrued
compensation to $147,000 at June 30, 1999 from $375,000 at
March 31, 1999 primarily reflected accrued bonus and related
compensation paid during the quarter.
The Company had approximately $835,000 of capital expenditures
during the first three months of fiscal 2000. Approximately
$118,000 was spent for equipment and equipment upgrades in the
existing plant and $717,000 was spent for the second-phase of
the new plant expansion. The Company anticipates total
capital expenditures for fiscal 2000 for the existing plant to
be $1.3 million and for the second-phase of the new plant
expansion to be $2.2 million for a total of $3.5 million. The
Company expects to finance these capital expenditures from
internal cash flow and does not anticipate the need for any
new debt or equity financing.
YEAR 2000
The Year 2000 ("Y2K") issue arose as the result of existing
computer programs that use only the last two digits to refer
to a year. Any of the Company's computer programs that have
date-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. If not corrected, many
computer applications could fail or create erroneous results.
The Company has established a Y2K team lead by its Chief
Financial Officer. The team has completed its assessment of
the Company's information systems which support business
applications. The Company utilizes packaged application
strategies for these information systems functions. The
Company believes that these information system components are
current with all Y2K updates and changes recommended by the
vendors. These information systems include enterprise
software, operating systems, networking components,
application and data servers, PC hardware and core office
automation software. The team has also completed its
assessment of the Company's research and development,
manufacturing processes and facility management systems. The
Company believes that these systems and components are
current, or will be current by the end of September 1999, with
all Y2K updates and changes recommended by the vendors. The
Company is undertaking a Y2K supplier and customer assessment
program. It is in the process of contacting key suppliers and
customers to determine the level of their Y2K readiness.
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
The Company's information technology expenditures for fiscal
1999 were $90,000, of which approximately 22% related to the
Company's Y2K program. These expenses were paid out of
revenues from operations. In connection with its
responsibility to undertake a Y2K program, the Company has
hired an outside consultant to provide limited advice to the
Company's Y2K team and Board of Directors on the Company's Y2K
program. The Company has hired another outside consultant to
assist the Company's Y2K team in developing and running
certain Y2K on-site testing protocols. The Company expects
that these activities will be completed by the end of Summer
1999 and has budgeted $20,000 for these consultants.
Like all businesses, the Company will be at risk from external
infrastructure failures that could arise from Y2K failures. It
is not clear that electrical power, telephone and computer
networks, for example, will be fully functional across the
nation in the year 2000. Investigation and assessment of
infrastructures, like the nations' power grid, is beyond the
scope and resources of the Company. Investors should use their
own awareness of the issues in the nations' infrastructure to
make ongoing infrastructure risk assessments and their
potential impact to a company's performance.
It should also be noted that there have been predictions of
failures of key components in the transportation
infrastructure due to the Y2Kissue. It is possible that there
could be delays in rail, over-the-road and air shipments due
to failure in transportation control systems. Investigation
and validation of the world's transportation infrastructure is
beyond the scope and the resources of the Company. Investors
should use their own awareness of the issues in the nations'
infrastructure to make ongoing infrastructure risk assessments
and their potential impact to a company's performance.
The failure to correct a material Y2K problem could result in
an interruption in, or a failure of, certain normal business
activities or operations. Such failures could materially and
adversely affect the Company's results of operations,
liquidity and financial condition. Due to the general
uncertainty inherent in the Y2K issue, resulting in part from
the uncertainty of the Y2K readiness of third-party suppliers
and customers, the Company is unable to determine at this time
whether the consequences of Y2K failures will have a material
impact on the Company's results of operations, liquidity or
financial condition. The Company's efforts to help ensure Y2K
preparedness are expected to significantly reduce the
Company's level of uncertainty about the Y2K issue. The
Company believes that, with completion of the above-mentioned
system upgrades and testing, the possibility of significant
interruptions of normal operations should be reduced.
During the Summer of 1999, the Company intends to determine
whether, and to what extent, to develop contingency plans in
regard to Y2K issues. The Company expects to have completed
any contingency plans that it decides to undertake by the end
of Fall 1999.
___________________________________
This Form 10-Q includes "forward-looking" information (as
defined in Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934).
Investors are cautioned that forward-looking statements
involve risks and uncertainties, and various factors
could cause actual results to differ materially from
those in the forward-looking statements. Forward-looking
statements include, without limitation, any statement that
may predict, forecast, indicate or imply future results,
performance or achievements, and may
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
contain the words "believe," "anticipate," "expect,"
"estimate," "project," "will be," "will continue," "will
likely result," or words or phrases of similar meanings. The
risks and uncertainties include, but are not limited to, the
following: the uncertain market for products, customer
concentration, potential quarterly revenue fluctuations,
industry cost factors, competition, government regulation,
product liability risks, technological change, increased costs
associated with the Company's facility expansions,
international business risks, and Y2K risks. Investors are
directed to the Company's filings with the Securities and
Exchange Commission, including the Company's Form 10-K for the
fiscal year ended March 31, 1999, which are available from the
Company without charge, for a further description of the risks
and uncertainties related to forward-looking statements made
by the Company as well as to other aspects of the Company's
business.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(i)* Articles of Incorporation of Synthetech, Inc., as amended.
3(ii) Bylaws of Synthetech, Inc., as amended.
27 Financial Data Schedule
__________________
*Incorporated by reference herein from the Company's
Form 10-KSB for the year ended March 31, 1997.
(b) Reports
No reports on Form 8-K were filed during the quarter.
<PAGE> 14
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.
SYNTHETECH, INC.
(Registrant)
Date: August 10, 1999 /s/M. Sreenivasan
M. Sreenivasan
President & C.E.O.
Date: August 10, 1999 /s/ Charles B. Williams
Charles B. Williams
Vice President, Finance
and Administration, C.F.O.,
Chief Accounting Officer
<PAGE> 15
INDEX TO EXHIBITS
Sequential Page No.
3(ii) Bylaws of Synthetech, Inc., as amended.
27 Financial Data Schedule for Three Months Ended
June 30, 1999
<PAGE>
Exhibit 3(ii)
of Form 10-Q
BYLAWS
OF
SYNTHETECH, INC.
(as amended)
<PAGE>
CONTENTS
SECTION 1. OFFICES 1
SECTION 2. SHAREHOLDERS 1
2.1 Annual Meeting; Procedures 1
2.1.1 Annual Meeting 1
2.1.2 Procedures 1
2.2 Special Meetings 2
2.3 Place of Meeting; Conduct of Meeting 3
2.3.1 Place of Meeting 3
2.3.2 Conduct of Meeting 3
2.4 Notice of Meeting 3
2.5 Waiver of Notice 4
2.6 Fixing of Record Date for Determining
Shareholders 4
2.7 Shareholders' List 4
2.8 Quorum 5
2.9 Manner of Acting 5
2.10 Proxies 6
2.11 Voting of Shares 6
2.12 Voting for Directors 6
2.13 Action by Shareholders Without a Meeting 6
2.14 Voting of Shares by Corporations 6
2.14.1 Shares Held by Another
Corporation 6
2.14.2 Shares Held by the Corporation 7
<PAGE>
2.15 Acceptance or Rejection of Shareholder
Votes, Consents, Waivers and Proxy
Appointments 7
2.15.1 Documents Bearing Name of
Shareholders 7
2.15.2 Documents Bearing Name of Third
Parties 7
2.15.3 Rejection of Documents 8
SECTION 3. BOARD OF DIRECTORS 8
3.1 General Powers 8
3.2 Number, Tenure and Qualifications 8
3.3 Annual and Regular Meetings 9
3.4 Special Meetings 9
3.5 Meetings by Telecommunications 9
3.6 Notice of Special Meetings 9
3.6.1 Personal Delivery 9
3.6.2 Delivery by Mail 9
3.6.3 Delivery by Telegraph 10
3.6.4 Oral Notice 10
3.6.5 Notice by Facsimile Transmission 10
3.6.6 Notice by Private Courier 10
3.7 Waiver of Notice 10
3.7.1 Written Waiver 10
3.7.2 Waiver by Attendance 10
3.8 Quorum 11
3.9 Manner of Acting 11
3.10 Presumption of Assent 11
<PAGE>
3.11 Action by Board or Committees Without a
Meeting 11
3.12 Resignation 11
3.13 Removal 12
3.14 Vacancies 12
3.15 Minutes 13
3.16 Executive and Other Committees 13
3.16.1 Creation of Committees 13
3.16.2 Authority of Committees 13
3.16.3 Quorum and Manner of Acting 13
3.16.4 Minutes of Meetings 14
3.16.5 Resignation 14
3.16.6 Removal 14
3.17 Compensation 14
SECTION 4. OFFICERS 14
4.1 Number 14
4.2 Appointment and Term of Office 15
4.3 Resignation 15
4.4 Removal 15
4.5 Vacancies 15
4.6 Chair of the Board 15
4.7 President 16
4.8 Vice President 16
4.9 Secretary 16
<PAGE>
4.10 Treasurer 17
4.11 Salaries 17
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS 17
5.1 Contracts 17
5.2 Loans to the Corporation 17
5.3 Loans to Directors 17
5.4 Checks, Drafts, Etc. 18
5.5 Deposits 18
SECTION 6. CERTIFICATES FOR SHARES AND THEIR
TRANSFER 18
6.1 Issuance of Shares 18
6.2 Escrow for Shares 18
6.3 Certificates for Shares 18
6.4 Stock Records 19
6.5 Restriction on Transfer 19
6.5.1 Securities Laws 19
6.5.2 Other Restrictions 19
6.6 Transfer of Shares 19
6.7 Lost or Destroyed Certificates 20
6.8 Transfer Agent and Registrar 20
6.9 Officer Ceasing to Act 20
6.10 Fractional Shares 20
<PAGE>
SECTION 7. BOOKS AND RECORDS 20
SECTION 8. FISCAL YEAR 20
SECTION 9. SEAL 20
SECTION 10. INDEMNIFICATION 21
10.1 Directors and Officers 21
10.2 Officers, Employees and Other Agents 21
10.3 No Presumption of Bad Faith 21
10.4 Advances of Expenses 21
10.5 Enforcement 21
10.6 Nonexclusivity of Rights 22
10.7 Survival of Rights 22
10.8 Insurance 23
10.9 Amendments to Law 23
10.10 Savings Clause 23
10.11 Certain Definitions 23
SECTION 11. AMENDMENTS 24
SECTION 12. CONTROL SHARE ACQUISITION STATUTE 24
<PAGE>
BYLAWS
OF
SYNTHETECH, INC.
(as amended)
SECTION 1. OFFICES
The principal office of the Corporation shall be located at
the principal place of business or such other place as the
Board of Directors (the "Board") may designate. The
Corporation may have such other offices, either within or
without the State of Oregon, as the Board may designate or
as the business of the Corporation may require from time to
time.
SECTION 2. SHAREHOLDERS
2.1 Annual Meeting; Procedures
2.1.1 Annual Meeting
The annual meeting of the shareholders shall be held the
15th day of July in each year, or on such other day as shall
be fixed by resolution of the Board, at the principal office
of the Corporation or such other place as fixed by the
Board, for the purpose of electing Directors and transacting
such other business as may properly come before the meeting.
If the day fixed for the annual meeting is a legal holiday
at the place of the meeting, the meeting shall be held on
the next succeeding business day. At any time prior to the
commencement of the annual meeting, the Board may postpone
the annual meeting for a period of up to 120 days from the
date fixed for such meeting in accordance with this Section.
2.1.2 Procedures
Only such business shall be conducted at an annual meeting
of shareholders as shall have been properly brought before
the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the
direction of the Board, (b) otherwise properly brought
before the meeting by or at the direction of the Board, or
(c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary. To
be timely, a shareholder's notice must be delivered to or
mailed and received at the principal office of the
corporation not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that
the date of the annual meeting is changed by more than
<PAGE>
thirty (30) calendar days from such anniversary date, notice
by the shareholder to be timely must be so received not
later than the close of business on the tenth (10th)
calendar day following the earlier of the day on which
notice of the date of the meeting was mailed or public
disclosure was made. A shareholder's notice to the
Secretary shall set forth (a) as to each matter the
shareholder proposes to bring before the annual meeting, a
brief description of the business proposed to be brought
before the annual meeting, the language of the proposal, if
appropriate, and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear
on the corporation's books, of the shareholder proposing
such business, (c) a representation that the shareholder is
entitled to vote at such meeting and a statement of the
class and number of shares of the corporation which are
beneficially owned by the shareholder, (d) any material
interest of the shareholder in such business, and (e) a
representation that the shareholder intends to appear in
person or by proxy at the meeting to present the business
specified in the notice. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at
any annual meeting except in accordance with the procedures
set forth in this Section 2.1.2. The Board or the Chair of
the meeting shall, if the facts warrant, determine (i) that
a proposal does not constitute proper business to be
transacted at the meeting, or (ii) that business was not
properly brought before the meeting in accordance with the
provisions of this Section 2.1.2, and, if it is so
determined, in either case, any such business shall not be
transacted. The procedures set forth in this Section 2.1
for business to be properly brought before an annual meeting
by a shareholder are in addition to, and not in lieu of, the
requirements set forth in Rule 14a-8 under Section 14 of the
Securities Exchange Act of 1934, as amended, or any
successor provision.
2.2 Special Meetings
The Board, the President or the Chair of the Board may call
special meetings of the shareholders for any purpose. At
any special meeting of the shareholders, only such business
as is specified in the notice of such special meeting given
by or at the direction of the Board, the President or the
Chair of the Board, in accordance with Section 2.4 hereof,
shall come before such meeting. The holders of not less
than one-tenth of all the outstanding shares of the
Corporation entitled to vote on any issue proposed to be
considered at the proposed special meeting, if they date,
sign and deliver to the Corporation's Secretary a written
demand for a special meeting setting forth (a) as to each
matter the shareholder proposes to bring before the meeting,
a brief description of the business proposed to be brought
before the meeting, the language of the proposal, if
appropriate, 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 shareholder proposing such
business, (c) a representation that the shareholder is
entitled to vote at such meeting and a
<PAGE>
statement of the class and number of shares of the
corporation which are beneficially owned by the shareholder,
(d) any material interest of the shareholder in such
business, and (e) a representation that the shareholder
intends to appear in person or by proxy at the meeting to
present the business specified in the notice.
2.3 Place of Meeting; Conduct of Meeting
2.3.1 Place of Meeting
All meetings shall be held at the principal office of the
Corporation or at such other place as designated by the
Board.
2.3.2 Conduct of Meeting
The Chair of the meeting shall have the authority to adopt
such rules for the conduct of any annual or special meeting
of shareholders as he or she may deem necessary or
appropriate to facilitate orderly meetings.
2.4 Notice of Meeting
2.4.1 The Corporation shall cause to be delivered to
each shareholder entitled to notice of or to vote at an
annual or special meeting of shareholders, either personally
or by mail, not less than ten (10) nor more than sixty (60)
days before the meeting, written notice stating the date,
time and place of the meeting and, in the case of a special
meeting, the purpose(s) for which the meeting is called.
2.4.2 Notice to a shareholder of an annual or special
shareholder meeting shall be in writing. Such notice, if in
comprehensible form, is effective (a) when mailed, if it is
mailed postpaid and is correctly addressed to the
shareholder's address shown in the Corporation's current
record of shareholders; or (b) when received by the
shareholder, if it is delivered by telegraph, facsimile
transmission or private courier.
2.4.3 If an annual or special shareholders' meeting is
adjourned to a different date, time or place, notice need
not be given of the new date, time or place if the new date,
time or place is announced at the meeting before adjournment,
unless a new record date for the adjourned meeting is or must
be fixed under Section 2.6.1 of these bylaws or the Oregon
Business Corporation Act.
<PAGE>
2.5 Waiver of Notice
2.5.1 Whenever any notice is required to be given to
any shareholder under the provisions of these Bylaws, the
Articles of Incorporation or the Oregon Business Corporation
Act, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the
time stated therein, and delivered to the Corporation for
inclusion in the minutes for filing with the corporate
records, shall be deemed equivalent to the giving of such
notice.
2.5.2 The attendance of a shareholder at a meeting
waives objection to lack of, or defect in, notice of such
meeting or of consideration of a particular matter at the
meeting, unless the shareholder, at the beginning of the
meeting or prior to consideration of such matter, objects to
holding the meeting, transacting business at the meeting, or
considering the matter when presented at the meeting.
2.6 Fixing of Record Date for Determining Shareholders
2.6.1 For the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of
shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to
make a determination of shareholders for any other purpose,
the Board may fix in advance a date as the record date for
any such determination. Such record date shall be not more
than seventy (70) days, and in case of a meeting of
shareholders, not less than ten (10) days, prior to the date
on which the particular action requiring such determination
is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to
vote at a meeting, or to receive payment of a dividend, the
date on which the notice of meeting is mailed or on which
the resolution of the Board declaring such dividend is
adopted, as the case may be, shall be the record date for
such determination. Such determination shall apply to any
adjournment of the meeting, provided such adjournment is not
set for a date more than 120 days after the date fixed for
the original meeting.
2.6.2 The record date for the determination of
shareholders entitled to demand a special shareholder
meeting shall be the date the first shareholder signs the
demand.
2.7 Shareholders' List
2.7.1 Beginning two (2) business days after notice of
a meeting of shareholders is given, a complete alphabetical
list of the shareholders entitled to notice of such meeting
shall be made, arranged by voting group, and within each
voting group by class or series, with the address of and
number of shares held by each shareholder. This record
shall be
<PAGE>
kept on file at the Corporation's principal office or at a
place identified in the meeting notice in the city where the
meeting will be held. On written demand, this record shall
be subject to inspection by any shareholder at any time
during normal business hours. Such record shall also be
kept open at such meeting for inspection by any shareholder.
2.7.2 A shareholder may, on written demand, copy the
shareholders' list at such shareholder's expense during
regular business hours, provided that:
a. Such shareholder's demand is made in
good faith and for a proper purpose;
b. Such shareholder has described with
reasonable particularity his/her/its purpose in the written
demand; and
c. The shareholders' list is directly
connected with such shareholder's purpose.
2.8 Quorum
A majority of the votes entitled to be cast on a matter at a
meeting by a voting group, represented in person or by
proxy, shall constitute a quorum of that voting group for
action on that matter at a meeting of the shareholders. If
a quorum is not present for a matter to be acted upon, a
majority of the shares represented at the meeting may
adjourn the meeting from time to time without further
notice. If the necessary quorum is present or represented
at a reconvened meeting following such an adjournment, any
business may be transacted that might have been transacted
at the meeting as originally called. The shareholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
2.9 Manner of Acting
2.9.1 If a quorum exists, action on a matter (other
than the election of Directors) by a voting group is
approved if the votes cast within the voting group favoring
the action exceed the votes cast opposing the action, unless
the affirmative vote of a greater number is required by
these Bylaws, the Articles of Incorporation or the Oregon
Business Corporation Act.
2.9.2 If a matter is to be voted on by a single group,
action on that matter is taken when voted upon by that
voting group. If a matter is to be voted on by two or more
voting groups, action on that matter is taken only when
voted upon by each of those voting groups counted
separately. Action may be taken by one voting group on a
matter
<PAGE>
even though no action is taken by another voting group
entitled to vote on such matter.
2.10 Proxies
A shareholder may vote by proxy executed in writing by the
shareholder or by his or her attorney-in-fact. Such proxy
shall be effective when received by the Secretary or other
officer or agent authorized to tabulate votes at the
meeting. A proxy shall become invalid eleven (11) months
after the date of its execution, unless otherwise expressly
provided in the proxy. A proxy for a specified meeting
shall entitle the holder thereof to vote at any adjournment
of such meeting but shall not be valid after the final
adjournment thereof.
2.11 Voting of Shares
Each outstanding share entitled to vote shall be entitled to
one vote upon each matter submitted to a vote at a meeting
of shareholders.
2.12 Voting for Directors
Each shareholder may vote, in person or by proxy, the number
of shares owned by such shareholder that are entitled to
vote at an election of Directors, for as many persons as
there are Directors to be elected and for whose election
such shares have a right to vote. Unless otherwise provided
in the Articles of Incorporation, Directors are elected by a
plurality of the votes cast by shares entitled to vote in
the election at a meeting at which a quorum is present.
2.13 Action by Shareholders Without a Meeting
Any action which could be taken at a meeting of the
shareholders may be taken without a meeting if a written
consent setting forth the action so taken is signed by all
shareholders entitled to vote with respect to the subject
matter thereof. The action shall be effective on the date
on which the last signature is placed on the consent, or at
such earlier or later time as is set forth therein. Such
written consent, which shall have the same force and effect
as a unanimous vote of the shareholders, shall be inserted
in the minute book as if it were the minutes of a meeting of
the shareholders.
2.14 Voting of Shares by Corporations
2.14.1 Shares Held by Another Corporation
Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the bylaws of such
other corporation may prescribe, or, in the absence of such
<PAGE>
provision, as the board of directors of such corporation may
determine; provided, however, such shares are not entitled
to vote if the Corporation owns, directly or indirectly, a
majority of the shares entitled to vote for directors of
such other corporation.
2.14.2 Shares Held by the Corporation
Authorized but unissued shares shall not be voted or counted
for determining whether a quorum exists at any meeting or
counted in determining the total number of outstanding
shares at any given time. Notwithstanding the foregoing,
shares of its own stock held by the Corporation in a
fiduciary capacity may be counted for purposes of
determining whether a quorum exists, and may be voted by the
Corporation.
2.15 Acceptance or Rejection of Shareholder Votes,
Consents, Waivers and Proxy Appointments
2.15.1 Documents Bearing Name of Shareholders
If the name signed on a vote, consent, waiver or proxy
appointment corresponds to the name of a shareholder, the
Secretary or other agent authorized to tabulate votes at the
meeting may, if acting in good faith, accept such vote,
consent, waiver or proxy appointment and give it effect as
the act of the shareholder.
2.15.2 Documents Bearing Name of Third Parties
If the name signed on a vote, consent, waiver or proxy
appointment does not correspond to the name of its
shareholder, the Secretary or other agent authorized to
tabulate votes at the meeting may nevertheless, if acting in
good faith, accept such vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder
if:
a. The shareholder is an entity and the
name signed purports to be that of an officer or an agent of
the entity;
b. The name signed purports to be that of
an administrator, executor, guardian or conservator
representing the shareholder and, if the Secretary or other
agent requests, acceptable evidence of fiduciary status has
been presented;
c. The name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder, and,
if the Secretary or other agent requests, acceptable
evidence of this status has been presented;
<PAGE>
d. The name signed purports to be that of a
pledgee, beneficial owner or attorney-in-fact of the
shareholder and, if the Secretary or other agent requests,
acceptable evidence of the signatory's authority to sign has
been presented; or
e. Two or more persons are the shareholder
as cotenants or fiduciaries and the name signed purports to
be the name of at least one of the co-owners and the person
signing appears to be acting on behalf of all co-owners.
2.15.3 Rejection of Documents
The Secretary or other agent authorized to tabulate votes at
the meeting is entitled to reject a vote, consent, waiver or
proxy appointment if such agent, acting in good faith, has
reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign
for the shareholder.
SECTION 3. BOARD OF DIRECTORS
3.1 General Powers
The business and affairs of the Corporation shall be managed
by the Board, except as may be otherwise provided in these
Bylaws, the Articles of Incorporation or the Oregon Business
Corporation Act.
3.2 Number, Tenure and Qualifications
The Board shall consist of no less than three (3) and no
more than seven (7) Directors, the specific number to be set
by resolution of the Board. The number of Directors may be
changed from time to time by amendment to these Bylaws, but
no decrease in the number of Directors shall shorten the
term of any incumbent Director. The Board shall be divided
into three classes, with each class to contain at least two
members and to be as nearly equal in number as possible, but
no decrease in the number of such classes shall the effect
of shortening the term of any incumbent Director. At the
1997 annual meeting of shareholders, the Directors of
Class 1 shall be elected for a term expiring at the 1998
annual meeting of shareholders, and the Directors of Class 2
shall be elected for a term expiring at the 1999 annual
meeting of shareholders and the Directors of Class 3 shall
be elected for a term expiring at the 2000 annual meeting of
shareholders. Commencing in 1998, and at each annual
meeting of shareholders thereafter, the successors to the
class of Directors whose terms expire at that meeting shall
be elected to hold office for a term of three (3) years, and
each Director shall serve for the term he or she was elected
or until his or her successor shall have been elected and
qualified or until his or her death, resignation,
<PAGE>
or removal from office. Directors need not be shareholders
of the corporation or residents of the State of Oregon.
3.3 Annual and Regular Meetings
An annual Board meeting shall be held without further notice
immediately after and at the same place as the annual
meeting of shareholders.
By resolution the Board, or any committee thereof, may
specify the time and place for holding regular meetings
thereof without other notice than such resolution.
3.4 Special Meetings
Special meetings of the Board or any committee designated by
the Board may be called by or at the request of the
President or any member of the Board of Directors and, in
the case of any special meeting of any committee designated
by the Board, or by the Chair thereof. The person or
persons authorized to call special meetings may fix any
place either within or without the State of Oregon as the
place for holding any special Board or committee meeting
called by them.
3.5 Meetings by Telecommunications
Members of the Board or any committee designated by the
Board may participate in a meeting of such Board or
committee by use of any means of communication by which all
persons participating may simultaneously hear each other
during the meeting. Participation by such means shall be
deemed presence in person at the meeting.
3.6 Notice of Special Meetings
Notice of a special Board or committee meeting stating the
date, time and place of the meeting shall be given to a
Director in writing or orally by telephone or in person as
set forth below. Neither the business to be transacted at,
nor the purpose of, any special meeting need be specified in
the notice of such meeting.
3.6.1 Personal Delivery
If delivery is by personal service, the notice shall be
effective if delivered at such address at least one day
before the meeting.
3.6.2 Delivery by Mail
If notice is delivered by mail, the notice shall be deemed
effective if deposited in the official government mail at
least five days before the meeting properly addressed to a
<PAGE>
Director at his or her address shown on the records of the
Corporation with postage prepaid.
3.6.3 Delivery by Telegraph
If notice is delivered by telegraph, the notice shall be
deemed effective if the content thereof is delivered to the
telegraph company by such time that the telegraph company
guarantees delivery at least one day before the meeting.
3.6.4 Oral Notice
If notice is delivered orally, by telephone or in person,
the notice shall be effective if personally given to a
Director at least one day before the meeting.
3.6.5 Notice by Facsimile Transmission
If notice is delivered by facsimile transmission, the notice
shall be deemed effective if the content thereof is
transmitted to the office of a Director, at the facsimile
number shown on the records of the Corporation, at least one
day before the meeting, and receipt is either confirmed by
confirming transmission equipment or acknowledged by the
receiving office.
3.6.6 Notice by Private Courier
If notice is delivered by private courier, the notice shall
be deemed effective if delivered to the courier, properly
addressed and prepaid, by such time that the courier
guarantees delivery at least one day before the meeting.
3.7 Waiver of Notice
3.7.1 Written Waiver
Whenever any notice is required to be given to any Director
under the provisions of these Bylaws, the Articles of
Incorporation or the Oregon Business Corporation Act, a
waiver thereof in writing, executed at any time, specifying
the meeting for which notice is waived, signed by the person
or persons entitled to such notice, and filed with the
minutes or corporate records, shall be deemed equivalent to
the giving of such notice.
3.7.2 Waiver by Attendance
The attendance of a Director at a Board or committee meeting
shall constitute a waiver of notice of such meeting, unless
the Director, at the beginning of the meeting, or promptly
upon such Director's arrival, objects to holding the meeting
or transacting any business
<PAGE>
thereat and does not thereafter vote for or assent to action
taken at the meeting.
3.8 Quorum
A majority of the number of Directors fixed by or in the
manner provided by these Bylaws shall constitute a quorum
for the transaction of business at any Board meeting.
3.9 Manner of Acting
The act of the majority of the Directors present at a Board
or committee meeting at which there is a quorum shall be the
act of the Board or committee, unless the vote of a greater
number is required by these Bylaws, the Articles of
Incorporation or the Oregon Business Corporation Act.
3.10 Presumption of Assent
A Director of the Corporation present at a Board or
committee meeting at which action on any corporate matter is
taken shall be deemed to have assented to the action taken
unless such Director objects at the beginning of the
meeting, or promptly upon such Director's arrival, to
holding the meeting or transacting business at the meeting;
or such Director's dissent is entered in the minutes of the
meeting; or such Director delivers a written notice of
dissent or abstention to such action with the presiding
officer of the meeting before the adjournment thereof; or
such Director forwards such notice by registered mail to the
Secretary of the Corporation immediately after the
adjournment of the meeting. A Director who voted in favor
of such action may not thereafter dissent or abstain.
3.11 Action by Board or Committees Without a Meeting
Any action which could be taken at a meeting of the Board or
of any committee appointed by the Board may be taken without
a meeting if a written consent setting forth the action so
taken is signed by each Director or by each committee
member. The action shall be effective when the last
signature is placed on the consent, unless the consent
specifies an earlier or later date. Such written consent,
which shall have the same effect as a unanimous vote of the
Directors or such committee, shall be inserted in the minute
book as if it were the minutes of a Board or committee
meeting.
3.12 Resignation
Any Director may resign at any time by delivering written
notice to the Chair of the Board, the Board, or to the
registered office of the Corporation. Such resignation
shall
<PAGE>
take effect at the time specified in the notice, or if no
time is specified, upon delivery. Unless otherwise
specified therein, the acceptance of such resignation shall
not be necessary to make it effective. Once delivered, a
notice of resignation is irrevocable unless revocation is
permitted by the Board.
3.13 Removal
One or more members of the Board (including the entire
Board) may be removed at a meeting of shareholders called
expressly for that purpose, provided that the notice of such
meeting states that the purpose, or one of the purposes, of
the meeting is such removal. A member of the Board may be
removed with or without cause, unless the Articles of
Incorporation permit removal for cause only, by a vote of
the holders of a majority of the shares then entitled to
vote on the election of the Director(s). A Director may be
removed only if the number of votes cast to remove the
Director exceeds the number of votes cast to not remove the
Director. If a Director is elected by a voting group of
shareholders, only the shareholders of that voting group may
participate in the vote to remove such Director.
3.14 Vacancies
Any vacancy occurring on the Board, including a vacancy
resulting from an increase in the number of Directors, may
be filled by the shareholders, by the Board, by the
affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board, or by a sole
remaining Director. A Director elected to fill a vacancy
shall be elected for the unexpired term of his or her
predecessor in office; except that the term of a Director
elected by the Board to fill a vacancy expires at the next
shareholders' meeting at which Directors are elected. Any
Directorship to be filled by reason of an increase in the
number of Directors may be filled by the affirmative vote of
a majority of the number of Directors fixed by the Bylaws
prior to such increase for a term of office continuing only
until the next election of Directors by the shareholders.
Any Directorship not so filled by the Directors shall be
filled by election at the next annual meeting of
shareholders or at a special meeting of shareholders called
for that purpose. If the vacant Directorship is filled by
the shareholders and was held by a Director elected by a
voting group of shareholders, then only the holders of
shares of that voting group are entitled to vote to fill
such vacancy. A vacancy that will occur at a specific later
date by reason of a resignation effective at such later date
or otherwise may be filled before the vacancy occurs, but
the new Director may not take office until the vacancy occurs.
<PAGE>
3.15 Minutes
The Board shall keep minutes of its meetings and shall cause
them to be recorded in books kept for that purpose.
3.16 Executive and Other Committees
3.16.1 Creation of Committees
The Board, by resolution adopted by a majority of the number
of Directors fixed in the manner provided by these Bylaws,
may appoint standing or temporary committees, including an
Executive Committee, from its own number and consisting of
no less than two (2) Directors. The Board may invest such
committee(s) with such powers as it may see fit, subject to
such conditions as may be prescribed by the Board, these
Bylaws, the Articles of Incorporation and the Oregon
Business Corporation Act.
3.16.2 Authority of Committees
Each committee shall have and may exercise all of the
authority of the Board to the extent provided in the
resolution of the Board designating the committee and any
subsequent resolutions pertaining thereto and adopted in
like manner, except that no such committee shall have the
authority to: (a) authorize distributions, except as may be
permitted by Section 3.16.2(g) of these Bylaws; (b) approve
or propose to shareholders actions required by the Oregon
Business Corporation Act to be approved by shareholders; (c)
fill vacancies on the Board or any committee thereof; (d)
adopt, amend or repeal these Bylaws; (e) amend the Articles
of Incorporation pursuant to the Oregon Business Corporation
Act; (f) approve a plan of merger not requiring shareholder
approval; (g) authorize or approve reacquisition of shares,
except within limits prescribed by the Board; or (h)
authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation of relative
rights, preferences and limitations of a class or series of
shares, except that Board may authorize a committee or an
officer of the Corporation to do so within limits prescribed
by the Board.
3.16.3 Quorum and Manner of Acting
A majority of the number of Directors composing any
committee of the Board, as established and fixed by
resolution of the Board, shall constitute a quorum for the
transaction of business at any meeting of such committee.
<PAGE>
3.16.4 Minutes of Meetings
All committees so appointed shall keep regular minutes of
their meetings and shall cause them to be recorded in books
kept for that purpose.
3.16.5 Resignation
Any member of any committee may resign at any time by
delivering written notice thereof to the Board, the Chair of
the Board or the Corporation. Any such resignation shall
take effect at the time specified in the notice, or if no
time is specified, upon delivery. Unless otherwise
specified therein, the acceptance of such resignation shall
not be necessary to make it effective. Once delivered, a
notice of resignation is irrevocable unless revocation is
permitted by the Board.
3.16.6 Removal
The Board may remove from office any member of any committee
elected or appointed by it, but only by the affirmative vote
of not less than a majority of the number of Directors fixed
by or in the manner provided by these Bylaws.
3.17 Compensation
By Board resolution, Directors and committee members may be
paid their expenses, if any, of attendance at each Board or
committee meeting, or a fixed sum for attendance at each
Board or committee meeting, or a stated salary as Director
or a committee member, or a combination of the foregoing.
No such payment shall preclude any Director or committee
member from serving the Corporation in any other capacity
and receiving compensation therefor.
SECTION 4. OFFICERS
4.1 Number
The Officers of the Corporation shall be a President and a
Secretary, each of whom shall be appointed by the Board.
One or more Vice Presidents, a Treasurer and such other
Officers and assistant Officers, including a Chair of the
Board, may be appointed by the Board; such Officers and
assistant Officers to hold office for such period, have such
authority and perform such duties as are provided in these
Bylaws or as may be provided by resolution of the Board.
Any Officer may be assigned by the Board any additional
title that the Board deems appropriate. The Board may
delegate to any Officer or agent the power to appoint any
such subordinate Officers or agents and to prescribe their
respective terms of office, authority and duties. Any two
or more offices may be held by the same person.
<PAGE>
4.2 Appointment and Term of Office
The Officers of the Corporation shall be appointed annually
by the Board at the Board meeting held after the annual
meeting of the shareholders. If the appointment of Officers
is not made at such meeting, such appointment shall be made
as soon thereafter as a Board meeting conveniently may be
held. Unless an Officer dies, resigns, or is removed from
office, he or she shall hold office until the next annual
meeting of the Board or until his or her successor is
appointed.
4.3 Resignation
Any Officer may resign at any time by delivering written
notice to the Corporation. Any such resignation shall take
effect at the time specified in the notice, or if no time is
specified, upon delivery. Unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective. Once delivered, a notice of
resignation is irrevocable unless revocation is permitted by
the Board.
4.4 Removal
Any Officer or agent appointed by the Board may be removed
by the Board, with or without cause, but such removal shall
be without prejudice to the contract rights, if any, of the
person so removed. Appointment of an Officer or agent shall
not of itself create contract rights.
4.5 Vacancies
A vacancy in any office because of death, resignation,
removal, disqualification, creation of a new office or any
other cause may be filled by the Board for the unexpired
portion of the term, or for a new term established by the
Board. If a resignation is made effective at a later date,
and the Corporation accepts such future effective date, the
Board may fill the pending vacancy before the effective
date, if the Board provides that the successor does not take
office until the effective date.
4.6 Chair of the Board
If appointed, the Chair of the Board shall perform such
duties as shall be assigned to him or her by the Board from
time to time and shall preside over meetings of the Board
and shareholders unless another Officer is appointed or
designated by the Board as Chair of such meeting.
<PAGE>
4.7 President
The President shall be the chief executive Officer of the
Corporation unless some other Officer is so designated by
the Board, shall preside over meetings of the Board and
shareholders in the absence of a Chair of the Board and,
subject to the Board's control, shall supervise and control
all of the assets, business and affairs of the Corporation.
The President shall have authority to sign deeds, mortgages,
bonds, contracts, or other instruments, except when the
signing and execution thereof have been expressly delegated
by the Board or by these Bylaws to some other Officer or
agent of the Corporation, or are required by law to be
otherwise signed or executed by some other Officer or in
some other manner. In general, the President shall perform
all duties incident to the office of President and such
other duties as are prescribed by the Board from time to
time.
4.8 Vice President
In the event of the death of the President or his or her
inability to act, the Vice President (or if there is more
than one Vice President, the Vice President who was
designated by the Board as the successor to the President,
or if no Vice President is so designated, the Vice President
first appointed to such office) shall perform the duties of
the President, except as may be limited by resolution of the
Board, with all the powers of and subject to all the
restrictions upon the President. Vice Presidents shall
have, to the extent authorized by the President or the
Board, the same powers as the President to sign deeds,
mortgages, bonds, contracts or other instruments. Vice
Presidents shall perform such other duties as from time to
time may be assigned to them by the President or by the
Board.
4.9 Secretary
The Secretary shall: (a) prepare and keep the minutes of
meetings of the shareholders and the Board in one or more
books provided for that purpose; (b) see that all notices
are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be responsible for custody
of the corporate records and seal of the corporation; (d)
keep registers of the post office address of each
shareholder and Director; (e) have general charge of the
stock transfer books of the Corporation; (f) sign, with the
President or other Officer authorized by the President or
the Board, deeds, mortgages, bonds, contracts or other
instruments; and (g) in general perform all duties incident
to the office of Secretary and such other duties as from
time to time may be assigned to him or her by the President
or by the Board. In the absence of the Secretary, an
Assistant Secretary may perform the duties of the Secretary.
<PAGE>
4.10 Treasurer
If required by the Board, the Treasurer shall give a bond
for the faithful discharge of his or her duties in such
amount and with such surety or sureties as the Board shall
determine. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the
Corporation; receive and give receipts for moneys due and
payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in
banks, trust companies or other depositories selected in
accordance with the provisions of these Bylaws; and in
general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him or her by the President or by the Board. In
the absence of the Treasurer, an Assistant Treasurer may
perform the duties of the Treasurer.
4.11 Salaries
The salaries of the Officers shall be fixed from time to
time by the Board or by any person or persons to whom the
Board has delegated such authority. No Officer shall be
prevented from receiving such salary by reason of the fact
that he or she is also a Director of the Corporation.
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts
The Board may authorize any Officer or Officers, or agent or
agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to
specific instances.
5.2 Loans to the Corporation
No loans shall be contracted on behalf of the Corporation
and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board. Such
authority may be general or confined to specific instances.
5.3 Loans to Directors
The Corporation shall not lend money to or guarantee the
obligation of a Director unless: (a) the particular loan or
guarantee is approved by a majority of the votes represented
by the outstanding voting shares of all classes, voting as a
single voting group, excluding the votes of the shares owned
by or voted under the control of the benefited Director; or
(b) the Board determines that the loan or guarantee benefits
the Corporation and either approves the specific loan or
guarantee or a general plan authorizing the loans and
<PAGE>
guarantees. The fact that a loan or guarantee is made in
violation of this provision shall not affect the borrower's
liability on the loan.
5.4 Checks, Drafts, Etc.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such Officer or
Officers, or agent or agents, of the Corporation and in such
manner as is from time to time determined by resolution of
the Board.
5.5 Deposits
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the
Board may select.
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares
No shares of the Corporation shall be issued unless
authorized by the Board, which authorization shall include
the maximum number of shares to be issued and the
consideration to be received for each share. Before the
Corporation issues shares, the Board shall determine that
the consideration received or to be received for such shares
is adequate. Such determination by the Board shall be
conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly
issued, fully paid and nonassessable.
6.2 Escrow for Shares
The Board may authorize the placement in escrow of shares
issued for a contract for future services or benefits or a
promissory note, or may authorize other arrangements to
restrict the transfer of shares, and may authorize the
crediting of distributions in respect of such shares against
their purchase price, until the services are performed, the
note is paid or the benefits received. If the services are
not performed, the note is not paid, or the benefits are not
received, the Board may cancel, in whole or in part, such
shares placed in escrow or restricted and such distributions
credited.
6.3 Certificates for Shares
Certificates representing shares of the Corporation shall be
in such form as shall be determined by the Board. Such
certificates shall be signed by any two of the following
<PAGE>
officers: the Chair of the Board, the President, any Vice
President, the Treasurer, the Secretary or any Assistant
Secretary. Any or all of the signatures on a certificate
may be facsimiles if the certificate is manually signed on
behalf of a transfer agent or a registrar other than the
Corporation itself or an employee of the Corporation. All
certificates shall be consecutively numbered or otherwise
identified.
6.4 Stock Records
The stock transfer books shall be kept at the registered
office or principal place of business of the Corporation or
at the office of the Corporation's transfer agent or
registrar. The name and address of each person to whom
certificates for shares are issued, together with the class
and number of shares represented by each such certificate
and the date of issue thereof, shall be entered on the stock
transfer books of the Corporation. The person in whose name
shares stand on the books of the Corporation shall be deemed
by the Corporation to be the owner thereof for all purposes.
6.5 Restriction on Transfer
6.5.1 Securities Laws
Except to the extent that the Corporation has obtained an
opinion of counsel acceptable to the Corporation that
transfer restrictions are not required under applicable
securities laws, or has otherwise satisfied itself that such
transfer restrictions are not required, all certificates
representing shares of the Corporation shall bear
conspicuously on the front or back of the certificate a
legend or legends describing the restriction or
restrictions.
6.5.2 Other Restrictions
In addition, the front or back of all certificates shall
include conspicuous written notice of any further
restrictions which may be imposed on the transferability of
such shares.
6.6 Transfer of Shares
Transfer of shares of the Corporation shall be made only on
the stock transfer books of the Corporation pursuant to
authorization or document of transfer made by the holder of
record thereof or by his or her legal representative, who
shall furnish proper evidence of authority to transfer, or
by his or her attorney-in-fact authorized by power of
attorney duly executed and filed with the Secretary of the
Corporation. All certificates surrendered to the
Corporation for transfer shall be cancelled and no new
certificate shall be issued until
<PAGE>
the former certificates for a like number of shares shall
have been surrendered and cancelled.
6.7 Lost or Destroyed Certificates
In the case of a lost, destroyed or mutilated certificate, a
new certificate may be issued therefor upon such terms and
indemnity to the Corporation as the Board may prescribe.
6.8 Transfer Agent and Registrar
The Board may from time to time appoint one or more Transfer
Agents and one or more Registrars for the shares of the
Corporation, with such powers and duties as the Board shall
determine by resolution.
6.9 Officer Ceasing to Act
In case any officer who has signed or whose facsimile
signature has been placed upon a stock certificate shall
have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same
effect as if the signer were such officer at the date of its
issuance.
6.10 Fractional Shares
The Corporation shall not issue certificates for fractional
shares.
SECTION 7. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and
records of account, stock transfer books, minutes of the
proceedings of its shareholders and Board and such other
records as may be necessary or advisable.
SECTION 8. FISCAL YEAR
The fiscal year of the Corporation shall be the twelve month
period ending on March 31 of each year, provided that if a
different fiscal year is at any time selected for purposes
of federal income taxes, the fiscal year shall be the year
so selected.
SECTION 9. SEAL
The seal of the Corporation shall consist of the name of the
Corporation, the year of its incorporation and the state of
its incorporation.
<PAGE>
SECTION 10. INDEMNIFICATION
10.1 Directors and Officers
The Corporation shall indemnify its directors and officers
to the fullest extent not prohibited by law.
10.2 Officers, Employees and Other Agents
The Corporation shall have the power to indemnify its
officers, employees and other agents to the fullest extent
not prohibited by law.
10.3 No Presumption of Bad Faith
The termination of any 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 the person reasonably believed to be in or not opposed
to the best interests of this Corporation, or, with respect
to any criminal proceeding, that the person had reasonable
cause to believe that the conduct was unlawful.
10.4 Advances of Expenses
The expenses incurred by a director or officer in any
proceeding shall be paid by the Corporation in advance at
the written request of the director or officer, if the
director or officer:
10.4.1 Furnishes the Corporation a written affirmation
of such person's good faith belief that such person is
entitled to be indemnified by the Corporation; and
10.4.2 Furnishes the Corporation a written undertaking
to repay such advance to the extent that it is
ultimately determined by a court that such person is
not entitled to be indemnified by the Corporation.
Such advances shall be made without regard to the
person's ability to repay such expenses and without
regard to the person's ultimate entitlement to
indemnification under this Bylaw or otherwise.
10.5 Enforcement
Without the necessity of entering into an express contract,
all rights to indemnification and advances under this Bylaw
shall be deemed to be contractual rights and be effective to
the same extent and as if provided for in a contract between
the Corporation and the director or officer who serves in
such capacity at any time while this Bylaw and any other
<PAGE>
applicable law, if any, are in effect. Any right to
indemnification or advances granted by this Bylaw to a
director or officer shall be enforceable by or on behalf of
the person holding such right in any court of competent
jurisdiction if (a) the claim for indemnification or
advances is denied, in whole or in part, or (b) no
disposition of such claim is made within ninety (90) days of
request thereof. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be
also paid the expense of prosecuting the claim. It shall be
a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in connection with
any proceeding in advance of its final disposition when the
required affirmation and undertaking have been tendered to
the Corporation) that the claimant has not met the standards
of conduct which makes it permissible under the law for the
Corporation to indemnify the claimant, but the burden of
proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of
Directors, independent legal counsel or its shareholders) to
have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the
circumstances because the claimant has met the applicable
standard of conduct, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel or its shareholders) that the claimant has not
met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
10.6 Nonexclusivity of Rights
The rights conferred on any person by this Bylaw shall not
be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of
articles of incorporation, bylaws, agreement, vote of
shareholders or disinterested directors or otherwise, both
as to action in the person's official capacity and as to
action in another capacity while holding office. The
Corporation is specifically authorized to enter into
individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and
advances to the fullest extent not prohibited by law.
10.7 Survival of Rights
The rights conferred on any person by this Bylaw shall
continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
<PAGE>
10.8 Insurance
To the fullest extent not prohibited by law, the
Corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or
permitted to be indemnified pursuant to this Bylaw.
10.9 Amendments to Law
For purposes of this Bylaw, the meaning of "law" within the
phrase "to the fullest extent not prohibited by law" shall
include, but not be limited to, the Oregon Business
Corporation Act, as the same exists on the date hereof or as
it may be amended; provided, however, that in the case of
any such amendment, such amendment shall apply only to the
extent that it permits the Corporation to provide broader
indemnification rights than the Act permitted the
Corporation to provide prior to such amendment.
10.10 Savings Clause
If this Bylaw or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, the
Corporation shall indemnify each director, officer or other
agent to the fullest extent permitted by any applicable
portion of this Bylaw that shall not have been invalidated,
or by any other applicable law.
10.11 Certain Definitions
For the purposes of this Section, the following definitions
shall apply:
10.11.1 The term "proceeding" shall be broadly
construed and shall include, without limitation, the
investigation, preparation, prosecution, defense, settlement
and appeal of any threatened, pending or completed action,
suit or proceeding, whether brought in the right of the
Corporation or otherwise and whether civil, criminal,
administrative or investigative, in which the director or
officer may be or may have been involved as a party or
otherwise by reason of the fact that the director or officer
is or was a director or officer 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.
10.11.2 The term "expenses" shall be broadly construed
and shall include, without limitation, all costs, charges
and expenses (including fees and disbursements of attorneys,
accountants and other experts) actually and reasonably
incurred by a director or officer in connection with any
proceeding, all expenses of investigations, judicial or
administrative proceedings or appeals, and any expenses of
establishing a right to indemnification under
<PAGE>
these Bylaws, but shall not include amounts paid in
settlement, judgments or fines.
10.11.3 "Corporation" shall mean Synthetech, Inc., and
any successor corporation thereof.
10.11.4 Reference to a "director," "officer,"
"employee" or "agent" of the Corporation shall include,
without limitation, situations where such person is serving
at the request of the Corporation as a director, officer,
employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
10.11.5 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. References to "serving at the
request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation
which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an
employee benefit plan, its participants, or beneficiaries.
A person who acted in good faith and in a manner the person
reasonably believed to be in the interest of the
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 Bylaw.
SECTION 11. AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by the Board at any regular or special
meeting of the Board; provided, however, that the
shareholders, in amending or repealing a particular Bylaw,
may provide expressly that the Board may not amend or repeal
that Bylaw. The shareholders may also make, alter, amend
and repeal the Bylaws of the Corporation at any annual
meeting or at a special meeting called for that purpose.
All Bylaws made by the Board may be amended, repealed,
altered or modified by the shareholders at any regular or
special meeting called for that purpose.
SECTION 12. CONTROL SHARE ACQUISITION STATUTE
The provisions of ORS 60.801-60.816 shall apply fully to the
acquisition of shares of the Corporation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the June 30, 1999 10-Q Balance Sheets, Income
Statements, and Cash Flow Statements, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-END> Jun-30-1999
<CASH> 77360000
<SECURITIES> 0
<RECEIVABLES> 2485000
<ALLOWANCES> 15000
<INVENTORY> 3376000
<CURRENT-ASSETS> 14019000
<PP&E> 12010000
<DEPRECIATION> 0
<TOTAL-ASSETS> 26033000
<CURRENT-LIABILITIES> 1337000
<BONDS> 0
<COMMON> 14000
0
0
<OTHER-SE> 24052000
<TOTAL-LIABILITY-AND-EQUITY> 26033000
<SALES> 4636000
<TOTAL-REVENUES> 4636000
<CGS> 2629000
<TOTAL-COSTS> 3099000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1621000
<INCOME-TAX> 616000
<INCOME-CONTINUING> 1005000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1005000
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>