<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------
For Quarter Ended October 31, 1995 Commission File No. 0-18472
HEALTH MANAGEMENT, INC.
-----------------------
(Exact name of registrant as specified in charter)
Delaware 75-2096632
-----------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
4250 Veterans Memorial Highway
Suite 400 West
Holbrook, New York 11741
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 981-0034
-------------
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
-------- ------
As of November 15, 1995, there were outstanding 9,322,182 shares of common
stock, $.03 par value per share.
This reports consists of 18 pages.
(1)
<PAGE>
HEALTH MANAGEMENT, INC.
October 31, 1995
TABLE OF CONTENTS
Page No.
--------
Part I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15 - 17
SIGNATURES 18
(2)
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed consolidated financial statements begin on the page
following Item 2.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Three months ended October 31, 1995 vs. October 31, 1994
The Company's revenues were $40,238,092 for the quarter ended October 31, 1995,
an increase of $20,150,898 or 100.3% over revenues of $20,087,194 for the three
months ended October 31, 1994. This increase was attributable principally to the
increase in revenues generated by the recent acquisitions of the Company which
expanded the Company's Lifecare Program into other chronic disease therapies as
well as to continued growth in the Company's core aftercare business areas.
Gross profit margins were 30.0% for the quarter ended October 31, 1995, as
compared to 33.0% for the quarter ended October 31, 1994. The decrease in gross
profit margin was primarily attributable to the following factors: increases in
multiple sclerosis revenues, which presently yield lower margins than have been
historically experienced by the Company in other disease management programs,
reductions in the fixed fee reimbursement rates from certain state Medicaid
programs (principally New York, which lowered its reimbursement rate by 10%),
and reduction of reimbursement rates that occur when the drug benefit is carved
out from the major medical benefit and is switched to a drug card plan. In
addition, the Company has continued to experience an increase in the number of
transplant patients receiving immunosuppressant drug benefits under Medicare due
to the extension of Medicare coverage beyond the historical one year
post-transplant period. Medicare reimburses at lower rates than indemnity
insurance. The Company believes that these trends will continue to affect profit
margins in the near term but as the industry moves to HMO and managed care, or
back to a single payor, it may be in a position to negotiate for more favorable
reimbursement rates.
Operating expenses as a percentage of revenues increased by 2.2% to 19.8% for
the quarter ended October 31, 1995, as compared to 17.6% for the quarter ended
October 31, 1994. Total operating expenses were $7,957,653 for the quarter ended
October 31, 1995, an increase of $4,423,597 over the quarter ended October 31,
1994. The increase was due to the fact that during the last quarter of the
fiscal year ended April 30, 1995 the Company consummated two acquisitions, the
principal one being the acquisition of the Clozaril Patient Management Business
("CPMB") from Caremark International, Inc. Operating expenses in connection with
these acquisitions accounted for approximately $2,800,000 of expenses during the
quarter ended October 31, 1995. In addition to support the Company's continued
(3)
<PAGE>
expansion, payroll-related expenses increased by approximately $500,000 and
selling expenses increased by approximately $200,000. Also non cash expenditures
such as depreciation, amortization and bad debt expense increased by
approximately $600,000. The balance of the increase occurred in distribution and
administration expenses.
Net interest expense for the quarter ended October 31, 1995 was $651,926, an
increase of $742,380 compared to net interest income of $90,454 for the quarter
ended October 31, 1994. Approximately $520,000 of the increase was due to
interest charges relating to the Company's $24,000,000 debt financing of the
CPMB acquisition. The balance of the increase was a result of interest charges
for the Company's borrowings against it's line of credit.
Net income was $2,038,734 for the quarter ended October 31, 1995, compared to
$1,853,348 for the quarter ended October 31, 1994, an increase of $185,386 or
10.0%. The increase in net income was primarily attributable to the increases in
Lifecare revenues, increased revenues derived from the Company's acquisitions,
offset by a lower gross profit margin, increases in operating and interest
expenses.
Primary earnings and fully diluted earnings per common share for the quarter
ended October 31, 1995 were $.22 compared to $.20 for the quarter ended
October 31, 1994.
Six months ended October 31, 1995 vs. October 31, 1994
Revenues increased for the six months ended October 31, 1995, were $80,039,871
an increase of $41,834,027 or 109.5%, in comparison to revenues for the six
months ended October 31, 1994. This increase was attributable principally to the
increase in revenues generated by the recent acquisitions of the Company which
expanded the Lifecare Program into other chronic disease therapies as well as to
continued growth in the Company's core aftercare business areas.
Gross profit margins were 29.5% for the six months ended October 31, 1995
compared to 33.4% for the same period last year. The decrease in gross profit
margin was primarily attributable to the following factors: increases in
multiple sclerosis revenues, which presently yield lower margins than have been
historically experienced by the Company in other disease management programs,
reductions in the fixed fee reimbursement rates from certain state Medicaid
programs (principally New York, which lowered its reimbursement rate by 10%),
and reduction of reimbursement rates that occur when the drug benefit is carved
out from the major medical benefit and is switched to a drug card plan. In
addition, the Company has continued to experience an increase in the number of
transplant patients receiving immunosuppressant drug benefits under Medicare due
to the extension of Medicare coverage beyond the historical one year
post-transplant period. Medicare reimburses at lower rates than indemnity
insurance. The Company believes that these trends will continue to affect profit
margins in the near term but as the industry moves to HMO and managed care, or
back to a single payor, it may be in a position to negotiate for more favorable
reimbursement rates.
Operating expenses as a percentage of revenues increased by 1.7% to 20.0% for
the six months ended October 31, 1995, as compared to 18.3% for the six months
ended October 31, 1994. Total operating expenses were $16,003,476 for the six
(4)
<PAGE>
months ended October 31, 1995, an increase of $9,017,845 over the six months
ended October 31, 1994. Operating expenses in connection with the acquisition
that occurred during the last quarter of fiscal year ended April 30, 1995
accounted for approximately $5,500,000 of expenses during the six months ended
October 31, 1995. In addition to support the Company's continual expansion,
payroll related expenses increased by approximately $1,100,000 and selling
expenses increased by approximately $700,000. Also non-cash expenditures such as
depreciation, amortization and bad debt expense increased by approximately
$1,000,000. The balance of the increase occurred in distribution and
administrative expenses.
Net interest expense for the six months ended October 31, 1995 was $1,262,862 an
increase of $1,441,620 compared to net interest income of $178,758 for the same
period last year. Approximately $1,100,000 of the increase was due to charges
relating to the Company's financing of the CPMB acquisition, while the balance
of the increase was a result of interest charges for the Company's borrowings
against its line of credit.
Net income was $3,740,852 an increase of $267,291 or 7.7% for the six months
ended October 31, 1995 compared to net income of $3,473,561 for the same period
last year. The increase in net income was primarily attributable to the
increases in the Company's Lifecare revenues, increased revenues derived from
the Company's acquisitions, offset by a lower gross profit margin, increases in
operating and interest expenses.
Primary and fully diluted earnings per share for the six months ended
October 31, 1995 were $.40 as compared to .37 for the same fiscal period last
year.
LIQUIDITY AND CAPITAL RESOURCES
The decrease in the Company's cash and cash equivalents of $468,839 to
$4,093,873 at October 31, 1995 from April 30, 1995 was attributable to cash used
for operating and investing activities offset by net cash provided by financing
activities. The Company's continued growth resulted in utilization of cash for
operating and capital investing activities. Increases in net income, accounts
payable and non-cash adjustments were offset by increases in accounts
receivable and inventory.
Working capital at October 31, 1995 was $42,710,874 an increase of $5,681,019
from April 30, 1994. The primary factors were increases in accounts receivable
net of the allowance for doubtful accounts of $12,373,040 and inventories of
$1,009,713, offset by increases in accounts payable of $6,209,920 and the
payment of corporate income taxes.
The Company has borrowed $21,000,000 on a term loan of which $1,500,000 has been
repaid as of October 31, 1995. This term loan bears interest at a rate of .5%
above the alternative base rate which was 8.75% on October 31, 1995. The
principal is payable over 5 years in quarterly installment payments of $750,000
through March 31, 1996; $1,000,000 through March 31, 1997, $1,250,000 through
March 31, 1999 and $1,000,000 through March 21, 2000.
(5)
<PAGE>
The Company also maintains a credit facility of up to $15,000,000 with the same
lending institutions and matures in March 1997. As of October 31, 1995, the
Company had borrowed $5,650,000 leaving an availability of $9,350,000 under the
line of credit.
In connection with the CPMB acquisition, the Company is also obligated on a
$3,000,000 subordinated note payable bearing interest at an annual rate of 8%
and matures on March 31, 2000.
As of October 31, 1995, days sales outstanding were 109 down 14 days from 123
days for the quarter ended October 31, 1994. The days sales outstanding was
positively impacted by the newly generated revenues arising out of the recent
acquisitions.
The Company believes that its working capital, internally generated funds and
amounts available under its existing line of credit will be sufficient to meet
the Company's capital requirements for at least the foreseeable future.
(6)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Index to Condensed Consolidated Financial Statements
Page No.
--------
Balance Sheets as of October 31, 1995 (Unaudited)
and April 30, 1995 (Audited) 8 - 9
Statements of Income for the Three and Six Months Ended
October 31, 1995 and October 31, 1994 (Unaudited) 10
Statements of Cash Flows for the Six Months Ended October 31, 1995
and October 31, 1994 (Unaudited) 11-12
Statement of Changes in Stockholders' Equity for the Six Months
Ended October 31, 1995 (Unaudited) 13
Notes to Financial Statements 14
(7)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
October 31, 1995 April 30, 1995
---------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,093,873 $ 4,562,712
Accounts Receivable, less allowance for
doubtful accounts 48,256,394 35,883,354
Inventories 10,843,566 9,833,853
Due from Seller 403,000 --
Deferred Taxes 2,084,792 1,575,300
Prepaid Expenses and Other 809,989 1,163,541
------------ ------------
Total Current Assets 66,491,614 53,018,760
IMPROVEMENTS and EQUIPMENT, less
accumulated depreciation and
amortization 4,171,817 2,488,307
EXCESS OF PURCHASE PRICE OVER
NET ASSETS ACQUIRED 34,805,278 35,464,260
OTHER 1,174,566 1,275,775
------------ ------------
$106,643,275 $ 92,247,102
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(8)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
October 31, 1995 April 30, 1995
---------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 18,053,864 $ 11,843,944
Accrued Expenses 1,516,148 1,009,694
Taxes Payable 324,620 --
Current Maturities of Long Term Debt 3,886,108 3,135,267
------------ ------------
TOTAL CURRENT LIABILITIES 23,780,740 15,988,905
Deferred Taxes 426,324 --
Long Term Debt, Less Current Maturities 25,576,410 23,191,123
------------ ------------
TOTAL LIABILITIES 49,783,474 39,180,028
------------ ------------
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock - $.01 Par Value:
Shares Authorized - 1,000,000:
Issued and Outstanding-0 -- --
Common Stock - $.03 Par Value:
Shares Authorized - 20,000,000:
Issued and Outstanding -
9,321,017 and 9,316,017 279,631 279,481
Additional Paid-In Capital 38,071,235 38,019,510
Retained Earnings 18,508,935 14,768,083
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 56,859,801 53,067,074
------------ ------------
$106,643,275 $ 92,247,102
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(9)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $40,238,092 $20,087,194 $80,039,871 $38,205,844
Cost of Sales 28,169,902 13,464,744 56,422,513 25,443,310
----------- ----------- ----------- -----------
Gross Profits 12,068,190 6,622,450 23,617,358 12,762,534
----------- ----------- ----------- -----------
Operating Expense:
Selling 1,003,250 804,027 2,040,331 1,326,111
General & Administrative 6,954,403 2,730,029 13,963,145 5,659,520
----------- ----------- ----------- -----------
7,957,653 3,534,056 16,003,476 6,985,631
----------- ----------- ----------- -----------
Income from Operations 4,110,537 3,088,394 7,613,882 5,776,903
Interest Expense (Income) 651,926 (90,454) 1,262,862 (178,758)
----------- ----------- ----------- -----------
Income Before Taxes on Income 3,458,611 3,178,848 6,351,020 5,955,661
Taxes on Income 1,419,877 1,325,500 2,610,168 2,482,100
----------- ----------- ----------- -----------
Net Income $ 2,038,734 $ 1,853,348 $ 3,740,852 $ 3,473,561
=========== =========== =========== ===========
Earnings Per Common Share
Primary $.22 $ .20 $.40 $ .37
Fully Diluted $.22 $ .20 $.40 $ .37
Weighted Average Shares Outstanding
Primary 9,405,222 9,332,371 9,425,071 9,326,910
Fully Diluted 9,405,222 9,373,719 9,425,071 9,347,584
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(10)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Statement of Cash Flow
For The Six Months Ended October 31
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating
activities:
Net Income $ 3,740,852 $ 3,473,561
Adjustments to reconcile net income to net cash
used in operating activities
Depreciation & Amortization 1,377,394 433,277
Provision for Doubtful Accounts 2,776,901 1,201,777
Deferred Taxes (83,168) (320,000)
Compensation Under Restricted Stock -- 28,530
Increase (decrease) in cash flows
from changes in operating assets
and liabilities net of effects of acquisition
of PMA in 1994:
Accounts receivable (15,149,941) (6,116,229)
Inventory (1,009,713) (1,011,580)
Prepaid Expenses and Other 91,802 (189,015)
Other Assets (12,535) (85,658)
Accounts Payable 6,209,920 275,908
Receivable from Seller (403,000) --
Accrued Expenses 506,454 (473,717)
Income Tax Payable 324,620 (1,710,911)
------------ ------------
Net cash used in operating
activities (1,630,414) (4,494,057)
------------ ------------
Cash flows from investing activities
Capital Expenditures (1,037,034) (724,600)
Cash used in acquisition of PMA -- (187,500)
Proceeds from closing adjustments of
the Murray Group -- 1,444,426
------------ ------------
Net Cash provided by (used in) Investing activities (1,037,034) 532,326
------------ ------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(11)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Statement of Cash Flow (concluded)
For The Six Months Ended October 31
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from financing activities:
Increase (Decrease) in bank loan,
net of repayments $ 2,150,000 $ --
Principal payments on long-term debt, (3,266) (117,941)
Proceeds from exercise of underwriter
warrants -- 145,800
Proceeds from exercise of stock options 51,875 --
------------ ------------
Net cash provided by
financing activities 2,198,609 27,859
------------ ------------
Net increase (decrease) in cash and
cash equivalents (468,839) (3,933,872)
Cash and cash equivalents,
at beginning of period 4,562,712 13,495,480
------------ ------------
Cash and cash equivalents, at end of period $ 4,093,873 $ 9,561,608
============ ============
Supplemental disclosures of cash flow information:
Cash Paid for Interest $ 924,511 $ 54,215
Cash Paid for Taxes $ 2,202,380 $ 2,687,683
</TABLE>
Supplemental disclosure of non-cash investing activities:
1. The company financed $989,394 of new computer equipment during the six
months ended 10/31/95.
2. On May 14, 1994, the Company issued 20,000 shares of non-registered common
stocks in connection with the PMA acquisition.
See Notes to Condensed Consolidated Financial Statements
(12)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
Six Months Ended October 31, 1995
<TABLE>
<CAPTION>
(Unaudited)
Common Stock Additional
$.03 Par Value Paid-in Retained
Shares Amount Capital Earnings
------ ------ ---------- --------
<S> <C> <C> <C> <C>
Balance, May 1, 1995 9,316,017 $ 279,481 $ 38,019,510 $14,768,083
Common Stock Issued
Upon Exercise of
Stock Options 5,000 150 51,725 --
Net Income for the Six
Months Ended
October 31, 1995 -- -- -- 3,740,852
--------------------------------------------------------------------------
Balance, October 31, 1995 9,321,017 $ 279,631 $38,071,235 $18,508,935
========= ========= =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(13)
<PAGE>
HEALTH MANAGEMENT, INC.
And Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
The condensed consolidated financial statements include Health Management, Inc.,
(the "Company"), (A Delaware corporation) and its wholly-owned subsidiaries
Homecare Management, Inc., ("HMI - New York"), a New York corporation, HMI
Pennsylvania, Inc., HMI Retail Corp., Inc., HMI PMA, Inc., Health Reimbursement
Corp., HMI Maryland, Inc., and HMI Illinois, Inc. All intercompany accounts and
transactions have been eliminated in consolidation.
The condensed Consolidated Financial Statements included herein are unaudited
and include all adjustments which, in the opinion of management, are necessary
for a fair presentation of the results of operations of the interim period
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. These condensed financial statements should be
read in conjunction with the Company's form 10-K for the year ended April 30,
1995. The results of operations for periods for the interim periods are not
necessarily indicative of the operating results for the whole year.
Note 2: Capital Transactions
During the quarter ended October 31, 1995, two employees exercised 5,000 stock
options for a total exercise price of $51,875.
Note 3: Contingency
On April 3, 1995, American Preferred Prescription, Inc. ("APP") filed a
complaint against the Company, Preferred Rx, Inc., Community Prescription
Services and Sean Strub in the New York Supreme Court for tortious interference
with existing and prospective contractual relationships, for lost customers and
business opportunities resulting from allegedly slanderous statements and for
allegedly false advertising and promotion. Four separate causes of action are
alleged, each for up to $10 million in damages. APP had previously filed a
similar suit in the United States Bankruptcy Court of the East District of New
York, which was dismissed and the court abstained from exercising jurisdiction.
The Company has answered the complaint and counterclaimed for libel and slander
predicated upon a false press release issued by APP and added as defendants the
principals of APP. Management believes APP's suit against it to be without
merit, intends to defend the proceedings vigorously and believes the outcome
will not have a material adverse effect on the Company's results of operations
or financial position.
On or about November 6, 1995, a stipulation of dismissal without prejudice was
entered into in the United States Bankruptcy Court, Eastern District of New York
in respect of the lawsuit which APP brought against the Company and a former
employee of APP who currently is an employee of the Company. That lawsuit, which
was filed on or about April 14, 1995, involved, among others, claims by APP that
the Company had offered the employee employment in order to obtain confidential
information regarding APP and that the Company's employment of the employee
constituted interference with the employee's contract with APP. In that lawsuit,
APP sought injunctive relief and damages in excess of $10 million.
(14)
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On April 3, 1995, American Preferred Prescription, Inc. ("APP") filed a
complaint against the Company, Preferred Rx, Inc., Community Prescription
Services and Sean Strub in the New York Supreme Court for tortious interference
with existing and prospective contractual relationships, for lost customers and
business opportunities resulting from allegedly slanderous statements and for
allegedly false advertising and promotion. Four separate causes of action are
alleged, each for up to $10 million in damages. APP had previously filed a
similar suit in the United States Bankruptcy Court of the East District of New
York, which was dismissed and the court abstained from exercising jurisdiction.
The Company has answered the complaint and counterclaimed for libel and slander
predicated upon a false press release issued by APP and added as defendants the
principals of APP. Management believes APP's suit against it to be without
merit, intends to defend the proceedings vigorously and believes the outcome
will not have a material adverse effect on the Company's results of operations
or financial position.
On or about November 6, 1995, a stipulation of dismissal without prejudice was
entered into in the United States Bankruptcy Court, Eastern District of New York
in respect of the lawsuit which APP brought against the Company and a former
employee of APP who currently is an employee of the Company. That lawsuit, which
was filed on or about April 14, 1995, involved, among others, claims by APP that
the Company had offered the employee employment in order to obtain confidential
information regarding APP and that the Company's employment of the employee
constituted interference with the employee's contract with APP. In that lawsuit,
APP sought injunctive relief and damages in excess of $10 million.
Item 2. Change in Securities- None
Item 3. Default Upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of stockholders which was held on October
25, 1995, two matters were submitted to a vote of the stockholders.
First, the existing five directors of the Company, Clifford E. Hotte,
Robert C. Clifton, Virginia Belloise, Andre C. Dimitriadis and David R.
Walker, were re-elected for a one-year term.
Second, the stockholders approved the appointment of BDO Seidman as the
Company's independent auditors. 6,919,910 votes were cast in favor of such
appointment, 27,429 votes were against and 15,144 were abstention or broken
non-votes.
Item 5. Other Information - None
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Company, as
filed with the Secretary of State of Delaware on
March 25, 1986 (incorporated by reference to
Registration Statement on Form S-1, Registration No.
33-04485).
3.2 Certificate of Amendment to Certificate of
Incorporation of the Company, as filed with the
Secretary of State of Delaware on March 9, 1988
(incorporated by reference to Form 10-K for year
ended April 30, 1988).
(15)
<PAGE>
3.3 Certificate of Amendment to Certificate of
Incorporation of the Company, as filed with the
Secretary of State of Delaware on March 31, 1992
(incorporated by reference to Registration Statement
on Form S-1, No. 33-46996).
3.4 Certificate of Amendment to Certificate of
Incorporation of the Company, as filed with the
Secretary of State of Delaware on October 27, 1994
(incorporated by reference to Form 10-K for year
ended April 30, 1995).
3.5* Amended and Restated By-Laws of the Company.
27* Financial Data Schedule - 601 (c)
* Filed Herewith.
(b) Reports on Form 8-K
Amendment No. 1 on Form 8-K/A, dated July 18, 1995, to the
Company's Current Report on Form 8-K, dated April 14, 1995,
was filed with the Commission on July 24, 1995,
(16)
<PAGE>
HEALTH MANAGEMENT, INC.
ITEM 601 (C) OF REGULATION S-K
APPENDIX A
<TABLE>
<CAPTION>
ITEM NUMBER ITEM DESCRIPTION AMOUNT
- ----------- ---------------- ------
<S> <C> <C>
5-02 (1) Cash and cash items $ 4,093,873
5-02 (2) Marketable securities 0
5-02 (3) (a) (1) Notes and accounts receivable trade 53,341,252
5-02 (4) Allowance for doubtful accounts 5,084,858
5-02 (6) Inventory 10,843,566
5-02 (9) Total current assets 66,491,614
5-02 (13) Property, plant and equipment 5,922,676
5-02 (14) Accumulated depreciation 1,750,859
5-02 (18) Total assets 106,643,275
5-02 (21) Total current liabilities 23,780,740
5-02 (22) Bonds, mortgages and similar debt 25,576,410
5-02 (28) Preferred stock--mandatory redemption 0
5-02 (29) Preferred stock--no mandatory redemption 0
5-02 (30) Common stock 279,631
5-02 (31) Other stockholders equity 56,580,170
5-02 (32) Total liabilities and stockholders' equity 106,643,275
5-03 (b) 1 (a) Net sales of tangible property 79,937,976
5-03 (b) 1 Total revenue 80,039,871
5-03 (b) 2 (a) Cost of tangible goods sold 56,422,513
5-03 (b) 2 Total cost and expenses applicable to sales and 72,425,989
revenues
5-03 (b) 3 Other cost and expenses 0
5-03 (b) 5 Provision for doubtful accounts and notes 1,377,394
5-03 (b) 8 Interest and amortization of debt discount 1,262,862
5-03 (b) 10 Income before taxes and other items 6,351,020
5-03 (b) 11 Income tax expense 2,610,168
5-03 (b) 14 Income/loss continuing operations 3,740,852
5-03 (b) 15 Discontinued operations 0
5-03 (b) 17 Extraordinary items 0
5-03 (b) 18 Cumulative effect--changes in accounting principles 0
5-03 (b) 19 Net income or loss 3,740,852
5-03 (b) 20 Earnings per share--primary .40
5-03 (b) 20 Earnings per share--fully diluted .40
</TABLE>
(17)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the County of Suffolk, State of
New York, on the 12th of December 1995.
HEALTH MANAGEMENT, INC.
(Registrant)
By: /s/ Clifford E. Hotte
------------------------------------
Clifford E. Hotte, President
Principal Executive Officer
By: /s/ Drew Bergman
------------------------------------
Drew Bergman, Treasurer
Principal Financial Officer
(18)
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
3.1 Certificate of Incorporation of the Company, as filed with the
Secretary of State of Delaware on March 25, 1986 (incorporated by
reference to Registration Statement on Form S-1, Registration No.
33-04485).
3.2 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on March 9,
1988).
3.3 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on March 31,
1992 (incorporated by reference to Registration Statement of Form S-1,
No. 33-46996).
3.4 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on October
27, 1994 (incorporated by reference to Form 10-K for your ended April
30, 1995).
3.5* Amended and Restated By-Laws of the Company.
27* Financial Data Schedule
*Filed Herewith.
<PAGE>
EXHIBIT 3.5
HEALTH MANAGEMENT, INC.
A Delaware Corporation
AMENDED AND RESTATED
BY-LAWS
EFFECTIVE AS OF SEPTEMBER 25, 1995
---------------------------
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting.
An annual meeting of stockholders for the purposes of electing
directors and of transacting such other business as may come before it shall be
held on the first Friday during November of each year if not a legal holiday,
and if a legal holiday, the next succeeding full business day, or at such other
date and time as shall be designated from time to time by the Board of Directors
or the President, either within or without the State of Delaware, as may be
specified by the Board of Directors.
Section 1.2 Special Meetings.
Special meetings of stockholders for any purpose or purposes may be
held at any time upon call of the Chairman of the Board, if any, the President,
the Secretary, or a majority of the Board of Directors, at such time and place
either within or without the State of Delaware as may be stated in the notice. A
special meeting of stockholders shall be called by the President or the
Secretary upon the written request, stating time, place, and the purpose or
purposes of the meeting, of stockholders who together own of record 25% of the
outstanding stock of all classes entitled to vote at such meeting.
Section 1.3 Notice of Meetings.
Written notice of stockholders' meetings, stating the place, date, and
hour thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board, if
any, the President, any Vice President, the Secretary, or an Assistant
Secretary, to each stockholder entitled to vote thereat at least ten days but
not more than sixty days before the date of such meeting, unless a different
period is prescribed by law.
Section 1.4 Quorum.
Except as otherwise provided by law or in the Certificate of
Incorporation or these Amended and Restated By-Laws, at any meeting of
stockholders, the holders of a majority of the outstanding shares of each class
of stock entitled to vote thereat shall be present or represented by proxy in
order to constitute a quorum for the transaction of any business. In the absence
of a quorum, a majority in interest of the stockholders present or the chairman
of the meeting may adjourn the meeting from time to time in the manner provided
in Section 1.5 of these Amended and Restated By-Laws until a quorum shall
attend.
<PAGE>
Section 1.5 Adjournment.
Any meeting of stockholders, annual or special, may adjourn from time
to time to reconvene at the same or some other place, and notice need not be
given of any such adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.6 Organization.
The Chairman of the Board, if any, or in his absence the President, or
in their absence any Vice President, shall call to order meetings of
stockholders and shall act as chairman of such meetings. The Board of Directors
or, if the Board fails to act, the stockholders may appoint any stockholder,
director, or officer of the Corporation to act as chairman of any meeting in the
absence of the Chairman of the Board, the President, and the Secretary.
The Secretary of the Corporation shall act as secretary of all meetings
of stockholders, but, in the absence of the Secretary, the chairman of the
meeting may appoint any other person to act as secretary of the meeting.
Section 1.7 Voting.
Except as otherwise provided by law or in the Certificate of
Incorporation or these Amended and Restated By-Laws and except for the election
of directors, at any meeting duly called and held at which a quorum is present,
a majority of the votes cast at such meeting upon a given question by the
holders of the outstanding shares of stock of all classes of stock of the
Corporation entitled to vote thereon who are present in person or by proxy shall
decide such question. At any meeting duly called and held for the election of
directors at which a quorum is present, those directors receiving a plurality of
the votes cast by the holders (acting as such) of shares of stock of the
Corporation entitled to elect directors as a class shall be elected.
Section 1.8 Action Without a Meeting.
The stockholders may take any action required or permitted to be taken
by them without a meeting unless otherwise prohibited by law or the Certificate
of Incorporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office.
The business, property, and affairs of the Corporation shall be managed
by or under the direction of a Board of one director; provided, however, that
the Board, by resolution adopted by vote of a majority of the then authorized
number of directors, may increase or decrease the number of directors. The
directors shall be elected by the holders of shares entitled to vote thereon at
the annual meeting of stockholders, and each shall serve (subject to the
provisions of Article IV) until the next succeeding annual meeting of
stockholders and until his respective successor is elected and qualified.
<PAGE>
Section 2.2 Chairman of the Board.
The directors may elect one of their members to be Chairman of the
Board of Directors. The Chairman shall be subject to the control of, and may be
removed by, the Board of Directors. He shall perform such duties as may from
time to time be assigned to him by the Board.
Section 2.3 Meetings.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board.
Special meetings of the Board of Directors shall be held at such time
and place as shall be designated in the notice of the meeting whenever called by
the Chairman of the Board, if any, the President, or by a majority of the
directors then in office.
Section 2.4 Notice of Special Meetings.
The Secretary, or, in his absence, any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board of Directors by mail at least five days before the
meeting, or by telecopy or overnight courier at least three days before the
meeting. Unless otherwise stated in the notice thereof, any and all business may
be transacted at any meeting without specification of such business in the
notice.
Section 2.5 Quorum and Organization of Meetings.
A majority of the total number of members of the Board of Directors as
constituted from time to time shall constitute a quorum for the transaction of
business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place, and
the meeting may be held as adjourned without further notice or waiver. Except as
otherwise provided by law or in the Certificate of Incorporation or these
Amended and Restated By-Laws, a majority of the directors present at any meeting
at which a quorum is present may decide any question brought before such
meeting. Meetings shall be presided over by the Chairman of the Board, if any,
or in his absence by the President, or in the absence of both by such other
person as the directors may select. The Secretary of the Corporation shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.6 Committees.
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business, property, and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
pursuant to authority expressly granted to the Board of Directors by the
Certificate of Incorporation, fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of the
assets of the Corporation, or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the same
<PAGE>
or any other class or classes of stock of the Corporation), adopting an
agreement of merger or consolidation under Section 251 or 252 of the General
Corporation Law of the State of Delaware, recommending to the stockholders the
sale, lease, or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of dissolution, or amending these Amended and
Restated By-Laws; and, unless such resolution or resolutions expressly so
provided, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the General Corporation Law of
the State of Delaware. Each committee which has been established by the Board of
Directors pursuant to these Amended and Restated By-Laws may fix its own rules
and procedures. Notice of meetings of committees, other than of regular meetings
provided for by committee rules, shall be given to committee members. All action
taken by committees shall be recorded in minutes of the meetings.
Section 2.7 Action Without Meeting.
The Board of Directors or any committee designated by the Board may
take any action required or permitted to be taken by them without a meeting
unless otherwise prohibited by law or the Certificate of Incorporation.
Section 2.8 Telephone Meetings.
Nothing contained in these Amended and Restated By-Laws shall be deemed
to restrict the power of members of the Board of Directors, or any committee
designated by the Board, to participate in a meeting of the Board, or committee,
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers.
The executive officers of the Corporation shall be a President, a
Treasurer, and a Secretary, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint such other officers
(including a Controller and one or more Assistant Treasurers and Assistant
Secretaries) as it may deem necessary or desirable. Each officer shall hold
office for such term as may be prescribed by the Board of Directors from time to
time. Any person may hold at one time two or more offices.
Section 3.2 Powers and Duties.
The Chairman of the Board, if any, or, in his absence, the President,
or, in his absence, the Secretary shall preside at all meetings of the
stockholders and of the Board of Directors. The President shall be the chief
executive officer of the Corporation. In the absence of the President, the
Secretary and, in the absence of the Secretary, a Vice President appointed by
the President or, if the President fails to make such appointment, by the Board,
shall perform all the duties of the President. The officers and agents of the
Corporation shall each have such powers and authority and shall perform such
duties in the management of the business, property, and affairs of the
Corporation as generally pertain to their respective offices, as well as such
powers and authorities and such duties as from time to time may be prescribed by
the Board of Directors.
<PAGE>
ARTICLE IV
RESIGNATIONS, REMOVALS, AND VACANCIES
Section 4.1 Resignations.
Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President, or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
Section 4.2 Removals.
The Board of Directors, by a vote of not less than a majority of the
entire Board, at any meeting thereof, or by written consent, at any time, may,
to the extent permitted by law, remove with or without cause from office or
terminate the employment of any officer or member of any committee and may, with
or without cause, disband any committee.
Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares entitled at the time
to vote at an election of directors.
Section 4.3 Vacancies.
Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from an increase in the number of directors, may be
filled at any time by a majority of the directors then in office (even though
less than a quorum remains) or, in the case of any vacancy in the office of any
director, by the stockholders, and, subject to the provisions of this Article
IV, the person so chosen shall hold office until his successor shall have been
elected and qualified; or, if the person so chosen is a director elected to fill
a vacancy, he shall (subject to the provisions of this Article IV) hold office
for the unexpired term of his predecessor.
ARTICLE V
CAPITAL STOCK
Section 5.1 Stock Certificates.
The certificates representing shares of the capital stock of the
Corporation shall be in such form as shall be prescribed by law and approved,
from time to time, by the Board of Directors.
Section 5.2 Transfer of Shares.
Shares of the capital stock of the Corporation may be transferred on
the books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer agent
of the certificate, properly endorsed, representing such stock.
Section 5.3 Fixing Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which, unless
otherwise provided by law, 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 other
action.
<PAGE>
Section 5.4 Lost Certificates.
The Board of Directors or any transfer agent of the Corporation may
direct a new certificate or certificates representing stock of the Corporation
to be issued in place of any certificate or certificates theretofore issued by
the Corporation, alleged to have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate to be
lost, stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall direct to indemnify the
Corporation against any claim that may be made against the Corporation with
respect to the certificate or certificates alleged to have been lost, stolen, or
destroyed or the issuance of such new certificate or certificates, and such
requirement may be general or confined to specific instances.
Section 5.5 Regulations.
The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Seal.
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words "Corporate Seal" and
"Delaware."
Section 6.2 Fiscal Year.
The fiscal year of the Corporation shall end on April 30 or such date
as otherwise determined by the Board of Directors.
Section 6.3 Notices and Waivers Thereof.
Whenever any notice whatever is required by law, the Certificate of
Incorporation, or these Amended and Restated By-Laws to be given to any
stockholder, director, or officer, such notice, except as otherwise provided by
law, may be given personally, or by mail, telecopy, or overnight courier
addressed to such address as appears on the books of the Corporation. Any notice
given by telecopy shall be deemed to have been given when it shall have been
delivered for transmission, and any notice given by mail or overnight courier
shall be deemed to have been given when it shall have been deposited in the
United States mail with postage thereon prepaid or given to such courier
service, as the case may be.
Whenever any notice is required to be given by law, the Certificate of
Incorporation, or these Amended and Restated By-Laws, a written waiver thereof,
signed by the person entitled to such notice, whether before or after the
meeting or at the time stated therein, shall be deemed equivalent in all
respects to such notice to the full extent permitted by law.
<PAGE>
Section 6.4 Stock of Other Corporations or Other Interests.
Unless otherwise ordered by the Board of Directors, the President, the
Secretary, and such attorneys or agents of the Corporation as may be, from time
to time, authorized by the Board of Directors or the President shall have full
power and authority on behalf of the Corporation to attend and to act and vote
in person or by proxy at any meeting of the holders of securities of any
corporation or other entity in which the Corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all the
rights and powers incident to the ownership of such shares or other securities
which the Corporation, as the owner or holder thereof, might have possessed and
exercised if present. The President, Secretary, or such attorneys or agents may
also execute and deliver on behalf of the Corporation powers of attorney,
proxies, consents, waivers, and other instruments relating to the shares or
securities owned or held by the Corporation.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote for the election of
directors shall have the power to adopt, amend, or repeal these Amended and
Restated By-Laws of the Corporation by vote of not less than a majority of such
shares, and, except as otherwise provided by law, the Board of Directors shall
have power equal in all respects to that of the stockholders to adopt, amend, or
repeal these Amended and Restated By-Laws of the Corporation by vote of not less
than a majority of the entire Board. However, any By-Law adopted by the Board
may be amended or repealed by vote of the holders of a majority of the shares
entitled at the time to vote for the election of directors.
ARTICLE XIII
PROVISIONS OF LAW
These Amended and Restated By-Laws of the Corporation shall be subject
to such provisions of the statutory and common laws of the State of Delaware as
may be applicable to corporations organized under the laws of the State of
Delaware. References herein to provisions of law shall be deemed to be
references to the aforesaid provisions of law unless otherwise explicitly
stated. All references in these Amended and Restated By-Laws to such provisions
of law shall be construed to refer to such provisions as from time to time
amended.
ARTICLE IX
CERTIFICATE OF INCORPORATION
These Amended and Restated By-Laws of the Corporation shall be subject
to the Certificate of Incorporation of the Corporation. All references in these
Amended and Restated By-Laws to the Certificate of Incorporation shall be
construed to mean the Certificate of Incorporation of the Corporation as from
time to time amended.
<PAGE>
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification Generally.
Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director, officer, employee, or
agent of the Corporation or any of its direct or indirect subsidiaries or is or
was serving at the request of the Corporation as a director, officer, employee,
or agent of any other corporation or of a partnership, joint venture, trust, or
other enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee, or agent or in
any other capacity while serving as a director, officer, employee, or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability, and loss
(including attorneys' fees, judgments, fines, excise or other taxes assessed
with respect to an employee benefit plan, penalties, and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith, and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the indemnitee's heirs, executors, and administrators; provided,
however, that, except as provided in Section 10.3 with respect to proceedings to
enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors.
Section 10.2 Advancement of Expenses.
The right to indemnification conferred in Section 10.1 shall include
the right to be paid by the Corporation the expenses incurred in defending any
proceeding for which such right to indemnification is applicable in advance of
its final disposition (hereinafter an "advancement of expenses"); provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Article X or otherwise.
Section 10.3 Standards for Indemnification
The rights to indemnification and to the advancement of expenses
conferred in Sections 10.1 and 10.2 shall be contract rights. If a claim under
such sections is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
<PAGE>
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by an indemnitee to enforce
a right to an advancement of expenses) it shall be a defense that the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law, and (ii) any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article X or otherwise, shall be on the Corporation.
Section 10.4 Non-exclusive Rights.
The rights to indemnification and to the advancement of expenses
conferred in this Article X shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Certificate of
Incorporation, these Amended and Restated By-Laws, or any agreement, vote of
stockholders or disinterested directors, or otherwise.
Section 10.5 Insurance.
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee, or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or loss
under the Delaware General Corporation Law.
Section 10.6 Proration.
The Corporation's obligation, if any, to indemnify any person who was
or is serving as a director, officer, employee, or agent of any direct or
indirect subsidiary of the Corporation or, at the request of the Corporation, of
any other corporation or of a partnership, joint venture, trust, or other
enterprise shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
or other enterprise.
Section 10.7 Modification.
Any repeal or modification of the foregoing provisions of this Article
X shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
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