UNITED STATES
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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
Commission File Number 0-14758
SOMATIX THERAPY CORPORATION
- ------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2762045
- ------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
850 Marina Village Parkway, Alameda, California 94501
- ------------------------------------------------------------
(Address of principal executive offices) (zip code)
(510) 748-3000
- ------------------------------------------------------------
(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 outstanding of each of the issuer's
classes of common stock as of:
Class Outstanding at September 30, 1995
- ------------------------------------------------------------
Common Stock, $0.01 Par Value 22,689,599
Preferred Stock, $0.01 Par Value 258,594
<PAGE>
-----------------
TABLE OF CONTENTS
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PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements.
Consolidated Balance Sheets as of
September 30, 1995 and June 30, 1995 . . . 1, 2
Consolidated Statements of Operations
for the Three Months Ended
September 30, 1995 and 1994 . . . . . . . 3
Consolidated Statements of Cash Flows
for the Three Months Ended
September 30, 1995 and 1994 . . . . . . . . 4
Notes to Consolidated Financial Statements. 5
Item 2 - Management's Discussion and
Analysis of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 1 Legal Proceedings . . . . . . . . . 7
Item 2 Changes in Securities . . . . . . . 7
Item 3 Defaults upon Senior Securities . . 7
Item 4 Submission of Matters to a Vote of
Security Holders . . . . . . . . . 7
Item 5 Other Information . . . . . . . . . 7
Item 6 Exhibits and Reports on Form 8-K . . 7
Exhibits Index. . . . . . . . . . . . . . . . . . . 7
Signatures . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
SOMATIX THERAPY CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
1995 1995
(unaudited)
------------ -------
Current assets:
Cash and cash equivalents. . . $13,826,000 $14,326,000
Marketable securities. . . . . 6,921,000 250,000
Other current assets . . . . . 759,000 726,000
---------- ----------
Total current assets . . . 21,506,000 15,302,000
Restricted cash . . . . . . . . . 300,000 300,000
Equipment and improvements, at cost:
Laboratory and production
equipment . . . . . . . . . . . 3,817,000 3,942,000
Equipment under capital leases . . 3,273,000 3,078,000
Furniture and office equipment . . 1,112,000 1,115,000
Leasehold improvements . . . . . . 3,787,000 3,781,000
---------- ---------
11,989,000 11,916,000
Less accumulated depreciation
and amortization. . . . . . . . 8,987,000 8,523,000
---------- ----------
Net equipment and improvements . . 3,002,000 3,393,000
---------- ----------
Other assets. . . . . . . . . . . . . 160,000 133,000
------- --------
$24,968,000 $19,128,000
=========== ===========
See accompanying notes.
<PAGE>
SOMATIX THERAPY CORPORATION
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
1995 1995
(unaudited)
------------- --------
Current liabilities:
Accounts payable and accrued liabilities . $ 1,806,000 $ 2,642,000
Accrued compensation and related expenses. 1,110,000 992,000
Capital lease obligations. . . . . . . . . 786,000 718,000
Accrued restructuring costs. . . . . . . . 670,000 859,000
Other current liabilities. . . . . . . . . 186,000 186,000
----------- -----------
Total current liabilities . . . . . . . 4,558,000 5,397,000
Capital lease obligations, net of current
portion . . . . . . . . . . . . . . . . . . 1,605,000 1,692,000
Accrued restructuring costs,
net of current portion . . . . . . . . . . 1,187,000 1,288,000
Other liabilities . . . . . . . . . . . . . . 198,000 262,000
Stockholders' equity
Series A preferred stock, par value $0.01
per share, 1,000,000 shares authorized;
258,594 shares, issued and outstanding
(254,000 at June 30, 1995) . . . . . . . . 3,000 3,000
Common stock, par value $0.01 per share,
40,000,000 shares authorized,
22,683,591 issued and outstanding
(20,991,996 at June 30, 1995). . . . . . . . 227,000 210,000
Additional paid-in capital. . . . . . . . . . 171,239,000 159,749,000
Accumulated deficit . . . . . . . . . . . . . (154,049,000) (149,473,000)
------------- ------------
Total stockholders' equity . . . . . . . . 17,420,000 10,489,000
------------- -------------
$ 24,968,000 $ 19,128,000
============ ============
See accompanying notes.
<PAGE>
SOMATIX THERAPY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------------
September 30, September 30,
1994 1995
------------ -------------
Revenues:
Research agreement. . . . . . $ -- $ 250,000
Costs and expenses:
Research and development. . . 3,887,000 4,220,000
General and administrative. . 907,000 1,007,000
--------- -----------
Total costs and expenses 4,794,000 5,227,000
--------- ---------
Operating loss. . . . . . . . . . (4,794,000) (4,977,000)
Other income, net . . . . . . . 218,000 159,000
--------- ---------
Net loss. . . . . . . . . . $(4,576,000) $(4,818,000)
============ ============
Net loss per share. . . . . . . . $ (0.21) (0.31)
======== ======
Shares used in calculation of
net loss per share. . . . . . 21,815,617 15,749,761
No dividends were declared or paid during the period.
See accompanying notes.
<PAGE>
<TABLE>
SOMATIX THERAPY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . $(4,576,000) $(4,818,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization . . . . . . . . . 464,000 424,000
Decrease (increase) in other current assets . . (33,000) 60,000
Decrease (increase)in other assets. . . . . . . (27,000) 1,000
Increase (decrease) in accounts payable and
accrued liabilities. . . . . . . . . . . . . (836,000) 331,000
Increase in accrued compensation
and related expenses . . . . . . . . . . . . 118,000 173,000
Decrease in accrued restructuring costs . . . . (290,000) --
Increase (decrease) in other liabilities . . . (64,000) 26,000
----------- ----------
Net cash used in operating activities . . . (5,244,000) (3,803,000)
Cash flows from investing activities:
Sales of marketable securities . . . . . . . . . . -- 11,500,000
Purchase of marketable securities. . . . . . . . . (6,671,000) (4,749,000)
Increase in restricted cash. . . . . . . . . . . . -- (100,000)
Purchase of equipment and improvements . . . . . . (73,000) (243,000)
----------- ----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . (6,744,000) 6,408,000
Cash flows from financing activities:
Borrowings under sale/leaseback agreement. . . . . 154,000 360,000
Principal payments under capital
lease obligations . . . . . . . . . . . . . . . (173,000) (133,000)
Net proceeds from issuance of common stock . . . . 11,507,000 2,000
---------- --------
Net cash provided by financing activities . 11,488,000 229,000
Net increase (decrease) in cash . . . . . . . . . . . (500,000) 2,834,000
Cash and cash equivalents, beginning of period . . . 14,326,000 777,000
---------- ----------
Cash and cash equivalents, end of period. . . . . . . $13,826,000 $ 3,611,000
=========== ===========
Cash paid for interest. . . . . . . . . . . . . . . . $ 82,000 $ 54,000
See accompanying notes.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
1. Basis of Presentation
---------------------
The information at September 30, 1995 and 1994, and for the periods
then ended, is unaudited, but includes all adjustments (consisting
only of normal recurring entries) which the Company's management
believes to be necessary for the fair presentation of the financial
position, results of operations and changes in cash flows for the
periods presented. Interim results are not necessarily indicative
of results for a full year. The accompanying consolidated financial
statements should be read in conjunction with the Company's audited
financial statements for the fiscal year ended June 30, 1995.
2. Per Share Information
---------------------
Per share information is based on the weighted average number of
shares of common stock outstanding during each period. Preferred
shares convertible to 6.25 shares of common stock for each share of
preferred and shares issuable upon the exercise of outstanding
options and warrants to purchase shares of the Company's common
stock (common stock equivalents) are not included in the
calculation of the net loss per share for the three month periods
ended September 30, 1995 and 1994, since their inclusion would be
anti-dilutive.
3. Equity Investment
-----------------
On August 14, 1995, the Company entered into an agreement with
Bristol-Myers Squibb to evaluate possible areas for collaboration
in gene therapy. The Company received an initial equity investment
of $10 million for 1,195,572 shares of common stock or $8.36 per
share and subject to obtaining release from regulatory agencies to
start a Phase II clinical trial for its GVAX (Trademark) cancer
vaccine, Bristol-Myers Squibb will make an additional $10 million
equity investment in the Company's common stock.
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial
-------------------------------------------------
Condition And Results Of Operations
- -----------------------------------
Results Of Operations
- ---------------------
Somatix Therapy Corporation ("Somatix" or the "Company") is a
research and development company in the field of gene therapy.
Absent significant funding from research collaborations, the
Company expects costs and expenses to exceed revenues in future
periods, resulting in increasing losses for the next several years.
There were no revenues for the three months ended September
30, 1995 compared to $250,000 in the same period in the prior
fiscal year. Prior fiscal year revenues were derived from a
research agreement.
On June 29, 1995, the Company completed a restructuring and
cost savings program separating its research and development
infrastructure into two groups. Costs and expenses for the three
month period ended June 30, 1995 were $6,469,000 compared to the
current three month period of $4,794,000.
Research and development expenses for the three-month period
ended September 30, 1995 decreased by $333,000 from the same period
in the prior fiscal year. The decrease is due to the Company's
restructuring and cost savings program.
General and administrative expenses for the three-month period
ending September 30, 1995 decreased by $100,000 from the same
period in the prior fiscal year. The decrease is due to the
Company's restructuring and cost savings program.
Other income consists principally of interest income earned on
the Company's cash reserves. The increase, to $218,000 in the
first three months of fiscal year 1996, from $159,000 for the same
period in fiscal year 1995, was primarily due to larger cash
balances available for investment.
Liquidity And Capital Resources
- -------------------------------
On September 30, 1995, the Company had cash, cash equivalents
and marketable securities of $20,747,000, compared with $14,576,000
on June 30, 1995. The increase in cash, cash equivalents and
marketable securities is directly attributable to a $10 million
equity investment in the Company (see Note 3 to the Consolidated
Financial Statements). Operating expenses have exceeded revenues
for a number of years. For the three-month period ended September
30, 1995, capital expenditures amounted to $73,000. The capital
expenditures/new leases included $52,000 for equipment for research
and development and $14,000 for computer equipment and office
furniture, and $7,000 for tenant improvements. The Company expects
its cash requirements and net losses to increase significantly in
future periods due to higher research and development costs and
other expenses. The Company has no material capital commitments.
Given its current operating plans, the Company anticipates
that its existing cash will be sufficient to meet its cash
requirements for the next twelve months. The Company's future cash
requirements will depend upon many factors, including the progress
of the Company's research and development, the scope and results of
preclinical studies and clinical trials, the expense in conjunction
with obtaining regulatory approvals, the rate of technological
advances, the determination of the commercial potential of the
Company's products under development, the status of competitive
products, and the establishment of production capacity for clinical
trials. The Company anticipates that it will be
<PAGE>
required to raise substantial additional funds through
collaborative research, development and commercialization
relationships and public or private financings. Consummation of
any such transaction would be subject to numerous conditions and
contingencies, and there can be no assurance that any such
transaction will occur in the near term, if at all. The Company
may also seek to access the public equity markets if and when
conditions are favorable, even if it does not have an immediate
need for additional cash at that time. If financing opportunities
are not available to the Company, it will adjust its operating
plans accordingly.
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings. None.
-----------------
Item 2. Changes in Securities. None.
---------------------
Item 3. Defaults Upon Senior Securities. None.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. None.
---------------------------------------------------
Item 5. Other Information. None.
-----------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
The following documents are referenced or included in
this report:
Exhibit
No.
- -------
3.1 1/ Amended and Restated Certificate of Incorporation effective
November 29, 1994.
3.2 2/ Certificate of Designation of Preferences of Preferred
Shares effective June 27, 1995.
3.3 Bylaws, as amended and restated September 14, 1995.
4.1 Reference Exhibits 3.1, 3.2 and 3.3.
23.1 Consent of Independent Auditors.
27 Financial Data Statement
- -----------------
1/ Incorporated by reference to exhibit filed with registrant's
Amendment No. 1 to Current Report on Form 8-K/A as filed
with the SEC on February 14, 1995.
2/ Incorporated by reference to exhibit of the registrant's
Registration Statement on Form S-3 (File No. 33-60873) as
filed with the SEC on June 19, 1995.
(b) REPORTS ON FORM 8-K. A report on Form 8-K dated
August 15, 1995 was filed in the quarter ended September 30, 1995,
with disclosure in Item 5 and Item 7 thereto. No financial
statements were filed in conjunction therewith.
<PAGE>
SOMATIX THERAPY CORPORATION
September 30, 1995
------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be
signed in its behalf by the undersigned thereunto duly authorized.
DATE: , 1995 By: /s/
--------------------- -----------------------------
President, Chief Executive
Officer and Chairman of the
Board
DATE: , 1995 By: /s/
--------------------- -----------------------------
Vice President, Finance
(Principal Financial and
Accounting Officer)
BYLAWS
OF
SOMATIX THERAPY CORPORATION
(As Amended and Restated September 14, 1995)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City
of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at
such other places both within and without the State of Delaware
as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
Section 1. All meetings of the stockholders for the
election of directors shall be held in the City of Alameda, State
of California, at such place as may be fixed from time to time by
the Board of Directors, or at such other place either within or
without the State of Delaware as shall be designated from time to
time by the Board of Directors and stated in the notice of the
meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
<PAGE>
Section 2. The annual meeting of the stockholders
shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
Section 3. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting not less than
ten (10) nor more than sixty (60) days before the date of the
meeting.
Section 4. The officer who has charge of the stock
ledger of the corporation shall prepare and make, or cause a
third party to prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours,
for a period of at least ten days prior to the meeting, either at
a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
Section 5. Special meetings of the stockholders of
this Corporation, for any purpose or purposes, unless otherwise
prescribed by statute or by the certificate of incorporation, may
be called by the Chief Executive Officer or the President, and
shall be called by the Chief Executive Officer or the President
or Secretary at the request in writing of a majority of the Board
of Directors, or at the request in writing of
2.
<PAGE>
stockholders owning a majority in amount of the entire capital
stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating
the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less
than ten (10) nor more than sixty (60) days before the date of
the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting
of stockholders shall be limited to the purposes stated in the
notice.
Section 8. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business,
except as otherwise provided by statute or by the certificate of
incorporation.
Section 9. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been
transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the
3.
<PAGE>
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 10. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one
upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in
which case such express provision shall govern and control the
decision of such question.
Section 11. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after
three years from its date, unless the proxy provides for a longer
period.
Section 12. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at
any annual or special meeting of stockholders of the corporation,
or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate
4.
<PAGE>
action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall
constitute the whole board shall not be less than six (6) nor
more than eleven (11), with the number of directors presently set
at ten (10). Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the
Board of Directors or by the stockholders at the annual meeting
of the stockholders, except as provided in Section 2 of this
Article III, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office,
though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office
shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors,
5.
<PAGE>
summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors
chosen by the directors then in office.
Section 3. The business of the corporation shall be
managed by or under the direction of its Board of Directors which
may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the
certificate of incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation
may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 5. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual
meeting of stockholders and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present. In
the event such meeting is not held at such time, the meeting may
be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board
of Directors, or as shall be specified in a written waiver signed
by all of the directors.
Section 6. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as
shall from time to time be determined by the board.
Section 7. Special meetings of the Board of Directors
may be called for any purpose or purposes at any time by the
Chairman of the Board or the Chief
6.
<PAGE>
Executive Officer or the President or any Vice President or the
Secretary or any two (2) directors. Notice of time and place of
special meetings shall be delivered on four (4) days' notice to
each director by mail or 48 hours' notice to each director either
personally or by telephone or telegram. The notice need not
specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive office of the
corporation.
Section 8. At all meetings of the Board of Directors a
majority of the authorized number of directors shall constitute a
quorum for the transaction of business and the act of a majority
of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may
be otherwise specifically provided by statute or by the
certificate of incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority
of the required quorum for that meeting.
Section 9. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required
or permitted to be taken at any meeting of the Board of Directors
or of any committee thereof may be taken without a meeting, if
all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
7.
<PAGE>
Section 10. Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the
Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution
passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the
directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member.
Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise
all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the
power or authority in reference to amending the
8.
<PAGE>
certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease
or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution,
or amending the bylaws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so
provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board
of Directors.
Section 12. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors
when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the
certificate of incorporation or these bylaws, the Board of
Directors shall have the authority to fix the compensation of
directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special
or standing committees may be allowed like compensation for
attending committee meetings.
9.
<PAGE>
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the
certificate of incorporation or bylaw, any director or the entire
Board of Directors may be removed, with or without cause, by the
holders of a majority of shares entitled to vote at an election
of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the
statutes or of the certificate of incorporation or of these
bylaws, notice is required to be given to any director or
stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by first-class mail or
telegraphic or other written communication, charges prepaid, ad-
dressed to such director or stockholder, at his address as it
appears on the records of the corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time
when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of
incorporation or of these bylaws, a written waiver of notice or a
consent to a holding of the meeting or an approval of the
minutes, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
10.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be
chosen by the Board of Directors and shall be a chief executive
officer, a president, a secretary and a chief financial officer.
The Board of Directors may elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The
Board of Directors may also choose one or more vice-presidents,
assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting
after each annual meeting of stockholders shall choose a chief
executive officer, a president, a chief financial officer and a
secretary, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers.
Section 3. The Board of Directors may appoint such
other officers and agents as it shall deem necessary, who shall
hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time
by the Board of Directors.
Section 4. The salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold
office until their successors are chosen and qualify. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the
Board
11.
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of Directors. An officer may resign at any time by giving
written notice to the corporation. Any resignation shall take
effect at the date of the receipt of that notice or at any later
time specified in that notice; and, unless otherwise specified in
that notice, the acceptance of the resignation is without
prejudice to the rights, if any, of the corporation under any
contract to which the officer is a party. Any vacancy occurring
in any office of the corporation shall be filled by the Board of
Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall
preside at all meetings of the Board of Directors and of the
stockholders at which he shall be present. He shall have and may
exercise such powers as are, from time to time, assigned to him
by the Board and as may be provided by law.
Section 7. In the absence of the Chairman of the
Board, the Vice Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and of the stockholders at
which he shall be present. He shall have and may exercise such
powers as are, from time to time, assigned to him by the Board
and as may be provided by law.
THE CHIEF EXECUTIVE OFFICER, PRESIDENT AND VICE PRESIDENT
Section 8. The Chief Executive Officer shall be the
chief executive officer of the corporation; and in the absence of
the Chairman and Vice Chairman of the Board he shall preside at
all meetings of the stockholders and the Board of Directors; he
shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect.
12.
<PAGE>
Section 9. The Chief Executive Officer shall execute
bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the
corporation.
Section 10. In the absence of the Chief Executive
Officer or in the event of his inability or refusal to act, the
President shall perform the duties of the Chief Executive
Officer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Chief Executive Officer.
The President shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 11. In the absence of the President or in the
event of his inability or refusal to act, the Vice-President, if
any (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the directors, or in
the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so
acting shall have all the powers of and be subject to all the
restrictions upon the President. The Vice-Presidents shall
perform such other duties and have such other powers as the Board
of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 12. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and
record all the proceedings of the meetings of the corporation and
of the Board of Directors in a book to be kept for that
13.
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purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of
all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or Chief Executive Officer,
under whose supervision he shall be. He shall have custody of
the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested
by his signature or by the signature of such assistant secretary.
The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 13. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined
by the Board of Directors (or if there be no such determination,
then in the order of their election) shall, in the absence of the
Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
THE CHIEF FINANCIAL OFFICER
Section 14. The Chief Financial Officer shall have the
custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the
Board of Directors.
14.
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Section 15. The Chief Financial Officer shall disburse
the funds of the corporation as may be ordered by the Board of
Directors or Chief Executive Officer, taking proper vouchers for
such disbursements, and shall render to the Chief Executive
Officer and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his
transactions as Chief Financial Officer and of the financial
condition of the corporation.
Section 16. If required by the Board of Directors, the
Chief Financial Officer shall give the corporation a bond (which
shall be renewed every six years) in such sum and with such
surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the
corporation.
Section 17. The Assistant Treasurer, or Controller, or
if there shall be more than one, the Assistant Treasurers or
Controllers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their
election) shall, in the absence of the Chief Financial Officer or
in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Chief Financial Officer and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
15.
<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the
name of the corporation by, the chairman or vice-chairman of the
Board of Directors, or the President or a Vice-President and the
Chief Financial Officer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation,
certifying the number of shares owned by him in the corporation.
Certificates may be issued for partly paid shares and
in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon
shall be specified.
If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the
powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of
stock, provided that, except as otherwise provided in section 202
of the General Corporation Law of Delaware, in lieu of the
foregoing requirements, there may be set forth on the face or
back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who
so requests the powers, designations, preferences and relative,
participating, optional or other special
16.
<PAGE>
rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences
and/or rights.
Section 2. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the
date of issue.
Section 3. The Chairman of the Board, the Chief
Executive Officer, the President, or any Vice President, or any
other person authorized by resolution of the Board or by any of
the foregoing designated officers, is authorized to vote on
behalf of the corporation any and all shares of any other
corporation or corporations, foreign or domestic, standing in the
name of the corporation. The authority granted to these officers
to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or
corporations may be exercised by any of these officers in person
or by any person authorized to do so by a proxy duly executed by
these officers.
LOST CERTIFICATES
Section 4. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or
17.
<PAGE>
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 5. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
FIXING RECORD DATE
Section 6. In order that the corporation may determine
the stockholders entitled to notice of or to vote at any meeting
of stockholder or any adjournment thereof, or to express consent
to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action. A
18.
<PAGE>
determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any
adjournment of the meeting: provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares and shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital
stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve or reserves
to
19.
<PAGE>
meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes
of the corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from
time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a
corporate seal having inscribed thereon the name of the
corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced
or otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest
extent permitted by Section 145 of the General Corporation Law of
Delaware, as that Section may be amended and supplemented from
time to time, indemnify any director of the corporation, against
expenses (including attorneys' fees), judgments, fines, amounts
paid in settlement and/or other matters referred to in or covered
by that Section, by reason of the fact that he is or
20.
<PAGE>
was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
Expenses incurred by a director of the corporation in
defending a civil or criminal action, suit or proceeding by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation (or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise) shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized
by relevant sections of the General Corporation Law of Delaware;
provided, however, the corporation shall not be required to
advance such expenses to a director (i) who commences any action,
suit or proceeding as a plaintiff unless such advance is
specifically approved by a majority of the Board of Directors or
(ii) who is party to an action, suit or proceeding brought by the
corporation and approved by a majority of the Board which alleges
willful misappropriation of corporate assets by such director,
disclosure of confidential information in violation of such
director's fiduciary or contractual obligations to the
corporation, or any other willful and deliberate breach in bad
faith of such director's duty to the corporation or its
stockholders.
21.
<PAGE>
The corporation's obligation to provide indemnification
under this Section 6 of Article VII shall be offset to the extent
the indemnified party is indemnified by any other source
including, but not limited to, any applicable insurance coverage
under a policy maintained by the corporation, the indemnified
party or any other person.
The indemnification and advancement of expenses
provided for in this Section 6 of Article VII (i) shall not be
deemed exclusive of any other rights to which those indemnified
may be entitled under any by-law, agreement or vote of
stockholders or disinterested directors or otherwise, both as to
action in their official capacities and as to action in another
capacity while holding such office, (ii) shall continue as to a
person who has ceased to be a director and (iii) shall inure to
the benefit of the heirs, executors and administrators of such a
person.
The foregoing provisions of this Section 6 of Article
VII shall be deemed to be a contract between the corporation and
each director of the corporation, who serves in such capacity at
any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations
then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding
theretofore or thereafter brought based in whole or in part upon
any such state of facts.
The Board of Directors in its discretion shall have
power on behalf of the corporation to indemnify any person, other
than a director or officer, made a party to any action, suit or
proceeding by reason of the fact that such person, such person's
testator or intestate, is or was an employee of the corporation.
22.
<PAGE>
The phrases and terms set forth in this Section 6 of
Article VII shall be given the same meaning as the identical
terms and phrases are given in Section 145, as that Section may
be amended and supplemented from time to time.
LOANS
Section 7. The Board of Directors of this corporation
may, without shareholder approval, authorize loans to, or
guaranty obligations of, or otherwise assist, including, without
limitation, the adoption of employee benefit plans under which
loans and guarantees may be made, any officer or other employee
of the corporation or of its subsidiary, including any officer or
employee who is a director of the corporation or its subsidiary,
whenever, in the judgment of the directors, such loan, guaranty
or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with
or without interest, and may be unsecured, or secured in such
manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the
corporation.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or
repealed or new bylaws may be adopted by the stockholders or by
the Board of Directors, when such power is conferred upon the
Board of Directors by the certificate of incorporation at any
regular meeting of the stockholders or of the Board of Directors
or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or
adoption of new bylaws be contained in the notice of such special
23.
<PAGE>
meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or
incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
24.
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