UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended January 2, 1999 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________ to
_____________.
Commission file number 0-17885
BEI MEDICAL SYSTEMS COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 71-0455756
(State of incorporation) (I.R.S. Employer Identification No.)
100 Hollister Road
Teterboro, New Jersey 07608
(Address of principal executive offices)
(201) 727-4900
(Registrant's telephone number)
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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: $.001 Par Value, 7,777,296 shares as of February 1, 1999
<PAGE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION (Unaudited) PAGE
----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -- January 2,
1999 (unaudited) and October 3, 1998 3
Condensed Consolidated Statements of Operations --
Three Months Ending January 2, 1999 (unaudited) and
December 27, 1997 (unaudited) 4
Condensed Consolidated Statements of Cash Flows --
Three Months Ending January 2, 1999 (unaudited) and
December 27, 1997 (unaudited) 5
Notes to Condensed Consolidated Financial Statements --
January 2, 1999 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
(a) Exhibits
3.2 By-laws
27.1 Financial Data Schedule
(b) Reports on Form 8-K
SIGNATURES 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 2, October 3,
1999 1998
(Unaudited) (See note below)
- --------------------------------------------------------------------------------
(dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents $ 4,416 $ 3,504
Trade receivables, net 1,550 1,897
Inventories -- Note 2 2,974 3,087
Refundable income taxes 283 2,384
Other current assets 320 360
- --------------------------------------------------------------------------------
Total current assets 9,543 11,232
Property, plant and equipment, net 760 820
Tradenames, patents and other, net 1,760 1,846
Goodwill, net 3,293 3,353
Other assets 137 137
- --------------------------------------------------------------------------------
Total assets $15,493 $17,388
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 1,183 $ 1,551
Accrued expenses and other liabilities 1,360 1,376
Current portion of long-term debt -- 21
- --------------------------------------------------------------------------------
Total current liabilities 2,543 2,948
Stockholders' equity 12,950 14,440
- --------------------------------------------------------------------------------
Total liabilities and stockholders' equity $15,493 $17,388
================================================================================
See notes to condensed consolidated financial statements
Note: The balance sheet at October 3, 1998 has been derived from the audited
consolidated balance sheet at that date but does not include all the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
3
<PAGE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ending
---------------------------
January 2, December 27,
1999 1997
(amounts in thousands except
per share amounts)
- -------------------------------------------------------------------------------
Revenues $ 2,164 $ 2,418
Cost of sales 1,308 1,495
- -------------------------------------------------------------------------------
Gross Profit 856 923
Selling, general and administrative expenses 1,817 2,264
Research, development and related expenses 726 478
- -------------------------------------------------------------------------------
2,543 2,742
- -------------------------------------------------------------------------------
Loss from operations (1,687) (1,819)
Interest income 30 120
Interest expense (4) (11)
- -------------------------------------------------------------------------------
Loss before income taxes (1,661) (1,710)
Income tax benefit (134) (514)
- -------------------------------------------------------------------------------
Net loss ($1,527) ($1,196)
===============================================================================
Loss per Common Share -- Note 3
Loss per common share, basic and diluted ($ 0.20) ($ 0.17)
- -------------------------------------------------------------------------------
Weighted average shares outstanding -- Note 3 7,479 7,185
===============================================================================
See notes to condensed consolidated financial statements
4
<PAGE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ending
-------------------------
January 2, December 27,
1999 1997
(dollars in thousands)
- -------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ 948 ($ 851)
Cash flows from investing activities:
Purchases of plant and equipment (15) (18)
Purchases of patents and licenses -- (4)
- -------------------------------------------------------------------------------
Net cash used in investing activities (15) (22)
Cash flows from financing activities:
Payments on long-term debt (21) (35)
- -------------------------------------------------------------------------------
Net cash (used in) financing activities (21) (35)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 912 (908)
Cash and cash equivalents at beginning of period 3,504 9,271
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 4,416 $ 8,363
===============================================================================
See notes to condensed consolidated financial statements.
5
<PAGE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
January 2, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the interim periods presented are not
necessarily indicative of the results that may be expected for the year ending
October 2, 1999. For further information, refer to the consolidated financial
statements and footnotes thereto in the Company's Annual Report on Form 10-K for
the year ended October 3, 1998.
On September 27, 1997, BEI Electronics, Inc. ("Electronics") distributed to
holders of Electronics common stock one share of common stock of BEI
Technologies, Inc. ("Technologies"), a newly formed subsidiary, for each share
of Electronics common stock held (the "Distribution"). In connection with the
Distribution, Electronics transferred to Technologies all of the assets,
liabilities and operations of its BEI Sensors & Systems Company, Inc. and
Defense Systems Company, Inc. business segments. After the Distribution, the
sole asset of Electronics was its investment in its subsidiary, BEI Medical
Systems Company, Inc. ("Medical"). On November 4, 1997, Electronics merged with
Medical and became one company with Electronics as the surviving corporation
(the "Merger"). After the Merger, Electronics changed its name to BEI Medical
Systems Company, Inc. (the "Company").
NOTE 2--INVENTORIES
January 2, October 3,
1999 1998
(dollars in thousands)
- --------------------------------------------------------------------------------
Finished products $2,071 $2,128
Work in process 147 196
Materials 756 763
- --------------------------------------------------------------------------------
Inventories $2,974 $3,087
================================================================================
6
<PAGE>
NOTE 3--LOSS PER SHARE
As a result of the net loss for all periods presented, weighted average shares
used in the calculation of basic and diluted loss per share are the same.
Weighted average shares exclude unvested restricted stock, which amounted to
299,000 and 268,000 shares for the three months ending January 2, 1999 and
December 27, 1997, respectively. Common stock equivalents are excluded from the
loss per share for all periods presented because the effect would be
anti-dilutive.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this section, and those discussed in the
Company's Form 10-K for the year ended October 3, 1998.
The following table sets forth, for the fiscal periods indicated, the percentage
of revenues represented by certain items in the Company's Condensed Consolidated
Statements of Operations.
Three Months Ending
----------------------------
January 2, December 27,
1999 1997
- --------------------------------------------------------------------------------
Revenues 100.0% 100.0%
Cost of sales 60.4% 61.8%
- --------------------------------------------------------------------------------
Gross profit 39.6% 38.2%
Selling, general and administrative expenses 84.1% 93.6%
Research, development and related expenses 33.5% 19.8%
- --------------------------------------------------------------------------------
Loss from operations (78.0%) (75.2%)
Interest income 1.4% 5.0%
Interest expense (0.2%) (0.6%)
- --------------------------------------------------------------------------------
Loss before income taxes (76.8%) (70.8%)
Income tax benefit (6.2%) (21.3%)
- --------------------------------------------------------------------------------
Net loss (70.6%) (49.5%)
================================================================================
Three Months Ended January 2, 1999 and December 27, 1997
Revenues for the three months ending January 2, 1999, were $2,164,000 a decrease
of $254,000 or 10.5% from the comparable three month period of fiscal 1998,
ending December 27, 1997. The lower revenue principally reflects the impact of
reduced shipments of reusable instruments and Lletz disposable products to both
domestic and international customers in the gynecology market. Revenues from
these products declined $242,000 or 13.1% in the first quarter of fiscal 1999
compared to the first quarter of fiscal 1998 due to a temporary production
problem at the Company's outside vendors and what the Company believes to be
8
<PAGE>
generally soft market conditions. International revenues from shipments of the
Company's Hydro ThermAblator(R) ("HTA(R)") system for endometrial ablation
declined to $81,000 in the first quarter of fiscal 1999 from $131,000 in the
comparable quarter of fiscal 1998. The decline reflects a large order from one
of the Company's Latin America distributors that was shipped in the first
quarter of fiscal 1998 that was not repeated in fiscal 1999. Partially
offsetting these decreases were increased revenues from gastrointestinal
products which increased 20.8% in the first quarter of fiscal 1999 to $203,000
compared to the comparable period of fiscal 1998.
Gross profit as a percentage of revenues increased to 39.6% in the first quarter
of fiscal 1999 compared to 38.2% for the comparable quarter in fiscal 1998. The
increase was principally due to reduced expenditures for manufacturing overhead
resulting from the consolidation of the Company's manufacturing and distribution
facilities that occurred in the fourth quarter of fiscal 1998. The impact of the
reduced overhead cost was partially offset by a change in the product mix, with
a larger portion of lower margin products being sold during the first quarter of
fiscal 1999 compared to the comparable period of fiscal 1998 and higher overhead
absorption costs resulting from the reduced volume.
Selling, general and administrative expenses declined $447,000 to $1,817,000 or
84.1% of revenues for the three months ending January 2, 1999 compared to
$2,264,000 or 93.6% of revenues for the comparable period in fiscal 1998. The
decline in expenses reflects a reduction in legal fees ($323,000) following
settlement of the Company's litigation with CooperSurgical in July 1998 and
reduced amortization of intangible assets ($173,000) following the sale of a
previously acquired product line as well as the impact of a non compete
agreement that became fully amortized during the second quarter of fiscal 1998.
Increased administrative expenses associated with the Company's efforts to
obtain additional financing partially offset the above.
Research, development and related expenses as a percentage of revenues were
33.5% or $726,000 in the first quarter of fiscal 1999 compared to 19.8% or
$478,000 for the same period of fiscal 1998. The increased spending reflects
expenses associated with recruiting and treating patients as part of the HTA
Phase III clinical trials in the United States. The Company received approval
from the Food and Drug Administration ("FDA") to proceed to the Phase III
portion of the HTA clinical trials in July 1998 and in September 1998 began to
treat patients under the approved protocol. The Company will treat 276 patients
at nine clinical sites around the country under the Phase III protocol. As of
February 5, 1999, 111 of the 276 patients have been treated, and an additional
17 patients have been enrolled in the program and are awaiting treatment. Data
from examinations one year following treatment is required for FDA approval.
Interest income declined to $30,000 in the three month period ended January 2,
1999 compared to $120,000 in the three month period ended December 27, 1997, as
a result of the lower average cash balances on hand during the quarter.
Income tax benefit was 8.1% of the pretax loss in the three month period ending
January 2, 1999 compared to 30.1% of the pretax loss in the comparable period
ending December 27, 1997. The income tax benefit reflects the Company's ability
to carry back losses and collect a refund against prior year taxes paid on the
earnings of previously discontinued operations. The amount of carryback
available to the Company is limited to the taxes paid on earnings of the
previous two fiscal years and the lower effective tax rate in fiscal 1999
results from the reduced amount of remaining carryback available to the Company
compared to fiscal 1998. The remaining carryback available to the Company is
approximately $213,000 which will be recognized throughout the remainder of
fiscal 1999 at the Company's estimated annual effective tax rate.
9
<PAGE>
Liquidity and Capital Resources
The Company's capital requirements depend on numerous factors, including the
progress of the Company's clinical research and product development programs,
the timing and receipt of regulatory clearances and approvals, and the resources
the Company devotes to developing, manufacturing and marketing its products. The
Company's capital requirements also depend on the resources required to expand
and develop a direct sales force in the United States and to expand the
Company's manufacturing capacity, and the extent to which the Company's products
gain market acceptance and sales. The timing and amount of such capital
requirements cannot be predicted accurately. The Company is currently seeking
additional financing. Consequently, although the Company believes its existing
cash balances together with operating revenues, tax refunds and anticipated
working capital financing will provide adequate funding to meet the Company's
liquidity requirements for the remainder of the current fiscal year, there can
be no assurance that additional financing will be available on terms favorable
to the Company, or at all. In the event the Company is unable to generate
sufficient cash flows from revenues or secure additional sources of capital, its
ability to continue as a going concern may be impaired. Any additional equity
financing may be dilutive to stockholders and debt financing, if available, may
involve restrictive covenants and/or also be dilutive to stockholders.
During the first three months of fiscal 1999, cash provided by operations was
$948,000 principally due to the receipt of $2,410,000 of income tax refunds and
other changes in operating assets and liabilities, which more than offset the
$1,527,000 net loss for the period.
Cash used in investing activities during the first three months of fiscal 1999
of $15,000 consisted of purchases of equipment. The Company had no material
capital or other commitments at January 2, 1999.
Cash flows used in financing activities consisted of $21,000 in scheduled
payments made on long-term debt. The Company has no material or other
commitments at January 2, 1999.
Year 2000 Compliance: Modification of Management Information Systems
Currently, many computer systems and software products are coded to accept only
two digit entries in the date code field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced in order to comply with such Year 2000 requirements,
especially those with internally developed systems.
10
<PAGE>
The Company and third parties, with which the Company does business, rely on
numerous computer programs in their day-to-day operations. The Company's Year
2000 project is divided into the following major sections: infrastructure and
applications software commonly referred to as "IT Systems", third party
suppliers and customers commonly referred to as "External Agents", process
control and instrumentation and company products.
IT Systems. The Company has completed a preliminary assessment of Year 2000
issues as they relate to the Company's IT systems. This analysis includes such
activities as order taking, billing, purchasing/accounts payable, general
ledger/financial, and inventory. Systems critical to the Company's business are
commercial packages available from third party vendors and currently in use with
little modification. According to information provided by the suppliers of these
products, Year 2000 compliant versions of these systems are available. In some
cases, the version of the software the Company is currently using is believed to
be compliant in all storage and calculation functions but may have some screens
that display a two-digit year. In other cases, the version of the software
currently in use is believed to be fully Year 2000 compliant, based upon
representation received from the vendors. In still other cases, the version of
the software currently being operated by the Company is not Year 2000 compliant.
However, for software that is not Year 2000 compliant, the Company has acquired
an updated version of the software that is believed to be Year 2000 compliant
based upon representations from the vendor. The Company plans to use both
internal and external resources to test the versions of the software believed to
be Year 2000 compliant and to complete such testing by the middle of calendar
year 1999 and plans to implement these versions before the end of fiscal year
1999. The Year 2000 analysis and upgrading of existing systems are being
performed as a part of the Company's routine maintenance of computer systems and
are not anticipated to be material to the Company's financial results.
External Agents. The Company is currently assessing the impact of Year 2000
readiness of External Agents with which the Company relies for critical products
and services. The Company has developed questionnaires and letters of inquiry to
be sent to the External Agents to assist the Company in assessing the Year 2000
readiness of its External Agents and evaluate the scope of the Company's
exposure. The letter to be sent to each External Agent will be tailored to the
significance of the contribution each makes to the Company's business. The
Company anticipates that the assessment phase of this part of the project will
be completed by early calendar year 1999. To date, the Company is not aware of
any External Agent with a Year 2000 issue that would materially impact the
Company's results of operations, liquidity or capital resources. However, the
Company has no means of ensuring that External Agents will be Year 2000 ready.
The inability of External Agents to complete their Year 2000 resolution process
in a timely fashion could materially impact the Company. The effect of
non-compliance by External Agents is not determinable.
Process Control and Instrumentation. All other items with potential Year 2000
issues are currently being inventoried and evaluated. These include such items
as telephone systems, security systems, HVAC, copiers, FAX machines, production
equipment, tools and other process systems. The Company anticipates that the
assessment phase of this part of the project will be completed by early calendar
year 1999 and anticipates it will utilize both internal and external resources
to reprogram, replace and test noncompliant equipment. Although the Company is
in the early phases of this portion of the Year 2000 project, based upon a
11
<PAGE>
preliminary review the Company does not anticipate costs related to this portion
of the project to be material to the financial results of the Company.
Company Products. In addition, BEI Medical has reviewed the Year 2000 issue as
it relates to the electronic products manufactured for sale by the Company. The
Company believes that none of its products are date sensitive or will require
modification to become Year 2000 compliant. Accordingly, the Company does not
believe the Year 2000 issue presents a material exposure as it relates to the
Company's products.
While the Company currently believes that it has an effective program in place
to resolve the Year 2000 issues in a timely manner, as noted above, the Company
has not yet completed all necessary phases of the Year 2000 project. In the
event that the Company does not complete any additional phases, the Company
would be unable to efficiently take customer orders, manufacture and ship
products, invoice customers or collect payments. In addition, disruptions in the
economy generally resulting from Year 2000 issues could also materially
adversely affect the Company.
The Company currently has no contingency plan in place in the event it does not
successfully complete all phases of its Year 2000 project. The Company plans to
finish evaluation of the status of its Year 2000 plan in the second quarter of
calendar year 1999 and determine whether such a plan is necessary.
Effects of Inflation
Management believes that, for the periods presented, inflation has not had a
material effect on the Company's operations.
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 By-laws
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the first quarter
ended January 2, 1999.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on February 16, 1999.
BEI Medical Systems Company, Inc.
By: /s/ Thomas W. Fry
---------------------------------------------
Thomas W. Fry
Vice President of Finance and Administration,
Secretary and Treasurer
(Chief Financial Officer)
13
BY-LAWS
OF
BEI MEDICAL SYSTEMS COMPANY, INC.
(as amended through January 29, 1999)
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I Offices..................................................1
Section 1. Registered Office...................................1
Section 2. Other Offices.......................................1
ARTICLE II Corporate Seal...........................................1
Section 3. Corporate Seal......................................1
ARTICLE III Stockholders' Meetings...................................1
Section 4. Place of Meetings...................................1
Section 5. Annual Meetings.....................................1
Section 6. Special Meetings....................................4
Section 7. Notice of Meetings..................................4
Section 8. Quorum..............................................5
Section 9. Adjournment and Notice of Adjourned Meetings........5
Section 10. Voting Rights.......................................5
Section 11. Beneficial Owners of Stock..........................6
Section 12. List of Stockholders................................6
Section 13. Action without Meeting..............................7
Section 14. Organization........................................7
ARTICLE IV Directors................................................7
Section 15. Number and Term of Office...........................7
Section 16. Powers..............................................7
Section 17. Classes Of Directors................................8
Section 18. Vacancies...........................................8
Section 19. Resignation.........................................8
Section 20. Removal.............................................8
Section 21. Meetings............................................9
(a) Annual Meetings.....................................9
(b) Regular Meetings....................................9
(c) Special Meetings....................................9
(d) Telephone Meetings..................................9
(e) Notice Of Meetings..................................9
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
(f) Waiver of Notice....................................9
Section 22. Quorum and Voting..................................10
Section 23. Action without Meeting.............................10
Section 24. Fees and Compensation..............................10
Section 25. Committees.........................................10
(a) Executive Committee................................10
(b) Other Committees...................................11
(c) Term...............................................11
(d) Meetings...........................................11
Section 26. Organization.......................................12
ARTICLE V Officers................................................12
Section 27. Officers Designated................................12
Section 28. Tenure and Duties of Officers......................12
(a) General............................................12
(b) Duties of Chairman of the Board of Directors.......12
(c) Duties of President................................13
(d) Duties of Vice Presidents..........................13
(e) Duties of Secretary................................13
(f) Duties of Chief Financial Officer or Treasurer.....13
Section 29. Delegation of Authority............................13
Section 30. Resignations.......................................14
Section 31. Removal............................................14
ARTICLE VI Execution Of Corporate Instruments And Voting Of
Securities Owned By The Corporation.....................14
Section 32. Execution of Corporate Instruments.................14
Section 33. Voting of Securities Owned by the Corporation......15
ARTICLE VII Shares Of Stock.........................................15
Section 34. Form and Execution of Certificates.................15
Section 35. Lost Certificates..................................15
Section 36. Transfers..........................................16
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 37. Fixing Record Dates................................16
Section 38. Registered Stockholders............................16
ARTICLE VIII Other Securities Of The Corporation.....................17
Section 39. Execution of Other Securities......................17
ARTICLE IX Dividends...............................................17
Section 40. Declaration of Dividends...........................17
Section 41. Dividend Reserve...................................17
ARTICLE X Fiscal Year.............................................18
Section 42. Fiscal Year........................................18
ARTICLE XI Indemnification.........................................18
Section 43. Indemnification of Directors, Executive Officers,
Other Officers, Employees And Other Agents.........18
(a) Directors and Executive Officers...................18
(b) Other Officers, Employees and Other Agents.........18
(c) Expenses...........................................18
(d) Enforcement........................................19
(e) Non-Exclusivity Of Rights..........................19
(f) Survival Of Rights.................................20
(g) Insurance..........................................20
(h) Amendments.........................................20
(i) Saving Clause......................................20
(j) Certain Definitions................................20
ARTICLE XII Notices.................................................21
Section 44. Notices............................................21
(a) Notice to Stockholders.............................21
(b) Notice to Directors................................21
(c) Address Unknown....................................21
(d) Affidavit of Mailing...............................21
(e) Time Notices Deemed Given..........................21
(f) Methods of Notice..................................22
iii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
(g) Failure to Receive Notice..........................22
(h) Notice to Person with Whom Communication
Is Unlawful........................................22
(i) Notice to Person with Undeliverable Address........22
ARTICLE XIII Amendments..............................................23
Section 45. Amendments.........................................23
ARTICLE XIV Loans To Officers.......................................23
Section 46. Loans to Officers..................................23
iv.
<PAGE>
BY-LAWS
OF
BEI MEDICAL SYSTEMS COMPANY, INC.
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be in the City of Dover, County of Kent. (Del. Code
Ann., tit. 8, ss. 131)
Section 2. Other Offices. The corporation shall also have and maintain an
office or principal place of business in San Francisco, California, at such
place as may be fixed by the Board of Directors, and 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. (Del. Code Ann., tit. 8, ss. 122(8))
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof. (Del. Code Ann., tit. 8, ss. 211(a))
Section 5. Annual Meetings.
(a) The annual meeting of the stockholders of the corporation, for the
purpose of election of Directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors. Nominations of persons for election
to the Board of Directors of the corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of
1.
<PAGE>
stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by
any stockholder of the corporation who was a stockholder of record at the time
of giving of notice provided for in the following paragraph, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
Section 5. (Del. Code Ann., tit. 8, ss. 211(b)).
(b) At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a stockholder pursuant to Section 5(a) of these Bylaws, (i) the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation,
(ii) such other business must be a proper matter for stockholder action under
the General Corporation Law of Delaware, (iii) if the stockholder, or the
beneficial owner on whose behalf any such proposal or nomination is made, has
provided the corporation with a Solicitation Notice (as defined in this Section
5(b)), such stockholder or beneficial owner must, in the case of a proposal,
have delivered a proxy statement and form of proxy to holders of at least the
percentage of the corporation's voting shares required under applicable law to
carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy statement and form of proxy to holders of a percentage of the
corporation's voting shares reasonably believed by such stockholder or
beneficial owner to be sufficient to elect the nominee or nominees proposed to
be nominated by such stockholder, and must, in either case, have included in
such materials the Solicitation Notice, and (iv) if no Solicitation Notice
relating thereto has been timely provided pursuant to this section, the
stockholder or beneficial owner proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this Section 5. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the corporation not later than the close of business on the ninetieth (90th) day
nor earlier than the close of business on the one hundred twentieth (120th) day
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced more
than thirty (30) days prior to or delayed by more than thirty (30) days after
the anniversary of the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the one hundred twentieth (120th) day prior to such annual meeting
and not later than the close of business on the later of the ninetieth (90th)
day prior to such annual meeting or the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made. In no event
shall the public announcement of an adjournment of an annual meeting commence a
new time period for the giving of a stockholder's notice as described above.
Such stockholder's notice shall set forth: (A) as to each person whom the
stockholder proposed to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (B) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder
2.
<PAGE>
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the corporation's books, and of such beneficial owner, (ii) the
class and number of shares of the corporation which are owned beneficially and
of record by such stockholder and such beneficial owner, and (iii) whether
either such stockholder or beneficial owner intends to deliver a proxy statement
and form of proxy to holders of, in the case of the proposal, at least the
percentage of the corporation's voting shares required under applicable law to
carry the proposal or, in the case of a nomination or nominations, a sufficient
number of holders of the corporation's voting shares to elect such nominee or
nominees (an affirmative statement of such intent, a "Solicitation Notice").
(c) Notwithstanding anything in the third sentence of Section 5(b) of these
Bylaws to the contrary, in the event that the number of Directors to be elected
to the Board of Directors of the corporation is increased and there is no public
announcement naming all of the nominees for Director or specifying the size of
the increased Board of Directors made by the corporation at least one hundred
(100) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 5 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the procedures
set forth in this Section 5 shall be eligible to serve as Directors and only
such business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 5. Except as otherwise provided by law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made, or proposed, as the case may
be, in accordance with the procedures set forth in these Bylaws and, if any
proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Section 5, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the 1934 Act.
3.
<PAGE>
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be called,
for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii)
the Chief Executive Officer, or (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board) of Directors for
adoption) and shall be held at such place, on such date, and at such time as the
Board of Directors shall fix.
(b) If a special meeting is properly called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within one
hundred (100) days after the receipt of the request, the person or persons
properly requesting the meeting may set the time and place of the meeting and
give the notice. Nothing contained in this paragraph (b) shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called by
action of the Board of Directors may be held.
(c) Nominations of persons for election to the Board of Directors may be
made at a special meeting of stockholders at which Directors are to be elected
pursuant to the corporation's notice of meeting (i) by or at the direction of
the Board of Directors or (ii) by any stockholder of the corporation who is a
stockholder of record at the time of giving notice provided for in these Bylaws
who shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 6(c). In the event the corporation calls a
special meeting of stockholders for the purpose of electing one or more
Directors to the Board of Directors, any such stockholder may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the corporation's notice of meeting, if the stockholder's notice required by
Section 5(b) of these Bylaws shall be delivered to the Secretary at the
principal executive offices of the corporation not earlier than the close of
business on the one hundred twentieth (120th) day prior to such special meeting
and not later than the close of business on the later of the ninetieth (90th)
day prior to such meeting or the tenth (10th) day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as described
above.
Section 7. Notice of Meetings. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each
4.
<PAGE>
stockholder entitled to vote at such meeting, such notice to specify the place,
date and hour and purpose or purposes of the meeting. Notice of the time, place
and purpose of any meeting of stockholders may be waived in writing, signed by
the person entitled to notice thereof, either before or after such meeting, and
will be waived by any stockholder by his attendance thereat in person or by
proxy, except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Any stockholder so
waiving notice of such meeting shall be bound by the proceedings of any such
meeting in all respects as if due notice thereof had been given. (Del. Code
Ann., tit. 8, ss.ss. 222, 229)
Section 8. Quorum. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. Any shares, the voting of which at said
meeting has been enjoined, or which for any reason cannot be lawfully voted at
such meeting, shall not be counted to determine a quorum at such meeting. In the
absence of a quorum any meeting of stockholders may be adjourned, from time to
time, either by the chairman of the meeting or by vote of the holders of a
majority of the shares represented thereat, but no other business shall be
transacted at such meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation; provided,
however, that Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of Directors. Where a separate vote by a class or classes
is required, a majority of the outstanding shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and the affirmative vote of
the majority (plurality, in the case of the election of Directors) of shares of
such class or classes present in person or represented by proxy at the meeting
shall be the act of such class. (Del. Code Ann., tit. 8, ss. 216)
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
represented thereat. When a meeting is adjourned to another time or place,
notice need not be given of the 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
(30) 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. (Del. Code Ann., tit. 8,
ss. 222(c))
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date,
5.
<PAGE>
as provided in Section 12 of these Bylaws, shall be entitled to vote at any
meeting of stockholders. Except as may be otherwise provided in the Certificate
of Incorporation or these Bylaws, each stockholder shall be entitled to one vote
for each share of capital stock held by such stockholder. Every person entitled
to vote or execute consents shall have the right to do so either in person or by
an agent or agents authorized by a written proxy executed by such person or his
duly authorized agent, which proxy shall be filed with the Secretary at or
before the meeting at which it is to be used. An agent so appointed need not be
a stockholder. No proxy shall be voted after three (3) years from its date of
creation unless the proxy provides for a longer period. All elections of
Directors shall be by written ballot, unless otherwise provided in the
Certificate of Incorporation. (Del. Code Ann., tit. 8, ss.ss. 211(e), 212(b))
Section 11. Beneficial Owners of Stock. (a) If shares or other securities
having voting power stand of record in the names of two (2) or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety, or otherwise, or if two (2) or more persons have the
same fiduciary relationship respecting the same shares, unless the Secretary is
given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(a) if only one (1) votes, his act binds all; (b) if more than one (1) votes,
the act of the majority so voting binds all; (c) if more than one (1) votes, but
the vote is evenly split on any particular matter, each faction may vote the
securities in question proportionally, or may apply to the Delaware Court of
Chancery for relief as provided in the General Corporation Law of Delaware,
Section 217(b). If the instrument filed with the Secretary shows that any such
tenancy is held in unequal interests, a majority or even-split for the purpose
of this subsection (c) shall be a majority or even-split in interest. (Del. Code
Ann., tit. 8, ss. 217(b))
(b) Persons holding stock in a fiduciary capacity shall be entitled to vote
the shares so held. Persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the corporation he has
expressly empowered the pledgee to vote thereon, in which case only the pledgee,
or his proxy, may represent such stock and vote thereon. (Del. Code Ann., tit.
8, ss. 217(a)).
Section 12. List of Stockholders. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
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 (10) 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 specified, at the place where
the meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof, and may be inspected by any
stockholder who is present. (Del. Code Ann., tit. 8, ss. 219(a))
6.
<PAGE>
Section 13. Action without Meeting.
(a) No action shall be taken by the stockholders except at an annual or
special meeting of stockholders called in accordance with these Bylaws, and no
action shall be taken by the stockholders by written consent.
Section 14. Organization. (a) At every meeting of stockholders, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or, if the President is absent, the most senior Vice
President present, or in the absence of any such officer, a chairman of the
meeting chosen by a majority in interest of the stockholders entitled to vote,
present in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall act as
secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless, and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Term of Office. The authorized number of directors
of the corporation shall be fixed from time to time by the Board of Directors
either by a resolution or a bylaw duly adopted by the Board of Directors. The
number of directors presently authorized is eight (8). Directors need not be
stockholders unless so required by the Certificate of Incorporation. If for any
cause, the Directors shall not have been elected at an annual meeting, they may
be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws. No
reduction of the authorized number of Directors shall have the effect of
removing any Director before the Director's term of office expires, unless such
removal is made pursuant to the provisions of Section 20 hereof. (Del. Code
Ann., tit. 8, ss.ss. 141(b), 211(b), (c))
Section 16. Powers. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation
(Del. Code Ann., tit. 8, ss. 141(a))
7.
<PAGE>
Section 17. Classes Of Directors. Subject to the rights of the holders of
any series of Preferred Stock to elect additional directors under specified
circumstances, the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively, and the number of directors in
each class shall be as nearly equal as possible. Each director shall serve for a
term ending on the date of the third annual meeting of stockholders following
the annual meeting at which the director was elected; provided, however, that
each initial director in Class I shall hold office until the annual meeting of
stockholders in 1990; and each initial director in Class II shall hold office
until the annual meeting of stockholders in 1991; and each initial director in
Class III shall hold office until the annual meeting of stockholders in 1992. At
each succeeding annual meeting of stockholders, directors shall be elected for a
full term of three years to succeed the directors of the class whose terms
expire at such annual meeting.
Notwithstanding the foregoing provisions of this Section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal.
Section 18. Vacancies. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified. A vacancy in the Board of Directors shall be deemed
to exist under this Bylaw in the case of the death, removal or resignation of
any director. (Del. Code Ann., tit. 8, ss. 223(a), (b))
Section 19. Resignation. Any director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it shall
be deemed effective at the pleasure of the Board of Directors. When one or more
Directors shall resign from the Board of Directors, effective at a future date,
a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each Director so chosen shall hold office for the unexpired portion of the term
of the Director whose place shall be vacated and until his successor shall have
been duly elected and qualified. (Del. Code Ann., tit. 8, ss.ss. 141(b), 223(d))
Section 20. Removal. Subject to the rights of the holders of any series of
Preferred Stock, no director shall be removed without cause. Subject to any
limitations imposed by law, the Board of Directors or any individual director
may be removed from office at any time with cause by the affirmative vote of the
holders of eighty percent (80%) of the voting power of all the then-outstanding
shares of voting stock of the corporation, entitled to vote at an election of
directors (the "Voting Stock").
8.
<PAGE>
Section 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors shall be
held immediately after the annual meeting of stockholders and at the place where
such meeting is held. No notice of an annual meeting of the Board of Directors
shall be necessary and such meeting shall be held for the purpose of electing
officers and transacting such other business as may lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided, regular
meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been determined by the Board of Directors. (Del. Code
Ann., tit. 8, ss. 141(g))
(c) Special Meetings. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
President or a majority of the Directors. (Del. Code Ann., tit. 8, ss. 141(g))
(d) Telephone Meetings. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting. (Del. Code Ann., tit. 8,
ss. 141(i))
(e) Notice Of Meetings. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
facsimile, telegraph or telex, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. (Del. Code Ann., tit. 8, ss. 229)
(f) Waiver of Notice. The transaction of all business at any meeting of the
Board of Directors, or any committee thereof, however called or noticed, or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum is present and if, either before or after
the meeting, each of the Directors not present signs a written waiver of notice,
or a consent to holding such meeting, or an approval of the minutes thereof.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in any written
waiver of notice or consent unless so required by the Certificate of
Incorporation or these Bylaws. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
(Del. Code Ann., tit. 8, ss. 229)
9.
<PAGE>
Section 22. Quorum and Voting.
(a) Unless the Certificate of Incorporation requires a greater number and
except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of Directors
fixed from time to time in accordance with Section 15 hereof, but not less than
one (1), a quorum of the Board of Directors shall consist of a majority of the
exact number of Directors fixed from time to time in accordance with Section 15
of these Bylaws, but not less than one (1); provided, however, at any meeting
whether a quorum be present or otherwise, a majority of the Directors present
may adjourn from time to time until the time fixed for the next regular meeting
of the Board of Directors, without notice other than by announcement at the
meeting. (Del. Code Ann., tit. 8, ss. 141(b))
(b) At each meeting of the Board of Directors at which a quorum is present
all questions and business shall be determined by a vote of a majority of the
Directors present, unless a different vote be required by law, the Certificate
of Incorporation or these Bylaws. (Del. Code Ann., tit. 8, ss. 141(b))
Section 23. Action without Meeting. 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 of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee. (Del. Code Ann., tit. 8, ss. 141(f))
Section 24. Fees and Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor. (Del. Code
Ann., tit. 8, ss. 141(h))
Section 25. Committees.
(a) Executive Committee. The Board of Directors may by resolution passed by
a majority of the whole Board of Directors appoint an Executive Committee to
consist of one (1) or more members of the Board of Directors. The Executive
Committee, to the extent permitted by law and 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, including without limitation the power or authority to declare a
dividend, to authorize the issuance of stock and to adopt a certificate of
ownership and merger, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation
(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 fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion
10.
<PAGE>
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), 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. (Del.
Code Ann., tit. 8, ss. 141(c))
(b) Other Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board of Directors, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors shall consist of one (1) or more members of the Board of
Directors, and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committee have the powers denied to the Executive Committee in
these Bylaws. (Del. Code Ann., tit. 8, ss. 141(c))
(c) Term. The members of all committees of the Board of Directors shall
serve a one (1) year term. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Section 25, may at any time increase or decrease
the number of members of a committee or terminate the existence of a committee.
The membership of a committee member shall terminate on the date of his death or
voluntary resignation from the committee or from the Board of Directors. The
Board of Directors may at any time for any reason remove any individual
committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors 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, and, in addition, in the absence or
disqualification of any 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. (Del. Code Ann., tit. 8, ss.141(c))
(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any Director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or
11.
<PAGE>
convened. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee. (Del. Code Ann., tit. 8, ss.ss. 141(c), 229)
Section 26. Organization. At every meeting of the Directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated. The officers of the corporation shall be
the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Chief Financial Officer or Treasurer, all of
whom shall be elected at the annual organizational meeting of the Board of
Directors. The order of the seniority of the Vice Presidents shall be in the
order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign
such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation at
any one time unless specifically prohibited therefrom by law. The salaries and
other compensation of the officers of the corporation shall be fixed by or in
the manner designated by the Board of Directors. (Del. Code Ann., tit. 8, ss.ss.
122(5), 142(a), (b))
Section 28. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of the Board of
Directors and until their successors shall have been duly elected and qualified,
unless sooner removed. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors. If the office of
any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors. (Del. Code Ann., tit. 8, ss. 141(b), (e))
(b) Duties of Chairman of the Board of Directors. The Chairman of the Board
of Directors, if appointed and present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28. (Del. Code Ann., tit. 8, ss. 142(a))
12.
<PAGE>
(c) Duties of President. The President shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors, unless the Chairman
of the Board of Directors has been appointed and is present. The President shall
be the Chief Executive Officer of the corporation and shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business and officers of the corporation. The President shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors shall
designate from time to time. (Del. Code Ann., tit. 8, ss. 142(a))
(d) Duties of Vice Presidents. The Vice Presidents, in the order of their
seniority, may assume and perform the duties of the President in the absence or
disability of the President or whenever the office of President is vacant. The
Vice Presidents shall perform other duties commonly incident to their office and
shall also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time. (Del. Code Ann.,
tit. 8, ss. 142(a))
(e) Duties of Secretary. The Secretary shall attend all meetings of the
stockholders and of the Board of Directors, and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary may
give notice in conformity with these Bylaws of all meetings of the stockholders,
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, ss. 142(a))
(f) Duties of Chief Financial Officer or Treasurer. The Chief Financial
Officer or Treasurer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner, and shall render statements of the
financial affairs of the corporation in such form and as often as required by
the Board of Directors or the President. The Chief Financial Officer or
Treasurer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, ss. 142(a))
Section 29. Delegation of Authority. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.
13.
<PAGE>
Section 30. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer. (Del. Code Ann., tit. 8, ss. 142(b))
Section 31. Removal. Any officer may be removed from office at any time,
either with or without cause, by the vote or written consent of a majority of
the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION
Section 32. Execution of Corporate Instruments. The Board of Directors may,
in its discretion, determine the method and designate the signatory officer or
officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation. (Del. Code
Ann., tit. 8, ss.ss. 103(a), 142(a), 158)
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors. (Del. Code
Ann., tit. 8, ss.ss. 103(a), 142(a), 158)
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount. (Del. Code
Ann., tit. 8, ss.ss. 103(a), 142(a), 158).
14.
<PAGE>
Section 33. Voting of Securities Owned by the Corporation. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
(Del. Code Ann., tit. 8, ss. 123)
ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates. Certificates for the shares
of stock of the corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. 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 of the Board of Directors, or the President or
any Vice President and by the Treasurer or Assistant Treasurer or the Secretary
or Assistant Secretary, certifying the number of shares owned by him in the
corporation. Where such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical. (Del. Code Ann., tit. 8, ss. 158)
Section 35. Lost Certificates. A new certificate or certificates may be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, 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 or to
give the corporation a surety bond in such form and amount 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.
(Del. Code Ann., tit. 8, ss. 167)
15.
<PAGE>
Section 36. Transfers.
(a) Transfers of record of shares of stock of the corporation shall be made
only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares. (Del. Code Ann., tit. 8, ss. 201, tit.
6, ss. 8-401(1))
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware. (Del. Code Ann., tit. 8,
ss. 160 (a))
Section 37. Fixing Record Dates.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting. If
no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders 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 record
date shall not precede the date upon which the resolution fixing the record date
is adopted, and which record date shall be not more than sixty (60) days prior
to such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. (Del.
Code Ann., tit. 8, ss. 213)
Section 38. Registered Stockholders. 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 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.
(Del. Code Ann., tit. 8, ss.ss. 213(a), 219)
16.
<PAGE>
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution of Other Securities. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates (covered
in Section 34), may be signed by the Chairman of the Board of Directors, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Chief Financial Officer or Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature of a
trustee under an indenture pursuant to which such bond, debenture or other
corporate security shall be issued, the signatures of the persons signing and
attesting the corporate seal on such bond, debenture or other corporate security
may be the imprinted facsimile of the signatures of such persons. Interest
coupons appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. 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 pursuant to law at any regular
or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation. (Del. Code Ann., tit. 8, ss.ss. 170, 173)
Section 41. Dividend Reserve. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created. (Del.
Code Ann., tit. 8, ss. 171)
17.
<PAGE>
ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year. The fiscal year of the corporation shall end on
the nearest Saturday to the 30th day of September of each year and begin on the
following day or at such other times as may be fixed by resolution of the Board
of directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees And Other Agents.
(a) Directors and Executive Officers. The corporation shall indemnify its
directors and executive officers (for the purposes of this Article XI,
"executive officers shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and executive
officers; and, provided, further, that the corporation shall not be required to
indemnify any director or executive officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(b) Other Officers, Employees and Other Agents. The corporation shall have
power to indemnify its other officers, employees and other agents as set forth
in the Delaware General Corporation Law.
(c) Expenses. The corporation shall advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph
(e) of this Bylaw, no advance shall be made by the corporation to an executive
officer of the corporation (except by reason of the fact that such executive
officer is or was a director of the corporation in which event this paragraph
shall not apply) in any action, suit or proceeding, whether civil,
18.
<PAGE>
criminal, administrative or investigative, if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.
(d) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and executive
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
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 action that indemnification of the claimant is
proper in the circumstances because he 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 claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct. In any suit
brought by a director or executive officer to enforce a right to indemnification
or to an advancement of expenses hereunder, the burden of proving that the
director or executive officer is not entitled to be indemnified, or to such
advancement of expenses, under this Article XI or otherwise shall be on the
corporation.
(e) Non-Exclusivity Of Rights. The rights conferred on any person by this
Bylaw shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents
19.
<PAGE>
respecting indemnification and advances, to the fullest extent not prohibited by
the Delaware General Corporation Law.
(f) Survival Of Rights. The rights conferred on any person by this Bylaw
shall continue as to a person who has ceased to be a director, officer, employee
or other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) Insurance. To the fullest extent permitted by the Delaware General
Corporation Law, the corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(h) Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each director and executive officer to the full extent
not prohibited by any applicable portion of this Bylaw that shall not have been
invalidated, or by any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the following
definitions shall apply:
(i) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony
in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and shall include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of
any nature or kind incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Bylaw with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
20.
<PAGE>
(iv) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(v) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
Section 44. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of these Bylaws,
notice is required to be given to any stockholder, it shall be given in writing,
timely and duly deposited in the United States mail, postage prepaid, and
addressed to his last known post office address as shown by the stock record of
the corporation or its transfer agent. (Del. Code Ann., tit. 8, ss. 222)
(b) Notice to Directors. Any notice required to be given to any Director
may be given by the method stated in subsection (a), or by facsimile, telex or
telegram, except that such notice other than one which is delivered personally
shall be sent to such address as such Director shall have filed in writing with
the Secretary, or, in the absence of such filing, to the last known post office
address of such Director.
(c) Address Unknown. If no address of a stockholder or Director be known,
notice may be sent to the office of the corporation required to be maintained
pursuant to Section 2 hereof.
(d) Affidavit of Mailing. An affidavit of mailing, executed by a duly
authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stock- holder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained. (Del. Code Ann., tit. 8, ss. 222)
(e) Time Notices Deemed Given. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing and all
notices given by
21.
<PAGE>
facsimile, telex or telegram shall be deemed to have been given as of the
sending time recorded at time of transmission.
(f) Methods of Notice. It shall not be necessary that the same method of
giving notice be employed in respect of all Directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.
(g) Failure to Receive Notice. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to act, or within which any Director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, shall not be affected or extended in any manner by the
failure of such stockholder or such Director to receive such notice.
(h) Notice to Person with Whom Communication Is Unlawful. Whenever notice
is required to be given, under any provision of law or of the Certificate of
Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
(i) Notice to Person with Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph. (Del. Code Ann, tit. 8, ss. 230 )
22.
<PAGE>
ARTICLE XIII
AMENDMENTS
Section 45. Amendments. Subject to paragraph (h) of Section 43 of the
Bylaws, (i) the affirmative vote of at least eighty percent (80%) of the voting
power of all of the then outstanding shares of the Voting Stock, shall be
required to alter, amend or repeal Sections 5, 6, 13, 15, 16, 17, 18, 20, 43 and
45 of the Bylaws or to adopt any provision inconsistent with the Bylaws, and
(ii) the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%)
of the voting power of all of the then outstanding shares of the Voting Stock
shall be required to alter, amend or repeal any other Section of the Bylaws. The
Board of Directors shall also have the power to adopt, amend or repeal Bylaws.
(Del. Code Ann., tit. 8, ss.ss. 109(a), 122(6)).
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee 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. Nothing in this Section 46 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute. (Del. Code Ann., tit. 8, ss. 143)
23.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JANUARY 2, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-02-1999
<PERIOD-START> OCT-04-1998
<PERIOD-END> JAN-02-1999
<CASH> 4,416
<SECURITIES> 0
<RECEIVABLES> 1,702
<ALLOWANCES> (152)
<INVENTORY> 2,974
<CURRENT-ASSETS> 9,756
<PP&E> 1,615
<DEPRECIATION> (855)
<TOTAL-ASSETS> 15,706
<CURRENT-LIABILITIES> 2,543
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 13,153
<TOTAL-LIABILITY-AND-EQUITY> 15,706
<SALES> 2,164
<TOTAL-REVENUES> 2,164
<CGS> 1,308
<TOTAL-COSTS> 2,543
<OTHER-EXPENSES> 2,543
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4)
<INCOME-PRETAX> (1,661)
<INCOME-TAX> (134)
<INCOME-CONTINUING> (1,527)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,527)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
