<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File number 0-20711
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VIRUS RESEARCH INSTITUTE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-3098869
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
61 Moulton Street, Cambridge, MA 02138
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(Address of principal executive offices) (Zip code)
(617) 864-6232
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
( ) Yes (X) No
As of August 2, 1996, there were 8,810,768 shares of Common Stock outstanding.
<PAGE> 2
VIRUS RESEARCH INSTITUTE, INC.
<TABLE>
INDEX
<CAPTION>
PART I - FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements:
Balance Sheets as of December 31, 1995 and
June 30, 1996................................................................3
Statements of Operations for the Three Months Ended June 30,
1995 and 1996, for the Six Months Ended June 30, 1995 and
1996, and for the Period from Inception through June 30, 1996................4
Statements of Cash Flows for the Six Months Ended June 30,
1995 and 1996 and for the period from
Inception through June 30, 1996..............................................5
Notes to Financial Statements .................................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................................8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................12
Item 2. Changes in Securities.........................................................12
Item 3. Defaults upon Senior Securities...............................................12
Item 4. Submission of Matters to a Vote of Security Holders...........................12
Item 5. Other Information.............................................................13
Item 6. Exhibits and Reports on Form 8-K..............................................13
SIGNATURES......................................................................................14
</TABLE>
(2)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
BALANCE SHEETS
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,180,176 $ 27,061,966
Prepaid expenses 199,097 347,155
Other current assets 34,845 18,245
------------ ------------
Total current assets 1,414,118 27,427,366
Leasehold improvements and equipment (net
of accumulated depreciation and amortization
of $1,342,046 at December 31, 1995 and
$1,685,709 at June 30, 1996) 1,205,487 1,183,032
Other assets 108,300 84,019
------------ ------------
Total assets $ 2,727,905 $ 28,694,417
============ ============
Current liabilities:
Notes payable $ 923,315 $ 0
Accounts payable 372,577 135,393
Accrued rent 50,417 22,917
Accrued consulting and research fees 457,712 715,552
Other accrued expenses 259,219 427,930
Deferred revenue 0 137,500
Current portion of lease obligation payable 175,090 147,724
------------ ------------
Total current liabilities 2,238,330 1,587,016
Lease obligation payable, less current portion 210,842 151,463
Redeemable convertible preferred stock 24,527,073 0
Stockholders' equity (deficit):
Common stock -- $.001 par value; 30,000,000 shares authorized; 690,004 shares
issued at December 31, 1995 and 8,795,321 shares issued at June 30, 1996 690 8,795
Additional paid-in capital 134,202 51,877,873
Deficit accumulated during the development stage (24,383,232) (24,930,730)
------------ ------------
Total stockholders' equity (24,248,340) 26,955,938
------------ ------------
Total liabilities and stockholders' equity $ 2,727,905 $ 28,694,417
============ ============
(deficit)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(3)
<PAGE> 4
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED CUMULATIVE
JUNE 30, JUNE 30, SINCE INCEPTION
1995 1996 1995 1996 (1991)
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<S> <C> <C> <C> <C> <C>
REVENUE:
Licensing & option revenue $ 0 $2,500,000 $ 0 $2,520,000 $ 3,990,000
Research & development revenue 157,480 312,500 157,480 837,500 1,926,249
Interest income 32,076 99,465 97,406 111,892 485,342
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TOTAL REVENUE 189,556 2,911,965 254,886 3,469,392 6,401,591
EXPENSES:
Research and development 1,424,048 1,286,648 3,063,251 2,633,634 21,380,607
General & administrative 575,319 567,668 1,139,879 916,476 7,552,631
Depreciation 146,128 175,077 290,880 343,662 1,788,057
Other expense 5,312 63,161 11,983 123,118 611,026
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TOTAL EXPENSES 2,150,807 2,092,554 4,505,993 4,016,890 31,332,321
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NET INCOME (LOSS) $(1,961,251) $ 819,411 $(4,251,107) $ (547,498) $(24,930,730)
==========================================================================
Net income (loss) per share $ (0.31) $ 0.12 $ (0.67) $ (0.08)
=========================================================
Weighted average common shares
outstanding 6,390,901 6,864,975 6,390,633 6,451,487
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(4)
<PAGE> 5
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
SIX MONTHS ENDED CUMULATIVE
JUNE 30, SINCE INCEPTION
1995 1996 (1991)
--------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $(4,251,107) $ (547,498) $(24,930,730)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation & amortization 290,880 366,412 1,826,589
Conversion of accrued interest to preferred stock 0 46,026 58,373
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses
and other assets (107,933) (107,176) (326,292)
Increase (decrease) in accounts payable and
accrued expenses 8,509 (8,132) 1,131,792
Increase in deferred revenue 0 137,500 137,500
-------------------------------------------
Net cash (used in) operating activities (4,059,651) (112,868) (22,102,768)
Cash flows from investing activities:
Capital expenditures (118,708) (321,206) (2,886,186)
Other 0 0 (46,182)
-------------------------------------------
Net cash (used in) investing activities (118,708) (321,206) (2,932,368)
Cash flows from financing activities:
Proceeds from notes payable 0 0 7,973,668
Sale & leaseback related to capital acquisitions 0 0 751,311
Principal payments on lease obligations (94,376) (90,745) (600,437)
Sale of common stock 162 27,607,712 27,656,605
Sale of preferred stock 0 1,500,140 19,258,613
Offering costs (1,477) (2,701,243) (2,939,044)
Founders' shares reacquired 0 0 (846)
Purchase of treasury stock 0 0 (2,768)
-------------------------------------------
Net cash provided by (used in) financing activities (95,691) 26,315,864 52,097,102
Net increase (decrease) in cash (4,274,050) 25,881,790 27,061,966
Cash and cash equivalents, beginning of period 5,669,490 1,180,176 0
-------------------------------------------
Cash and cash equivalents, end of period $ 1,395,440 $27,061,966 $ 27,061,966
===========================================
Supplemental disclosure of cash flow information:
Interest paid during the period $ 11,983 $ 34,492 $ 201,682
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(5)
<PAGE> 6
VIRUS RESEARCH INSTITUTE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(1) FINANCIAL STATEMENT PRESENTATION
The unaudited financial statements of Virus Research Institute, Inc.
(the "Company") herein have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC) and, in the opinion of
management, reflect all adjustments (consisting of normal recurring accruals)
necessary to present fairly the results of operations for the interim periods
presented. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principals have been condensed or omitted pursuant to such rules and
regulations; however, management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements and
the notes thereto should be read in conjunction with the financial statements
and the notes thereto included in the Company's Registration Statement on Form
S-1 (Commission File No. 333-3378). The results for the interim periods are not
necessarily indicative of the results for the full fiscal year.
(2) NET INCOME/(LOSS) PER SHARE
Net income/(loss) per common share is based on the weighted average number of
common shares outstanding during the periods presented, assuming, where
applicable, the automatic conversion of all shares of Series A, B, C, and D
redeemable convertible preferred stock then outstanding into 5,415,942 and
5,553,578 shares of common stock at June 30, 1995 and 1996, respectively.
Pursuant to the requirements of the SEC, common stock and preferred stock issued
during the 12 months immediately preceding the initial public offering, plus
shares of common stock that became issuable during the same period pursuant to
the grant of common stock options and warrants, have been included in the
calculation of weighted average common shares outstanding for the periods prior
to those ended June 30, 1996 using the treasury stock method.
During June 1996, all shares of Series A, B, C, and D redeemable convertible
preferred stock then outstanding were converted to common stock upon the closing
of the initial public offering.
(3) CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS
During June 1996, the Company converted the $1,000,000 notes payable to
stockholders and $46,027 of accrued interest into 653,769 shares of Series C
redeemable convertible preferred stock which automatically converted into
217,923 shares of common stock upon the closing of the initial public offering
discussed in Note 5.
(4) SALE OF SERIES D PREFERRED STOCK
During April 1996, The Company sold an aggregate of 294,844 shares of Series D
redeemable convertible preferred stock for net proceeds of approximately
$1,000,000. These preferred shares automatically converted into 98,282 shares of
common stock upon the closing of the initial public offering discussed in Note
5.
(6)
<PAGE> 7
(5) INITIAL PUBLIC OFFERING
In June 1996, the company completed an initial public offering of 2,300,000
shares of common stock for $12.00 per share, resulting in net proceeds of
approximately $24.7 million. In addition, all outstanding shares of Series A, B,
C, and D redeemable convertible preferred stock were automatically converted
into 5,553,578 shares of common stock upon the closing of the initial public
offering.
(7)
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company for the three and six months ended June 30, 1995 and 1996 should be
read in conjunction with the accompanying unaudited financial statements and the
related notes thereto.
This report may contain certain forward looking statements which involve risks
and uncertainties. Such statements are subject to certain factors which may
cause the Company's plans and results to differ significantly from the plans and
results discussed in forward looking statements. Factors that may cause such
differences include, but are not limited to, the progress of the Company's
research and development programs, the Company's ability to compete successfully
with larger companies, risks of failure inherent in product development based on
new technologies and novel delivery systems, the company's ability to attract
and retain qualified personnel, the Company's ability to enter into and maintain
collaborations with third parties, the Company's ability to enter into and
progress in clinical trials, the time and costs involved in obtaining regulatory
approvals, the costs involved in obtaining and enforcing patents, proprietary
rights and any necessary licenses, the ability of the Company to establish
development and commercialization capacities or relationships, the costs of
manufacturing, the Company's ability to obtain additional funds, and those other
risks discussed under the heading "Risk Factors" in the Prospectus dated June 5,
1996 included in the Company's Registration Statement on Form S-1, as amended
(File No. 333-3378).
OVERVIEW
Virus Research Institute, Inc. (the "Company") is engaged in the
discovery and development of vaccine delivery systems and improved and novel
vaccines for adults and children. The Company is developing a portfolio of
proprietary vaccine delivery systems designed to improve the efficacy, lower the
cost of administration and improve patient compliance for a variety of vaccine
products. The Company and its collaborators currently are applying the Company's
vaccine delivery systems to develop vaccines for the prevention of influenza,
Lyme disease, and H. pylori infections. The Company has entered into long-term
collaboration agreements with Pasteur Merieux Serums & Vaccins S.A. (Pasteur
Merieux), pursuant to which Pasteur Merieux may utilize the Company's vaccine
delivery systems in developing a number of vaccines. The Company is also
developing its own proprietary vaccines utilizing antigens licensed exclusively
by the Company, including an oral vaccine for rotavirus infection, a
gastrointestinal disease of infants, and a vaccine for HSV2, the virus causing
genital herpes.
The Company is in the development stage and has devoted substantially
all of its resources to the research and development of its vaccine delivery
systems and vaccine candidates and general and administrative expenses. Through
June 30, 1996 the Company has not generated any revenue from product sales, but
has received an aggregate of $6,402,000 in revenues from licensing, option and
research and development agreements, research and development grants and
interest income. There can be no assurance that the Company will receive any
such revenue in the future.
The Company has incurred losses since inception principally as a result
of expenditures under its research and development programs. The Company expects
to continue to incur significant operating losses over the next several years
due primarily to expanded research and development efforts, preclinical and
clinical testing of its product candidates, investment in new technologies,
investment in production capabilities for
(8)
<PAGE> 9
certain product candidates and the performance of commercialization activities.
The Company's results of operations may vary significantly from quarter to
quarter due to timing of license and milestone payments and other factors.
NEW DEVELOPMENTS
The Company completed its initial public offering on June 11, 1996 in
which it sold 2,300,000 shares of Common Stock at a price of $12.00 per share.
The net proceeds to the Company from such sale totaled approximately $24.7
million, a portion of which was used to repay indebtedness and the balance of
which will be devoted to research and development activities and for working
capital and other general corporate purposes.
In July 1996 the Company commenced a Phase I/II clinical trial of its
rotavirus vaccine candidate. The clinical trial is a double-blinded, placebo
controlled study designed to define the optimal vaccine dose and optimal age for
immunization. The Company plans that 120 infants will be enrolled in the study,
which is to be conducted at Children's Hospital, Cincinnati, Ohio and Johns
Hopkins University, Baltimore, Maryland.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
The Company's total revenue increased by $2,722,000 to $2,912,000 in
the three months ended June 30, 1996 from $190,000 for the same period in 1995.
Licensing and option revenue in the 1996 quarter consisted of $2,500,000 for the
achievement of a milestone pursuant to an agreement with Pasteur Merieux. The
Company reported no licensing and option revenue for the 1995 quarter. Revenue
from research and development support agreements increased by $155,000 to
$312,000 for the 1996 quarter from $157,000 for the prior year quarter primarily
due to funding received pursuant to agreements with Pasteur Merieux and
SmithKline Beecham plc. The same quarter for 1995 consisted primarily of
$138,000 in research support payments received pursuant to an agreement with
SmithKline Beecham plc. Interest income increased by $67,000 to $99,000 for the
three months ended June 30, 1996 compared with $32,000 for the 1995 quarter,
principally due to an increase in cash and cash equivalents, including the
proceeds from the company's initial public offering.
The Company's total expenses decreased by $58,000 to $2,093,000 in the
three months ended June 30, 1996 from $2,151,000 in the 1995 quarter. Research
and development expenses decreased by $137,000 to $1,287,000 in the three months
ended June 30, 1996 from $1,424,000 in the prior year quarter principally due to
a reduction in outside consulting costs and the conclusion of certain sponsored
research agreements. General and administrative expenses decreased $8,000 to
$568,000 in the three months ended June 30, 1996 from $576,000 in the 1995
quarter which was the net result of reduced compensation costs and legal costs
associated with license agreements and patent filings offset by a foreign tax
withholding associated with a milestone payment. Depreciation increased $29,000
to $175,000 in the three months ended June 30, 1996 from $146,000 in the 1995
quarter principally due to the Company's increased investment in laboratory
equipment and improvements. Other expenses increased by $58,000 to $63,000
compared with $5,000 for the 1995 quarter, due to increased interest costs
associated with certain equipment leases entered into in 1995 and a short term
bank loan entered into in 1996.
SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
(9)
<PAGE> 10
The Company's total revenue increased by $3,214,000 to $3,469,000 in
the six months ended June 30, 1996 from $255,000 for the same period in 1995.
Licensing and option revenue in the 1996 period included $2,500,000 for the
achievement of a milestone pursuant to an agreement with Pasteur Merieux. The
Company reported no licensing and option revenue for the 1995 period. Research
and development revenue increased by $679,000 to $837,000 in the current period
from $158,000 for the same period last year. The increase was primarily due to
funding received pursuant to agreements with Pasteur Merieux and SmithKline
Beecham plc. The same period for 1995 consisted primarily of $138,000 in
research support payments received pursuant to an agreement with SmithKline
Beecham plc. Interest income increased by $15,000 to $112,000 for the six months
ended June 30, 1996 compared with $97,000 for the 1995 period, principally due
to an increase in cash and cash equivalents, including the proceeds from the
company's initial public offering.
The Company's total expenses decreased by $490,000 to $4,016,000 in the
six months ended June 30, 1996 from $4,506,000 in the 1995 period. Research and
development expenses decreased by $430,000 to $2,633,000 in the six months ended
June 30, 1996 from $3,063,000 in the prior year period principally due to
reduced compensation costs, a reduction in outside consulting costs and the
conclusion of certain sponsored research agreements. General and administrative
expenses decreased $224,000 to $916,000 in the six months ended June 30, 1996
from $1,140,000 in the 1995 period principally as a result of reduced legal
costs associated with license agreements and patent filings offset in part by a
foreign tax withholding associated with a milestone payment from a collaborator.
Depreciation increased $53,000 to $344,000 in the six months ended June 30, 1996
from $291,000 in the 1995 period principally due to the Company's increased
investment in laboratory equipment and improvements. Other expenses increased by
$111,000 to $123,000 compared with $12,000 for the 1995 period, due to increased
interest costs associated with certain equipment leases entered into in 1995 and
a short term bank loan entered into in 1996.
LIQUIDITY AND CAPITAL RESOURCES
From inception (February 11, 1991) through June 30, 1996, the Company's
cash expenditures have exceeded revenues. The Company's operations have been
funded principally through the sale of equity, loans from stockholders,
equipment lease financing and payments under licensing, options and research and
development agreements. Net cash used by the Company's operations since
inception was $22,103,000, including $113,000 used by operations in the current
year, primarily to fund research and development efforts and its general and
administrative expenses. Since inception the Company incurred $2,886,000 in
capital expenditures, primarily for leasehold improvements and equipment for the
Company's laboratories. During the six months ended June 30, 1996 the Company
incurred $321,000 in capital expenditures primarily for improvements to its
polymer chemistry laboratory and related facilities. In total, the Company
anticipates incurring approximately $750,000 in capital expenditures during 1996
primarily on equipment necessary for the scale up of polyphosphazene
manufacturing.
From inception through June 30, 1996, the Company raised net proceeds
of approximately $51,946,000 through the sale of equity securities, including
net proceeds of $24,747,000 from the Company's initial public offering in June
1996. During the period, the Company borrowed an aggregate of $7,974,000 from
certain stockholders. Of the amount borrowed, an aggregate of $7,676,000 plus
accrued interest has been converted into common stock. In addition, from
inception the Company has funded $751,000 of capital expenditures through
capital leases, of which $600,000 in principal has been repaid through June 30,
1996. In April 1996, the Company entered into a loan agreement with a
(10)
<PAGE> 11
bank pursuant to which it borrowed $1,000,000. The principal plus accrued
interest on the loan was repaid from the proceeds of the Company's initial
public offering.
The Company expects to incur substantial additional costs, including those
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, production and the expansion of its
facilities. The Company anticipates that its existing funds, together with the
proceeds from its initial public offering, and interest earned thereon should be
sufficient to funds its operating and capital requirements as currently planned
for the next twenty four months. However, the Company's cash requirements may
vary materially from those now planned, due to many factors, including, but not
limited to, the progress of the Company's research and development programs, the
scope and results of preclinical and clinical testing, changes in existing and
potential relationships with corporate collaborators, the time and cost in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents, proprietary rights and any necessary licenses, the ability of the
Company to establish development and commercialization capacities or
relationships, the costs of manufacturing and other factors. The Company may
need to raise substantial additional funds through additional financings,
including public or private equity offerings and collaborations with corporate
partners. There can be no assurance that funds will be available on terms
acceptable to the Company, if at all. If adequate funds are not available, the
Company may be required to delay, scale back, or eliminate certain of its
product development programs or to license to others the right to commercialize
products or technologies the Company would otherwise seek to develop and
commercialize itself, any of which would have a material adverse effect on the
Company.
(11)
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities.
On June 11, 1996, the Company's Series A, B, C and D
Convertible Preferred Stock converted into Common Stock in
accordance with their terms in conjunction with the closing of
the Company's initial public offering. See Item 4 below. For
certain changes in the Certificate of Incorporation and
By-Laws of the Company, see Item 4 below. The rights of the
holders of Common Stock of the Company, after giving effect to
all changes described in Item 4 below, are summarized in the
Prospectus dated June 5, 1996, included as part of the
Registration Statement on Form S-1 (Commission File No.
333-3378) with respect to the Company's initial public
offering under the heading "Description of Capital Stock,"
which is incorporated herein by reference.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
A. The stockholders of the Company acted by written consent in
lieu of Special Meeting of Stockholders dated May 8, 1996
pursuant to which the stockholders approved the following
matters: (1) one-for-three reverse stock split in order to
decrease the number of shares of Common Stock of the Company
outstanding prior to the initial public offering; and (2)
amendments to the Company's Certificate of Incorporation to
effectuate the reverse stock split, increase the authorized
capital stock of the Company, and to provide for the automatic
conversion of all outstanding shares of Preferred Stock of the
Company into Common Stock upon closing of the initial public
offering. Each of these matters was approved by the
affirmative vote of 1,501,856 shares of Common Stock,
3,883,495 shares of Series A Convertible Preferred Stock,
6,034,483 shares of Series B Convertible Preferred Stock,
4,960,410 shares of Series C Convertible Preferred Stock and
1,003,437 shares of Series D Convertible Preferred Stock.
B. The stockholders of the Company acted by written consent in
lieu of Special Meeting of Stockholders dated May 31, 1996
pursuant to which the stockholders approved the following
matters: (1) amendments to the Company's Certificate of
Incorporation to permit stockholders to amend the Company's
By-Laws by two-thirds vote and under certain circumstances by
majority vote, to expand the procedures by which the
Certificate of Incorporation may be amended and to prohibit
action by stockholders by written consent; (2) amendments to
the Company's By-Laws establishing procedures to call and set
stockholder meetings, to bring proposals before such meetings
and to nominate candidates for election to the Board of
Directors; and (3) amendments to the Company's 1992 Equity
Incentive Plan. Each of these matters was approved by the
affirmative vote of 1,044,381 shares of Common Stock,
3,883,495 shares of Series A Convertible Preferred Stock,
6,034,483 shares of Series B Convertible
(12)
<PAGE> 13
Preferred Stock, 5,559,035 shares of Series C Convertible
Preferred Stock and 1,062,455 shares of Series D Convertible
Preferred Stock.
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on form 8-K
(a) Exhibits:
3.1 Sixth Restated Certificate of Incorporation
of Virus Research Institute, Inc.
3.2 Amended and Restated By-Laws of
Virus Research Institute, Inc.
11.1 Statement regarding computation of earnings
per share
27.1 Financial Data Schedule
(13)
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 7, 1996
VIRUS RESEARCH INSTITUTE, INC.
a Delaware Corporation
(Registrant)
By: /S/ J. Barrie Ward
- ------------------------------------------------------------------
J. Barrie Ward
Chief Executive Officer
By: /S/ William A. Packer
- ----------------------------------------------------------
William A. Packer
President, Chief Financial Officer
By: /S/ David H. Ramsdell
- ------------------------------------------------------------------
David H. Ramsdell
Principal Accounting Officer
(14)
<PAGE> 1
EXHIBIT 3.1
SIXTH RESTATED CERTIFICATE OF INCORPORATION
OF
VIRUS RESEARCH INSTITUTE, INC.
VIRUS RESEARCH INSTITUTE, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Delaware General Corporation Law"), hereby certifies as
follows:
FIRST: The name of the Corporation is Virus Research Institute, Inc. A
Certificate of Incorporation of the Corporation originally was filed by the
Corporation with the Secretary of State of Delaware on February 12, 1991, a
Restated Certificate of Incorporation was filed with the Secretary of State of
Delaware on July 16, 1992, a Second Restated Certificate of Incorporation was
filed with the Secretary of State of Delaware on October 30, 1992, a Third
Restated Certificate of Incorporation was filed with the Secretary of State of
Delaware on March 25, 1993, a Certificate of Amendment to the Third Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on March 1, 1994, a Fourth Restated Certificate of Incorporation was filed with
the Secretary of State of Delaware on April 8, 1994, a Fifth Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on December 20, 1994 and Certificates of Amendment to the Fifth Restated
Certificate of Incorporation were filed on September 26, 1995, January 5, 1996,
May 31, 1996 and June 11, 1996.
SECOND: This Sixth Restated Certificate of Incorporation only restates
and integrates and does not further amend the Fifth Restated Certificate of
Incorporation of the Corporation, was duly adopted by the Board of Directors of
the Corporation without a vote of stockholders in accordance with the provisions
of Section 245 of the Delaware General Corporation Law, and there is no
discrepancy between the provisions of the Fifth Restated Certificate of
Incorporation and the provisions of the Sixth Restated Certificate of
Incorporation.
THIRD: The text of the Fifth Restated Certificate of Incorporation
of the Corporation, as amended to date, is hereby restated to read in its
entirety as follows:
ARTICLE I
---------
Name
----
The name of the Corporation is Virus Research Institute, Inc.
<PAGE> 2
ARTICLE II
----------
Purpose
-------
The Corporation is organized to engage in any lawful act or activity
for which a corporation may be organized under the Delaware General Corporation
Law.
ARTICLE III
-----------
Capital Stock
--------------
AUTHORIZATION. (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 35,000,000, consisting of
5,000,000 shares of Preferred Stock, par value $.001 per share (the "Preferred
Stock"), and 30,000,000 shares of Common Stock, par value $.001 per share (the
"Common Stock").
(b) The Preferred Stock may be issued in any number of series
designated by the Board of Directors of the Corporation (the "Board of
Directors") pursuant to Section B.1 hereof.
PART A. COMMON STOCK
---------------------
A.1 DESIGNATION AND AMOUNT. The designation of this class of capital
stock shall be "Common Stock," par value $.001 per share ("Common Stock"). The
number of authorized shares of Common Stock is 30,000,000. Subject to any other
applicable restrictions, the number of authorized shares of Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote, irrespective of the provisions of Section
242(b)(2) of the Delaware General Corporation Law.
A.2 VOTING. Except as provided in this Sixth Restated Certificate of
Incorporation or by applicable law, each Common Stockholder shall be entitled to
one vote for each share of Common Stock held of record on all matters as to
which Common Stockholders shall be entitled to vote, which voting rights shall
not be cumulative. In any election of directors, no Common Stockholder shall be
entitled to more than one vote per share of Common Stock.
A.3 OTHER RIGHTS. Each share of Common Stock issued and outstanding
shall be identical in all respects with each other such share, and no dividends
shall be paid on any shares of Common Stock unless the same dividend is paid on
all shares of Common Stock outstanding at the time of such payment. Except for
and subject to those rights expressly granted to the holders of Preferred Stock
and except as may be provided by the laws of the State of Delaware, the Common
Stockholders shall have all other rights of stockholders, including, without
limitation, (a) the right to receive dividends, when and as declared by the
Board of Directors, out of assets lawfully available therefor, and (b) in the
event of any liquidation, dissolution, winding up or otherwise of the
Corporation, the right
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to receive ratably and equally, together with the holders of outstanding shares
of any other class or series of stock then having such rights, all the assets
and funds of the Corporation remaining after the payment of all debts and
liabilities of the Corporation and all preferential amounts to which the holders
of Preferred Stock, if any, may be entitled with respect to the distribution of
assets in liquidation, as provided herein.
PART B. PREFERRED STOCK
------------------------
B.1 DESIGNATION OF SERIES OF PREFERRED STOCK. Subject to any
limitations prescribed by law, the Board of Directors is hereby expressly
authorized to provide for, designate and issue, out of the authorized but
unissued shares of Preferred Stock, one or more other series of Preferred Stock,
subject to the terms and conditions set forth herein. Before any shares of any
such series are issued, the Board of Directors shall fix, and hereby is
expressly empowered to fix, by resolution of resolutions, the following
provisions of the shares of any such series:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof, if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights
or powers, in addition to any voting rights required by law, and, if so, the
terms of such voting rights or powers, which may be full or limited;
(c) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, the preference or relation
which such dividends shall be payable, the preference or relation which such
dividends shall bear to the dividends payable on any shares of stock of any
other class or series;
(d) whether the shares of such class or series shall be subject
to redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(e) the amount or amounts payable upon shares of such class or
series upon, and the rights of the holders of such class or series in the
voluntary or involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(f) whether the shares of such class or series shall be
subject to the operation of a retirement or sinking fund and, if so, the extent
to and manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such class or series for retirement
or other corporate purposes and the terms and provisions relative to the
operation thereof;
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(g) whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of stock of any other class or
series of any other securities and, if so, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the same,
and any other terms and condition of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective
while any shares of such class or series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or series;
(i) the conditions or restrictions, if any, to be effective
while any shares of such class or series are outstanding upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such class or series or of any other class or
series; and
(j) any other powers, designations, preferences and relative,
participating, optional or other special rights, and any qualifications,
limitations or restrictions thereof.
The powers, designations, preferences and relative, participating,
optional or other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding. The Board of
Directors is hereby expressly authorized from time to time to increase (but not
above the total number of authorized shares of Preferred Stock) or decrease (but
not below the number of shares thereof then outstanding) the number of shares of
stock of any series of Preferred Stock designated to any one or more series of
Preferred Stock pursuant to this Section B.1.
ARTICLE IV
----------
Registered Agent
-----------------
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, Wilmington, DE, New Castle County, 19805. The
name of the registered agent of the Corporation at such address is The
Prentice-Hall Corporation System, Inc.
ARTICLE V
---------
Board of Directors
------------------
The number of directors of the Corporation shall be such number as from
time to time shall be fixed by, or in the manner provided in, the By-laws of the
Corporation. Unless and except to the extent that the By-laws of the Corporation
otherwise require, the election of directors of the Corporation need not be by
written ballot.
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ARTICLE VI
----------
Amendment of By-laws
--------------------
Except as otherwise provided by law, the By-laws of the Corporation may
be amended or repealed by the Board of Directors. The By-laws of the Corporation
may be amended or repealed at any annual meeting of stockholders, or special
meeting of stockholders called for such purpose, by the affirmative vote of at
least two-thirds of the votes present and entitled to vote on such amendment or
repeal by holders of voting stock, voting together as a single class; provided,
however, that if the Board of Directors recommends that stockholders approve
such amendment or repeal at such meeting of stockholders, such amendment or
repeal shall only require the affirmative vote of a majority of the votes
present and entitled to vote on such amendment or repeal by holders of voting
stock, voting together as a single class.
ARTICLE VII
-----------
Perpetual Existence
-------------------
The Corporation is to have perpetual existence.
ARTICLE VIII
------------
Amendments and Repeal of Certificate of Incorporation
-----------------------------------------------------
The Corporation reserves the right to amend or repeal this Certificate
of Incorporation in the manner now or hereafter prescribed by statute and this
Certificate of Incorporation, and all rights conferred upon stockholders herein
are granted subject to this reservation. No amendment or repeal of this
Certificate of Incorporation shall be made unless the same is first approved by
the Board of Directors pursuant to a resolution adopted by the Board of
Directors in accordance with Section 242 of the Delaware General Corporation
Law, and, except as otherwise provided by law, thereafter approved by the
stockholders. Whenever any vote of the holders of voting stock is required, and
in addition to any other vote of holders of voting stock that is required by
this Certificate of Incorporation or by law, the affirmative vote of a majority
of the total votes eligible to be cast by holders of voting stock with respect
to such amendment or repeal, voting together a single class, at a duly
constituted meeting of stockholders called expressly for such purpose shall be
required to amend or repeal any provisions of this Certificate of Incorporation;
provided, however, that the affirmative vote of not less than 80% of the total
votes eligible to be cast by holders of voting stock, voting together a single
class, shall be required to amend or repeal any of the provisions of Article XII
or this Article VIII of this Certificate of Incorporation.
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ARTICLE IX
----------
Compromises and Arrangements
----------------------------
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of the Delaware General Corporation Law or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under Section 279 of the Delaware General Corporation Law, order a
meeting of creditors or class of creditors, and/or of the stockholders or class
of stockholders of the Corporation, as the case may be, to be summoned in such
manner as such court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the Corporation as a
consequence of such compromise or arrangement, then such compromise or
arrangement and such reorganization shall, if sanctioned by the court to which
such application has been made, be binding on all the creditors or class of
creditors, and/or on all of the stockholders or class of stockholders of the
Corporation, as the case may be, and also on the Corporation.
ARTICLE X
---------
Limitation of Liability
-----------------------
A director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that the elimination or limitation of
liability is not permitted under the Delaware General Corporation Law as in
effect when such liability is determined. No amendment or repeal of this
provision shall deprive a director of the benefits hereof with respect to any
act or omission occurring prior to such amendment or repeal.
ARTICLE XI
----------
Indemnification
---------------
The Corporation shall, to the fullest extent permitted by the Delaware
General Corporation Law, as amended from time to time, indemnify each 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, administrative or
investigative, by reason of the fact that such person is or was, or has agreed
to become, a director or officer of the corporation, or is or was serving, or
has agreed to serve, at the request of the Corporation, as a director, officer
or trustee of, or in a similar capacity with, another corporation, as a
director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise, from and
against all expenses (including attorneys' fees),
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judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person or on his or her behalf in connection with such action, suit or
proceeding and any appeal therefrom.
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person in not
entitled to indemnification under this Article, which undertaking may be
accepted without reference to the financial ability of such person to make such
payments.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of Directors
of the Corporation.
The indemnification rights provided in this Article XII (i) shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and (ii) shall inure to the benefit of the heirs,
executors and administrators of such persons. The Corporation may, to the extent
authorized from time to time by its Board of Directors, grant indemnification
rights to other employees or agents of the Corporation or other persons serving
the Corporation and such rights may be equivalent to, or greater or less than,
those set forth in this Article.
Any person seeking indemnification under this Article shall be deemed
to have met the standard of conduct required for such indemnification unless the
contrary shall be established.
Any amendment or repeal of the provisions of this Article shall not
adversely affect any right or protection of a director or officer of the
Corporation with respect to any act or omission of much director or officer
occurring prior to such amendment or repeal.
ARTICLE XII
-----------
Stockholder Action
------------------
Any action required or permitted to be taken by the stockholders of the
Corporation at any annual or special meeting of stockholders of the Corporation
must be effected at a duly called annual or special meeting of stockholders and
may not be taken or effected by a written consent of stockholders in lieu
thereof.
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I, William A. Packer, President of the Corporation, for the purpose of
restating the Corporation's Certificate of Incorporation pursuant to the
Delaware General Corporation Law, do make this certificate, hereby declaring and
certifying that this is my act and deed on behalf of the Corporation this 31st
day of July, 1996.
VIRUS RESEARCH INSTITUTE, INC.
By: /s/ WILLIAM A PACKER
-------------------------------------
WILLIAM A PACKER
President
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<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
VIRUS RESEARCH INSTITUTE, INC.
Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1 These by-laws are subject to the certificate of incorporation of
the corporation. In these by-laws, references to law, the certificate of
incorporation and by-laws mean the law, the provisions of the certificate of
incorporation and the by-laws as from time to time in effect.
Section 2. STOCKHOLDERS
2.1 ANNUAL MEETING. The annual meeting of stockholders shall be held
at the hour, date and place within the United States which is fixed by the
majority of the board of directors, the chairman of the board, if one is
elected, or the president, which time, date and place may subsequently be
changed at any time by vote of the board of directors. If no annual meeting has
been held for a period of thirteen months after the corporation's last annual
meeting of stockholders, a special meeting in lieu thereof may be held, and
such special meeting shall have, for the purposes of these by-laws or otherwise,
all the force and effect of an annual meeting. Any and all references hereafter
in these by-laws to an annual meeting or annual meetings also shall be deemed
to refer to any special meeting(s) in lieu thereof.
2.2 MATTERS TO BE CONSIDERED AT ANNUAL MEETINGS. At any annual
meeting of stockholders or any special meeting in lieu of annual meeting of
stockholders (the "Annual Meeting"), only such business shall be conducted, and
only such proposals shall be acted upon, as shall have been properly brought
before such Annual Meeting. To be considered as properly brought before an
Annual Meeting, business must be: (a) specified in the notice of meeting, or
(b) otherwise properly brought before the meeting (i) by, or at the direction
of, the board of directors, (ii) by any holders of record (as of the record
date for the meeting in question) of an aggregate of not less than 7 1/2% of
the shares of capital stock of the corporation entitled to vote at such meeting
(a "7 1/2% Stockholder") or (iii) by any other holder of record (both as of the
time notice of such proposal is given by the stockholder as set forth below and
as of the record date for the Annual Meeting in question) of any shares of
capital stock of the corporation entitled to vote at such Annual Meeting who
complies with the requirements set forth in this Section.
In addition to any other applicable requirements, for business
to be properly brought before an Annual Meeting by a stockholder of record of
any shares of capital stock entitled to vote at such Annual Meeting, other than
a 7 1/2% Stockholder, such stockholder shall: (i) give timely notice as required
by this Section to the secretary of the corporation
<PAGE> 2
and (ii) be present at such meeting, either in person or by a representative.
For the first Annual Meeting following the initial public offering of common
stock of the corporation, a stockholder's notice shall be timely if delivered
to, or mailed to and received by, the corporation at its principal executive
office not later than the close of business on the later of (A) the 75th day
prior to the scheduled date of such Annual Meeting or (B) the 15th day following
the day on which public announcement of the date of such Annual Meeting is first
made by the corporation. For all subsequent Annual Meetings, a stockholder's
notice shall be timely if delivered to, or mailed to and received by, the
corporation at its principal executive office not less than 75 days nor more
than 120 days prior to the anniversary date of the immediately preceding Annual
Meeting (the "Anniversary Date"); provided, however, that in the event the
Annual Meeting is scheduled to be held on a date more than 30 days before the
Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed to and received
by, the corporation at its principal executive office not later than the close
of business on the later of (A) the 75th day prior to the scheduled date of such
Annual Meeting or (B) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the
corporation.
For purposes of these by-laws, "public announcement" shall
mean: (i) disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service, (ii) a report or other
document filed publicly with the Securities and Exchange Commission (including,
without limitation, a Form 8-K), or (iii) a letter or report sent to
stockholders of record of the corporation at the time of the mailing of such
letter or report.
Such a stockholder's notice to the secretary shall set forth
as to each matter proposed to be brought before an Annual Meeting: (i) a brief
description of the business the stockholder desires to bring before such Annual
Meeting and the reasons for conducting such business at such Annual Meeting,
(ii) the name and address, as they appear on the corporation's stock transfer
books, of the stockholder proposing such business, (iii) the class and number of
shares of the corporation's capital stock beneficially owned by the stockholder
proposing such business, (iv) the names and addresses of the beneficial owners,
if any, of any capital stock of the corporation registered in such stockholder's
name on such books, and the class and number of shares of the corporation's
capital stock beneficially owned by such beneficial owners, (v) the names and
addresses of other stockholders known by the stockholder proposing such business
to support such proposal, and the class and number of shares of the
corporation's capital stock beneficially owned by such other stockholders, and
(vi) any material interest of the stockholder proposing to bring such business
before such meeting (or any other stockholders known to be supporting such
proposal) in such proposal.
If the board of directors or a designated committee thereof
determines that any stockholder proposal was not made in a timely fashion in
accordance with the provisions of this Section or that the information provided
in a stockholder's notice does not
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satisfy the information requirements of this Section in any material respect,
such proposal shall not be presented for action at the Annual Meeting in
question. If neither the board of directors nor such committee makes a
determination as to the validity of any stockholder proposal in the manner set
forth above, the presiding officer of the Annual Meeting shall determine whether
the stockholder proposal was made in accordance with the terms of this Section.
If the presiding officer determines that any stockholder proposal was not made
in a timely fashion in accordance with the provisions of this Section or that
the information provided in a stockholder's notice does not satisfy the
information requirements of this Section in any material respect, such proposal
shall not be presented for action at the Annual Meeting in question. If the
board of directors, a designated committee thereof or the presiding officer
determines that a stockholder proposal was made in accordance with the
requirements of this Section, the presiding officer shall so declare at the
Annual Meeting and ballots shall be provided for use at the meeting with respect
to such proposal.
Notwithstanding the foregoing provisions of this by-law, a
stockholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder with respect to the matters set forth in this by-law, and
nothing in this by-law shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation's proxy statement pursuant to
Rule 14a-8 under the Exchange Act.
2.3 SPECIAL MEETINGS. Except as otherwise required by law, special
meetings of the stockholders of the corporation may be called only by (a) the
board of directors pursuant to a resolution approved by the affirmative vote of
a majority of the directors then in office or (b) holders of record of not less
than 20% of the shares of capital stock of the corporation entitled to vote at a
meeting of stockholders.
2.4 MATTERS TO BE CONSIDERED AT SPECIAL MEETINGS. At any special
meeting of stockholders, only such business shall be conducted, and only such
proposals shall be acted upon, as shall have been properly brought before such
meeting. To be considered as properly brought before a special meeting of
stockholders, business must be: (a) specified in the notice of meeting, (b)
otherwise properly brought before the meeting (i) by, or at the direction of,
the board of directors or (ii) by a 7 1/2% Stockholder.
2.5 NOTICE OF MEETINGS; ADJOURNMENTS. Except as otherwise provided by
law, a written notice of each meeting of stockholders stating the place, day and
hour thereof and; in the case of a special meeting, the purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the meeting, to each stockholder entitled to vote thereat, and to each
stockholder who, by law, by the certificate of incorporation or by these
by-laws, is entitled to notice, by leaving such notice with him or at his
residence or usual place of business, or by depositing it in the United States
mail, postage prepaid, and addressed to such stockholder at his address as it
appears in the records of the corporation. Such notice shall be given by the
secretary, or by an officer or person designated by the board of directors, or
in the case of a special meeting by the
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officer calling the meeting. As to any adjourned session of any meeting of
stockholders, notice of the adjourned meeting need not be given if the time and
place thereof are announced at the meeting at which the adjournment was taken
except that if the adjournment is for more than thirty days or if after the
adjournment a new record date is set for the adjourned session, notice of any
such adjourned session of the meeting shall be given in the manner heretofore
described. No notice of any meeting of stockholders or any adjourned session
thereof need be given to a stockholder if a written waiver of notice, executed
before or after the meeting or such adjourned session by such stockholder, is
filed with the records of the meeting or if the stockholder attends such meeting
without objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the
stockholders or any adjourned session thereof need be specified in any written
waiver of notice.
2.6 QUORUM OF STOCKHOLDERS. At any meeting of the stockholders a
quorum as to any matter shall consist of a majority of the votes entitled to be
cast on the matter, except where a larger quorum is required by law, by the
certificate of incorporation or by these by-laws. Any meeting may be adjourned
from time to time by a majority of the votes properly cast upon the question,
whether or not a quorum is present. If a quorum is present at an original
meeting, a quorum need not be present at an adjourned session of that meeting.
Shares of its own stock belonging to the corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of any corporation to
vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.
2.7 ACTION BY VOTE. When a quorum is present at any meeting, a
plurality of the votes properly cast for election to any office shall elect to
such office and a majority of the votes properly cast upon any question other
than an election to an office shall decide the question, except when a larger
vote is required by law, by the certificate of incorporation or by these
by-laws. No ballot shall be required for any election unless requested by a
stockholder present or represented at the meeting and entitled to vote in the
election.
2.8 PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, objecting
to or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. The authorization of
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a proxy may but need not be limited to specified action, provided, however, that
if a proxy limits its authorization to a meeting or meetings of stockholders,
unless otherwise specifically provided such proxy shall entitle the holder
thereof to vote at any adjourned session but shall not be valid after the final
adjournment thereof.
2.9 INSPECTORS. The directors or the person presiding at the meeting
may, but need not, appoint one or more inspectors of election and any substitute
inspectors to act at the meeting or any adjournment thereof. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them.
2.10 LIST OF STOCKHOLDERS. The secretary shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in his name. The stock ledger shall be the only evidence as to who are
stockholders entitled to examine such list or to vote in person or by proxy at
such meeting.
Section 3. BOARD OF DIRECTORS
3.1 NUMBER. The number of directors which shall constitute the whole
board shall not be less than one nor more than nine in number. Thereafter,
within the foregoing limits, the board of directors shall determine the number
of directors and the number of directors may be increased at any time or from
time to time by the directors by vote of a majority of the directors then in
office. The number of directors may be decreased to any number permitted by the
foregoing at any time by the directors by vote of a majority of the directors
then in office, but only to eliminate vacancies existing by reason of the death,
resignation or removal of one or more directors. Directors need not be
stockholders.
3.2 TENURE. Except as otherwise provided by law, by the certificate
of incorporation or by these by-laws, each director shall hold office until his
successor is elected and qualified, or until he sooner dies, resigns, is removed
or becomes disqualified.
3.3 POWERS. The business and affairs of the corporation shall be
managed by or under the direction of the board of directors who shall have and
may exercise all the
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powers of the corporation and do all such lawful acts and things as are not by
law, the certificate of incorporation or these by-laws directed or required to
be exercised or done by the stockholders.
3.4 DIRECTOR NOMINATIONS. Nominations of candidates for election as
directors of the corporation at any Annual Meeting may be made only (a) by, or
at the direction of, a majority of the board of directors, or (b) by (i) a
7-1/2% Stockholder or (ii) any other holder of record (both as of the time
notice of such nomination is given by the stockholder as set forth below and as
of the record date for the Annual Meeting in question) of any shares of the
capital stock of the corporation entitled to vote at such Annual Meeting who
complies with the timing, informational and other requirements hereinafter set
forth in this Section. Any stockholder who has complied with the timing,
informational and other requirements set forth in this Section and who seeks to
make such a nomination, or his, her or its representative, must be present in
person at the Annual Meeting. Only persons nominated in accordance with the
procedures set forth in this Section shall be eligible for election as directors
at an Annual Meeting.
Nominations, other than those made by, or at the direction of,
the board of directors or by a 7-1/2% Stockholder, shall be made pursuant to
timely notice in writing to the secretary of the corporation as set forth in
this Section. For the first Annual Meeting following the initial public offering
of common stock of the corporation, a stockholder's notice shall be timely if
delivered to, or mailed to and received by, the corporation at its principal
executive office not later than the close of business on the later of (A) the
75th day prior to the scheduled date of such Annual Meeting or (B) the 15th day
following the day on which public announcement of the date of such Annual
Meeting is first made by the corporation. For all subsequent Annual Meetings, a
stockholder's notice shall be timely if delivered to, or mailed to and received
by, the corporation at its principal executive office not less than 75 days nor
more than 120 days prior to the Anniversary Date; provided, however, that in the
event the Annual Meeting is scheduled to be held on a date more than 30 days
before the Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed and received by,
the corporation at its principal executive office not later than the close of
business on the later of (i) the 75th day prior to the scheduled date of such
Annual Meeting or (ii) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the
corporation.
Such a stockholder's notice to the secretary shall set forth
as to each person whom the stockholder proposes to nominate for election or
re-election as a director: (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the corporation's capital stock
which are beneficially owned by such person on the date of such stockholder
notice, and (iv) the consent of each nominee to serve as a director if elected.
A stockholder's notice to the secretary shall further set forth as to the
stockholder giving such notice: (i) the name and address, as they appear on the
corporation's stock transfer
6
<PAGE> 7
books, of such stockholder and of the beneficial owners (if any) of the
corporation's capital stock registered in such stockholder's name and the name
and address of other stockholders known by such stockholder to be supporting
such nominee(s), (ii) the class and number of shares of the corporation's
capital stock which are held of record, beneficially owned or represented by
proxy by such stockholder and by any other stockholders known by such
stockholder to be supporting such nominee(s) on the record date for the Annual
Meeting in question (if such date shall then have been made publicly available)
and on the date of such stockholder's notice, and (iii) a description of all
arrangements or understandings between such stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by such stockholder.
If the board of directors or a designated committee thereof
determines that any stockholder nomination was not made in accordance with the
terms of this Section or that the information provided in a stockholder's notice
does not satisfy the informational requirements of this Section in any material
respect, then such nomination shall not be considered at the Annual Meeting in
question. If neither the board of directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this Section, the presiding officer of the Annual Meeting shall
determine whether a nomination was made in accordance with such provisions. If
the presiding officer determines that any stockholder nomination was not made in
accordance with the terms of this Section or that the information provided in a
stockholder's notice does not satisfy the informational requirements of this
Section in any material respect, then such nomination shall not be considered at
the Annual Meeting in question. If the board of directors, a designated
committee thereof or the presiding officer determines that a nomination was made
in accordance with the terms of this Section, the presiding officer shall so
declare at the Annual Meeting and ballots shall be provided for use at the
meeting with respect to such nominee.
Notwithstanding anything to the contrary in the second
sentence of the second paragraph of this Section, 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 by the corporation naming all of
the nominees for director or specifying the size of the increased board of
directors at least 75 days prior to the Anniversary Date, a stockholder's notice
required by this Section shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if such notice shall
be delivered to, or mailed to and received by, the corporation at its principal
executive office not later than the close of business on the 15th day following
the day on which such public announcement is first made by the corporation.
No person shall be elected by the stockholders as a Director
of the corporation unless nominated in accordance with the procedures set forth
in this Section. Election of Directors at the annual meeting need not be by
written ballot, unless otherwise provided by the board of directors or presiding
officer at such annual meeting. If written
7
<PAGE> 8
ballots are to be used, ballots bearing the names of all the persons who have
been nominated for election as Directors at the annual meeting in accordance
with the procedures set forth in this Section shall be provided for use at the
annual meeting.
3.5 VACANCIES. Vacancies and any newly created directorships
resulting from any increase in the number of directors may be filled by vote of
the stockholders at a meeting called for the purpose, or by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. When one or more directors shall resign from the board, effective at
a future date, a majority of the directors then in office, including those who
have resigned, shall have power to fill such vacancy or vacancies, the vote or
action by writing thereon to take effect when such resignation or resignations
shall become effective. The directors shall have and may exercise all their
powers notwithstanding the existence of one or more vacancies in their number,
subject to any requirements of law or of the certificate of incorporation or of
these by-laws as to the number of directors required for a quorum or for any
vote or other actions.
3.6 COMMITTEES. The board of directors may, by vote of a majority of
the whole board, (a) designate, change the membership of or terminate the
existence of any committee or committees, each committee to consist of one or
more of the directors; (b) designate one or more directors as alternate members
of any such committee who may replace any absent or disqualified member at any
meeting of the committee; and (c) determine the extent to which each such
committee shall have and may exercise the powers of the board of directors in
the management of the business and affairs of the corporation, including the
power to authorize the seal of the corporation to be affixed to all papers which
require it and the power and authority to declare dividends or to authorize the
issuance of stock; excepting, however, such powers which by law, by the
certificate of incorporation or by these by-laws they are prohibited from so
delegating. In the absence or disqualification of any member of such committee
and his alternate, if any, the member or members thereof present at any meeting
and not disqualified from voting, whether or not constituting 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. Except as the
board of directors may otherwise determine, any committee may make rules for the
conduct of its business, but unless otherwise provided by the board or such
rules, its business shall be conducted as nearly as may be in the same manner as
is provided by these by-laws for the conduct of business by the board of
directors. Each committee shall keep regular minutes of its meetings and report
the same to the board of directors upon request.
3.7 REGULAR MEETINGS. Regular meetings of the board of directors may
be held without call or notice at such places within or without the State of
Delaware and at such times as the board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of stockholders.
8
<PAGE> 9
3.8 SPECIAL MEETINGS. Special meetings of the board of directors may
be held at any time and at any place within or without the State of Delaware
designated in the notice of the meeting, when called by the chairman of the
board, if any, the president, or by a majority of the directors, reasonable
notice thereof being given to each director by the secretary or by the chairman
of the board, if any, the president or any one of the directors calling the
meeting.
3.9 NOTICE. It shall be reasonable and sufficient notice to a
director to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to him at his usual or
last known business or residence address or to give notice to him in person or
by telephone at least twenty-four hours before the meeting. Notice of a meeting
need not be given to any director if a written waiver of notice, executed by
him before or after the meeting, is filed with the records of the meeting, or
to any director who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
3.10 QUORUM. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, at any meeting of the
directors a majority of the directors then in office shall constitute a quorum;
a quorum shall not in any case be less than one-third of the total number of
directors constituting the whole board. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
3.11 ACTION BY VOTE. Except as may be otherwise provided by law, by
the certificate of incorporation or by these by-laws, when a quorum is present
at any meeting the vote of a majority of the directors present shall be the
act of the board of directors.
3.12 ACTION WITHOUT A MEETING. Any action required or permitted to be
taken at any meeting of the board of directors or a committee thereof may be
taken without a meeting if all the members of the board or of such committee, as
the case may be, consent thereto in writing, and such writing or writings are
filed with the records of the meetings of the board or of such committee. Such
consent shall be treated for all purposes as the act of the board or of such
committee, as the case may be.
3.13 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of
the board of directors, or any committee designated by such board, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other or by any other means
permitted by law. Such participation shall constitute presence in person at
such meeting.
9
<PAGE> 10
3.14 COMPENSATION. In the discretion of the board of directors, each
director may be paid such fees for his services as director and be reimbursed
for his reasonable expenses incurred in the performance of his duties as
director as the board of directors from time to time may determine. Nothing
contained in this section shall be construed to preclude any director from
serving the corporation in any other capacity and receiving reasonable
compensation therefor.
3.15 INTERESTED DIRECTORS AND OFFICERS.
(a) No contract or transaction between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of the corporation's directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the stockholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
Section 4. OFFICERS AND AGENTS
4.1 ENUMERATION; QUALIFICATION. The officers of the corporation
shall be a president, a treasurer, a secretary and such other officers, if any,
as the board of directors from time to time may in its discretion elect or
appoint including without limitation a chairman of the board, one or more vice
presidents and a controller. The corporation may also have such agents, if
any, as the board of directors from time to time may in its discretion choose.
Any officer may be but none need be a director or stockholder. Any
10
<PAGE> 11
two or more offices may be held by the same person. Any officer may be required
by the board of directors to secure the faithful performance of his duties to
the corporation by giving bond in such amount and with sureties or otherwise as
the board of directors may determine.
4.2 POWERS. Subject to law, to the certificate of incorporation and
to the other provisions of these by-laws, each officer shall have, in addition
to the duties and powers herein set forth, such duties and powers as are
commonly incident to his office and such additional duties and powers as the
board of directors may from time to time designate.
4.3 ELECTION. The officers may be elected by the board of directors
at their first meeting following the annual meeting of the stockholders or at
any other time. At any time or from time to time the directors may delegate to
any officer their power to elect or appoint any other officer or any agents.
4.4 TENURE. Each officer shall hold office until the first meeting of
the board of directors following the next annual meeting of the stockholders and
until his respective successor is chosen and qualified unless a shorter period
shall have been specified by the terms of his election or appointment, or in
each case until he sooner dies, resigns, is removed or becomes disqualified.
Each agent shall retain his authority at the pleasure of the directors, or the
officer by whom he was appointed or by the officer who then holds agent
appointive power.
4.5 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND VICE PRESIDENT.
The chairman of the board, if any, shall have such duties and powers as shall be
designated from time to time by the board of directors. Unless the board of
directors otherwise specifies, the chairman of the board, or if there is none
the chief executive officer, shall preside, or designate the person who shall
preside, at all meetings of the stockholders and of the board of directors.
Unless the board of directors otherwise specifies, the president shall
be the chief executive officer and shall have direct charge of all business
operations of the corporation and, subject to the control of the directors,
shall have general charge and supervision of the business of the corporation.
Any vice presidents shall have such duties and powers as shall be set
forth in these by-laws or as shall be designated from time to time by the board
of directors or by the president.
4.6 TREASURER AND ASSISTANT TREASURERS. Unless the board of directors
otherwise specifies, the treasurer shall be the chief financial officer of the
corporation and shall be in charge of its funds and valuable papers, and shall
have such other duties and powers as may be designated from time to time by the
board of directors or by the president. If no
11
<PAGE> 12
controller is elected, the treasurer shall, unless the board of directors
otherwise specifies, also have the duties and powers of the controller.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.
4.7 CONTROLLER AND ASSISTANT CONTROLLERS. If a controller is elected,
he shall, unless the board of directors otherwise specifies, be the chief
accounting officer of the corporation and be in charge of its books of account
and accounting records, and of its accounting procedures. He shall have such
other duties and powers as may be designated from time to time by the board of
directors, the president or the treasurer.
Any assistant controller shall have such duties and powers as shall be
designated from time to time by the board of directors, the president, the
treasurer or the controller.
4.8 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record
all proceedings of the stockholders, of the board of directors and of
committees of the board of directors in a book or series of books to be kept
therefor and shall file therein all actions by written consent of stockholders
or directors. In the absence of the secretary from any meeting, an assistant
secretary, or if there be none or he is absent, a temporary secretary chosen at
the meeting, shall record the proceedings thereof. Unless a transfer agent has
been appointed the secretary shall keep or cause to be kept the stock and
transfer records of the corporation, which shall contain the names and record
addresses of all stockholders and the number of shares registered in the name
of each stockholder. He shall have such other duties and powers as may from
time to time be designated by the board of directors or the president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
secretary.
Section 5. RESIGNATIONS AND REMOVALS
5.1 Any director or officer may resign at any time by delivering his
resignation in writing to the chairman of the board, if any, the president, or
the secretary or to a meeting of the board of directors. Such resignation shall
be effective upon receipt unless specified to be effective at some other time,
and without in either case the necessity of its being accepted unless the
resignation shall so state. A director (including persons elected by directors
to fill vacancies in the board) may be removed from office with or without cause
by the vote of the holders of a majority of the shares issued and outstanding
and entitled to vote in the election of directors. The board of directors may at
any time remove any officer either with or without cause. The board of directors
may at any time terminate or modify the authority of any agent. No director or
officer resigning and (except where a right to receive compensation shall be
expressly provided in a duly authorized written agreement with the corporation)
no director or officer removed shall have any right to any
12
<PAGE> 13
compensation as such director or officer for any period following his
resignation or removal, or any right to damages on account of such removal,
whether his compensation be by the month or by the year or otherwise; unless, in
the case of a resignation, the directors, or, in the case of removal, the body
acting on the removal, shall in their or its discretion provide for
compensation.
Section 6. VACANCIES
6.1 If the office of the president or the treasurer or the secretary
becomes vacant, the directors may elect a successor by vote of a majority of the
directors then in office. If the office of any other officer becomes vacant, any
person or body empowered to elect or appoint that officer may choose a
successor. Each such successor shall hold office for the unexpired term, and in
the case of the president, the treasurer and the secretary until his successor
is chosen and qualified or in each case until he sooner dies, resigns, is
removed or becomes disqualified. Any vacancy of a directorship shall be filled
as specified in section 3.5 of these by-laws.
Section 7. CAPITAL STOCK
7.1 STOCK CERTIFICATES. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by-laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the chairman
or vice chairman of the board, if any, or the president or a vice president and
by the treasurer or an assistant treasurer or by the secretary or an assistant
secretary. Any of or all the signatures on the certificate may be a facsimile.
In case an officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the time of its issue.
7.2 LOSS OF CERTIFICATES. In the case of the alleged theft, loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the corporation against any claim on account thereof, as
the board of directors may prescribe.
Section 8. TRANSFER OF SHARES OF STOCK
8.1 TRANSFER ON BOOKS. Subject to the restrictions, if any, stated or
noted on the stock certificate, shares of stock may be transferred on the books
of the corporation by the surrender to the corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
board of directors or the transfer agent of the corporation may
13
<PAGE> 14
reasonably require. Except as may be otherwise required by law, by the
certificate of incorporation or by these by-laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to receive notice and to vote or to give any consent with respect thereto and to
be held liable for such calls and assessments, if any, as may lawfully be made
thereon, regardless of any transfer, pledge or other disposition of such stock
until the shares have been properly transferred on the books of the corporation.
It shall be the duty of each stockholder to notify the corporation of
his post office address.
8.2 RECORD DATE AND CLOSING TRANSFER BOOKS. 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 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 nor less than ten days before the
date of such meeting. If no such record date is fixed by the board of directors,
the record date for determining the 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.
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 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 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 days prior to such payment, exercise or other
action. If no such 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.
Section 9. CORPORATE SEAL
9.1 Subject to alteration by the directors, the seal of the
corporation shall consist of a flat-faced circular die with the word "Delaware"
and the name of the corporation cut or engraved thereon, together with such
other words, dates or images as may be approved from time to time by the
directors.
14
<PAGE> 15
Section 10. EXECUTION OF PAPERS
10.1 Except as the board of directors may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts or other obligations made,
accepted or endorsed by the corporation shall be signed by the chairman of the
board, if any, the president, a vice president or the treasurer.
Section 11. FISCAL YEAR
11.1 The fiscal year of the corporation shall end on the 31st day of
December of each year.
Section 12. AMENDMENTS
12.1 These by-laws may be adopted, amended or repealed by vote of a
majority of the directors then in office. The by-laws of the corporation may be
amended or repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose, by the affirmative vote of at least
two-thirds of the votes present and entitled to vote on such amendment or repeal
by holders of voting stock, voting together as a single class; provided,
however, that if the board of directors recommends that stockholders approve
such amendment or repeal at such meeting of stockholders, such amendment or
repeal shall only require the affirmative vote of a majority of the votes
present and entitled to vote on such amendment or repeal by holders of voting
stock, voting together as a single class.
15
<PAGE> 1
EXHIBIT 11.1
<TABLE>
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1996 1995 1996
---------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $(1,961,251) $ 819,411 $(4,251,107) $ (547,498)
Shares used in computing net income (loss) per common share:
Weighted average common stock
outstanding during the period 688,176 1,187,553 687,908 938,800
Conversion of redeemable
convertible preferred stock (1) 5,415,942 5,576,644 5,415,942 5,512,687
Dilutive effect of common
equivalent shares -- "cheap stock" (2) 286,783 N/A 286,783 N/A
Common stock equivalents (3) N/A 100,778 N/A N/A
Weighted average common shares ---------------------------------------------------------
outstanding 6,390,901 6,864,975 6,390,633 6,451,487
Net income (loss) per common
share $(0.31) $ 0.12 $(0.67) $(0.08)
<FN>
(1) Effective with the closing of the Company's initial public offering of
common stock, redeemable convertible preferred stock converted into
shares of common stock. Accordingly, the equivalent number of weighted
average common shares that would have been outstanding during each
period presented have been included as outstanding.
(2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock, preferred stock, stock options and warrants issued
at prices below the initial public offering price per share ("cheap
stock") during the twelve month period immediately preceding the filing
of the Company's Registration Statement for its initial public offering
have been included as common equivalents for periods prior to the initial
public offering.
(3) No common stock equivalents have been included in the six month period
ended June 30, 1996 as their effect would be antidilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 27,061,966
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,427,366
<PP&E> 2,868,741
<DEPRECIATION> (1,685,709)
<TOTAL-ASSETS> 28,694,417
<CURRENT-LIABILITIES> 1,587,016
<BONDS> 0
<COMMON> 8,795
0
0
<OTHER-SE> 26,947,143
<TOTAL-LIABILITY-AND-EQUITY> 28,694,417
<SALES> 0
<TOTAL-REVENUES> 2,911,965
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,029,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,161
<INCOME-PRETAX> 819,411
<INCOME-TAX> 0
<INCOME-CONTINUING> 819,411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 819,411
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
