<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1998
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act
For the transition period from to
Commission file number 1-13400
STRATASYS, INC.
(Exact Name of Small Business Issuer in Its charter)
Delaware 36-3658792
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
14950 Martin Drive, Eden Prairie, Minnesota 55344
(Address of Principal Executive Offices)
(612) 937-3000
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.
Yes X No
----- -----
As of August 7, 1998, the Issuer had 6,095,724 shares of Common
Stock, $.01 par value, outstanding.
Transitional Small Business Disclosure Format: Yes No X
----- -----
<PAGE> 2
STRATASYS, INC.
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements.................................................. 1
Balance Sheets as at June 30,1998 and December 31, 1997.............. 1
Statements of Operations for the three months and six months ended
June 30, 1998 and 1997............................................... 2
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997............................................... 3
Notes to Financial Statements........................................ 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 4
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders................... 13
Item 6. Exhibits and Reports on Form 8-K...................................... 13
Signatures..................................................................... 13
</TABLE>
(i)
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
STRATASYS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $10,806,774 $ 9,116,232
Marketable Securities 4,625,932 4,441,380
Accounts receivable, less allowance for doubtful
accounts of $395,291 in 1998 and $514,461 in 1997 9,043,421 11,666,054
Inventories 6,649,974 5,492,130
Prepaid expenses 543,317 226,698
Deferred taxes 1,051,000 1,051,000
----------- -----------
Total current assets 32,720,418 31,993,494
----------- -----------
MACHINERY AND EQUIPMENT, less
accumulated depreciation 3,570,914 3,445,265
----------- -----------
OTHER ASSETS
Intangible assets 3,055,138 3,376,038
Sundry 207,319 169,633
----------- -----------
3,262,457 3,545,671
----------- -----------
$39,553,789 $38,984,430
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Obligations under capitalized leases, current portion 119,697 144,137
Accounts payable and other current liabilities 3,014,613 3,066,342
Unearned maintenance revenue 2,427,892 2,426,270
Income taxes payable 240,428
----------- -----------
Total current liabilities 5,802,630 5,636,749
----------- -----------
DEFERRED TAXES 124,000 124,000
OBLIGATIONS UNDER CAPITALIZED LEASES, less current portion 74,476 136,314
----------- -----------
198,476 260,314
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value, authorized 15,000,000
shares, issued and outstanding 6,089,798 shares
in 1998 and 6,079,659 shares in 1997 60,898 60,797
Capital in excess of par value 33,575,141 33,556,084
Accumulated deficit (83,005) (529,514)
Cumulative translation adjustment (351)
----------- -----------
Total Stockholders' Equity 33,552,683 33,087,367
----------- -----------
$39,553,789 $38,984,430
=========== ===========
</TABLE>
See notes to financial statements
1
<PAGE> 4
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES $8,256,810 $6,965,334 $15,264,482 $12,173,861
COST OF GOODS SOLD 2,535,718 2,313,502 4,911,565 4,076,865
----------------------------- ------------------------------
GROSS PROFIT 5,721,092 4,651,832 10,352,917 8,096,996
COSTS AND EXPENSES
Research and development 1,307,858 1,226,771 2,583,029 2,340,996
Selling, general and administrative 3,859,845 3,670,109 7,365,720 6,690,912
----------------------------- ------------------------------
5,167,703 4,896,880 9,948,749 9,031,908
----------------------------- ------------------------------
OPERATING INCOME (LOSS) 553,389 (245,048) 404,168 (934,912)
----------------------------- ------------------------------
OTHER INCOME (EXPENSE)
Interest income 126,913 119,027 307,868 207,752
Interest expense (11,476) (12,248) (25,099) (22,523)
----------------------------- ------------------------------
115,437 106,779 282,769 185,229
----------------------------- ------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 668,826 (138,269) 686,937 (749,683)
INCOME TAXES (BENEFIT) 234,089 (55,385) 240,428 (262,385)
----------------------------- ------------------------------
NET INCOME (LOSS) $ 434,737 $ (82,884) $ 446,509 $ (487,298)
----------------------------- ------------------------------
EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.07 $ (0.01) $ 0.07 $ (0.09)
============================= ==============================
Diluted $ 0.07 $ (0.01) $ 0.07 $ (0.09)
============================= ==============================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 6,084,325 5,676,502 6,082,170 5,608,179
============================= ==============================
Diluted 6,172,145 5,676,502 6,173,373 5,608,179
============================= ==============================
</TABLE>
See notes to financial statements.
2
<PAGE> 5
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------
1998 1997
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 446,509 $ (487,298)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Deferred taxes (262,385)
Depreciation and amortization 641,469 435,773
Amortization of intangibles and other assets 470,378 453,073
Increase (decrease) in cash attributable to
changes in assets and liabilities
Accounts receivable 2,622,282 1,052,581
Inventory (1,157,844) (3,544,749)
Prepaid expenses (316,619) 148,926
Accounts payable and other current liabilities (51,729) (180,279)
Income taxes payable 240,428
Unearned maintenance revenue 1,622 197,504
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,896,496 (2,186,854)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of marketable securities -- 871,698
Purchases of marketable securities (184,552)
Acquisition of machinery and equipment (767,118) (1,159,804)
Payments of sundry other assets (37,686) (65,421)
Payments for intangible assets (149,478) (91,610)
---------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,138,834) (445,137)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of obligations under capitalized leases (86,278) (91,795)
Proceeds from the sale of common stock 19,158 1,155,117
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (67,120) 1,063,322
----------- -----------
NET INCREASE (DECREASE) IN CASH 1,690,542 (1,568,669)
CASH AND CASH EQUIVALENTS, beginning of period 9,116,232 3,964,968
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $10,806,774 $ 2,396,299
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
cash paid during the period for interest $ 25,099 $ 22,523
----------- -----------
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Machinery and equipment acquired under
capital lease obligations $ -- $ 50,150
----------- -----------
</TABLE>
See notes to financial statements.
3
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The financial information herein is unaudited; however, such
information reflects all adjustments (consisting of normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim period. The results of operations for the
three and six months ended June 30, 1998, are not necessarily indicative of the
results to be expected for the full year. Certain financial information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The reader is referred to the audited financial statements and notes
thereto for the year ended December 31, 1997, filed as part of the Company's
Annual Report on Form 10-KSB for such year.
Note 2 -- Common Stock
In the three months ended June 30, 1998, the Company received net
proceeds of approximately $17,600 from the exercise of 9,652 options at prices
ranging from $1.59 to $5.38 per share.
Note 3 -- Inventory
Inventories consist of the following at June 30 and December 31,
respectively:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Finished Goods $3,924,195 $2,318,013
Work in process 152,112 276,366
Raw materials 2,573,668 2,897,751
---------- ----------
$6,649,974 $5,492,130
</TABLE>
Note 4 -- Material Commitment
The Company has signed material commitments with several vendors for
fixed delivery of selected inventory expected to be used over the remainder of
1998 and into early 1999. These commitments amount to approximately $1,300,000
and contain non-cancellation clauses.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
Stratasys develops, manufactures, and markets a family of rapid
prototyping devices that enable engineers and designers to create physical
models, tooling and prototypes out of plastic and other materials directly from
a computer aided design ("CAD") workstation. Historically, the Company's growth
has come from sales to a number of industries, including automotive, consumer
products, electronics, medical, and aerospace. Universities, other educational
institutions, and service bureaus have also been significant markets for the
Company. The Company's current and future growth is largely dependent upon its
ability to penetrate new markets, develop new applications, and develop and
market new rapid prototyping devices that meet the needs of its current and
prospective customers. New product developments will focus on various rapid
prototyping devices, modeling materials, and software enhancements. The Company
anticipates that in 1998 its primary business strategy will be on the expansion
of its international and domestic sales of its existing family of rapid
prototyping devices while maintaining on-going development of new rapid
prototyping equipment, modeling materials, and software. Growth through
appropriate acquisitions may also occur, but the
4
<PAGE> 7
Company can give no assurance that any such acquisitions will be consummated.
The Company introduced one major new product, the FDM(R) Quantum, in
February 1998. The Quantum incorporates a new technology called the
MagnaDrive(R) system. This system offers frictionless movement of its extrusion
head that floats on a bed of air while controlled through a precise
electromagnetic homing device. The Quantum offers a large-build envelope
combined with throughput improvements that offer faster model build times. The
list price of the Quantum is between $325,000 and $400,000, depending upon
options. Sales of the Quantum contributed significantly to second quarter
revenue following its introduction in the first quarter of 1998. The Company has
continued to market and sell the FDM(R) 8000, its other large envelope system,
at a domestic price of approximately $200,000, depending upon options.
Continuing software, materials and hardware enhancements to improve the
performance and throughput of the Company's systems have also been introduced in
1998.
Net sales of the Company's rapid prototyping devices, modeling
materials, and maintenance have increased each year since 1990. Management
expects, but cannot assure, that this trend will continue. The Company believes
that the rapid prototyping industry is growing at approximately 20-30% per year
and that the industry's unit growth is approximately 30% to 40% per year. The
Company believes that there is a trend toward lower priced rapid prototyping
systems capable of producing functional prototypes, and that a sizable market
exists for concept or visualization 3D printers. This pricing trend should lead
to growth in the more traditional functional prototyping marketplace as
companies continue to address in-house rapid prototyping needs. Certain market
segments in the industry have not demonstrated pricing sensitivity. These
segments are more interested in modeling envelope size, modeling material
variety, throughput, and part quality, which should allow growth to continue for
higher priced rapid prototyping systems addressing these needs.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1998 COMPARED WITH THE QUARTER ENDED JUNE 30, 1997
The following table sets forth certain statement of income data as a
percentage of net sales for the periods indicated. All items are included in or
derived from the Company's statements of income.
<TABLE>
<CAPTION>
For the quarter ended June 30,
1998 1997
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of Sales 30.7% 33.2%
Gross Margin 69.3% 66.8%
Selling, general, and administrative expenses 46.7% 52.7%
Research & development expense 15.8% 17.6%
Operating income (loss) 6.7% (3.5%)
Other Income 1.4% 1.5%
Income (loss) before taxes 8.1% (2.0%)
Income taxes (benefit) 2.8% (.8%)
Net income (loss) 5.3% (1.2%)
</TABLE>
NET SALES
Net sales for the quarter ended June 30, 1998 were $8,256,810,
compared with sales of $6,965,334 recorded for the quarter ended June 30, 1997.
This represents an increase of $1,291,476, or 18.5%. The increase was due to the
Company's on-going sales of the FDM(R) Quantum and to strong sales of the
Company's FDM(R) Benchtop and Genisys
5
<PAGE> 8
systems, refurbished systems sales, system upgrades, maintenance contracts, and
consumables. Consumable and maintenance revenue continued as one of the fastest
growing components of the Company's revenue mix. Genisys revenues recorded in
the quarter ended June 30, 1998 were up sharply over the revenues recorded in
the second quarter of 1997. Sales of the Company's Benchtop systems (the FDM(R)
1650 and 2000) remained the largest product in the Company's product mix. The
Company was able to increase unit sales by 6.6% and average selling price by
5.6% in the second quarter of 1998 as compared with the second quarter of 1997.
Domestic sales accounted for approximately 64% of total revenue, and
increased by approximately 39% as compared to the second quarter of 1997. The
Company's eastern region was the Company's strongest domestic region.
International sales accounted for about 36% of total revenue, which represents a
6% decline as compared to the second quarter of 1997. Europe was the strongest
international region. The Company's combined Asia-Pacific region, which is
composed of Japan, China, the Far East and India, accounted for approximately
12% of total revenue. Historically the Company has derived a larger percentage
of its revenues from the Far East, Japan, and China. The Company planned for
slower sales in the Far East as a result of the region's poor economic
conditions, but expected Japan to be relatively strong. Bookings from Japan were
strong in the second quarter of 1998, but the region's economic problems
negatively impacted bookings elsewhere in the region. Early indications suggest
that bookings in Japan will continue to be strong throughout the third quarter
of 1998, but the rest of the region is expected to remain weak. No assurances,
however, can be given that future sales and profitability will not be adversely
impacted by the economic conditions of this region.
GROSS PROFIT
Gross profit amounted to $5,721,092 in the quarter ended June 30,
1998, compared with $4,651,832 in the quarter ended June 30, 1997, an
improvement of $1,069,260, or 23.0%. Gross profit as a percentage of sales
amounted to 69.3% in the 1998 period as compared with 66.8%in the 1997 period.
The increase in the Company's 1998 gross profit was primarily due to a reduction
in the Company's manufacturing overhead. Product mix can influence the materials
component of cost of sales, but the Company was able to hold the materials
component of cost of goods sold for the quarter ended June 30, 1998, at roughly
the 1997 level. The 1997 period was impacted by the introduction of two new
products (the FDM(R) 2000 and 8000) combined with the start-up costs and
inefficiencies that were a result of moving into a new manufacturing facility.
OPERATING EXPENSES
Selling, general and administrative ("SG&A") expenses increased to
$3,859,845 for the quarter ended June 30, 1998, from $3,670,109 for the quarter
ended June 30, 1997. This represents an increase of $189,736, or 5.2%. Much of
the increase was in salaries and wages, as the Company increased its sales
organization headcount to 70 employees at June 30, 1998 from 49 employees at
June 30, 1998. Travel and commission expenses were also higher for the quarter
ended June 30, 1998 as compared to the comparable 1997 period.
Research and development ("R&D") expense increased to $1,307,858 for
the quarter ended June 30, 1998 from $1,226,771 for the quarter ended June 30,
1997. The increase in the 1998 period over the 1997 period amounted to $81,087,
or 6.6%. Payroll expenses and professional services accounted for much of the
increase to R&D expense in the 1998 period.
The Company's operating income for the quarter ended June 30, 1998
improved to $553,389, or 6.7% of sales, from an operating loss of $245,048, or
(3.5%) of sales, for the quarter ended June 30, 1997. Whereas total revenue
increased by 18.6% in the quarter ended June 30, 1998 as compared with the
quarter ended June 30, 1997, operating expenses increased by 5.5% in the
comparable period.
6
<PAGE> 9
OTHER INCOME
Other income and expense netted to $115,437 in the quarter ended
June 30, 1998. Interest income amounted to $126,913, an increase of $7,886
compared with 1997. This was due to a higher average balance of cash and
marketable securities. Interest expense declined by $772 to $11,476 in 1998 as a
result of the expiration of several capitalized leases.
NET INCOME
Net income for the quarter ended June 30, 1998 amounted to $434,737
compared with a net loss of $82,884 in the quarter ended June 30, 1997. This
represents $.07 diluted earnings per share in the 1998 period compared to a $.01
loss per share in the comparable 1997 period.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1997
The following table sets forth certain statement of income data as a
percentage of net sales for the periods indicated. All items are included in or
derived from the Company's statement of income.
<TABLE>
<CAPTION>
For the six months ended June 30,
1998 1997
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of Sales 32.2% 33.5%
Gross Margin 67.8% 66.5%
Selling, general, and administrative expenses 48.2% 55.0%
Research & development expense 16.9% 19.2%
Operating income (loss) 2.6% (7.7%)
Other Income 1.9% 1.5%
Income (loss) before taxes 4.5% (6.2%)
Income taxes (benefit) 1.6% (2.2%)
Net income (loss) 2.9% (4.0%)
</TABLE>
NET SALES
Net sales for the six months ended June 30, 1998 were $15,264,482,
compared with sales of $12,173,861 recorded for the six months ended June 30,
1997. This represents an increase of $3,090,621, or 25.4%. Sales of the FDM(R)
Quantum continued to be strong for the Company, following its introduction in
the first quarter of 1998. The Company's FDM(R) Benchtop systems, including
refurbished and upgraded systems, continued to account for the majority of the
Company's revenue in the six months ended June 30, 1998. Gensiys, consumable and
maintenance revenue increased significantly in the six months ended June 30,
1998 as compared with the comparable 1997 period. The Company was able to
increase unit sales by approximately 21% in the six months ended June 30, 1998
as compared with the six months ended June 30, 1997.
Domestic sales accounted for approximately 60% of total revenue in
the six months ended June 30, 1998, and increased by approximately 31% as
compared to the six months ended June 30, 1997. International sales accounted
for about 40% of total revenue, which represents a 4.6% increase compared to the
six months ended June 30, 1997. Europe was the strongest international region
for the six months ended June 30, 1998, accounting for approximately 21% of the
Company's revenue in the period.
7
<PAGE> 10
The Company's combined Asia-Pacific region, as described above,
accounted for approximately 19% of total revenue in the six months ended June
30, 1998. Historically the Company has derived a larger percentage of its
revenues from the Far East, Japan, India and China. As anticipated, with the
exception of Japan, sales in the Far East were very weak. While the bookings
were strong in Japan in the six months ended June 30, 1998, the Company believes
that bookings elsewhere in this region will be weak throughout the remainder of
1998. No assurances can be given that future sales and profitability will not be
adversely impacted by the economic conditions of this region.
GROSS PROFIT
Gross profit amounted to $10,352,917 in the six months ended June
30, 1998, compared with $8,096,996 in six months ended June 30, 1997, an
improvement of $2,255,921, or 27.9%. Gross profit as a percentage of sales
amounted to 67.8% of sales in the 1998 period as compared with 66.5% in the 1997
period. The increase in the Company's 1998 gross profit was primarily due to a
significant reduction in the Company's manufacturing overhead expense, coupled
with expanding high-margin consumable revenues. Product mix resulted in an
increase to the materials component of cost of sales, but not enough to offset
the improvement derived from reduced manufacturing overhead. The 1997 period was
impacted by the introduction of two new products (the FDM(R) 2000 and 8000)
combined with the start-up costs and inefficiencies that were a result of moving
into a new manufacturing facility.
OPERATING EXPENSES
SG&A expenses increased to $7,365,720 for the six months ended June
30, 1998, from $6,690,912 for the six months ended June 30, 1997. This
represents an increase of $674,808, or 10.1%. An increase in salaries and wages
was the primary reason for the change as the Company expanded its sales
organization. Travel and commission expenses related to higher sales volume also
accounted for the increase in the current period as compared to the 1997 period.
R&D expense increased to $2,583,029 for the six months ended June
30, 1998 from $2,340,996 for the six months ended June 30, 1997. The increase in
the 1998 period over the 1997 period amounted to $242,033, or 10.3%. Payroll
expenses and professional services accounted for much of the increase to R&D
expense in the 1998 period.
The Company's operating income for the six months ended June 30,
1998 improved to $404,168, or 2.6% of sales, from an operating loss of $934,912,
or (7.7%) of sales, for the six months ended June 30, 1997. Whereas total
revenue increased by 25.4% in the current six month period as compared with the
six months ended June 30, 1997, operating expenses increased by 10.2% in the
comparable period, for the reasons listed above.
OTHER INCOME
Other income and expense netted to $282,768 in the six months ended
June 30, 1998. Interest income amounted to $307,868, an increase of $100,116
compared with 1997. This was due to a higher average balance of cash and
marketable securities. Interest expense increased by $2,576 to $25,099 in 1998
as a result of several new capitalized leases.
NET INCOME
Net income for the six months ended June 30, 1998 amounted to
$446,509 compared with a net loss of $487,298 in the six months ended June 30,
1997. This represents $.07 diluted earnings per share in the 1998 period
compared to a $.09 loss per share in the comparable 1997 period.
8
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the six months ended June 30, 1998 provided
cash of $2,896,496, primarily reflecting the Company's net income in the period
of $446,509 coupled with a decrease of $2,622,282 in the Company's account
receivable balance. This change resulted from strong collections and a general
tightening of credit terms. The cash provided by operations was partially offset
by increases in inventory and prepaid expenses that amounted to $1,157,844 and
$316,619, respectively. The Company used cash of $2,186,854 in its operating
activities in the six months ended June 30, 1997, principally as a result of an
increase in inventories of $3,544,749, and a net loss of $487,298, which was
partially offset by a decrease in accounts receivable of $1,052,581. The Company
used $1,138,834 of cash for investing activities in the six months ended June
30, 1998, $767,118 of which was used in the acquisition of machinery and
equipment. In the six months ended June 30, 1997, investing activities used cash
of $445,137, including $1,159,804 used for the acquisition of machinery and
equipment, which was partially offset by proceeds from the sale of marketable
securities that amounted to $871,698. The Company used $67,120 of cash in its
financing activities in the first six months of 1998, principally for repayments
of obligations under capitalized leases. In the 1997 period the Company received
$1,063,322 of net cash from its financing activities, including $1,155,117 of
proceeds from the sale of common stock. This was offset by repayments under
capitalized leases of $91,795. The net increase in cash for the six months ended
June 30, 1998 amounted to $1,690,542 as compared with a net decrease of
$1,568,669 for the comparable 1997 period. The Company's ending cash and cash
equivalents balances as of June 30, 1998 and 1997 were $10,806,774 and
$2,396,299, respectively.
At June 30, 1998, the Company's cash, cash equivalents, and
marketable securities balances totaled $15,432,706. These assets will be used by
the Company for working capital purposes, for improvement to facilities, for new
product development and introduction, for tooling, for acquisition of production
equipment and computers, for increased selling and marketing activities, and for
potential acquisitions. Management believes that the Company's revenue from
operations, its current cash and cash equivalents balances, and the proceeds
from the sale of short-term marketable securities should provide sufficient cash
resources to finance its operations for at least 12 months.
As of June 30, 1998, the Company had gross accounts receivable of
$9,438,712, less an allowance of $395,291 for returns and doubtful accounts.
Historically, the Company's bad debt expense has been minimal. However, at June
30, 1998, large balances were concentrated with certain international
distributors. While the Company can give no assurances, it believes that most,
if not all, of the accounts receivable balances ultimately will be collected.
The Company has not experienced significant inventory adjustments, although it
can give no assurances that future inventory adjustments caused by obsolescence,
product design changes, declining sales, or other factors, will not occur.
The Company's total current assets amounted to $32,720,418 at June
30, 1998, the majority of which comprised cash, cash equivalents, marketable
securities, inventory and accounts receivable. Total current liabilities
amounted to $5,802,630. The Company's debt is minimal, consisting primarily of
payments due under capital leases. The Company estimates that it will spend
approximately $2,400,000 in 1998 for facility improvements, production and R&D
equipment, computers and integrated software, and tooling, approximately
$767,000 of which has already been incurred. As of June 30, 1998, material
commitments for inventory purchases from selected vendors for the ensuing
six-month period ending December 31, 1998 will amount to approximately
$1,300,000. In July 1998 the Company announced that it had received board
approval to commence a stock buyback program of up to 300,000 shares.
INFLATION
Management believes that inflation has not had a material effect on
the Company's operations or on its financial condition.
9
<PAGE> 12
FOREIGN CURRENCY TRANSACTIONS
Substantially all of the Company's transactions are negotiated,
invoiced, and paid in US dollars. Fluctuations in the currency exchange rates in
other countries may therefore reduce the demand for the Company's products by
increasing the price of the Company's products in the currency of the countries
in which the products are sold.
FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS OF
OPERATIONS
All statements herein that are not historical facts or that include
such words as expect, anticipate, project, estimates or believes or other
similar words are forward-looking statements deemed by the Company to be covered
by and to qualify for the safe harbor protection covered by the safe harbor
protection provided by the Private Securities Litigation Reform Act of 1995 (the
"1995 Act"). Investors and prospective investors in the Company should
understand that several factors govern whether any forward-looking statement
herein will be or can be achieved. Any one of these factors could cause actual
results to differ materially from those projected herein. These forward-looking
statements include the expected increases in net sales of rapid prototyping
systems and services, the ability of the Company to maintain its gross margins
on these sales, and the plans and objectives of management to introduce new
products, control expenses, improve profitability, and consummate acquisitions.
The forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions, among others, that the Company will (1) be
able to continue to introduce new rapid prototyping systems acceptable to the
market and improve existing technology and software in its current product
offering, including the Genisys rapid prototyping system that has been
especially affected by technological problems, (2) be able to maintain its gross
margins on its present products, (3) be able to control its operating expenses,
especially its selling, general and administrative expenses and (4) be able to
retain and recruit employees with the necessary skills to produce, develop,
market, and sell it products. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive, and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of those
assumptions could prove inaccurate and therefore there is and can be no
assurance that the results contemplated in any such forward-looking statement
will be realized. The impact of actual experience and business developments may
cause the Company to alter its marketing plans, capital expenditure budgets or
other budgets, which may in turn affect the Company's results of operations. Due
to the factors noted above and elsewhere in the Management's Discussion and
Analysis of Financial Condition and Results of Operations, the Company's future
earnings and stock price may be subject to significant volatility, particularly
on a quarterly basis. Additionally, the Company may not learn of revenue or
earnings shortfalls until late in a fiscal quarter, since the Company frequently
receives the majority of its orders very late in a quarter. This could result in
an immediate and adverse effect on the trading price of the Company's common
stock. Past financial performance should not be considered a reliable indicator
of future performance and investors should not use historical trends to
anticipate results or trends in future periods.
10
<PAGE> 13
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 14,
1998. The following Directors, constituting all of the Directors of the Company,
were elected at the meeting to serve as Directors until their successors are
duly elected and qualified. The Directors elected at the Annual Meeting received
the number of votes set forth opposite their respective names:
<TABLE>
<CAPTION>
Votes Cast
--------------------------------------
For Withheld
Election Authority/Abstained
--------- -------------------
<S> <C> <C>
Scott Crump 5,398,130 49,405
Ralph E. Crump 5,397,830 49,705
Clifford H. Schwieter 5,397,830 49,705
Arnold J. Wasserman 5,397,530 50,005
Gregory L. Wilson 5,397,830 49,705
</TABLE>
At the Annual Meeting, the stockholders also approved the following
proposal by the number of votes indicated below:
Approval of the Stratasys, Inc. 1998 Incentive Stock Option Plan.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
2,113,991 357,986 28,973 2,946,585
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated By-Laws.
27.1 Selected Financial Data.
(b) Reports on Form 8-K.
None
11
<PAGE> 14
SIGNATURES
In accordance with 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.
STRATASYS, INC.
By: /s/ Thomas W. Stenoien
-----------------------
Thomas W. Stenoien
Chief Financial Officer
Dated: August 15, 1998
---
Exhibit Index
Exhibit Description
3.1 Amended and Restated By-Laws
27.1 Selected Financial Data
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED BY-LAWS
OF
STRATASYS, INC.
<PAGE> 2
AMENDED AND RESTATED BY-LAWS
OF
STRATASYS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be as stated in the
corporation's Certificate of Incorporation.
1.2 OTHER OFFICES
The corporation may also have offices at such other place or places
(both within and without the State of Delaware) as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board of Directors.
2.2 ANNUAL MEETINGS
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the Board of Directors. At the meeting, directors
shall be elected and any other proper Cosiness may be transacted.
2.3 SPECIAL MEETING
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation,
may be called by the President or Secretary and shall be called by the President
or Secretary at the request in writing of any two (2) directors or any holder or
holders of at least twenty-five percent (25%) of the outstanding shares of the
Series A Preferred Stock. Business transacted at any special meeting of the
stockholders shall be limited to the purposes stated in the notice.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and
shall be sent or otherwise given in accordance with Section 2.5 of these Bylaws
not less than ten (10) nor more than sixty (60) days before the date of the
meeting to each stockholder entitled to vote at such meeting. The notice shall
specify the place, date, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
<PAGE> 3
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
If a quorum is present when a duly called or held meeting is
convened, the stockholders present may continue to transact business until
adjournment, even though the withdrawal of a number of stockholders originally
present leaves less than the proportion or number otherwise required for a
quorum.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
Bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of Section 2.11 of these
Bylaws, subject to the provisions of Sections 217 (fiduciaries, pledgors and
joint owners) and 218 (voting trusts and voting agreements) of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
Except as provided in the last paragraph of this Section 2.8, or as
may be otherwise provided in the Certificate of Incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
2
<PAGE> 4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the Certificate of Incorporation, any
action required by the General Corporation Law of Delaware to be taken at any
annual or special meeting of stockholders of the corporation, or any action that
may be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice, and without a vote, if a consent or
consents in writing, setting forth the action so taken, is signed by the holders
of outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which, all shares
of stock entitled to vote thereon were present and voted. Any such written
consents shall be delivered, within sixty (60) days of the earliest dated
consent, by hand or by certified mail, or registered mail return receipt
requested to the person having custody of the corporate minute book.
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is consented
to is such as would have required the filing of a certificate under any section
of the General Corporation Law of Delaware if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting, nor more than sixty (60) days prior to any
other action.
If the Board of Directors does not so fix a record date:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders
entitled to express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is
expressed.
(iii) The record date for determining stockholders for
any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
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 record date
for the adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the Secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
3
<PAGE> 5
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
2.14 CONDUCT OF MEETINGS OF STOCKHOLDERS
Subject to the following, meetings of stockholders generally shall
follow accepted rules of parliamentary procedure:
1. The chairman of the meeting shall have absolute
authority over matters of procedure and there shall be no appeal
from the ruling of the chairman, if in his absolute discretion, he
deems it advisable to dispense with the rules of parliamentary
procedure as to any one meeting of stockholders or part thereof, the
chairman shall so state and shall clearly state the rules under
which the meeting or appropriate part thereof shall be conducted.
2. If disorder should arise which prevents continuation
of the legitimate business of the meeting, the chairman may quit the
chair and announce the adjournment of the meeting; and upon his so
doing, the meeting is immediately adjourned.
3. The chairman may ask or require that anyone not a
bona fide stockholder or proxy leave the meeting.
2.15 ORDER OF BUSINESS
The suggested order of business at the annual meeting of
stockholders, and so far as possible at all other meetings of the stockholders,
shall be:
1. Calling of role.
2. Proof of due notice of meeting, or unanimous waiver.
3. Reading and disposal of any unapproved minutes.
4. Annual reports of all officers and committees.
5. Election of directors.
6. Unfinished business.
4
<PAGE> 6
7. New business.
8. Adjournment.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the Certificate of Incorporation or these Bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares of stock, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be at least one (1)
but not more than five (5). The exact number of directors shall be the number
duly adopted by the stockholders.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these Bylaws, directors shall
be elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
Certificate of Incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. when one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then remaining in office
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office as provided in this section in the filling
of other vacancies.
Unless otherwise provided in the Certificate of Incorporation or
these Bylaws:
(i) Vacancies and newly created directorships resulting
from any increase in the authorized number of directors elected by
all of the stockholders having the right to vote as a single class
may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director.
(ii) whenever the holders of any class or classes of
stock or series thereof are entitled to elect one or more directors
by the provisions of the Certificate of Incorporation, vacancies and
newly created directorships of such class or classes or series may
be filled by a majority of the directors elected by such class or
classes or series thereof then in office, or by a sole remaining
director so elected.
5
<PAGE> 7
Each director elected to fill a vacancy holds office until a
qualified successor is elected by the stockholders at the next annual meeting or
special meeting of the stockholders.
If at any time, by reason of death or resignation or other cause,
the corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the Certificate of Incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filing any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The Board of Directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware. If the
Board of Directors fails to select a place for a meeting, the meeting shall be
held at the principal executive office of the corporation.
Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, members of the Board of Directors or any committee designated by
the Board of Directors may participate in a meeting of the Board of Directors or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS
The first meeting of each newly elected Board of Directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected Board of Directors
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors or as shall be specified in a written waiver signed by all of
the directors.
3.7 REGULAR MEETINGS
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board. The notice need not state the purpose of the meeting.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the Board may be called by the President, by any
two (2) directors, or by any holder or holders of at least twenty-five percent
(25%) of the outstanding shares of the Series A Preferred Stock in each case,
upon at least ten (l0) days, notice to each director, either personally or by
mail, telegram, telex, facsimile, or telephone.
6
<PAGE> 8
3.9 QUORUM
At all meetings of the Board of Directors a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors except as may
be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum is not present at any meeting of the Board of
Directors then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provis4-on of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the Certificate of
Incorporation or these Bylaws.
3.11 ABSENT DIRECTORS
A director may give advance written consent or opposition to a
proposal to be acted on at a Board of Directors meeting. If the director is not
present at the meeting, consent or opposition to a proposal does not constitute
presence for purposes of determining the existence of a quorum, but consent or
opposition shall be counted as a vote in favor of or against the proposal and
shall be entered in the minutes or other record of action at the meeting, if the
proposal acted on at the meeting is substantially the same or has substantially
the same effect as the proposal to which the director has consented or objected.
3.12 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the Board of Directors
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee.
3.14 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid for their
services as a director as the Board of Directors may fix from time to time. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor. Committee members may also
be paid their expenses, if any, and be compensated as the Board of Directors may
determine for attending committee meetings.
7
<PAGE> 9
3.15 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of,
or otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section shall be deemed to deny, limit
or restrict the powers-of guaranty or warranty of the corporation at common law
or under any statute.
3.16 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the Certificate of
Incorporation or by these Bylaws, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
3.17 ORDER OF BUSINESS
The meetings shall be conducted in accordance with Roberts Rules of
Order, Revised, and the suggested order of business at any meeting of the
directors shall be:
1. Roll call.
2. Proof of due notice of meeting, or unanimous
consent, or unanimous presence and declaration by
President.
3. Reading and disposal of any unapproved minutes.
4. Reports of officers and committees.
5. Election of officers.
6. Unfinished business.
7. New business.
8. Adjournment.
8
<PAGE> 10
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, with each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Committee members shall be natural persons. In the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors or
in the Bylaws of the corporation, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation; but no such committee shall have the power or
authority to (i) amend the Certificate of Incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors as provided in
Section 151(a) of the General Corporation Law of Delaware, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation), (ii) adopt an agreement of merger or consolidation under Sections
251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, (iv,) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or (v) amend
the Bylaws of the corporation; and unless the Board resolution establishing the
committee, the Bylaws or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Minutes, if any, of committee meetings shall be made available upon
request to members of the committee and to any director.
4.3 MEETINGS AND ACTIONS OF COMMITTEES
Meetings and actions of committees shall be governed by, and held
and taken in accordance with, the provisions of Article III of these Bylaws,
Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (absent members), Section 3.12
(adjournment and notice of adjournment), and Section 3.13 (action without a
meeting), with such changes in the context of those Bylaws as are necessary to
substitute the committee and its members for the Board of Directors and its
members; provided, however, that the time of regular meetings of committees may
also be called by resolution of the Board of Directors and that notice of
special meetings of committees shall also be given to all alternate members, who
shall have the right to attend all meetings of the committee. The Board of
Directors may adopt rules for the government of any committee not inconsistent
with the provisions of these Bylaws.
9
<PAGE> 11
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a President, a Secretary,
and a Treasurer. The corporation may also have, at the discretion of the Board
of Directors a Chairman of the Board, one or more Vice Presidents, a Chief
Executive officer, a Chief Operating Officer, a Chief Financial officer, one or
more Assistant vice Presidents, Assistant Secretaries, Assistant Treasurers, and
any such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these Bylaws. Any number of offices may be held by the same
person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
Bylaws, shall be chosen by the Board of Directors subject to the rights, if any,
of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The Board of Directors may appoint, or empower the President to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws or as the Board of
Directors may from time to time determine.
5.4 DUTIES OF CHAIRMAN OF THE BOARD
The Chairman of the Board, if such an officer be elected, shall, if
present, preside at meetings of the Board of Directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
Board of Directors or as may be prescribed by these Bylaws. If there is no
President then the Chairman of the Board shall also be the Chief Executive
Officer of the corporation and shall have the powers and duties prescribed in
Section 5.5 of these Bylaws.
5.5 DUTIES OF PRESIDENT
The President shall have general active management of the business
of the corporation; when present, preside at all meetings of the Board of
Directors, if there is no Chairman of the Board elected and present, and of the
stockholders; see that all orders and resolutions of the Board are carried into
effect; sign and deliver in the name of the corporation any deeds, mortgages,
bonds, contracts or other instruments pertaining to the business of the
corporation, except in cases in which the authority to sign and deliver is
required by law to be exercised by another person or is expressly delegated by
the Board to some other officer or agent of the corporation; maintain records of
and, whenever necessary, certify all proceedings of the Board and the
stockholders; and perform other duties prescribed by the Board or these Bylaws.
The President may also be referred to as the Chief Executive officer.
5.6 DUTIES OF SECRETARY
The Secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares of stock present or
represented at stockholders' meetings and the proceedings thereof.
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<PAGE> 12
The Secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the Board of
Directors, a stock ledger, or a duplicate stock ledger, showing the names of all
stockholders and their addresses, the number and classes of stock held by each,
the number and date of certificates evidencing such stock, and the number and
date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required to be given
by law or by these Bylaws. He shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors, President, or these
Bylaws.
5.7 DUTIES OF TREASURER
The Treasurer shall keep accurate financial records for the
corporation; deposit all money, drafts, and checks in the name of and to the
credit of the corporation in the banks and depositories designated by the Board
of Directors; endorse for deposit all deposities designated by the Board of
Directors endorse for deposit all notes, checks, and drafts received by the
corporation as ordered by the Board, making proper vouchers therefor; disburse
corporate funds and issue checks and drafts in the name of the corporation, as
ordered by the Board; render to the President and the Board, whenever requested,
an account of all transactions by the Treasurer and of the financial condition
of the corporation; and perform other duties prescribed by the Board, the
President, or these Bylaws. The Treasurer may also be referred to as the Chief
Financial Officer.
5.8 DUTIES OF EXECUTIVE VICE PRESIDENT
The Executive vice President, if designated, shall manage the
business of the corporation under the advice and general control of the
President. At the request of the President, or in the event of his absence or
disability, he shall perform the duties and exercise the powers of the President
and shall perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe.
5.9 DUTIES OF VICE PRESIDENTS
Each vice President shall have such powers and perform such duties
as may from time to time be assigned to them respectively by the Board of
Directors or the President. In the absence of the President (and the Executive
vice President if one be designated) or in the event of his inability or refusal
to act, the vice President (or in the event there be more than one vice
President, the Vice Presidents in the order designated, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
5.10 DUTIES OF ASSISTANT SECRETARY
The Assistant Secretary, if designated, or if there by more than
one, the Assistant Secretaries in the order determined by the President (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other duties as the Board of Directors or the
President may from time to time prescribe.
5.11 DUTIES OF ASSISTANT TREASURER
The Assistant Treasurer, if designated, or if there shall be more
than one, the Assistant Treasurers in the order determined by the President (or
if there be no such determination, then in the order of their election) shall,
in the absence of the Treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of Directors
or the President may
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<PAGE> 13
from time to time prescribe.
5.12 TENURE, REMOVAL OR VACANCY
Each officer shall hold office until his successor is chosen and
qualified, or until his earlier death, disqualification, resignation or removal.
Subject to the provisions of a shareholder control agreement, an officer may be
removed at any. time with or without cause, by a resolution approved by the
affirmative vote of a majority of the directors present. Such removal, however,
shall be without prejudice to any contract rights of the officer. Any officer
may resign at any time by giving written notice to the corporation.
5.13 SALARIES
Salaries and other compensation of all officers of the corporation
shall be fixed by the Board of Directors, which action may be taken informally
without the benefit of written resolutions. Nothing contained herein shall be
construed to preclude any officer from serving the corporation as a director,
consultant, or in any other capacity and receiving proper compensation therefor.
ARTICLE VI
Indemnification
SECTION 1. General. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, and had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
12
<PAGE> 14
SECTION 3. Prepayment of Expenses. The Corporation shall pay the
expenses incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses incurred by a
director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the director or officer to repay
all amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified under this Article or otherwise.
SECTION 4. Non-Exclusivity of Rights. The rights conferred on any
person by this Article VI shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 5. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
SECTION 6. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article VI.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or
at such place or places as designated by the Board of Directors keep a record of
its stockholders listing their names and addresses and the number and class of
stock held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
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7.3 REPRESENTATION OF SHARES OF STOCK OF OTHER CORPORATIONS
The Chairman of the Board, the President, any vice President, the
Treasurer, the Secretary or Assistant Secretary of this corporation, or any
other person authorized by the Board of Directors or the President or a vice
President, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of stock of any other
corporation or corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly
exercised by such person having the authority.
ARTICLE VIII
STOCK
8.1 UNCERTIFICATED SHARES
Uncertificated shares are prohibited.
8.2 CERTIFICATES
Each stockholder of the corporation shall be entitled to have a
share certificate signed by or in the name of the corporation by an officer,
certifying the number of shares in the corporation owned by the stockholder.
8.3 FACSIMILE SIGNATURES
If a person signs or has a facsimile signature placed upon a
certificate while an officer, transfer agent, or registrar of a corporation, the
certificate may be issued by the corporation, even if the person has ceased to
have that capacity before the certificate is issued, with the same effect as if
the person had that capacity at the date of its issue.
8.4 PARTLY PAID SHARES
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, the total amount of the consideration to
be paid therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the corporation shall declare
a dividend upon partly paid shares of the same class, but only upon the basis of
the percentage of the consideration actually paid thereon.
8.5 TRANSFER; FRACTIONAL SHARES
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence or succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Transfers of fractional shares shall not be made nor shall certificates for
fractional shares be issued.
8.6 TREASURY STOCK
Treasury stock shall be held by the corporation subject to disposal
by the Board of Directors, in accordance with the Certificate of Incorporation
and these Bylaws, and shall not have voting rights nor participate in dividends.
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<PAGE> 16
8.7 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of
stock or more than one series of any class, then the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate that the
corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements there may be
set forth on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, the designations, the preferences, and the relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
8.8 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for
shares of stock shall be issued to replace a previously issued certificate
unless the latter is surrendered to the corporation and canceled at the same
time. The corporation may issue a new certificate of stock or uncertificated
shares in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
8.9 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.10 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares of stock to receive
dividends and to vote as such owner, shall be entitled to hold liable for calls
and assessments the person registered on its books as the owner of shares of
stock, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares of stock on the part of another person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
ARTICLE IX
DIVIDENDS, DISTRIBUTIONS, ETC.
9.1 DIVIDENDS
Subject to the provisions of the Certificate of Incorporation, these
Bylaws, and the applicable laws, the Board of Directors may declare a
distribution in the form of a dividend whenever, and in such amount as, in its
opinion, the condition and the affairs of the corporation shall render it
advisable.
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<PAGE> 17
9.2 OTHER DISTRIBUTIONS, RESERVES
Subject to the provisions of the Certificate of Incorporation and
these Bylaws, the Board of Directors in its discretion may purchase or acquire
any of the shares of the capital stock of this corporation in accordance with
law, or any of its bonds, debentures, notes, scrip or other securities or
evidences of indebtedness, or from time to time may set aside from its net
assets or net profits such sum or sums as it, in its absolute discretion, may
think proper as a reserve fund to meet contingencies, or for the purpose of
maintaining or increasing the property or business of the corporation or for any
other purpose it may think conductive to the best interests of the corporation.
ARTICLE X
FINANCIAL AND PROPERTY MANAGEMENT
10.1 FISCAL YEAR
The fiscal year of the corporation shall be set by the Board of
Directors.
10.2 AUDIT OF BOOKS AND ACCOUNTS
The books and accounts of the corporation shall be audited at such
times as may be ordered by the Board of Directors.
10.3 CONTRACTS
The Board of Directors may authorize any officer or officers, agent
or agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the corporation, and such authority may be general
or confined to specific instances.
10.4 CHECKS
All checks, drafts, or other orders for the payment of money, notes,
or other evidences of indebtedness issued in the name of the corporation shall
be signed by the Treasurer or such other officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
10.5 DEPOSITS
All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies, or other depositories as the Board of Directors may select.
10.6 VOTING SECURITIES HELD BY CORPORATION
The President or other agent designated by the Board of Directors,
shall have full power and authority on behalf of the corporation to attend, act
and vote at any meeting of security holders of other corporations in which this
corporation may hold securities. At such meeting the President or such other
agent, shall possess and exercise any and all rights and powers incident to the
ownership of such securities which the corporation might possess and exercise.
16
<PAGE> 18
ARTICLE XI
REIMBURSEMENT BY EMPLOYERS
11.1 REIMBURSEMENT OF DISALLOWED EXPENSES
Any payment made to an employee of the corporation, such as salary,
commission, bonus, interest or reimbursement for entertainment expenses incurred
by him, which shall be disallowed in whole or in part as a deductible corporate
expense by the Internal Revenue Service, shall be reimbursed to the corporation
by such employee to the full extent of such disallowance. It shall be the duty
of the Board of Directors, to enforce payment of each such amount disallowed. In
lieu of payment by the employee, subject to the determination of the Board of
Directors, proportionate amounts may be withheld from his future compensation
payments until the amount owed to the corporation has been recovered.
11.2 CONDITION OF EMPLOYMENT
The proper officers of this corporation are authorized and directed
to cause suitable announcement of this provision to be given to all employees to
whom it may pertain and to all future employees at the commencement of their
employment. It is to be made explicitly clear to all employees that acceptance
of this provision is a condition of continued employment by the corporation and
that failure to abide by same shall be cause for discharge.
11.3 NOTICES; GENERAL
Whenever notice is required to be given to any director or
stockholder under the laws of the State of Delaware, the Certificate of
Incorporation or these Bylaws, it shall not be construed to require personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given personally or by telegram or facsimile.
11.4 REQUIRED OF WAIVER IN WRITING
Whenever any notice whatever is required to be given by these
Bylaws, or the Certificate of Incorporation of the corporation or any of the
corporate laws of the State of Delaware, a waiver thereof in writing, signed by
the person or persons entitled to said notice, either before, at, or after the
time stated therein, shall be deemed equivalent thereto.
ARTICLE XII
AMENDMENTS
The original or other Bylaws of the corporation may be adopted,
amended or repealed by the Board of Directors, subject to the reserved power of
the stockholders to adopt, amend or repeal Bylaws.
ARTICLE XIII
CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Bylaws. without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
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ARTICLE XIV
DISSOLUTION
If it should be deemed advisable in the judgment of the Board of
Directors of the corporation that the corporation should be dissolved, the
Board, after the adoption of a resolution to that effect by a majority of the
whole Board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution
consent in writing, either in person or by duly authorized attorney, to a
dissolution, no meeting of directors or stockholders shall be necessary. The
consent shall be filed and shall become effective in accordance with Section 103
of the General Corporation Law of Delaware. Upon such consent's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved. If the consent is signed by an
attorney, then the original power of attorney or a photocopy thereof shall be
attached to and filed with ' the consent. The consent filed with the Secretary
of State shall have attached to it the affidavit of the Secretary or some other
officer of the corporation stating that the consent has been signed by or on
behalf of all the stockholders entitled to vote on a dissolution; in addition,
there shall be attached to the consent a certification by the Secretary or some
other officer of the corporation setting forth the names and residences of the
directors and officers of the corporation.
ARTICLE XV
CUSTODIAN
15.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may
appoint one or more persons to be custodians and, if the corporation is
insolvent, to be receivers, of and for, the corporation when:
(i) at any meeting held for the election of directors
the stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would have
expired upon qualification of their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so
divided respecting the management of the affairs of the corporation
that the required vote for action by the Board of Directors cannot
be obtained and the stockholders are unable to terminate this
division; or
(iii) the corporation has abandoned its business and has
failed within a reasonable time to take steps to dissolve, liquidate
or distribute its assets.
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<PAGE> 20
15.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
19
<PAGE> 21
CERTIFICATE OF ADOPTION OF RESTATED BYLAWS
OF
STRATASYS, INC.
The undersigned hereby certifies that she is the duly elected,
qualified, and acting Secretary of Stratasys, Inc., and that the foregoing
Restated Bylaws, comprising twenty-five pages, were adopted as the Restated
Bylaws of the corporation effective as of October 15, 1990, by the Board of
Directors of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the
15th day of October, 1990.
---------------------------
Lisa H. Crump
Secretary
20
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