<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997 Commission File number 0-21667
PHOTOELECTRON CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
MASSACHUSETTS 04-3035323
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5 FORBES ROAD, LEXINGTON, MASSACHUSETTS 02173
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip code)
(617) 861-2069
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
____________________
Check Whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
____________________
7,333,251 shares of Common Stock, $.01 par value, were outstanding as of July
28, 1997.
<PAGE>
PHOTOELECTRON CORPORATION
- --------------------------------------------------------------------------------
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 28, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
PART I - FINANCIAL INFORMATION Page
<S> <C>
Item 1 Consolidated Financial Statements 3
CONSOLIDATED BALANCE SHEETS AT JUNE 28,
1997 AND DECEMBER 28, 1996 3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
AND SIX MONTHS ENDED JUNE 28, 1997 AND
JUNE 29, 1996 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION 10
Item 6 Exhibits and Reports on Form 8-K 10
</TABLE>
- --------------------------------------------------------------------------------
-2-
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 28, 1997
(Unaudited) December 28, 1996
-------------- -------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 16,989,301 $ 2,537,023
Inventories 376,265 323,714
Prepaid Expenses 389,049 992,412
Other current assets 185,433 28,871
------------ ------------
Total current assets 17,940,048 3,882,020
PROPERTY AND EQUIPMENT:
Computer equipment 603,351 311,295
Lab and production
equipment 544,794 438,025
Clinical site equipment 685,573 656,395
Furniture and fixtures 126,308 97,164
Leasehold improvements 738,263 630,273
------------ ------------
2,698,289 2,133,152
Less-Accumulated 1,171,910 898,127
depreciation and ------------ ------------
amortization 1,526,379 1,235,025
------------ ------------
Total assets $ 19,466,427 $ 5,117,045
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 243,431 $ 307,795
Accrued expenses 175,023 247,880
Accrued payroll and 98,177 32,204
benefits
Current portion of
convertible --- 454,230
subordinated notes
------------ ------------
Total current
liabilities 516,631 1,042,109
------------ ------------
LONG-TERM DEBT:
Convertible subordinated notes,
net of current portion 1,637,347 1,589,147
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value-
Authorized - 7,500,000 shares
Issued and outstanding - none and
2,892,312 at June 28, 1997 and
December 28, 1996, respectively --- 28,923
Common Stock, $0.01 par value -
Authorized - 15,000,000 shares
Issued and outstanding
- 7,276,751 and 1,597,910 at
June 28, 1997 and December 28,
1996, respectively 72,767 15,979
Capital in excess of par value -
preferred stock --- 17,202,463
Capital in excess of par value - common
stock 37,166,773 2,679,724
Subscription receivable (44,082) (57,931)
Deficit accumulated during development
stage (19,883,009) (17,383,369)
------------ ------------
Total shareholders' equity 17,312,449 2,485,789
------------ ------------
Total liabilities and
shareholders' equity $ 19,466,427 $ 5,117,045
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ending
------------------------------------ ------------------------------------- Period from
June 28, June 29, June 28, June 29, Inception (January 4,
1997 1996 1997 1996 1989 to June 28, 1997)
---------------- ------------------ ---------------- ------------------- ----------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $ 14,800 $ -- $ 377,649 $ -- $ 377,649
Cost of Revenues 6,836 -- 189,735 -- 189,735
----------- ----------- ----------- ----------- ------------
Gross Profit 7,964 -- 187,914 -- 187,914
----------- ----------- ----------- ----------- ------------
Operating Expenses
Research and Development
expenses 1,056,757 688,776 2,030,150 1,406,169 15,280,418
General and
Administrative expenses 565,970 466,892 985,873 708,249 4,609,209
----------- ----------- ----------- ----------- ------------
Total Operating Expenses 1,622,727 1,155,668 3,016,023 2,114,418 19,889,627
----------- ----------- ----------- ----------- ------------
Income (loss) from
Operations (1,614,763) (1,155,668) (2,828,109) (2,114,418) (19,701,713)
Interest income 224,704 149,045 386,670 177,789 834,808
Interest expense (28,101) (30,227) (58,201) (60,237) (1,016,104)
----------- ----------- ----------- ----------- ------------
Interest income 196,603 118,818 328,469 117,552 (181,296)
(expense), net ----------- ----------- ----------- ----------- ------------
Net loss $(1,418,160) $(1,036,850) $(2,499,640) $(1,996,866) $(19,883,009)
=========== =========== =========== =========== ============
Net income (loss) per
common and common
equivalent share $(0.20) $(0.64) $(0.42) $(1.24)
=========== =========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding 7,026,778 1,616,660 6,024,919 1,919,052
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended Period from
------------------------------ Inception (January 4,
June 28, 1997 June 29, 1996 1989) to June 29, 1997
-------------- -------------- -----------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,499,640) $(1,996,866) $(19,883,009)
Adjustments to reconcile net
loss to net cash used in
operating activities-
Depreciation and
amortization 273,783 50,945 1,180,501
Noncash interest converted to
subordinated notes 58,201 59,830 928,796
Noncash salary converted to
common stock -- -- 250,000
Noncash research and development
expenses converted to
subordinated notes -- -- 9,000
Noncash salary stock options
extension -- -- 1,132,600
Changes in current accounts -
Inventories (52,551) 58,112 (375,995)
Prepaid expenses 130,357 (83,337) (80,849)
Other current assets (156,562) (101,190) (185,433)
Accounts payable (64,364) (60,541) 243,431
Accrued expenses (6,884) 42,295 72,252
----------- ----------- ------------
Net cash used in operating
activities (2,317,660) (2,030,752) (16,708,706)
----------- ----------- ------------
Cash flows from investing activities:
Purchases of equipment and
leasehold improvements (565,136) (307,902) (2,673,442)
Proceeds from the sale of
equipment and leasehold
improvements -- -- 9,845
----------- ----------- ------------
Net cash used in investing
activities (565,136) (307,902) (2,663,597)
----------- ----------- ------------
Cash flows from financing
activities:
Proceeds from issuance
of common stock 17,335,075 3,000 17,458,517
Proceeds from issuance
of preferred stock -- 600,000 13,385,370
Proceeds from issuance
of subordinated
convertible notes -- -- 5,322,000
Proceeds from issuance
of warrants -- -- 236,453
Payment under capital
lease obligations -- -- (40,735)
----------- ----------- ------------
Net cash provided by
financing activities 17,335,075 603,000 36,361,605
----------- ----------- ------------
Increase (decrease) in cash
and cash equivalents 14,452,279 (1,735,654) 16,989,302
Cash and cash equivalents,
beginning of period 2,537,023 7,191,268 --
----------- ----------- ------------
Cash and cash equivalents,
end of period $16,989,302 $ 5,455,614 $ 16,989,302
=========== =========== ============
Cash flows from noncash
financing activities:
Conversion of salary expense
to common stock $ -- $ -- $ 250,000
=========== =========== ============
Conversion of convertible
subordinated notes to
common stock $ 464,231 $ $ 4,491,246
=========== =========== ============
Conversion of common stock
to preferred stock $ $ $ 3,846,015
=========== =========== ============
Capital lease obligation
incurred for equipment $ $ $ 40,383
=========== =========== ============
Conversion of convertible
subordinated notes to
warrants $ $ $ 47,000
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
PHOTOELECTRON CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED RESULTS - The interim unaudited consolidated financial statements
contained herein have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
management's opinion, the unaudited information includes all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
of the financial position, results of operations, and cash flows for the
periods presented. The results of operations for the interim periods shown
on this report are not necessarily indicative of the results expected for the
full year. The interim financial statements should be read in conjunction
with the financial statements and notes for the year ended December 28, 1996
included in the Company's Form 10K filing with the Securities and Exchange
Commission.
2. INITIAL PUBLIC OFFERING - During January and February of 1997, the Company
completed its initial public offering of 2,275,000 shares of Common Stock,
including an exercise of the overallotment option. The total proceeds
received by the Company were approximately $17,087,000, after deducting
underwriting discounts and commissions and other expenses.
3. LOSS PER SHARE - Weighted average common and common equivalent shares
outstanding include the weighted average common shares outstanding for the
period and for all periods include the effect of the assumed conversion of
Series C Preferred Stock issued within one year prior to the Company's
initial public offering.
4. NEW ACCOUNTING PRONOUNCEMENT - In March of 1997, the Financial Accounting
Standards Board issued SFAS 128, "Earnings per Share." SFAS 128 requires the
replacement of primary loss per share with basic loss per share, but
continues the requirement to present diluted loss per share. It is effective
for fiscal years ending after December 15, 1997. The Company does not expect
it to have a material effect on previously reported loss per share amounts,
as the only common equivalent shares included in the determination of those
amounts are those included pursuant to certain Securities and Exchange
Commission requirements which remain unchanged.
5. REVENUE RECOGNITION - The Company recognizes revenue upon shipment of its
products or acceptance by the customer, as appropriate. The Company provides
a reserve for its estimate of warranty costs at the time of revenue
recognition.
-6-
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Certain statements contained in this Quarterly Report on Form 10-Q,
including, without limitation, statements containing the words "expects,"
"anticipates," "believes" and words of similar import, constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward looking statements are subject to various
risks and uncertainties, including those referred to in the Company's
Registration Statement on Form S-1 (Reg. No. 333-14541) and in the Company's
Form 10-K for the fiscal year ended December 28, 1996, that could cause actual
future results and events to differ materially from those currently anticipated.
Readers are cautioned not to place undue reliance on these forward looking
statements.
The Company is engaged in the design, development and commercialization of
the Photon Radiosurgery System ("PRS"), a proprietary, therapeutic device for
the treatment of cancerous tumors through the application of radiation directly
into a tumor. The Company does not anticipate receiving any significant revenue
from the sale of its products at least until the middle of 1998. The Company
has an accumulated deficit totaling approximately $19.9 million since its
inception and expects to continue to incur losses until such time as its
commercialization efforts yield offsetting revenues. The Company's research and
development, general and administrative and manufacturing expenses have and will
continue to significantly increase during 1997 as it pursues the
commercialization of the PRS.
Before medical devices such as the PRS can be marketed in the U.S.,
approval by the U.S. Food and Drug Administration ("FDA") is required. Phase II
clinical trials for the treatment of metastatic brain tumors are currently being
performed. Based on the results obtained in these ongoing Phase II trials, on
December 11, 1996 the Company submitted a Section 510(k) application to the FDA
seeking clearance to commercialize the current model of the PRS for treatment of
metastatic brain tumors. On June 20, 1997, the Company received clearance from
the FDA to market Model 3 of the PRS for treatment of intracranial tumors. The
Company is currently preparing to submit an application to the FDA under Section
510(k) of the Federal Food, Drug and Cosmetic Act seeking clearance to
commercialize the current model of the PRS (the "PRS 400"). Locally approved
clinical trials for the treatment of brain tumors are also being performed at
sites in Europe and Japan. The Company currently anticipates that clinical
trials to determine the safety of the PRS for treatment of breast cancer will
begin in late 1997 in England. Based upon those trials, the Company will submit
an application to the FDA to begin human clinical trials in the U.S. The
possibility of treating topical tumors of the skin and mouth with the PRS is
also being explored. A program has begun at a U.S. hospital which the Company
expects to lead to human clinical trials with the PRS in treating Kaposi's
sarcomas and other skin malignancies. Upon obtaining all necessary
-7-
<PAGE>
regulatory approvals, the Company intends to begin commercial sales of the PRS.
The Company will consider the use of the PRS for other potential applications on
an ongoing basis. In order to support such commercialization, the Company will
experience significant working capital and other financing needs.
If all regulatory clearances are obtained, the Company intends to market
and distribute its products through a combination of collaborative relationships
and in-house sales and marketing resources. The Company has developed and will
continue to develop strategic alliances with companies that have established
distribution channels in domestic and international markets. As part of the
manufacturing process, the Company intends to sub-contract the fabrication of
most of its electrical and mechanical components. The Company is actively
pursuing full functional compliance with ISO 9001 and the FDA's GMP standards
that govern quality assurance, personnel training, process control, customer
service, design control, supply management and facility and equipment
maintenance.
On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of its Common Stock at a price of $8.50 per share. Pursuant to
an option to purchase additional shares of Common Stock to cover over-
allotments, Needham & Company, Inc. and Dain Bosworth Incorporated (the
"Representatives") purchased an additional 275,000 shares of Common Stock on
March 4, 1997. The net proceeds of the offering are being used to (i) increase
the Company's research of cancer treatment applications; (ii) continue to expand
clinical trials for the PRS; (iii) obtain regulatory approvals for the PRS; (iv)
enhance manufacturing and marketing capabilities and (v) provide working
capital, as well as for general corporate purposes.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
The Company recorded the sale of a small amount of peripheral equipment in
the three months ended June 28, 1997. The Company recorded revenues in the
amount of $14,800 with costs of goods sold of $6,836. The gross margin on these
sales was $7,964.
Research and development expenses increased by $367,981 from $688,776 in
the second three months of 1996 to $1,056,757 in the second three months of
1997. This change reflects significant increases in activity in the Company's
clinical trial efforts, responding to FDA queries regarding the 510(k)
application, and breast research and development program. The principal costs
in research and development were the continuing progress to complete the
engineering development of the PRS 400 model. Other factors contributing to the
increase in research and development expenses were discussions with physicians
in the UK to formulate the breast research and trial protocol.
General and administrative expenses increased by $99,078 from $466,892 in
the second three months of 1996 to $565,970 in the second three months of 1997.
The
-8-
<PAGE>
increase reported is attributed to a growth in personnel from 25 to 35
employees and related costs. Additional increases are a function of legal and
professional fees related to the Company's reporting and other obligations under
the Securities Exchange Act of 1934, as amended.
Interest income increased by $75,659 from $149,045 in the second three
months of 1996 to $224,704 in the second three months of 1997. The increase was
the result of the investment of the proceeds received in completing the
Company's initial public offering.
SIX MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
The Company recorded the sale of one Photon Radiosurgery System (PRS) in
the six months ended June 29, 1997 to Toshiba Medical Company for use in
Japanese clinical trials. The Company and Toshiba have entered into agreements
relating to clinical trials in Japan, and to future product distribution
arrangements in that country. The Company recorded revenues in the amount of
$377,649 with costs of goods sold of $189,735. The gross margin on these sales
was $187,914.
Research and development expenses increased by $623,981 from $1,406,169 in
the first six months of 1996 to $2,030,150 in the first six months of 1997.
This change reflects significant increases in activity in the Company's clinical
trial efforts, responding to FDA queries regarding the 510(k) application
clearance, and breast research and development program. The principal costs in
research and development were the continuing progress to complete the
engineering development of the PRS 400 model. Other factors contributing to the
increase in research and development expenses were discussions with physicians
in the UK to formulate the breast research and trial protocol, and developing
accessory equipment for the trials.
General and administrative expenses increased by $277,624 from $708,249 in
the first six months of 1996 to $985,873 in the first six months of 1997. The
increase reported is attributed to a growth in personnel from 25 to 35 employees
and related costs. Additional increases are a function of legal and
professional fees related to the Company's reporting and other obligations under
the Securities Exchange Act of 1934, as amended. Interest income increased by
$208,881 from $177,789 in the first six months of 1996 to $386,670 in the first
six months of 1997. The increase was the result of investing the proceeds upon
the completion of the Company's initial public offering.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Company's initial public offering, the Company financed its
operations through the issuance of convertible debt and Preferred and Common
Stock in a series of private placements totaling approximately $20.8 million.
On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of Common Stock at a price of $8.50 per share. Pursuant to an
option to purchase additional shares of
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<PAGE>
Common Stock, the Representatives purchased an additional 275,000 shares of
Common Stock on March 4, 1997. See "---Overview". As a result of the initial
public offering, the Company received net proceeds of approximately $17.1
million, after deducting underwriting discounts and commissions and other
expenses.
Consolidated working capital was $17.4 million at June 28, 1997, compared
with $2.8 million at December 28, 1996. Included in working capital are cash
and cash equivalents of $17.0 million at June 28, 1997, compared with $2.5
million at December 28, 1996. The increase in working capital and cash is a
result of the initial public offering of the Company's Common Stock. During the
six months ended June 28, 1997, $2.3 million of cash was used for operating
activities.
The Company used $565,136 of cash in the six months ended June 28, 1977 for
fixed assets and leasehold improvements.
The Company maintains medical product liability insurance policies with
respect to its clinical trials which the Company believes contain reasonable
deductibles and other ordinary and customary provisions. The Company believes
that these policies cover such risks in such amounts as are reasonable and
prudent under the circumstances, and the Company does not anticipate that claims
under these policies, if any, will have a material adverse impact on the
Company's liquidity or capital resources. Prior to commercial sale of its
products, the Company will be required to obtain product liability insurance
covering the commercial use of its products.
The Company is currently involved in settlement discussion with a physician
and his employer. The Company has been notified that such physician and his
employer believe that they have certain rights with regard to their
understanding of the Company's planned use of the PRS for treatment of tumors in
body cavities. No formal legal proceedings were initiated and the Company
believes it has reached an agreement in principle with the parties as to
settlement of the matter. The Company's management also believes that the
outcome of this matter will not have a material effect on the Company's
financial position or results of operations.
The Company's capital requirements may change depending upon the progress
of the Company's research and development activities, progress of the clinical
trials, progress on new applications for treatment with the PRS and costs
involved with procuring and defending patents.
The Company's business plan calls for various applications of the PRS,
including the treatment of brain tumors, and tumors in the breast, prostate,
bladder and skin. The Company expects that the capital requirements to complete
the commercialization of the PRS to treat metastatic brain tumors will require
approximately $6.5 million from the net proceeds of the Company's initial public
offering. Such proceeds are needed to complete the Section 510(k) clearance,
ISO 9001 approval, purchase of capital equipment for assembly and manufacturing
of components for the PRS and to support a sales and
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<PAGE>
marketing structure. At this point, the Company is not able to estimate the
capital requirements of commercializing all applications of the PRS.
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
Copies of the following Exhibits are furnished with this report.
Additional Exhibits are incorporated herein by reference as reflected in the
Exhibit Index.
NO. DESCRIPTION
- ------ ----------------------------------
11.1 Computation of net loss per share.
27. Financial Data Schedule.
-11-
<PAGE>
(B) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
PHOTOELECTRON CORPORATION
By: /s/ Peter E. Oettinger
-------------------------------
Peter E. Oettinger
Vice President, Chief Operating
Officer
By: /s/ Gerald J. Bojas
-------------------------------
Gerald J. Bojas
Chief Financial Officer
Dated: August 4, 1997
-12-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE EXHIBIT NO. DESCRIPTION
- ---- ----------- -----------
<S> <C> <C>
- -- **3.1 Articles of Organization of the
Company, as amended.
- -- **3.2 Forms of Articles of Amendment of the
Company.
- -- *3.3 By-Laws of the Company, as amended.
- -- **4.1 Specimen Certificate representing the
Company's Common Stock.
- -- **4.2 Subordinated Convertible Note
Purchase Agreement among the Company,
Thermo Electron Corporation and
Photoelectron Investments Corporation
of Liberia dated as of May 22, 1990,
and Exhibits thereto.
- -- **4.3 Amendment and Waiver of Subordinated
Convertible Note Purchase Agreement
among the Company, Thermo Electron
Corporation and Photoelectron
Investments Corporation of Liberia
dated as of August 1, 1996, and
Exhibits thereto.
- -- **4.6 Amended and Restated Convertible Note
Purchase Agreement originally dated
as of July 11, 1991, among the
Company, PYC Corporation (formerly
known as Photoelectron Investments
Corporation of Liberia) and Peter M.
Nomikos, and Exhibits thereto.
- -- **4.7 8% Subordinated Convertible Note Due
1998 from the Company to Peter M.
Nomikos in the principal amount of
$500,000 dated as of August 8, 1996.
- -- **4.8 Convertible Note and Warrant Purchase
Agreement between the Company and
Peter M. Nomikos dated as of May 13,
1992, and Exhibits thereto.
- -- **4.9 Amendment and Waiver of Convertible
Note and Warrant Purchase Agreement
dated as of May 13, 1992 between the
Company and Peter M. Nomikos, dated
as of August 1, 1996 and Exhibits
thereto.
- -- *4.10 Amended and Restated 8% Subordinated
Convertible Note Due on Demand from
the Company to Peter M. Nomikos in
the principal amount of $705,000
dated as of August 1, 1996.
- -- **10.1 Lease Agreement dated June 12, 1996
between Lexington Development Company
Trust and the Company.
- -- **10.2 Cash or Deferred Profit Sharing Plan
and Trust dated April 1, 1995,
as amended, of the Company.
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C> <C>
- -- **10.3 Employee Stock Purchase Plan of the
Company and form of Subscription
Agreement.
- -- **10.4 1989 Employee Stock Option Plan of
the Company and forms of Stock Option
Agreements.
- -- **10.5 1996 Equity Incentive Plan of the
Company.
- -- **10.6 Form of Stock Purchase Warrant issued
to certain security holders of the
Company and Schedule of Substantially
Identical Documents from Exhibits.
- -- **10.7 Stock Option Agreements variously
dated between certain directors and
officers of the Company and the
Company.
- -- **10.8 Form of Subscription Agreement
between the Company and purchasers of
Series B Preferred Stock.
- -- **10.9 Form of Subscription Agreement
between the Company and purchasers of
Series C Preferred Stock.
- -- **10.10 Series B Subscription Agreement dated
1994 between the Company and Thermo
Electron Corporation.
- -- **10.11 Series C Subscription Agreement dated
December 16, 1995 between the Company
and Toshiba Medical Systems Co., Ltd.
- -- **10.12 Form of Registration Rights Agreement
between the Company
and holders of Series C Preferred
Stock.
- -- **10.13 Registration Rights Agreement dated
December 22, 1995 between the
Company and Toshiba Medical Systems
Co., Ltd.
- -- **10.14 Technology Cross License Agreement
dated as of January 4, 1989 between
the Company and Thermo Electron
Corporation.
- -- **10.15 International Distributor Sales and
Service Agreement dated December 13,
1995, as amended, between the Company
and Toshiba Medical Systems Co., Ltd.
- -- **10.16 Agreement dated as of February 1,
1991, as amended, between the Company
and the General Hospital Corporation.
</TABLE>
-14-
<PAGE>
<TABLE>
<S> <C> <C>
- -- **10.17 Clinical Trial Agreement dated as of
August 1, 1992, as amended, between
the General Hospital Corporation,
Nicholas T. Zervas, M.D. and the
Company.
- -- **10.18 Investigational Treatment Agreement
dated as of September 1, 1994 between
the General Hospital Corporation,
Rees G. Cosgrove, M.D. and the
Company.
- -- **10.19 Clinical Research Agreement dated as
of April 1, 1995, as amended, between
the Brigham and Women's Hospital
Corporation, Peter Black, M.D. and
the Company.
- -- **10.20 Clinical Trial Agreement dated as of
January 1, 1995 between the Tokyo
Women's Medical College, Kintomo
Takakura, M.D. and the Company.
- -- **10.21 Clinical Trial Agreement dated
December 13, 1995, as amended,
between the Company and Toshiba
Medical Systems Co., Ltd.
- -- **10.22 Clinical Research Agreement dated as
of November 1, 1995 between The Royal
Free Hampstead (NHS), Felix
Senanayake, M.D. and the Company.
- -- **10.23 Form of Lock-Up Letter with certain
security holders of the Company.
- -- **10.24 Forms of Medical Advisory Board
Agreements between the Company and
members of its Medical Advisory Board.
E-1 *11.1 Computation of net loss per share.
- -- **21.1 Subsidiaries of the Company.
- -- **24.1 Power of Attorney (included in
signature page to this Form 10-Q).
E-2 *27. Financial Data Schedule.
</TABLE>
_______________
* Filed herewith.
** Filed as same numbered exhibit to the Company's Registration Statement on
Form S-1 (Reg. No. 333-14541) and incorporated herein by reference.
-15-
<PAGE>
EXHIBIT 3.3
PHOTOELECTRON CORPORATION
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
ARTICLE I - GENERAL....................................... 1
Section 1.1. Offices.................................... 1
Section 1.2. Seal....................................... 1
Section 1.3. Fiscal Year................................ 1
ARTICLE II - STOCKHOLDERS................................. 1
Section 2.1. Place of Meeting........................... 1
Section 2.2. Annual Meetings............................ 1
Section 2.3. Special Meetings........................... 2
Section 2.4. Notice of Meetings......................... 2
Section 2.5. Quorum..................................... 3
Section 2.6. Voting..................................... 3
Section 2.7. Inspectors of Election..................... 4
Section 2.8. Action Without Meeting..................... 4
Section 2.9. Business at Stockholder Meetings........... 4
ARTICLE III - DIRECTORS................................... 6
Section 3.1. Powers..................................... 6
Section 3.2. Number, Election and Term of Office........ 6
Section 3.3. Place of Meetings.......................... 6
Section 3.4. Annual Meetings............................ 6
Section 3.5. Regular Meetings........................... 6
Section 3.6. Special Meetings........................... 7
Section 3.7. Notice of Meetings......................... 7
Section 3.8. Quorum..................................... 7
Section 3.9. Voting..................................... 7
Section 3.10. Action Without Meeting..................... 8
Section 3.11. Meetings by Telephone Conference Calls..... 8
Section 3.12. Resignations............................... 8
Section 3.13. Removal.................................... 8
Section 3.14. Vacancies.................................. 8
Section 3.15. Compensation of Directors.................. 9
Section 3.16. Committees................................. 9
</TABLE>
<PAGE>
-ii-
<TABLE>
<S> <C>
Section 3.17. Issuance of Stock.......................... 9
ARTICLE IV - OFFICERS..................................... 9
Section 4.1. Officers................................... 9
Section 4.2. Election and Term of Office................ 10
Section 4.3. President.................................. 10
Section 4.4. Vice Presidents............................ 10
Section 4.5. Treasurer and Assistant Treasurer.......... 10
Section 4.6. Clerk and Assistant Clerk.................. 11
Section 4.7. Secretary and Assistant Secretary.......... 11
Section 4.8. Resignation................................ 11
Section 4.9. Removal.................................... 12
Section 4.10. Vacancies.................................. 12
Section 4.11. Subordinate Officers....................... 12
Section 4.12. Compensation............................... 12
ARTICLE V - STOCK......................................... 12
Section 5.1. Stock Certificates......................... 12
Section 5.2. Transfer of Stock.......................... 13
Section 5.3. Fixing Date for Determination of
Stockholders' Rights...................... 14
Section 5.4. Lost, Mutilated or Destroyed Certificates.. 14
ARTICLE VI - MISCELLANEOUS MANAGEMENT PROVISIONS.......... 15
Section 6.1. Execution of Instruments................... 15
Section 6.2. Corporate Records.......................... 15
Section 6.3. Voting of Securities owned by this
Corporation............................... 15
Section 6.4. Conflict of Interest....................... 16
ARTICLE VII - AMENDMENTS.................................. 17
Section 7.1. General.................................... 17
Section 7.2. Date of Annual Meeting of Stockholders..... 17
ARTICLE VIII - INDEMNIFICATION............................ 17
Section 8.1. Right to Indemnification................... 17
Section 8.2. Settlements................................ 18
Section 8.3. Notification and Defense of Proceedings.... 18
Section 8.4. Advancement of Expenses.................... 19
Section 8.5. Certain Presumptions and Determinations.... 20
Section 8.6. Remedies................................... 21
Section 8.7. Contract Right; Subsequent Amendment...... 22
Section 8.8. Other Rights............................... 22
Section 8.9. Partial Indemnification.................... 22
Section 8.10. Insurance.................................. 23
Section 8.11. Merger or Consolidation.................... 23
Section 8.12. Savings Clause............................. 23
Section 8.13. Subsequent Legislation..................... 23
Section 8.14. Indemnification of Others.................. 24
</TABLE>
<PAGE>
-iii-
<TABLE>
<S> <C>
ARTICLE IX - GENERAL...................................... 24
Section 9.1 Control Share Acquisitions................. 24
</TABLE>
<PAGE>
PHOTOELECTRON CORPORATION
B Y - L A W S
-------------
Article I - General
-------------------
Section 1.1. Offices. The principal office of the corporation shall be in
------- --- -------
Lexington, Massachusetts. The corporation may also have offices at such other
place or places within or without Massachusetts as the Board of Directors may
from time to time determine or the business of the corporation may require.
Section 1.2. Seal. The seal of the corporation shall be in the form of a
------- --- ----
circle inscribed with the name of the corporation, the year of its incorporation
and the word "Massachusetts". When authorized by the Board of Directors and to
the extent not prohibited by law, a facsimile of the corporate seal may be
affixed or reproduced.
Section 1.3. Fiscal Year. The fiscal year of the corporation shall be the
------- --- ------ ----
twelve months ending the Saturday nearest December 31 in each year.
Article II - Stockholders,
-------------------------
Section 2.1. Place of Meeting. Meetings of stockholders shall be held at
------- --- ----- -- -------
the principal office of the. corporation or, to the extent permitted by the
Articles of Organization, at such other place within the United States as the
Board of Directors may from time to time designate.
Section 2.2. Annual Meetings. The annual meetings of stockholders shall be
----------- ------ --------
held at 10:00 a.m., or at such other hour as may from time to time be designated
by the Board of Directors, on the third Wednesday in May of each year, beginning
in 1989, or, if a legal holiday, on the next succeeding full business day, for
the purpose of electing a Board of Directors and transacting such other business
as may properly be brought before such meeting. At the annual meeting any
business may be transacted whether or not the notice of such meeting shall have
contained a reference thereto, except where such a reference is required by law,
the Articles of Organization or these By-laws. If the annual meeting is not
held on the date determined in accordance with this Section, a special meeting
in lieu of
<PAGE>
-2-
the annual meeting may be held with all the force and effect of an
annual meeting.
Section 2.3. Special Meetings. Special meetings of stockholders may be
------- --- ------- --------
called by the President or by the Board of Directors, and shall be called by the
Clerk or, in case of death, absence, incapacity or refusal of the Clerk, by any
other officer, upon written application of one or more stockholders who hold at
least 40% in interest of the capital stock entitled to vote at the meeting.
Application to a court pursuant to Section 34(b) of Chapter 156B of the
Massachusetts General Laws requesting the call of a special meeting of
stockholders because none of the officers is able and willing to call such
meeting may be made only by stockholders who hold at least 40% in interest of
the capital stock entitled to vote thereat. Each call of a meeting shall state
the place, date, hour and purpose of the meeting.
Section 2.4. Notice of Meetings. Written or printed notice of each meeting
------- --- ------ -- --------
of stockholders, stating the place, date and hour and the purposes of the
meeting shall be given by the Clerk or other officer calling the meeting at
least seven days, but not more than sixty days, before the meeting to each
stockholder entitled to vote at the meeting or entitled to such notice by
leaving such notice with him at his residence or usual place of business or by
mailing it, postage prepaid, and addressed to the stockholder at his address as
it appears in the records of the corporation. No notice need be given to any
stockholder if he, or his authorized attorney, waives such notice by a writing
executed before or after the meeting and filed with the records of the meeting
or by his presence, in person or by proxy, at the meeting. Any person
authorized to give notice of any such meeting may make affidavit of such notice,
which, as to the facts therein stated, shall be conclusive. It shall be the
duty of every stockholder to furnish to the Clerk of the corporation or to the
transfer agent, if any, of the class of stock owned by him, his current post
office address.
Section 2.5. Quorum. At all meetings of stockholders the holders of a
------- --- ------
majority in interest of all capital stock entitled to vote at such meeting or,
if two or more classes of stock are issued, outstanding and entitled to vote as
separate classes, a majority in interest of each class, present in person or
represented by proxy, shall constitute a quorum, except when a larger quorum is
required by law, by the Articles of Organization or by these By-laws. The
<PAGE>
-3-
announcement of a quorum by the officer presiding at the meeting shall
constitute a conclusive determination that a quorum is present. The absence of
such an announcement shall have no significance. Shares of its own stock held
by the corporation or held for its use and benefit shall not be counted in
determining the total number of shares outstanding at any particular time. If a
quorum is not present or represented, the stockholders present or represented
and entitled to vote at such meeting, by a majority vote, may adjourn the
meeting from, time to time, without notice other than announcement at the
meeting until a quorum is present or represented. At any adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted if the meeting had been held as originally
called. The stockholders present at a duly organized meeting may continue to
transact business until adjournment notwithstanding the withdrawal of one or
more stockholders so as to leave less than a quorum.
Section 2.6. Voting. Except as otherwise provided by law or the Articles of
------- --- ------
Organization, at all meetings of stockholders each stockholder shall have one
vote for each share of stock entitled to vote and registered in his name and a
proportionate vote for a fractional share. Any stockholder may vote in person
or by proxy dated not more than six months prior to the meeting and filed with
the Clerk of the meeting. Every proxy shall be in writing, subscribed by a
stockholder or his authorized attorney-in-fact, and dated. A proxy with respect
to stock held in the name of two or more persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the corporation
receives a specific written notice to the contrary from any one of them. No
proxy shall be valid after the final adjournment of the meeting. Voting on all
matters, including the election of directors, shall be by voice vote unless
voting by ballot is requested by any stockholder. At all meetings of
stockholders, any matter put to a vote of stockholders shall be determined by a
vote of a majority of the shares voting on such matter, or, if two or more
classes of stock are entitled to vote as separate classes on such matter, a vote
of a majority of the shares voting of each class, present in person or
represented by proxy, except (i) where a larger vote is required by law, the
Articles of Organization or these By-laws or (ii) in the case of elections of
directors by stockholders, which shall be decided by a vote of a plurality of
shares so voting. The corporation shall not, directly or indirectly vote shares
of its own stock.
<PAGE>
-4-
Section 2.7. Inspectors of Election. Two inspectors may be appointed by the
----------- ---------- -- --------
Board of Directors before or at each meeting of stockholders, or, if no such
appointment shall have been made, the presiding officer may make such
appointment at the meeting. At the meeting for which they are appointed, such
inspectors shall open and close the polls, receive and take charge of the
proxies and ballots, and decide all questions touching on the qualifications of
voters, the validity of proxies and the acceptance and rejection of votes. If
any inspector previously-appointed shall fail to attend or refuse or be unable
to serve, the presiding officer shall appoint an inspector in his place.
Section 2.8. Action Without Meeting. Any action which may be taken by
------- --- ------ ------- -------
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of stockholders. Such consents shall be
treated for all purposes as a vote at a meeting.
Section 2.9. Business at Stockholder Meetings. Unless otherwise determined
------- ---- -------- -- ----------- --------
by the Board of Directors prior to a meeting of the stockholders, the officer
presiding at such meeting, determined in accordance with these By-laws, shall
determine the order of business and shall have the authority in his discretion
to regulate and conduct of such meeting, including, without limitation, to
impose restrictions on the persons (other than stockholders of the corporation
or their duly appointed proxies) who may attend such meeting, to regulate and
restrict the making of statements or asking of questions at such meeting and to
cause the removal from such meeting of any person who has disrupted or appears
likely to disrupt the proceedings at such meeting. At a meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a meeting of
stockholders, business must be (a) specified in the notice (or any supplement
thereto) given as provided in these By-laws, (b) otherwise properly brought
before the meeting by or at the direction of a majority of the Board of
Directors then in office or (c) otherwise properly brought before the meeting by
a stockholder. For business to be properly brought before a meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Clerk of the corporation and the stockholder must be a stockholder of record
at the time such notice is given. Except as may otherwise be required by law,
to be timely, a stockholder's
<PAGE>
-5-
notice must be delivered to or mailed and received at the principal executive
offices of the corporation, not fewer than 60 days nor more than 90 days prior
to the meeting; provided, however, that in the event that the date of the
-------- -------
meeting is not publicly announced by the corporation by mail, press release or
otherwise more than 70 days prior to the meeting, notice by the stockholder to
be timely must be delivered to the Clerk of the corporation not later than the
close of business on the tenth day following the day on which such announcement
of the date of the meeting was made. A stockholder's notice to the Clerk shall
set forth as to each matter such stockholder purposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, (b) the
name and address, as they appear on the corporation's books, of such stockholder
proposing such business, (c) the class and number of shares of the corporation
which are beneficially owned by such stockholder and (d) any material financial
interest of the stockholder in such business. Notwithstanding anything in the
By-laws to the contrary, no business shall be conducted at any meeting except in
accordance with the procedures set forth in this Section. The chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting and in accordance with the
provisions of this Section, and if he should so determine, he shall so declare
to the meeting and any such business not properly brought before the meeting
shall not be transacted. Notwithstanding the foregoing provisions of this
Section, a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Section.
Article III - Directors
-----------------------
Section 3.1. Powers. Except as otherwise provided by law, the Articles of
------- --- ------
Organization or these By-laws, the business of the corporation shall be managed
by a Board of Directors who may exercise all the powers of the corporation.
Section 3.2. Number, Election and Term of Office. The Board of Directors
------- --- ------- -------- ------------------
shall consist of not less than one nor more than seven directors. Within the
limits specified, the number of directors shall be determined (a) by a vote of
the stockholders at the annual meeting, or (b) by a vote of the stockholders at
a special meeting called for the purpose by
<PAGE>
-6-
the Board of Directors, or (c) by vote of the Board of Directors. Except for the
initial directors and except as provided in Section 3.14, the directors shall be
elected at the annual meeting of the stockholders or at a special meeting. All
directors shall hold office until the following annual meeting or special
meeting in lieu of the annual meeting and until their successors are chosen and
qualified.
Section 3.3. Place of Meetings. Meetings of the Board of Directors may be
------- --- ----- -- --------
held at any place within or without the Commonwealth of Massachusetts.
Section 3.4. Annual Meetings. A meeting of the Board of Directors for the
------- --- ---------------
election of officers and the transaction of general business shall be held each
year beginning in 1988, at the place of and immediately after the final
adjournment of the annual meeting of stockholders or the special meeting in lieu
of the annual meeting. No notice of such annual meeting need be given.
Section 3.5. Regular Meetings. Regular meetings of the Board of Directors
------- --- ------- --------
may be held, without notice, at such time and place as the Board of Directors
may determine. Any director not present at the time of the determination shall
be advised, in writing, of any such determination.
Section 3.6. Special Meetings. Special meetings of the Board of Directors,
----------- ------- --------
including meetings in lieu of the annual or regular meetings, may be held upon
notice at any time upon the call of the President and shall be called by the
President or the clerk or, in case of the death, absence, incapacity or refusal
of the Clerk, by any other officer, upon written application, signed by any two
directors, stating the purpose of the meeting.
Section 3.7. Notice of Meetings. Wherever notice of any meetings of the
------- --- ------ -- --------
Board of Directors is required by these By-laws or by vote of the Board of
Directors, such notice shall state the place, date and hour of the meeting and
shall be given to each director by the President, Clerk or other officer calling
the meeting at least two days prior to such meeting if given in person by
telephone or by telecopy or at least four days prior to meeting if given by
mail. Notice shall be deemed to have been duly given, if by mail, by depositing
the notice in the post office as a first class letter, postage prepaid, or, if
by telecopy, by completing the telecopier transmission and receiving an answer
back, the letter or telecopy being addressed to the director at
<PAGE>
-7-
his last known mailing address as it appears on the books of the corporation. No
notice need be given to any director who by a writing executed before or after
the meeting and filed with the records of the meeting or by his attendance at
the meeting without protesting at or before the commencement of the meeting the
lack of notice to him. No notice of adjourned meetings of the Board of Directors
need be given.
Section 3.8. Quorum. At all meetings of the Board of Directors, a majority
------- --- -------
of the directors then in office shall constitute a quorum. If a quorum is not
present, those present may adjourn the meeting from time to time until a quorum
is obtained. At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted if the meeting had
been held as originally called.
Section 3.9. Voting. At any meeting of the Board of Directors, the vote of
------- --- -----
a majority of those present shall decide any matter except as otherwise provided
by law, the Articles of Organization or these By-laws.
Section 3.10. Action Without Meeting. Any action which may be taken at any
------- ---- ----------------------
meeting of the Board of Directors may be taken without a meeting if all the
directors consent to the action in writing and the written consents are filed
with the records of the meetings of the Board of Directors. Such consents shall
be treated for all purposes as a vote at a meeting.
Section 3.11. Meetings by Telephone Conference Calls. Directors or members
------- ---- -------- -- --------- ---------- -----
of any committee designated by the Board of Directors may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
Section 3.12. Resignations. Any director may resign by giving written
------- ---- ------------
notice to the President or Clerk. Such resignation shall take effect at the
time or upon the event specified therein, or, if none is specified, upon
receipt. Unless otherwise specified in the resignation, its acceptance shall
not be necessary to make it effective.
Section 3.13. Removal. A director may be removed from office with or
------- ---- -------
without cause by vote of the holders of
<PAGE>
-8-
a majority interest of the stock entitled to vote in the election of such
director and may be removed from office with cause by a vote of a majority of
the directors then in office. A director may be removed for cause only after
reasonable notice and opportunity to be heard before the body proposing to
remove him.
Section 3.14. Vacancies. In the event of a vacancy in the Board of
------- ---- ---------
Directors, by reason of an enlargement of the Board of Directors or otherwise,
the remaining directors, by majority vote, may elect a director to fill such
vacancy and may exercise the powers of the full Board of Directors until the
vacancy is filled.
Section 3.15. Compensation of Directors. Directors may be paid such
------------ ------------ -- ---------
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 3.16. Committees. The Board of Directors may, by vote of a
------- ---- ----------
majority of the directors then in office, appoint from their number one or more
committees and delegate to such committees some or all of their powers to the
extent permitted by law, the Articles of Organization or these By-laws. Except
as the Board of Directors may otherwise determine, any such committee shall be
governed in the conduct of its business by the rules governing the conduct of
the business of the Board of Directors contained in these By-laws and may, by
majority vote of the entire committee, make other rules for the conduct of its
business. The Board of Directors shall have power at any time to fill vacancies
in any such committees, to change its membership or to discharge the committee.
Section 3.17. Issuance of Stock. The Board of Directors shall have power to
------- ---- ----------- -----
issue and sell or otherwise dispose of such shares of the corporation's
authorized but unissued capital stock to such persons and at such times and for
such consideration, cash, property, services, expenses, or otherwise, and upon
such terms as it shall determine from time to time.
<PAGE>
-9-
Article IV - Officers
---------------------
Section 4.1. Officers. The officers of the corporation shall consist of a
------- --- --------
President, a Treasurer, a Clerk, and such other officers with such other titles
as the Board of Directors may determine including a Chairman of the Board of
Directors, more Vice Presidents, Assistant Treasurers and Assistant Clerks, and
Assistant Secretaries. Any number of offices may be held by the same person.
Any officer may be required to give a bond for the faithful performance of his
duties in such form and with such sureties as the Board of Directors may
determine.
Section 4.2. Election and Term of Office. Except for the initial officers
------- --- -------- --- ---- -- ------
and except as provided in Section 4. 10, the President, Treasurer and Clerk
shall be elected by the Board of Directors at its annual meeting or at the
special meeting held in lieu of the annual meeting and shall hold office until
the following annual meeting of the Board of Directors or the special meeting in
lieu of said annual meeting and until their successors are chosen and qualified.
Other officers may be chosen by the Board of Directors at the annual meeting or
any other meeting and shall hold office for such period as the Board of
Directors may prescribe.
Section 4.3. President. Unless the Board of Directors otherwise
------- --- ---------
determines, the President shall be the chief executive officer of the
corporation. He shall have the general control and management of the
corporation's business and affairs. He need not be a director. Unless there is
a Chairman of the Board, the President shall preside at all meetings of the
Board of Directors and of the stockholders.
Section 4.4. Vice Presidents. The Vice President, or if there be more than
----------- ---- ----------
one, the Vice Presidents, shall perform such of the duties of the President on
behalf of the corporation as may be respectively assigned to him or them from
time to time by the Board of Directors or the President. The Board of Directors
may designate a Vice President as the Executive Vice President, and in the
absence or inability of the President to act, such Executive Vice President
shall have and possess all of the powers and discharge all of the duties of the
President, subject to the control of the Board of Directors.
<PAGE>
-10-
Section 4.5. Treasurer and Assistant Treasurer. The Treasurer shall be the
------- --- --------- --- --------- ---------
principal financial officer of the corporation. He shall have custody and
control over all funds and securities of the corporation, maintain full and
adequate accounts of all moneys received and paid by him on account of the
corporation and, subject to the control of the Board of Directors, discharge all
duties incident to the office of Treasurer. Any Assistant Treasurer shall
perform such of the duties of the Treasurer and such other duties as the Board
of Directors, the President or the Treasurer may designate. The Treasurer shall
have authority, in connection with the normal business of the corporation, to
sign contracts, bids, bonds, powers of attorney and other documents when
required.
Section 4.6. Clerk and Assistant Clerk. The Clerk shall be the principal
----------- -------------------------
recording officer of the corporation. He shall record all proceedings of the
stockholders and discharge all duties incident to the office of Clerk. Unless a
Secretary is appointed by the Board of Directors to perform such duties, the
Clerk shall record all proceedings of the Board of Directors and of any
committees appointed by the Board of Directors. Any Assistant Clerk shall
perform such of the duties of the Clerk and such other duties as the Board of
Directors, the President or the Clerk may designate. In the absence of the
Clerk or any Assistant Clerk from any meeting of stockholders, the Board of
Directors or any committee appointed by the Board of Directors, a Temporary
Clerk designated by the person presiding at the meeting shall perform the duties
of the Clerk. The Clerk shall be a resident of the Commonwealth of
Massachusetts unless a resident agent has been appointed by the corporation
pursuant to law to accept service of process.
Section 4.7. Secretary and Assistant Secretary. If appointed by the Board
----------- --------- --- --------- ---------
of Directors, the Secretary shall record all proceedings of the Board of
Directors and discharge all duties incident to the office of Secretary. Any
Assistant Secretary shall perform such of the duties of the Secretary and such
other duties as the Board of Directors, President or Secretary may designate.
The Board of Directors and any committee appointed by the Board of Directors may
appoint a Secretary and one or more Assistant Secretaries to perform the
functions of the Secretary and Assistant Secretary for such committee.
<PAGE>
-11-
Section 4.8. Resignation. Any officer may resign by giving written notice
------- --- -----------
to the President or Clerk. Such resignation shall take effect at the time or
upon the event specified therein, or, if none is specified, upon receipt.
Unless otherwise specified in the resignation, its acceptance shall not be
necessary to make it effective.
Section 4.9. Removal. An officer may be removed from office with cause,
----------- -------
after reasonable notice and opportunity to be heard, or without cause, in either
case, by vote of a majority of the directors then in office.
Section 4.10. Vacancies. The Board of Directors may fill any vacancy
------- ---- ---------
occurring in any office for any reason and may, in its discretion, leave
unfilled for such period as it may determine any offices other than those of
President, Treasurer and Clerk.
Section 4.11. Subordinate Officers. The Board of Directors may, from time
------------ --------------------
to time, authorize any officer to appoint and remove subordinate officers and to
prescribe their powers and duties. The term "subordinate officers" shall in no
event include the President, Treasurer and Clerk.
Section 4.12. Compensation. The Board of Directors may fix the compensation
------------ ------------
of all officers of the corporation and may authorize any officer upon whom the
power of appointing subordinate officers may have been conferred to fix the
compensation of such subordinate officers.
ARTICLE V - STOCK
- -----------------
Section 5.1. Stock Certificates. Each stockholder shall be entitled to a
------- --- ----- ------------
certificate or certificates of stock of the corporation in such form as the
Board of Directors may from time to time prescribe. Each certificate shall be
duly numbered and entered in the books of the corporation as it is issued, shall
state the holder's name and the number and the class and the designation of the
series, if any, of his shares, shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer and may, but need not,
be sealed with the seal of the corporation. If any stock certificate is signed
by a transfer agent, or by a registrar, other than a director, officer or
employee of the corporation, the signatures thereon of the officers may be
facsimiles. In case any
<PAGE>
-12-
officer who has signed or whose facsimile signature has been placed on any
certificate shall have ceased to be such officer before such certificate is
issued it may nevertheless be issued by the corporation and delivered with the
same effect as if he were such officer at the time of its issue. Every
certificate of stock which is subject to any restriction on transfer pursuant to
the Articles of Organization, the By-laws or any agreement to which the
corporation is a party, shall have the restrictions noted conspicuously on the
certificate and shall also set forth on the face or back of the certificate
either (i) the full text of the restriction, or (ii) a statement of the
existence of such restriction and a statement that the corporation will furnish
a copy thereof to the holder of such certificate upon written request and
without charge. Every certificate issued at a time when the corporation is
authorized to issue more than one class or series of stock shall set forth upon
the face or back of the certificate either (i) the full text of the preferences,
voting powers, qualifications and special and relative rights of the shares of
each class and series, if any, authorized to be issued, as set forth in the
Articles of organization or (ii) a statement of the existence of such
preferences, powers, qualifications and rights, and a statement that the
corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge.
Section 5.2. Transfer of Stock. Subject to any transfer restrictions then
------- --- -----------------
in force, the shares of stock of the corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives. Such transfer shall be effected by delivery of the
old certificate, together with a duly executed assignment and power to transfer
endorsed thereon or attached thereto and with such proof of the authenticity of
the signature and such proof of authority to make the transfer as the
corporation or its agents may reasonably require, to the person in charge of the
stock and transfer books and ledgers or to such other person as the Board of
Directors may designate, who shall thereupon cancel the old certificate and
issue a new certificate. The corporation may treat the holder of record of any
share or shares of stock as the owner of such stock, and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have notice thereof, express or
otherwise.
<PAGE>
-13-
Section 5.3. Fixing Date for Determination of Stockholders' Rights. The
------- --- ------ ---- --- ------------- -- ------------- ------
Board of Directors may fix in advance a time, not exceeding sixty days preceding
the date of any meeting of stockholders, or the date for the payment of any
dividend or the making of any distribution to stockholders, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or the last date on which the consent or
dissent of stockholders may be effectively expressed for any purpose, as the
record date for determining the stockholders entitled to notice of, and to vote
at, such meeting and any adjournment thereof, to receive such dividend or
distribution, to receive such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to
express such consent or dissent. In such case only stockholders of record on
the date so fixed shall have such right, notwithstanding any transfer of stock
on the books of the corporation after the record date. In lieu of fixing such
record date, the Board of Directors may close the stock transfer books for all
or any part of such period. In any case in which the Board of Directors does
not fix a record date or provide for the closing of the transfer books, the
record date shall be the thirtieth day next preceding the date of such meeting,
the dividend payment or distribution date, the date for allotment of rights, the
date for exercising of rights in respect of any such change, conversion or
exchange of capital stock, or the date for expressing such consent or dissent,
as the case may be.
Section 5.4. Lost, Mutilated or Destroyed Certificates. No certificates
------- --- ---- --------- -- --------- ------------
for shares of stock of the corporation shall be issued in place of any
certificate alleged to have been lost, mutilated or destroyed, except upon
production of such evidence of the loss, mutilation or destruction and upon
indemnification of the corporation and its agents to such extent and in such
manner as the Board of Directors may prescribe and as required by law.
Article VI - Miscellaneous Management Provisions
------------------------------------------------
Section 6.1. Execution of Instruments. Except as otherwise provided in
------- --- --------- -- -----------
these By-laws or as the Board of Directors may generally or in particular cases
authorize the execution thereof in some other manner, all instruments,
documents, deeds, leases, transfers, contracts, bonds, notes, checks, drafts and
other obligations made, accepted or endorsed by the corporation shall be signed
by the President or a Vice President, or by the Treasurer or an
<PAGE>
-14-
Assistant Treasurer, or by the Clerk. Facsimile signatures may be used in the
manner and to the extent authorized generally or in particular cases by the
Board of Directors.
Section 6.2. Corporate Records. The original, or attested copies, of the
------- --- --------- -------
Articles of Organization, By-laws, and records of all meetings of incorporators
and stockholders, and the stock and transfer records, which shall contain the
names of all stockholders and the record address and the amount of stock held by
each, shall be kept in the Commonwealth of Massachusetts at the principal office
of the corporation, or at an office of its Clerk, its resident agent or its
transfer agent. The copies and records need not all be kept in the same office.
They shall be available at all reasonable times for inspection by any
stockholder for any proper purpose. They shall not be available for inspection
to secure a list of stockholders or other information for the purpose of selling
such list or information or copies thereof or of using the same for a purpose
other than in the interest of the applicant, as a stockholder, relative to the
affairs of the corporation.
Section 6.3. Voting of Securities owned by this Corporation. Subject
----------- ------ -- ---------- ----- -- ---- -----------
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by this
corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this corporation if he is present at such
meeting, or in his absence by the Treasurer of this corporation if he is present
at such meeting, and (b) whenever, in the judgment of the President, it is
desirable for this corporation to execute a proxy or written consent in respect
to any shares or other securities issued by any other corporation and owned by
this corporation, such proxy or consent shall be executed in the name of this
corporation by the President, without the necessity of any authorization by the
Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or consent.
Any person or persons designated in the manner above stated as the proxy or
proxies of this corporation shall have full right, power and authority to vote
the shares or other securities issued by such other corporation and owned by
this
<PAGE>
-15-
corporation the same as such shares or other securities might be voted by
this corporation.
Section 6.4. Conflict of Interest. No contract or other transaction of
------- --- -------- -- --------
the corporation shall, in the absence of fraud, be affected or invalidated by
the fact that any stockholder, director or officer of the corporation or any
corporation, firm or association of which he may be a director, officer,
stockholder or member may be a party to or may have an interest, pecuniary or
otherwise, in, any such contract or other transaction, provided that the nature
and extent of his interest was disclosed to, or known by, the entire Board of
Directors before acting on such contract or other transaction. Except in the
case of any contract or other transaction between the corporation and any other
corporation controlling, controlled by or under common control with the
corporation, any director of the corporation who is also a director, officer,
stockholder or member of any corporation, firm or association with which the
corporation proposes to contract or transact any business, or who has an
interest, pecuniary or otherwise, in any such contract or other transaction,
may not be counted in determining the existence of a quorum at any meeting of
the Board of Directors which shall authorize any such contract or such
transaction, and such director shall not participate in the vote to authorize
any such contract or transaction. Any such contract or transaction may be
authorized or approved by a majority of the directors then in office and not
disqualified by this Section 6.4 to vote on such matters, even though the
disinterested directors do not constitute a quorum.
Article VII - Amendments
------------------------
Section 7.1. General. These By-laws may be amended, added to or repealed,
------- --- -------
in whole or in part, (a) by vote of the stockholders at a meeting, where the
substance of the proposed amendment is stated in the notice of the meeting, or
(b) by vote of a majority of the directors then in office, except that no
amendment may be made by the Board of Directors on matters reserved to the
stockholders by law or the Articles of Organization or which changes the
provisions of these By-laws relating to meetings of stockholders, to the removal
of directors or to the requirements for amendment of these By-laws. Notice of
any amendment, addition or repeal of any By-law by the Board of Directors
stating the substance of such action shall be given to all stockholders not
later than the time when notice is given of
<PAGE>
-16-
the meeting of stockholders next following such action by the Board of
Directors. Any By-law adopted by the Board of Directors may be amended or
repealed by the stockholders.
Section 7.2. Date of Annual Meeting of Stockholders. No amendment of these
------- --- --------------------------------------
By-laws changing the date of the annual meeting of stockholders may be made
within sixty days before the date fixed in these By-laws for such meeting.
Notice of such change shall be given to all stockholders at least twenty days
before the new date fixed for the meeting.
Article VIII - Indemnification
------------------------------
Section 8.1. Right to Indemnification. The corporation shall
----------- ------------------------
indemnify and hold harmless each person who was or is a party or is threatened
to be made a party to or is otherwise involved in any threatened, pending or
completed action, suit, proceeding or investigation, whether civil, criminal or
administrative (a "Proceeding"), by reason of being, having been or having
agreed to become, a director or officer of the corporation (including, without
limitation, in his capacity as a member of any committee of the corporation or
of the Board of Directors of the corporation), or serving, having served or
having agreed to serve, at the request of the corporation, as a director or
officer of, or in a similar capacity (including as a stockholder or member)
with, another organization or in any capacity with respect to an employee
benefit plan (any such person being referred to hereafter as an "Indemnitee"),
or by reason of any action alleged to have been taken or omitted in such
capacity, against all expense, liability and loss (including attorneys' fees,
judgments, fines, "ERISA" excise taxes or penalties) incurred or suffered by the
Indemnitee or on behalf of the Indemnitee, in connection with such Proceeding
and any appeal therefrom, unless the Indemnitee shall have been adjudicated in
such Proceeding not to have acted in good faith in the reasonable belief that
his action was in the best interest of the corporation or, to the extent such
matter relates to service with respect to an employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan.
Notwithstanding anything to the contrary in this Article, except as set forth in
Section 8.6 below, the corporation shall not indemnify or advance expenses to an
Indemnitee seeking indemnification in connection with a Proceeding
<PAGE>
-17-
(or part thereof) initiated by the Indemnitee, unless the initiation thereof was
approved by the Board of Directors of the corporation.
Section 8.2. Settlements. The right to indemnification conferred in
----------- -----------
this Article shall include the right to be paid by the corporation for amounts
paid in settlement of any such Proceeding and any appeal therefrom, and all
expenses (including attorneys' fees) incurred in connection with such
settlement, pursuant to a consent decree or otherwise, unless and to the extent
it is held or determined pursuant to Section 8.5 below that the Indemnitee did
not act in good faith in the reasonable belief that his action was in the best
interest of the corporation or, to the extent such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
Section 8.3. Notification and Defense of Proceedings. The Indemnitee
----------- ---------------------------------------
shall notify the corporation in writing as soon as reasonably practicable of any
Proceeding involving the Indemnitee for which indemnity or advancement of
expenses in intended to be sought. Any omission so to notify the corporation
will not relieve it from any liability that it may have to the Indemnitee under
this Article unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the corporation. With respect
to any Proceeding of which the corporation is so notified, the corporation will
be entitled, but not obligated, to participate therein at its own expense and/or
to assume the defense thereof at its own expense, with legal counsel reasonably
acceptable to the Indemnitee. After notice from the corporation to the
Indemnitee of its election so to assume such defense (subject to the limitations
in the last sentence of this Section 8.3), the corporation shall not be liable
to the Indemnitee for any fees and expenses of counsel subsequently incurred by
the Indemnitee in connection with such Proceeding, other than as provided below
in this Section 8.3. The Indemnitee shall have the right to employ his own
counsel in connection with such Proceeding, but the fees and expenses of such
counsel incurred after notice from the corporation of its assumption of the
defense thereof at its expense with counsel reasonably acceptable to Indemnitee
shall be at the expense of the Indemnitee unless (i) the employment of counsel
by the Indemnitee at the corporation's expense has been authorized by the
<PAGE>
-18-
corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that
there may be a conflict of interest or position on any significant issue between
the corporation and the Indemnitee in the conduct of the defense of such action
or (iii) the corporation shall not in fact have employed counsel reasonably
acceptable to the Indemnitee to assume the defense of such Proceeding within a
reasonable time after receiving notice thereof, in each of which cases the fees
and expenses of counsel for the Indemnitee shall be at the expense of the
corporation, except as otherwise expressly provided by this Article. The
corporation shall not be entitled, without the consent of the Indemnitee, to
assume the defense of any Proceeding brought by or in the right of the
corporation or as to which counsel for the Indemnitee shall have reasonably made
the conclusion provided for in clause (ii) above.
Section 8.4. Advancement of Expenses. Except as provided in Section
----------- -----------------------
8.3 above, as part of the right to indemnification granted by this Article, any
expenses (including attorneys' fees) incurred by an Indemnitee in defending any
Proceeding within the scope of Section 8.1 above or any appeal therefrom shall
be paid by the corporation in advance of the final disposition of such matter,
provided, however, that the payment of such expenses incurred by an Indemnitee
- -------- -------
in advance of the final disposition of such matter shall be made only upon
receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts
so advanced in the event that it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the corporation as authorized by
Section 8.1 or 8.2 above. Such undertaking need not be secured and shall be
accepted without reference to the financial ability of the Indemnitee to make
such repayment. Such advancement of expenses shall be made by the corporation
promptly following its receipt of written requests therefor by the Indemnitee
and of the foregoing undertaking.
Section 8.5. Certain Presumptions and Determinations. If, in a
----------- ---------------------------------------
Proceeding brought by or in the right of the corporation, a director of the
corporation is held not liable for monetary damages, whether because that
director is relieved of personal liability under any applicable provisions of
the Articles of Organization of the corporation or otherwise, that director
shall be deemed to have met the standard of conduct set forth in Section 8.1
above and thus to be entitled to be
<PAGE>
-19-
indemnified by the corporation thereunder. In any adjudicated Proceeding against
an Indemnitee brought by reason of the Indemnitee's serving, having served or
agreed to serve, at the request of the corporation, an organization other than
the corporation or an employee benefit plan in one or more of the capacities
indicated in Section 8.1 above, if the Indemnitee shall not have been
adjudicated not to have acted in good faith in the reasonable belief that the
Indemnitee's action was in the best interest of such other organization or
employee benefit plan, the Indemnitee shall be deemed to have met the standard
of conduct set forth in Section 8.1 above and thus be entitled to be indemnified
thereunder. An adjudication in such a Proceeding that the Indemnitee did not act
in good faith in the reasonable belief that the Indemnitee's action was in the
best interest of such other organization or employee benefit plan shall not
create a presumption that the Indemnitee has not met the standard of conduct set
forth in Section 8.1 above. In order to obtain indemnification of amounts paid
in settlement pursuant to Section 8.2 above, the Indemnitee shall submit to the
corporation a written request, including in such request such documentation and
information as is reasonably available to the Indemnitee and is reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
such indemnification. Any such indemnification under Section 8.2 above shall be
made promptly, and in any event within 60 days after receipt by the corporation
of the written request of the Indemnitee, unless a court of competent
jurisdiction holds within such 60-day period that the Indemnitee did not meet
the standard of conduct set forth in Section 8.2 above or the corporation
determines, by clear and convincing evidence, within such 60-day period that the
Indemnitee did not meet such standard. Such determination shall be made by the
Board of Directors of the corporation, based on advice of independent legal
counsel (who may, with the consent of the Indemnitee, be regular legal counsel
to the corporation). The corporation and the directors shall be under no
obligation to undertake any such determination or to seek any ruling from any
court.
Section 8.6. Remedies. The right to indemnification or advances as
----------- --------
granted by this Article shall be enforceable by the Indemnitee in any court of
competent jurisdiction if the corporation denies such a request, in whole or in
part, or, with respect to indemnification pursuant to Section 8.2 above, if no
<PAGE>
-20-
disposition thereof is made within the 60-day period referred to above in
Section 8.5. Unless otherwise provided by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the corporation. Neither absence of any determination
prior to the commencement of such action that indemnification is proper in the
circumstances because the Indemnitee has met any applicable standard of conduct,
nor an actual determination by the corporation pursuant to Section 8.5 above
that the Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or created a presumption that the Indemnitee has not met
the applicable standard of conduct. The Indemnitee's expenses (including
attorneys' fees) incurred in connection with successfully establishing his right
to indemnification, in whole or in part, in any such Proceeding shall also be
paid by the corporation.
Section 8.7. Contract Right; Subsequent Amendment. The right to
----------- -------------- ----------------------
indemnification and advancement of expenses conferred in this Article shall be a
contract right. No amendment, termination or repeal of this Article or of the
relevant provisions of Chapter 156B of the Massachusetts General Laws or any
other applicable laws shall affect or diminish in any way the rights of any
Indemnitee to indemnification or advancement of expenses under the provisions
hereof with respect to any Proceeding arising out of our relating to any action,
omission, transaction or facts occurring prior to the final adoption of such
amendment, termination or repeal, except with the consent of the Indemnitee.
Section 8.8. Other Rights. The indemnification and advancement of
----------- ----- ------
expenses provided by this Article shall not be deemed exclusive of any other
rights to which an Indemnitee seeking indemnification or advancement of expenses
may be entitled under any law (common or statutory), agreement or vote of
stockholder or directors or otherwise, both as to action in this official
capacity and as to action in any other capacity while holding office for the
corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
Article shall be deemed to prohibit, and the corporation is specifically
authorized to enter into, agreements with any Indemnitee
<PAGE>
-21-
providing indemnification rights and procedures different from those set forth
in the Article.
Section 8.9. Partial Indemnification. If an Indemnitee is entitled
----------- ------- ---------------
under any provision of this Article to indemnification by the corporation for
some or a portion of the expenses (including attorneys' fees), judgments, fines
or amounts paid in settlement actually and reasonably incurred by the Indemnitee
or on his behalf in connection with any Proceeding and any appeal therefrom but
not, however, for the total amount thereof, the corporation shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including attorneys'
fees), judgments, fines or amounts paid in settlement to which the Indemnitee is
entitled.
Section 8.10. Insurance. The corporation may purchase and maintain
------------ ---------
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the corporation or another organization or employee benefit plan
against any expense, liability or loss incurred by such person in any capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under Chapter 156B of the Massachusetts General Laws.
Section 8.11. Merger or Consolidation. If the corporation is merged
------------ ------ -- -------------
into or consolidated with another corporation and the corporation is not the
surviving corporation, the surviving corporation shall assume the obligations of
the corporation under this Article with respect to any Proceeding arising out of
or relating to any action, omission, transaction or facts occurring on or prior
the date of such merger or consolidation.
Section 8.12. Savings Clause. If this Article or any portion hereof
------------- ------- ------
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify and advance expenses to each
Indemnitee as to any expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with any Proceeding, including an
action by or in the right of the corporation, to the fullest extent permitted by
any applicable portion of this Article that shall not have been invalidated and
to the fullest extent permitted by applicable law.
<PAGE>
-22-
Section 8.13. Subsequent Legislation. If the Massachusetts General
------------ ---------- -----------
Laws are amended after adoption of this Article to expand further the
indemnification permitted to Indemnitees, then the corporation shall indemnify
such persons to the fullest extent permitted by the Massachusetts General Laws
as so amended.
Section 8.14. Indemnification of Others. The corporation may, to the
------------ --------------- -- ------
extent authorized from time to time by its Board of Directors, grant
indemnification rights to employees or agents of the corporation or other
persons serving the corporation who are not Indemnitees, and such rights may be
equivalent to, or greater or less than, those set forth in this Article."
Article IX - General
--------------------
Section 9.1 Control Share Acquisitions
------- --- ------- ----- ------------
The provisions of Chapter 110D of the Massachusetts General Laws shall
not apply to control share acquisitions (as defined in such Chapter) of the
corporation.
<PAGE>
Exhibit 11.1
Photoelectron Corporation and Subsidiary
(a Development Stage Company)
Statement of Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Six Months Ending
------------------------------ ------------------------------
June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
COMPUTATION OF PRIMARY NET LOSS PER
SHARE
Net Loss $(1,418,160) $(1,036,850) $(2,499,640) $(1,996,866)
SHARES:
Weighted average shares outstanding: 7,026,778 1,583,554 6,019,585 1,583,554
Shares issuable from the assumed
conversation of Series C Preferred
Stock issued within one year of
the Company's initial public
offering: -- 33,106 5,334 33,106
----------- ----------- ----------- -----------
Weighted average common and
common equivalent shares
outstanding: 7,026,778 1,616,660 6,024,919 1,616,660
Primary Net Loss Per Share: $ (0.20) $ (0.64) $ (0.42) $ (1.24)
=========== =========== =========== ===========
COMPUTATION OF FULLY DILUTED NET LOSS
PER SHARE:
Net Loss $(1,418,160) $(1,036,850) $(2,499,640) $(1,996,866)
SHARES:
Weighted average shares outstanding 7,026,778 1,583,554 6,019,585 1,583,554
Shares issuable from the assumed
conversion of Series C Preferred Stock
issued within one year of the
Company's initial public offering: -- 33,106 5,334 33,106
----------- ----------- ----------- -----------
Weighted average common and common
equivalent shares outstanding: 7,026,778 1,616,660 6,024,919 1,616,660
Primary Net Loss Per Share: $ (0.20) $ (0.64) $ (0.42) $ (1.24)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
PHOTOELECTRON'S QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-29-1998
<PERIOD-END> JUN-28-1998
<CASH> 16,989,301
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 376,265
<CURRENT-ASSETS> 17,940,048
<PP&E> 2,698,289
<DEPRECIATION> 1,171,910
<TOTAL-ASSETS> 19,466,427
<CURRENT-LIABILITIES> 516,631
<BONDS> 1,637,347
0
0
<COMMON> 72,767
<OTHER-SE> 17,239,682
<TOTAL-LIABILITY-AND-EQUITY> 19,466,427
<SALES> 377,649
<TOTAL-REVENUES> 377,649
<CGS> 189,735
<TOTAL-COSTS> 189,735
<OTHER-EXPENSES> 2,030,150
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,201
<INCOME-PRETAX> (2,499,640)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,499,640)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,499,640)
<EPS-PRIMARY> (0.42)
<EPS-DILUTED> 0
</TABLE>
