<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-20815
AVIRON
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 77-0309686
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
297 North Bernardo Avenue, Mountain View, California 94043
(Address of principal executive offices including zip code)
(415) 919-6500
(Registrant's telephone number, including area code)
------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ____ No _X_
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<S> <C>
Common Stock $.01 par value 11,447,382 shares
- -------------------------------------- --------------------------------------
(Class) (Outstanding at December 10, 1996)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AVIRON
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
-----------------
<S> <C> <C>
COVER PAGE........................................................................................... 1
TABLE OF CONTENTS.................................................................................... 2
PART I. FINANCIAL INFORMATION........................................................................ 3
ITEM 1. FINANCIAL STATEMENTS AND NOTES (UNAUDITED).............................................. 3
Condensed Balance Sheets as of September 30, 1996 and December 31, 1995................. 3
Condensed Statements of Operations for the three- and nine-month periods ended September 4
30, 1996 and 1995.....................................................................
Condensed Statements of Cash Flows for the nine-month periods ended September 30, 1996 5
and 1995..............................................................................
Notes to Condensed Financial Statements................................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 8
OPERATIONS............................................................................
PART II. OTHER INFORMATION........................................................................... 11
ITEM 1. LEGAL PROCEEDINGS....................................................................... 11
ITEM 2. CHANGES IN SECURITIES................................................................... 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................... 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................... 11
ITEM 5. OTHER INFORMATION....................................................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................ 11
SIGNATURES........................................................................................... 13
EXHIBIT INDEX........................................................................................ 14
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVIRON
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 31,
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 3,818 $ 11,532
Short-term investments............................................ 1,506 6,287
Accounts receivable............................................... 500 --
Prepaid expenses and other current assets......................... 1,220 679
----------- -----------
Total current assets................................................ $ 7,044 $ 18,498
----------- -----------
Property and equipment, net......................................... 2,350 1,275
Deposits and other assets........................................... 92 105
----------- -----------
TOTAL ASSETS........................................................ $ 9,486 $ 19,878
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................. $ 823 $ 312
Accrued compensation.............................................. 173 130
Accrued clinical trial costs...................................... 527 545
Accrued offering costs............................................ 530 --
Accrued expenses and other liabilities............................ 196 108
Deferred revenue.................................................. 63 208
Current portion of capital lease obligations...................... 601 420
----------- -----------
Total Current Liabilities........................................... $ 2,913 $ 1,723
----------- -----------
Capital lease obligations, noncurrent............................... 954 618
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 43,000,000 shares authorized,
issuable in Series; 39,031,971 and 39,168,297 convertible
preferred shares issued and outstanding at December 31, 1995 and
September 30,1996, respectively................................. $ 40,028 $ 39,844
Common stock, no par value; 53,000,000 shares authorized; 758,306
and 1,121,084 shares issued and outstanding at December 31, 1995
and September 30, 1996, respectively............................ 2,355 317
Notes from stockholders........................................... (262) --
Deferred compensation............................................. (1,305) (180)
Accumulated deficit............................................... (35,197) (22,444)
----------- -----------
Total Stockholders' Equity.......................................... $ 5,619 $ 17,537
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................... $ 9,486 $ 19,878
----------- -----------
----------- -----------
</TABLE>
3
<PAGE>
See accompanying notes.
AVIRON
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Total Revenues.......................... $ 688 $ 12 $ 1,063 $ 75
OPERATING EXPENSES:
Research and Development.............. $ 4,372 $ 2,204 $ 10,705 $ 7,541
General and Administrative............ $ 1,190 $ 769 $ 3,465 $ 2,334
---------- ---------- ----------- ----------
TOTAL OPERATING EXPENSES................ $ 5,562 $ 2,973 $ 14,170 $ 9,875
---------- ---------- ----------- ----------
LOSS FROM OPERATIONS.................... $ (4,874) $ (2,961) $ (13,107) $ (9,800)
---------- ---------- ----------- ----------
OTHER INCOME/(EXPENSE):
Interest Income....................... $ 107 $ 171 $ 505 $ 289
Interest Expense...................... (58) (45) (138) (123)
---------- ---------- ----------- ----------
TOTAL OTHER INCOME, NET................. $ 49 $ 126 $ 367 $ 166
---------- ---------- ----------- ----------
NET LOSS................................ $ (4,825) $ (2,835) $ (12,740) $ (9,634)
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Pro forma Net Loss Per Share............ $ 0.52 $ 0.31 $ 1.38 $ 1.05
Shares used in calculating proforma net
loss per share........................ 9,222 9,205 9,211 9,151
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
4
<PAGE>
AVIRON
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss................................................................................... $ (12,740) $ (9,634)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization............................................................ 852 449
Acquired technology and patent rights.................................................... 0 1,588
Changes in Assets and Liabilities
Accounts Receivable.................................................................... (500) (149)
Prepaid Expenses and Other Current Assets.............................................. (541) (108)
Deposits and Other Assets.............................................................. 13 (86)
Accounts Payable....................................................................... 511 112
Accrued Expenses and Other Liabilities................................................. 643 279
Deferred Revenue....................................................................... (145) 0
---------- ---------
NET CASH USED IN OPERATING ACTIVITIES...................................................... $ (11,907) $ (7,549)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments...................................................... (5,281) (8,713)
Sales/maturities of short-term investments............................................... 10,049 6,224
Expenditures for property and equipment.................................................. (509) (117)
---------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES.................................................. $ 4,259 $ (2,606)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligation........................................... (449) (247)
Cash proceeds from issuance of:
Convertible Preferred Stock............................................................ 184 13,380
Common Stock........................................................................... 199 1
---------- ---------
CASH FLOWS USED IN FINANCING ACTIVITIES.................................................... $ (66) $ 13,134
---------- ---------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS....................................... $ (7,714) $ 2,979
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........................................... 11,532 952
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................................. $ 3,818 $ 3,931
---------- ---------
---------- ---------
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Fixed Assets Financed by Capital Obligations............................................. $ 966 $ 321
---------- ---------
---------- ---------
Deferred Compensation related to the grant of certain stock options, net of
cancellations.......................................................................... $ 1,577 $ 0
Issuance of Notes receivable for Common Stock, net of cancellations...................... $ 262 $ 0
</TABLE>
5
<PAGE>
AVIRON
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial information at September 30, 1996 and for the three and nine
months ended September 30, 1996 and 1995 is unaudited, but includes all
adjustments (consisting only of normal recurring adjustments) which Aviron (the
"Company") considers necessary for a fair presentation of the financial position
at such date and the operating results and cash flows for those periods. The
balance sheet data at December 31, 1995 is derived from audited financial
statements at that date. The accompanying condensed financial statements should
be read in conjunction with the financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's Prospectus dated November
5, 1996. The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for a full
fiscal year.
2. NET LOSS PER SHARE
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from stock options, convertible preferred stock and warrants are excluded from
the computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common and common
equivalent shares issued during the 12 month prior to the initial filing of the
Company's initial public offering at prices substantially below the public
offering price have been included in the calculation as if they were outstanding
for all periods through September 30, 1996 (using the treasury stock method and
the assumed public offering price for stock options and warrants and the
if-converted method for convertible preferred stock).
Net loss per share calculated at this basis was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30
- ---------------------- ----------------------
<S> <C> <C> <C>
1996 1995 1996 1995
- ---------- ---------- ---------- ----------
$ 1.04 $ 0.62 $ 2.76 $ 2.09
4,623,930 4,607,253 4,612,812 4,606,943
</TABLE>
Pro forma per share data for the three and nine months ended September 30,
1996 and 1995, respectively, gives effect to the conversion of the preferred
stock (which converted into shares of common stock upon the completion of the
initial public offering) as if converted from the original date of issuance.
3. REVERSE STOCK SPLIT
In May 1996, the Company effected a one-for-five reverse stock split of the
Company's common stock. In addition, the conversion ratio of all outstanding
shares of convertible preferred stock were adjusted such that each share of
preferred stock converted into .20 shares of common stock. All references in the
accompanying financial statements to the number of shares of common stock and
the preferred to common stock conversion rates and per share amounts have been
retroactively restated to reflect the reverse stock split.
6
<PAGE>
AVIRON
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 (UNAUDITED)
4. SUBSEQUENT EVENTS
On November 7, 1996, the Company completed its initial public offering of
2,000,000 shares of common stock at $8.00 per share. Upon effectiveness of the
registration statement relating to the offering, all of the preferred stock
outstanding automatically converted into approximately 7,833,634 shares of
common stock. Concurrently Sang-A Pharmaceuticals purchased 222,222 shares of
common stock in a private placement at the same price. The proceeds from the
initial public offering to the company after underwriting discounts,
commissions, and other selling expenses, together with the concurrent sale of
the shares to Sang-A, were approximately $15.9 million. On December 10, 1996,
the underwriters exercised their overallotment option to purchase an additional
152,800 shares of common stock and Sang-A Pharmaceuticals purchased an
additional 16,978 shares, from which the Company received additional aggregate
proceeds of approximately $1.3 million.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" in the Company's
Registration Statement on Form S-1, File No. 333-05209, filed June 5, 1996, as
amended.
OVERVIEW
Since its inception in April 1992, Aviron has devoted substantially all of
its resources to its research and development programs. To date, Aviron has not
generated any revenues from the sale of products and does not expect to generate
any such revenues for at least several years, if at all. Aviron has incurred
cumulative net losses of approximately $35.2 million as of September 30, 1996,
and it expects to incur increasing operating losses for a number of years.
Aviron has financed its operations through proceeds from a public offering
of Common Stock in November 1996, private placements of Preferred Stock, revenue
from its collaborative agreements, including reimbursement of certain of
Aviron's research and development expenses, equipment lease financing and
investment income earned on cash balances and short-term investments.
The Company expects its research and development expenditures to increase
substantially over the next several years as the Company expands its research
and development efforts and preclinical testing and clinical trials with respect
to certain of its programs. In addition, general and administrative expenses are
expected to continue to increase as the Company expands its operations and
incurs the additional expenses associated with operating as a public company.
In October 1995, the Company signed an agreement with SmithKline Beecham
defining a collaboration on the Company's Epstein-Barr virus (EBV) vaccine
technology (the SB Agreement). Under the terms of the SB Agreement, the Company
granted SmithKline Beecham an exclusive license to produce, use and sell EBV
vaccines incorporating the Company's technology for prophylactic and therapeutic
uses on a worldwide basis, except in South and North Korea (together, Korea).
The Company has retained the right to co-distribute a monovalent formulation of
the vaccine in certain markets in the United States and to have SmithKline
Beecham supply such vaccine. SmithKline Beecham has agreed to fund research and
development at the Company related to the EBV vaccine, in specified minimum
amounts, during the first two years of the SB Agreement. SmithKline Beecham made
an initial upfront payment to the Company and agreed to make additional payments
upon the achievement of certain product development milestones. The Company is
entitled to royalties from SmithKline Beecham based on net sales of the vaccine.
No assurance can be given, however, that the Company will receive any additional
payments from SmithKline Beecham or that SmithKline Beecham will not terminate
its agreement with the Company.
In May 1995, the Company entered into a Development and License Agreement
with Sang-A. The Company granted to Sang-A exclusive clinical development,
manufacturing and marketing rights in Korea for specified products developed by
Aviron, including vaccines for influenza (cold adapted and recombinant), EBV,
cytomegalovirus (CMV), herpes simplex virus type 2 (HSV-2) and respiratory
syncytial virus (RSV). However, the Company is under no obligation to develop
any product. Sang-A also will make payments to the Company upon the Company's
meeting certain regulatory milestones for each product in Korea and will pay a
royalty to the Company on net sales of such products in Korea. No assurance can
be given, however, that the Company will receive any payments from Sang-A or
that Sang-A will not terminate its agreement with the Company.
On July 1, 1996, Chiron filed a complaint against the Company alleging
misappropriation of trade secrets with respect to certain of Aviron's patent
applications related to its EBV program. The Company believes that the
allegations in the complaint are without merit and intends to defend itself
vigorously
8
<PAGE>
against such action. However, the Company expects that the legal costs incurred
in defending itself against this action could be substantial. See Part
II--"Legal Proceedings".
The Company currently is evaluating the costs and benefits of developing
internal manufacturing capabilities or contracting with third-party
manufacturers. In April 1996, the Company completed construction of a pilot
manufacturing facility funded through its existing capital lease line of credit;
however, if the Company decides to establish its own commercial-scale
manufacturing facility, it would require a significant amount of funds.
The Company's business is subject to significant risks, including but not
limited to the risks inherent in its research and development efforts, including
preclinical testing and clinical trials, uncertainties associated both with
obtaining and enforcing its patents and with the patent rights of others, the
lengthy, expensive and uncertain process of seeking regulatory approvals,
uncertainties regarding government reforms and product pricing and reimbursement
levels, technological change and competition, manufacturing uncertainties and
dependence on third parties. Even if the Company's product candidates appear
promising at an early stage of development, they may not reach the market for
numerous reasons. Such reasons include the possibilities that the products will
be found unsafe or ineffective during clinical trials, will fail to receive
necessary regulatory approvals, will be difficult to manufacture on a large
scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
REVENUES
Total revenue for the three months ended September 30, 1996 was $688,000,
compared to $12,000 for the three months ended September 30, 1995. Total revenue
for the nine months ended September 30, 1996 was $1,063,000 compared to $75,000
for the nine months ended September 30, 1995. The substantial increase in
revenue in 1996 resulted primarily from the Company's license and development
agreement with SmithKline Beecham.
OPERATING EXPENSES
Research and development expenses increased 98% to $4.4 million in the three
months ended September 30, 1996 from $2.2 million for the three months ended
September 30, 1995. Research and development expenses increased 42% to $10.7
million for the nine months ended September 30, 1996 from $7.5 million for the
nine months ended September 30, 1995. Included in research and development
expenses for the nine months ended September 30, 1995 is a one-time charge of
$1.6 million relating to Aviron's agreement with the University of Michigan.
Without the one-time charge, research and development expenses increased 80%
between the nine months ended September 30, 1996 and 1995. These increases were
primarily due to increases in research and development staffing, licensing fees,
expenses associated with clinical trials of the Company's cold adapted influenza
vaccine and preclinical testing associated with other programs, and deferred
compensation charges in connection with certain stock options granted by the
Company.
General and administrative expenses increased 55% to $1.2 million in the
three months ended September 30, 1996 from $0.8 million for the three months
ended September 30, 1995. General and administrative expenses increased 48% to
$3.5 million in the nine months ended September 30, 1996 from $2.3 million in
the nine months ended September 30, 1995. These increases were incurred to
support the Company's expanded research and development facilities, patent and
legal expenses, its initial public offering of Common Stock and corporate
development activities.
9
<PAGE>
NET INTEREST INCOME
The Company's net interest income increased to $367,000 in the nine months
ended September 30, 1996, from $166,000 in the nine months ended September 30,
1995. During the three months ended September 30, 1996, net interest income was
$49,000, compared to $126,000 for the comparable period in 1995. The
fluctuations in interest income reflect the effects of the Company's changing
cash and short term investment balances.
LIQUIDITY AND CAPITAL RESOURCES
Aviron had cash, cash equivalents and short-term investments at September
30, 1996 of approximately $5.3 million. In order to preserve principal and
maintain liquidity, the Company's funds are invested in United States Treasury
obligations, highly rated corporate obligations and other short-term
investments.
The Company has financed its operations since inception primarily through
private placements of Preferred Stock and an initial public offering of its
Common Stock in November 1996. Through September 30, 1996, the Company had
raised approximately $42.1 million from such sales net of offering expenses.
Cash used in operations was $7.5 million and $11.9 million, for the first nine
months of 1995 and 1996, respectively. Cash expended for capital additions and
to repay lease financing arrangements amounts to approximately $364,000, and
$958,000 for the first nine months of 1995 and 1996, respectively. Capital
expenditures have increased in 1996 primarily as a result of the construction of
a pilot manufacturing facility. The Company expects expenditures for research
and development, clinical trials and general administrative expenditures to be
higher during the remainder of 1996 as the Company develops its products and
expands its clinical trials.
The Company anticipates that the proceeds of its initial public offering,
and the concurrent sale of shares to Sang-A, together with the interest thereon,
revenues from existing collaborations, cash, cash equivalents and short-term
investments, will enable it to maintain its current and planned operations at
least through 1997. The Company's future cash requirements will depend on
numerous factors, including continued scientific progress in the research and
development of the Company's technology and vaccine programs, the size and
complexity of these programs, the ability of the Company to establish and
maintain collaborative arrangements, progress with preclinical testing and
clinical trials, the time and costs involved in obtaining regulatory approvals,
the cost involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims, and product commercialization activities. The Company is seeking
additional collaborative agreements with corporate partners and may seek access
to the public or private equity markets. There can be no assurance, however,
that any such agreements will be entered into or that they will reduce the
Company's funding requirements or that additional funding will be available. The
Company expects that additional equity or debt financings will be required to
fund its operations. There can be no assurance that such funds will be available
on favorable terms, if at all. If adequate funds are not available, the Company
may be required to delay, reduce the scope of, or eliminate one or more of its
research or development programs or to obtain funds through collaborative
agreements with others that may require the Company to relinquish rights to
certain of its technologies, product candidates or products that the Company
would otherwise seek to develop or commercialize itself, which would materially
adversely affect the Company's business, financial condition and results of
operations.
10
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AVIRON
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 1. LEGAL PROCEEDINGS.
On July 1, 1996, Chiron Corporation ("Chiron") filed a complaint against the Company in
San Mateo County, California, Superior Court, alleging that certain of Aviron's patent
applications related to its Epstein Barr Virus program are based on Chiron proprietary
information, which was improperly conveyed to Aviron by a former Chiron employee, and that the
Company has engaged in unfair competition. The complaint seeks unspecified monetary damages
and seeks to impose a constructive trust, for Chiron's benefit, over the affected patent
applications, an exclusive assignment by the Company to Chiron of such patent applications and
an injunction against the Company from disclosing, using or applying such alleged proprietary
information. Aviron believes that the allegations in the complaint are without merit and
intends to defend itself vigorously against the complaint.
ITEM 2. CHANGES IN SECURITIES.
(c) On December 10, 1996, the Company sold and issued to Sang-A Pharm. Co., Ltd., a 5%
stockholder of the Company, 16,978 shares of the Company's Common Stock, in a private
placement concurrent with the exercise of the underwriters' overallotment option. The sale was
made at $8.00 per share. The sale of shares was made in reliance on Section 4(2) of the
Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In July 1996, the Company solicited the written consent of its stockholders for the
reincorporation of the Company from California to Delaware in connection with its public
offering. The Company had 8,934,979 shares of Common Stock (including Preferred Stock, on an
as-converted basis), on the date of the solicitation. The Company received consents from
holders of 7,115,594 shares of Common Stock (including Preferred Stock, on an as-converted
basis), in favor of the proposal. Broker nonvotes were not applicable at that time and "no
votes" were not tabulated.
ITEM 5. OTHER INFORMATION.
None
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
ITEM DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
3.1 Bylaws of the Registrant.
3.2 Restated Certificate of Incorporation of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate(1).
4.3 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of
New York(1).
4.4 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of
New York(1).
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
ITEM DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
4.5 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of
New York(1).
4.6 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of
New York(1).
4.7 Warrant for Series C Preferred Stock, issued to Raymond, James & Associates(1).
4.8 Investors Rights Agreement, dated July 18, 1995, among the Registrant and the investors named
therein(1).
+10.1 License Agreement between the Registrant and ARCH Development Corporation, dated July 1, 1992(1).
+10.2 Technology Transfer Agreement between the Registrant and The Mount Sinai School of Medicine of the
City University of New York, dated February 9, 1993(1).
+10.3 Materials Transfer and Intellectual Property Agreement between the Registrant and the Regents of the
University of Michigan, dated February 24, 1995(1).
10.4 Stock Transfer Agreement between the Registrant and the Regents of the University of Michigan, dated
February 24, 1995(1).
+10.5 Development and License Agreement between the Registrant and Sang-A Pharm. Co., Ltd., dated May 3,
1995(1).
+10.6 Cooperative Research and Development Agreement between the Registrant and the National Institutes of
Health, dated May 30, 1995(1).
+10.7 Heads of Agreement between the Registrant and SmithKline Beecham Biologicals S.A., dated October 8,
1995(1).
+10.8 Manufacturing and Development Agreement between the Registrant and Evans Medical Limited, dated
November 7, 1995(1).
10.9 1996 Equity Incentive Plan(1).
10.10 1996 Non-Employee Directors' Stock Option Plan(1).
10.11 1996 Employee Stock Purchase Plan(1).
10.12 Industrial Lease between the Registrant and the Vanni Business Park General Partnership, dated
August 29, 1995(1).
+10.13 First Amendment to License Agreement between the Registrant and ARCH Development Corporation, dated
March 15, 1996(1).
+10.14 Biological Materials License Agreement between the Registrant and the National Institutes of Health,
dated May 31, 1996(1).
11.1 Statement regarding Computation of Pro Forma Net Loss Per Share.
27.1 Financial Data Schedules.
</TABLE>
- ------------------------
+ Confidential treatment has been granted for portions of this exhibit.
(1) Incorporated by reference to the correspondingly numbered exhibit to the
Company's Registration Statement on Form S-1, File No. 333-05209, filed June
5, 1996, as amended.
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter ended September
30, 1996.
12
<PAGE>
AVIRON
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
AVIRON
<TABLE>
<S> <C> <C> <C>
Date: December 19, 1996 By: /s/ J. LEIGHTON READ, M.D.
------------------------------------------
J. Leighton Read, M.D.
Chairman and Chief Executive Officer
Date: December 19, 1996 By: /s/ VERA KALLMEYER, M.D., PH.D.
------------------------------------------
Vera Kallmeyer, M.D., Ph.D.
Chief Financial Officer and Vice President
Corporate Development
(Principal Financial and Accounting
Officer)
</TABLE>
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. OF
EXHIBIT DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Bylaws of the Registrant.
3.2 Restated Certificate of Incorporation of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate(1).
4.3 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New
York(1).
4.4 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New
York(1).
4.5 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New
York(1).
4.6 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New
York(1).
4.7 Warrant for Series C Preferred Stock, issued to Raymond, James & Associates(1).
4.8 Investors Rights Agreement, dated July 18, 1995, among the Registrant and the investors named therein(1).
+10.1 License Agreement between the Registrant and ARCH Development Corporation, dated July 1, 1992(1).
+10.2 Technology Transfer Agreement between the Registrant and The Mount Sinai School of Medicine of the City
University of New York, dated February 9, 1993(1).
+10.3 Materials Transfer and Intellectual Property Agreement between the Registrant and the Regents of the
University of Michigan, dated February 24, 1995(1).
10.4 Stock Transfer Agreement between the Registrant and the Regents of the University of Michigan, dated
February 24, 1995(1).
+10.5 Development and License Agreement between the Registrant and Sang-A Pharm. Co., Ltd., dated May 3,
1995(1).
+10.6 Cooperative Research and Development Agreement between the Registrant and the National Institutes of
Health, dated May 30, 1995(1).
+10.7 Heads of Agreement between the Registrant and SmithKline Beecham Biologicals S.A., dated October 8,
1995(1).
+10.8 Manufacturing and Development Agreement between the Registrant and Evans Medical Limited, dated November
7, 1995(1).
10.9 1996 Equity Incentive Plan(1).
10.10 1996 Non-Employee Directors' Stock Option Plan(1).
10.11 1996 Employee Stock Purchase Plan(1).
10.12 Industrial Lease between the Registrant and the Vanni Business Park General Partnership, dated August 29,
1995(1).
+10.13 First Amendment to License Agreement between the Registrant and ARCH Development Corporation, dated March
15, 1996(1).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NO. OF
EXHIBIT DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
+10.14 Biological Materials License Agreement between the Registrant and the National Institutes of Health,
dated May 31, 1996(1).
11.1 Statement regarding Computation of Pro Forma Net Loss Per Share.
27.1 Financial Data Schedules.
</TABLE>
- ------------------------
+ Confidential treatment has been granted for portions of this exhibit.
(1) Incorporated by reference to the correspondingly numbered exhibit to the
Company's Registration Statement on Form S-1, File No. 333-05209, filed June
5, 1996, as amended.
15
<PAGE>
Exhibit 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "AVIRON", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF
NOVEMBER, A.D. 1996, AT 9 O'CLOCK A.M.
/S/ EDWARD J. FREEL
[SEAL] ------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 8225359
DATE: 12-06-96
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AVIRON
AVIRON, a corporation organized and existing under the laws of the state
of Delaware (the "Corporation") hereby certifies that:
1. The name of the Corporation is Aviron. The corporation was
originally incorporated under the name Aviron Merger Corporation.
2. The date of filing of the Corporation's original Certificate of
Incorporation was March 7, 1996.
3. The Amended and Restated Certificate of Incorporation of the
Corporation as provided in Exhibit A hereto was duly adopted in accordance
with the provisions of Section 242 and Section 245 of the General Corporation
Law of the State of Delaware by the Board of Directors of the corporation.
4. Pursuant to Section 245 of the Delaware General Corporation Law,
approval of the stockholders of the corporation has been obtained.
5. The Amended and Restated Certificate of Incorporation so adopted
reads in full as set forth in Exhibit A attached hereto and is hereby
incorporated by reference.
IN WITNESS WHEREOF, the undersigned have signed this certificate this
8th day of November, 1996, and hereby affirm and acknowledge under penalty of
perjury that the filing of this Restated Certificate of Incorporation is the
act and deed of Aviron.
AVIRON
By /s/ J. Leighton Read
--------------------------------
J. Leighton Read
Chief Executive Officer
ATTEST:
/s/ Alan C. Mendelson
- -----------------------------
Alan C. Mendelson
Secretary
<PAGE>
AMENDED AND RESTATED Exhibit A
CERTIFICATE OF INCORPORATION
OF
AVIRON
I.
The name of this corporation is Aviron.
II.
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, 19805, County of New Castle
and the name of the name of the registered agent of the corporation in the
State of Delaware at such address is The Prentice-Hall Corporation System,
Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
IV.
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is Thirty Five
Million (35,000,000) shares. Thirty Million (30,000,000) shares shall be
Common Stock, each having a par value of one tenth of one cent ($.001). Five
Million (5,000,000) shares shall be Preferred Stock, each having a par value
of one tenth of one cent ($.001).
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
(a "Preferred Stock Designation") pursuant to the Delaware General
Corporation Law, to fix or alter from time to time the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions of any wholly unissued series of
Preferred Stock, and to establish from time to time the number of shares
constituting any such series or any of them; and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be decreased in accordance
with the foregoing sentence, the shares constituting such decrease shall
resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
1.
<PAGE>
V.
A. For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation, of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that:
(1) The management of the business and the conduct of the affairs
of the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
(2) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock to the public (the "Initial Public
Offering"), the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned
to each class in accordance with a resolution or resolutions adopted by the
Board of Directors. At the first annual meeting of stockholders following
the closing of the Initial Public Offering, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term
of three years. At the second annual meeting of stockholders following the
Closing of the Initial Public Offering, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full
term of three years. At the third annual meeting of stockholders following
the Closing of the Initial Public Offering, the term of office of the Class
III directors shall expire and Class III directors shall be elected for a
full term of three years. At each succeeding annual meeting of stockholders,
directors shall be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(3) Subject to the rights of the holders of any series of
Preferred Stock, the Board of Directors or any individual director may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares
of voting stock of the Corporation, entitled to vote at an election of
directors (the "Voting Stock") or (ii) without cause by the affirmative vote
of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the
voting power of all the then-outstanding shares of the Voting Stock.
(4) Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number
2.
<PAGE>
of directors, shall, unless the Board of Directors determines by resolution
that any such vacancies or newly created directorships shall be filled by the
stockholders, except as otherwise provided by law, be filled only by the
affirmative vote of a majority of the directors then in office, even though
less than a quorum of the Board of Directors, and not by the stockholders.
Any director elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the director for which the
vacancy was created or occurred and until such director's successor shall
have been elected and qualified.
B. (1) Subject to paragraph (h) of Section 43 of the Bylaws, the
Bylaws may be altered or amended or new Bylaws adopted by the affirmative
vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock. The Board
of Directors shall also have the power to adopt, amend, or repeal Bylaws.
(2) The directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
(3) No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws and following the closing of the Initial Public
Offering no action shall be taken by the stockholders by written consent.
(4) Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in
the Bylaws of the Corporation.
(5) Special meetings of the stockholders of the Corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the President, (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of the shares entitled to cast
not less that ten percent (10%) of the votes at the meeting, and shall be
held at such place, on such date, and at such time as the Board of Directors
shall fix.
VI.
A. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. If the Delaware General Corporation
Law is amended after approval by the stockholders of this Article to
authorize corporate action further eliminating or limiting the personal
liability of directors, then
3.
<PAGE>
the liability of a director shall be eliminated or limited to the fullest
extent permitted by the Delaware General corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time
of the alleged occurrence of any act or omission to act giving rise to
liability or indemnification.
VII.
A. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, except as provided in
paragraph B. of this Article VII, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of
any particular class or series of the Voting Stock required by law, this
Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal Articles V, VI, and VII.
4.
<PAGE>
Exhibit 3.2
BYLAWS
OF
AVIRON
(A DELAWARE CORPORATION)
<PAGE>
BYLAWS
OF
AVIRON
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be in the City of Dover, County of
Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and
maintain an office or principal place of business at such place as may be
fixed by the Board of Directors, and may also have offices at such other
places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a
die bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State
of Delaware, as may be designated from time to time by the Board of
Directors, or, if not so designated, then at the office of the corporation
required to be maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation, for
the purpose of election of directors and for such other business as may
lawfully come before it, shall be held
1.
<PAGE>
on such date and at such time as may be designated from time to time by the
Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting.
To be properly brought before an annual meeting, business must be: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (C)
otherwise properly brought before the meeting by a stockholder. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the corporation. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the
corporation not later than the close of business on the sixtieth (60th) day
nor earlier than the close of business on the ninetieth (90th) day prior to
the first anniversary of the preceding year's annual meeting; PROVIDED,
HOWEVER, that in the event that no annual meeting was held in the previous
year or the date of the annual meeting has been changed by more than thirty
(30) days from the date contemplated at the time of the previous year's proxy
statement, notice by the stockholder to be timely must be so received not
earlier than the close of business on the ninetieth (90th) day prior to such
annual meeting and not later than the close of business on the later of the
sixtieth (60th) day prior to such annual meeting or, in the event public
announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and address, as they appear on the corporation's books, of the
stock-holder proposing such business, (iii) the class and number of shares of
the corporation which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect
to a stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act. Notwithstanding anything in
these Bylaws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this paragraph
(b). The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this paragraph
(b), and, if he should so determine, he shall so declare at the meeting that
any such business not properly brought before the meeting shall not be
transacted.
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of
the corporation may be made at a meeting of stockholders
2.
<PAGE>
by or at the direction of the Board of Directors or by any stockholder of the
corporation entitled to vote in the election of directors at the meeting who
complies with the notice procedures set forth in this paragraph (c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the
Secretary of the corporation in accordance with the provisions of paragraph
(b) of this Section 5. Such stockholder's notice shall set forth (i) as to
each person, if any, whom the stockholder proposes to nominate for election
or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment
of such person, (C) the class and number of shares of the corporation which
are beneficially owned by such person, (D) a description of all arrangements
or understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the 1934 Act (including without limitation
such person's written consent to being named in the proxy statement, if any,
as a nominee and to serving as a director if elected); and (ii) as to such
stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 5. At the request of the Board of
Directors, any person nominated by a stockholder for election as a director
shall furnish to the Secretary of the corporation that information required
to be set forth in the stockholder's notice of nomination which pertains to
the nominee. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in
this paragraph (c). The chairman of the meeting shall, if the facts warrant,
determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should
so determine, he shall so declare at the meeting, and the defective
nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board of Directors for adoption) or (iv) by the holders of shares entitled to
cast not less than ten percent (10%) of the votes at the meeting, and shall
be held at such place, on such date, and at such time as the Board of
Directors, shall fix.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by tele-
3.
<PAGE>
graphic or other facsimile transmission to the Chairman of the Board of
Directors, the Chief Executive Officer, or the Secretary of the corporation.
No business may be transacted at such special meeting otherwise than
specified in such notice. The Board of Directors shall determine the time
and place of such special meeting, which shall be held not less than
thirty-five (35) nor more than one hundred twenty (120) days after the date
of the receipt of the request. Upon determination of the time and place of
the meeting, the officer receiving the request shall cause notice to be given
to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws. If the notice is not given within sixty (60) days
after the receipt of the request, the person or persons requesting the
meeting may set the time and place of the meeting and give the notice.
Nothing contained in this paragraph (b) shall be construed as limiting,
fixing, or affecting the time when a meeting of stockholders called by action
of the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law
or the Certificate of Incorporation, written notice of each meeting of
stockholders shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder entitled to vote at
such meeting, such notice to specify the place, date and hour and purpose or
purposes of the meeting. Notice of the time, place and purpose of any
meeting of stockholders may be waived in writing, signed by the person
entitled to notice thereof, either before or after such meeting, and will be
waived by any stockholder by his attendance thereat in person or by proxy,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Any
stockholder so waiving notice of such meeting shall be bound by the
proceedings of any such meet-ing in all respects as if due notice thereof had
been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote
shall constitute a quorum for the transaction of business. In the absence of
a quorum, any meeting of stockholders may be adjourned, from time to time,
either by the chairman of the meeting or by vote of the holders of a majority
of the shares represented thereat, but no other business shall be transacted
at such meeting. The stockholders present at a duly called or convened
meeting, at which a quorum is present, may continue to transact business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, all action taken by the holders
of a majority of the vote cast, excluding abstentions, at any meeting at
which a quorum is present shall be valid and binding upon the corporation;
PROVIDED, HOWEVER, that directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Where a separate vote by
a class or classes or series is required, except where otherwise provided by
the statute or by the Certificate of Incorporation or these Bylaws, a
majority of the outstanding shares of such class or classes or series,
present in person or represented by proxy, shall constitute a quorum entitled
to take action with respect to that vote on that matter and, except where
otherwise provided by the statute or by the Certificate of Incorporation or
these Bylaws,
4.
<PAGE>
the affirmative vote of the majority (plurality, in the case of the elec-tion
of directors) of the votes cast, including abstentions, by the holders of
shares of such class or classes or series shall be the act of such class or
classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any
meeting of stockholders, whether annual or special, may be adjourned from
time to time either by the chairman of the meeting or by the vote of a
majority of the shares casting votes, excluding abstentions. When a meeting
is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the corporation
may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty (30) days or if after
the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the
stock records of the corporation on the record date, as provided in Section
12 of these Bylaws, shall be entitled to vote at any meeting of stockholders.
Every person entitled to vote or execute consents (if such consents are
allowed pursuant to these Bylaws) shall have the right to do so either in
person or by an agent or agents authorized by a proxy granted in accordance
with Delaware law. An agent so appointed need not be a stockholder. No
proxy shall be voted after three (3) years from its date of creation unless
the proxy provides for a longer period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities
having voting power stand of record in the names of two (2) or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in
common, tenants by the entirety, or otherwise, or if two (2) or more persons
have the same fiduciary relationship respecting the same shares, unless the
Secretary is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect: (a) if only one (1) votes, his act binds all; (b) if more
than one (1) votes, the act of the majority so voting binds all; (c) if more
than one (1) votes, but the vote is evenly split on any particular matter,
each faction may vote the securities in question proportionally, or may apply
to the Delaware Court of Chancery for relief as provided in the General
Corporation Law of Delaware, Section 217(b). If the instrument filed with
the Secretary shows that any such tenancy is held in unequal interests, a
majority or even-split for the purpose of subsec-tion (c) shall be a majority
or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within
5.
<PAGE>
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof and may be inspected by any
stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of Incorporation,
any action required by statute to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or
special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty (60)
days of the earliest dated consent delivered to the corporation in the manner
herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to
its registered office in the State of Delaware, its principal place of
business or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made
to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of the State of Delaware if such
action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
notice and written consent have been given as provided in Section 228 of the
General Corporation Law of Delaware.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common
Stock of the corporation (the "Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the Chief
Executive Officer, or, if the Chief Executive Officer is absent, a chairman
of the meeting chosen by a majority in interest of the stockholders entitled
to vote, present in person or by proxy, shall act as chairman. The
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Secretary, or, in his absence, an Assistant Secretary directed to do so by
the Chairman, shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules
and regulations of the Board of Directors, if any, the chairman of the
meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are necessary, appropriate or convenient for the proper
conduct of the meeting, including, without limitation, establishing an agenda
or order of business for the meeting, rules and procedures for maintaining
order at the meeting and the safety of those present, limitations on
participation in such meeting to stockholders of record of the corporation
and their duly authorized and constituted proxies and such other persons as
the chairman shall permit, restrictions on entry to the meeting after the
time fixed for the commencement thereof, limitations on the time allotted to
questions or comments by participants and regulation of the opening and
closing of the polls for balloting on matters which are to be voted on by
ballot. Unless and to the extent determined by the Board of Directors or the
chairman of the meeting, meetings of stockholders shall not be required to be
held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the
Certificate of Incorporation. Directors need not be stockholders unless so
required by the Certificate of Incorporation. If for any cause, the
directors shall not have been elected at an annual meeting, they may be
elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be
exercised, its business conducted and its property controlled by the Board of
Directors, except as may be otherwise provided by statute or by the
Certificate of Incorporation.
SECTION 17. CLASSES OF DIRECTORS. Subject to the rights of the
holders of any series of Preferred Stock to elect additional directors under
specified circumstances, following the closing of the Initial Public
Offering, the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the
Board of Directors. At the first annual meeting of stockholders following
the closing of the Initial Public Offering, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term
of three years. At the second annual meeting of stockholders following the
Closing of the Initial Public Offering, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full
term of three years. At the third annual meeting of stockholders following
the Closing of the Initial Public Offering, the term of office of the Class
III directors
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shall expire and Class III directors shall be elected for a full term of
three years. At each succeeding annual meeting of stockholders, directors
shall be elected for a full term of three years to succeed the directors of
the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 18. VACANCIES. Unless otherwise provided in the Certificate
of Incorporation, any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of directors,
shall unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by stockholders, be
filled only by the affirmative vote of a majority of the directors then in
office, even though less than a quorum of the Board of Directors. Any
director elected in accordance with the preceding sentence shall hold office
for the remainder of the full term of the director for which the vacancy was
created or occurred and until such director's successor shall have been
elected and qualified. A vacancy in the Board of Directors shall be deemed
to exist under this Bylaw in the case of the death, removal or resignation of
any director.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to
specify whether it will be effective at a particular time, upon receipt by
the Secretary or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the
Board of Directors. When one or more directors shall resign from the Board
of Directors, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each Director so chosen shall
hold office for the unexpired portion of the term of the Director whose place
shall be vacated and until his successor shall have been duly elected and
qualified.
SECTION 20. REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock, the Board of Directors or any individual director
may be removed from office at any time (i) with cause by the affirmative vote
of the holders of a majority of the voting power of all the then-outstanding
shares of voting stock of the corporation, entitled to vote at an election of
directors (the "Voting Stock") or (ii) without cause by the affirmative vote
of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the
voting power of all the then-outstanding shares of the Voting Stock.
SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders
and at the place where such meeting is held. No notice of an annual meeting
of the Board of Directors shall be necessary
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and such meeting shall be held for the purpose of electing officers and
transacting such other business as may lawfully come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the
State of Delaware which has been designated by resolution of the Board of
Directors or the written consent of all directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may
be held at any time and place within or without the State of Delaware
whenever called by the Chairman of the Board, the Chief Executive Officer or
any two of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all
special meetings of the Board of Directors shall be orally or in writing, by
telephone, facsimile, telegraph or telex, during normal business hours, at
least twenty-four (24) hours before the date and time of the meeting, or sent
in writing to each director by first class mail, charges prepaid, at least
three (3) days before the date of the meeting. Notice of any meeting may be
waived in writing at any time before or after the meeting and will be waived
by any director by attendance thereat, except when the director attends the
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called
or noticed, or wherever held, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum be present and if,
either before or after the meeting, each of the directors not present shall
sign a written waiver of notice. All such waivers shall be filed with the
corporate records or made a part of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number
of directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority
of the exact number of directors fixed from time to time by the Board of
Directors in
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accordance with the Certificate of Incorporation; PROVIDED, HOWEVER, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next
regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.
(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative
vote of a majority of the directors present, unless a different vote be
required by law, the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing,
and such writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to
such compensation for their services as may be approved by the Board of
Directors, including, if so approved, by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, for attendance at
each regular or special meeting of the Board of Directors and at any meeting
of a committee of the Board of Directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise and receiving
compensation therefor.
SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors.
The Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, including without limitation the
power or authority to declare a dividend, to authorize the issuance of stock
and to adopt a certificate of ownership and merger, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but
no such committee shall have the power or authority in reference to amending
the Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors fix the designations and
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other
class or classes or any other series of the same or any other class or
classes of stock of the corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to
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the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the bylaws of the corporation.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time
appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or
more members of the Board of Directors and shall have such powers and perform
such duties as may be prescribed by the resolution or resolutions creating
such committees, but in no event shall such committee have the powers denied
to the Executive Committee in these Bylaws.
(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Bylaw may at any time increase or decrease the
number of members of a committee or terminate the existence of a committee.
The membership of a committee member shall terminate on the date of his death
or voluntary resignation from the committee or from the Board of Directors.
The Board of Directors may at any time for any reason remove any individual
committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members
of the committee. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place
of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places
as are determined by the Board of Directors, or by any such committee, and
when notice thereof has been given to each member of such committee, no
further notice of such regular meetings need be given thereafter. Special
meetings of any such committee may be held at any place which has been
determined from time to time by such committee, and may be called by any
director who is a member of such committee, upon written notice to the
members of such committee of the time and place of such special meeting given
in the manner provided for the giving of written notice to members of the
Board of Directors of the time and place of special meetings of the Board of
Directors. Notice of any special meeting of any committee may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends such special
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. A majority of the authorized number of members
of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which
a quorum is present shall be the act of such committee.
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SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed
or is absent, the Chief Executive Officer, or if the Chief Executive Officer
is absent, the President, or, in the absence of any such officer, a chairman
of the meeting chosen by a majority of the directors present, shall preside
over the meeting. The Secretary, or in his absence, an Assistant Secretary
directed to do so by the Chief Executive Officer, shall act as secretary of
the meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation
shall include, if and when designated by the Board of Directors, the Chairman
of the Board of Directors, the Chief Executive Officer, the President, one or
more Vice Presidents, the Secretary, the Chief Financial Officer, the
Treasurer, the Controller, all of whom shall be elected at the annual
organizational meeting of the Board of Directors. The Board of Directors may
also appoint one or more Assistant Secretaries, Assistant Treasurers,
Assistant Controllers and such other officers and agents with such powers and
duties as it shall deem necessary. The Board of Directors may assign such
additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the
corporation at any one time unless specifically prohibited therefrom by law.
The salaries and other compensation of the officers of the corporation shall
be fixed by or in the manner designated by the Board of Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly
elected and qualified, unless sooner removed. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board
of Directors. If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of
Directors shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board
of Directors shall designate from time to time.
(c) DUTIES OF CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer shall preside at all meetings of the stockholders and at all meetings
of the Board of Directors, unless the Chairman of the Board of Directors has
been appointed and is present. The Chief Executive Officer shall, subject to
the control of the Board of Directors, have general supervision, direction
and control of the business and officers of the corporation. The Chief
Executive Officer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the
Board of Directors shall designate from time to time.
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(d) DUTIES OF PRESIDENT. The President may assume and perform the
duties of the Chief Executive Officer in the absence or disability of the
Chief Executive Officer or whenever the office of Chief Executive Officer is
vacant. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors or the Chief Executive Officer shall designate from
time to time.
(e) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer or the President shall designate from
time to time.
(f) DUTIES OF SECRETARY. The Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all acts
and proceedings thereof in the minute book of the corporation. The Secretary
shall give notice in conformity with these Bylaws of all meetings of the
stockholders and of all meetings of the Board of Directors and any committee
thereof requiring notice. The Secretary shall perform all other duties given
him in these Bylaws and other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board
of Directors shall designate from time to time. The Chief Executive Officer
may direct any Assistant Secretary to assume and perform the duties of the
Secretary in the absence or disability of the Secretary, and each Assistant
Secretary shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board
of Directors or the Chief Executive Officer shall designate from time to
time.
(g) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render statements of
the financial affairs of the corporation in such form and as often as
required by the Board of Directors or the Chief Executive Officer. The Chief
Financial Officer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief
Financial Officer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the
Board of Directors or the Chief Executive Officer shall designate from time
to time. The Chief Executive Officer may direct the Treasurer or any
Assistant Treasurer, or the Controller or any Assistant Controller to assume
and perform the duties of the Chief Financial Officer in the absence or
disability of the Chief Financial Officer, and each Treasurer and Assistant
Treasurer and each Controller and Assistant Controller shall perform other
duties commonly incident to his office and shall also perform such other
duties and have such other powers as the Board of Directors or the Chief
Executive Officer shall designate from time to time.
SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof.
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SECTION 30. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors or to the Chief Executive
Officer or to the Secretary. Any such resignation shall be effective when
received by the person or persons to whom such notice is given, unless a
later time is specified therein, in which event the resignation shall become
effective at such later time. Unless otherwise specified in such notice, the
acceptance of any such resignation shall not be necessary to make it
effective. Any resignation shall be without prejudice to the rights, if any,
of the corporation under any contract with the resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of
the directors in office at the time, or by the unanimous written consent of
the directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of
Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute on
behalf of the corporation any corporate instrument or document, or to sign on
behalf of the corporation the corporate name without limitation, or to enter
into contracts on behalf of the corporation, except where otherwise provided
by law or these Bylaws, and such execution or signature shall be binding upon
the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and
other evidences of indebtedness of the corporation, and other corporate
instruments or documents requiring the corporate seal, and certificates of
shares of stock owned by the corporation, shall be executed, signed or
endorsed by the Chairman of the Board of Directors, or the President or any
Vice President, and by the Secretary or Treasurer or any Assistant Secretary
or Assistant Treasurer. All other instruments and documents requiring the
corporate signature, but not requiring the corporate seal, may be executed as
aforesaid or in such other manner as may be directed by the Board of
Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall
be signed by such person or persons as the Board of Directors shall authorize
so to do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any
amount.
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SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation
for itself, or for other parties in any capacity, shall be voted, and all
proxies with respect thereto shall be executed, by the person authorized so
to do by resolution of the Board of Directors, or, in the absence of such
authorization, by the Chairman of the Board of Directors, the Chief Executive
Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent
with the Certificate of Incorporation and applicable law. Every holder of
stock in the corporation shall be entitled to have a certificate signed by or
in the name of the corporation by the Chairman of the Board of Directors, or
the President or any Vice President and by the Treasurer or Assistant
Treasurer or the Secretary or Assistant Secretary, certifying the number of
shares owned by him in the corporation. Any or all of the signatures on the
certificate may be facsimiles. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued with the same
effect as if he were such officer, transfer agent, or registrar at the date
of issue. Each certificate shall state upon the face or back thereof, in
full or in summary, all of the powers, designations, preferences, and rights,
and the limitations or restrictions of the shares authorized to be issued or
shall, except as otherwise required by law, set forth on the face or back a
statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights. Within a reasonable time after the
issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section
or otherwise required by law or with respect to this section a statement that
the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Except as otherwise expressly provided by law, the rights and
obligations of the holders of certificates representing stock of the same
class and series shall be identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates
shall be issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed. The corporation may
require, as a condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require or to give the corporation a surety bond in such
form and amount as
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it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost,
stolen, or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock
of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Delaware.
SECTION 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; PROVIDED, HOWEVER, that the Board of Directors may fix a new record
date for the adjourned meeting.
(b) Prior to the Initial Public Offering, in order that the corporation
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which date shall
not be more than 10 days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. Any stockholder of record
seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board
of Directors to fix a record date. The Board of Directors shall promptly,
but in all events within 10 days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has
been fixed by the Board of Directors within 10 days of the date on which such
a request is received, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is required by applicable law, shall be the
first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings
16.
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of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix, in advance, a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the Chief Executive Officer, the President or any Vice President,
or such other person as may be authorized by the Board of Directors, and the
corporate seal impressed thereon or a facsimile of such seal imprinted
thereon and attested by the signature of the Secretary or an Assistant
Secretary, or the Chief Financial Officer or Treasurer or an Assistant
Treasurer; PROVIDED, HOWEVER, that where any such bond, debenture or other
corporate security shall be authenticated by the manual signature, or where
permissible facsimile signature, of a trustee under an indenture pursuant to
which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such
bond, debenture or other corporate security may be the imprinted facsimile of
the signatures of such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security, authenticated by a trustee as
aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the
corporation or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person.
In case any officer who shall have signed or attested any bond, debenture or
other corporate security, or whose facsimile signature shall appear thereon
or on any such interest coupon, shall have ceased to be such officer before
the bond, debenture or other corporate
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security so signed or attested shall have been delivered, such bond,
debenture or other corporate security nevertheless may be adopted by the
corporation and issued and delivered as though the person who signed the same
or whose facsimile signature shall have been used thereon had not ceased to
be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital
stock of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to
law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there
may be set aside out of any funds of the corporation available for dividends
such sum or sums as the Board of Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the Board of
Directors shall think conducive to the interests of the corporation, and the
Board of Directors may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND OFFICERS. The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the Delaware
General Corporation Law; PROVIDED, HOWEVER, that the corporation may modify
the extent of such indemnification by individual contracts with its directors
and executive officers and, PROVIDED, FURTHER, that the corporation shall not
be required to indemnify any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding
was authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the corporation, in its sole discretion,
pursuant to the
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powers vested in the corporation under the Delaware General Corporation Law
or (iv) such indemnification is required to be made under subsection (d).
(b) EMPLOYEES AND OTHER AGENTS. The corporation shall have power
to indemnify its employees and other agents as set forth in the Delaware
General Corporation Law.
(c) EXPENSES. The corporation shall advance to any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer, of the corporation, or is or was serving at the request
of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all
expenses incurred by any director or officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such person to
repay said amounts if it should be determined ultimately that such person is
not entitled to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to
an officer of the corporation (except by reason of the fact that such officer
is or was a director of the corporation in which event this paragraph shall
not apply) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if
such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in
or not opposed to the best interests of the corporation.
(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
officers and officers under this Bylaw shall be deemed to be contractual
rights and be effective to the same extent and as if provided for in a
contract between the corporation and the director or officer. Any right to
indemnification or advances granted by this Bylaw to a director or officer
shall be enforceable by or on behalf of the person holding such right in any
court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim
is made within ninety (90) days of request therefor. The claimant in such
enforcement action, if successful in whole or in part, shall be entitled to
be paid also the expense of prosecuting his claim. In connection with any
claim for indemnification, the corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law
for the corporation to indemnify the claimant for the amount claimed. In
connection with any claim by an officer of the corporation (except in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such officer is or was a director
of the corporation) for advances, the corporation shall be entitled to raise
a defense as to any such
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action clear and convincing evidence that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the
best interests of the corporation, or with respect to any criminal action or
proceeding that such person acted without reasonable cause to believe that
his conduct was lawful. Neither the failure of the corporation (including
its Board of Directors, independent legal counsel or its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the corporation (including
its Board of Directors, independent legal counsel or its stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that claimant has not met the
applicable standard of conduct.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or
permitted to be indemnified pursuant to this Bylaw.
(h) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the
full extent not prohibited by any applicable portion of this Bylaw that shall
not have been invalidated, or by any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement,
20.
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arbitration and appeal of, and the giving of testimony in, any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and
shall include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other costs
and expenses of any nature or kind incurred in connection with any
proceeding.
(iii) The term the "corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of
this Bylaw with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(iv) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include,
without limitation, situations where such person is serving at the
request of the corporation as, respectively, a director, executive
officer, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(v) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Bylaw.
21.
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ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail,
postage prepaid, and addressed to his last known post office address as shown
by the stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by
facsimile, telex or telegram, except that such notice other than one which is
delivered personally shall be sent to such address as such director shall
have filed in writing with the Secretary, or, in the absence of such filing,
to the last known post office address of such director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the
name and address or the names and addresses of the stockholder or
stockholders, or director or directors, to whom any such notice or notices
was or were given, and the time and method of giving the same, shall in the
absence of fraud, be prima facie evidence of the facts therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing,
and all notices given by facsimile, telex or telegram shall be deemed to have
been given as of the sending time recorded at time of transmission.
(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any
other permissible method or methods may be employed in respect of any other
or others.
(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice
sent him in the manner above provided, shall not be affected or extended in
any manner by the failure of such stockholder or such director to receive
such notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person
shall not be required and there shall be no duty to apply to any
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governmental authority or agency for a license or permit to give such notice
to such person. Any action or meeting which shall be taken or held without
notice to any such person with whom communication is unlawful shall have the
same force and effect as if such notice had been duly given. In the event
that the action taken by the corporation is such as to require the filing of
a certificate under any provision of the Delaware General Corporation Law,
the certificate shall state, if such is the fact and if notice is required,
that notice was given to all persons entitled to receive notice except such
persons with whom communication is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice
is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such person
during the period between such two consecutive annual meetings, or (ii) all,
and at least two, payments (if sent by first class mail) of dividends or
interest on securities during a twelve-month period, have been mailed
addressed to such person at his address as shown on the records of the
corporation and have been returned undeliverable, the giving of such notice
to such person shall not be required. Any action or meeting which shall be
taken or held without notice to such person shall have the same force and
effect as if such notice had been duly given. If any such person shall
deliver to the corporation a written notice setting forth his then current
address, the requirement that notice be given to such person shall be
reinstated. In the event that the action taken by the corporation is such as
to require the filing of a certificate under any provision of the Delaware
General Corporation Law, the certificate need not state that notice was not
given to persons to whom notice was not required to be given pursuant to this
paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of
the Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of
the voting power of all of the then-outstanding shares of the Voting Stock.
The Board of Directors shall also have the power to adopt, amend, or repeal
Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsid-iaries, including any officer or
employee who is a Director of the corporation or its subsidiaries, whenever,
in the judgment of the Board of Directors, such loan, guarantee or assistance
may reasonably be expected to benefit the corporation. The loan, guarantee
or other assistance may be with or without interest and may be unsecured, or
secured in such manner as
23.
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the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in these Bylaws shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
ARTICLE XV
MISCELLANEOUS
SECTION 47. ANNUAL REPORT.
(a) Subject to the provisions of paragraph (b) of this Bylaw, the
Board of Directors shall cause an annual report to be sent to each
stockholder of the corporation not later than one hundred twenty (120) days
after the close of the corporation's fiscal year. Such report shall include
a balance sheet as of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal year, accompanied
by any report thereon of independent accounts or, if there is no such report,
the certificate of an authorized officer of the corporation that such
statements were prepared without audit from the books and records of the
corporation. When there are more than 100 stockholders of record of the
corporation's shares, as determined by Section 605 of the California
Corporations Code, additional information as required by Section 1501(b) of
the California Corporations Code shall also be contained in such report,
provided that if the corporation has a class of securities registered under
Section 12 of the 1934 Act, that Act shall take precedence. Such report
shall be sent to stockholders at least fifteen (15) days prior to the next
annual meeting of stockholders after the end of the fiscal year to which it
relates.
(b) If and so long as there are fewer than 100 holders of record
of the corporation's shares, the requirement of sending of an annual report
to the stockholders of the corporation is hereby expressly waived.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office. . . . . . . . . . . . . 1
Section 2. Other Offices. . . . . . . . . . . . . . . 1
ARTICLE II
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Corporate Seal . . . . . . . . . . . . . . 1
ARTICLE III
STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . 1
Section 4. Place of Meetings. . . . . . . . . . . . . 1
Section 5. Annual Meeting . . . . . . . . . . . . . . 1
Section 6. Special Meetings . . . . . . . . . . . . . 3
Section 7. Notice of Meetings . . . . . . . . . . . . 4
Section 8. Quorum . . . . . . . . . . . . . . . . . . 4
Section 9. Adjournment and Notice of Adjourned
Meetings . . . . . . . . . . . . . . . . . 5
Section 10. Voting Rights. . . . . . . . . . . . . . . 5
Section 11. Joint Owners of Stock. . . . . . . . . . . 5
Section 12. List of Stockholders . . . . . . . . . . . 5
Section 13. Action Without Meeting . . . . . . . . . . 6
Section 14. Organization . . . . . . . . . . . . . . . 6
ARTICLE IV
DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 15. Number and Term of Office. . . . . . . . . 7
Section 16. Powers . . . . . . . . . . . . . . . . . . 7
Section 17. Classes of Directors.. . . . . . . . . . . 7
Section 18. Vacancies. . . . . . . . . . . . . . . . . 8
Section 19. Resignation. . . . . . . . . . . . . . . . 8
Section 20. Removal. . . . . . . . . . . . . . . . . . 8
Section 21. Meetings . . . . . . . . . . . . . . . . . 8
(a) Annual Meetings. . . . . . . . . . . . . . 8
(b) Regular Meetings . . . . . . . . . . . . . 9
(c) Special Meetings . . . . . . . . . . . . . 9
(d) Telephone Meetings . . . . . . . . . . . . 9
(e) Notice of Meetings . . . . . . . . . . . . 9
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
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(f) Waiver of Notice . . . . . . . . . . . . . 9
Section 22. Quorum and Voting. . . . . . . . . . . . . 9
Section 23. Action Without Meeting . . . . . . . . . . 10
Section 24. Fees and Compensation. . . . . . . . . . . 10
Section 25. Committees . . . . . . . . . . . . . . . . 10
(a) Executive Committee. . . . . . . . . . . . 10
(b) Other Committees . . . . . . . . . . . . . 11
(c) Term . . . . . . . . . . . . . . . . . . . 11
(d) Meetings . . . . . . . . . . . . . . . . . 11
Section 26. Organization . . . . . . . . . . . . . . . 12
ARTICLE V
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 27. Officers Designated. . . . . . . . . . . . 12
Section 28. Tenure and Duties of Officers. . . . . . . 12
(a) General. . . . . . . . . . . . . . . . . . 12
(b) Duties of Chairman of the Board of
Directors. . . . . . . . . . . . . . . . . 12
(c) Duties of Chief Executive Officer. . . . . 12
(d) Duties of President. . . . . . . . . . . . 13
(e) Duties of Vice Presidents. . . . . . . . . 13
(f) Duties of Secretary . . . . . . . . . . . 13
(g) Duties of Chief Financial Officer. . . . . 13
Section 29. Delegation of Authority. . . . . . . . . . 14
Section 30. Resignations . . . . . . . . . . . . . . . 14
Section 31. Removal. . . . . . . . . . . . . . . . . . 14
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION . . . . . . . . . . . . 14
Section 32. Execution of Corporate Instruments . . . . 14
Section 33. Voting of Securities Owned by the
Corporation. . . . . . . . . . . . . . . . 15
ARTICLE VII
SHARES OF STOCK. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 34. Form and Execution of Certificates . . . . 15
Section 35. Lost Certificates. . . . . . . . . . . . . 15
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 36. Transfers. . . . . . . . . . . . . . . . . 17
Section 37. Fixing Record Dates. . . . . . . . . . . . 17
Section 38. Registered Stockholders. . . . . . . . . . 18
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION. . . . . . . . . . . . . . 18
Section 39. Execution of Other Securities. . . . . . . 18
ARTICLE IX
DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 40. Declaration of Dividends . . . . . . . . . 19
Section 41. Dividend Reserve . . . . . . . . . . . . . 19
ARTICLE X
FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 42. Fiscal Year. . . . . . . . . . . . . . . . 19
ARTICLE XI
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 43. Indemnification of Directors, Executive
Officers, Other Officers, Employees and
Other Agents . . . . . . . . . . . . . . . 19
(a) Directors and Officers . . . . . . . . . . 19
(b) Employees and Other Agents . . . . . . . . 20
(c) Expenses . . . . . . . . . . . . . . . . . 20
(d) Enforcement . . . . . . . . . . . . . . . 20
(e) Non-Exclusivity of Rights . . . . . . . . 21
(f) Survival of Rights . . . . . . . . . . . . 21
(g) Insurance. . . . . . . . . . . . . . . . . 21
(h) Amendments . . . . . . . . . . . . . . . . 21
(i) Saving Clause. . . . . . . . . . . . . . . 21
(j) Certain Definitions. . . . . . . . . . . . 21
ARTICLE XII
NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
iii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 44. Notices. . . . . . . . . . . . . . . . . . 22
(a) Notice to Stockholders . . . . . . . . . . 22
(b) Notice to directors. . . . . . . . . . . . 23
(c) Affidavit of Mailing . . . . . . . . . . . 23
(d) Time Notices Deemed Given. . . . . . . . . 23
(e) Methods of Notice. . . . . . . . . . . . . 23
(f) Failure to Receive Notice. . . . . . . . . 23
(g) Notice to Person with Whom Communication Is
Unlawful . . . . . . . . . . . . . . . . . 23
(h) Notice to Person with Undeliverable
Address. . . . . . . . . . . . . . . . . . 23
ARTICLE XIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 45. Amendments . . . . . . . . . . . . . . . . 24
ARTICLE XIV
LOANS TO OFFICERS. . . . . . . . . . . . . . . . . . . . . . . 24
Section 46. Loans to Officers. . . . . . . . . . . . . 24
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 47. Annual Report. . . . . . . . . . . . . . . 24
iv.
<PAGE>
EXHIBIT 11.1
STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER NINE MONTHS ENDED SEPTEMBER
30, 30,
---------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net loss............................................ $ (4,825,000) $ (2,835,000) $ (12,740,000) $ (9,634,000)
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Weighted average shares of Common Stock
outstanding........................................ 1,118,000 697,971 1,050,637 697,360
Shares related to staff accounting bulletin topic
4D:
Stock options and warrants........................ 270,351 270,351 270,351 270,351
Common Stock...................................... -- 403,352 56,245 403,653
Convertible Preferred Stock (Series C)............ 3,235,579 3,235,579 3,235,579 3,235,579
Shares used in computing net loss per share......... 4,623,930 4,607,253 4,612,812 4,606,943
Net loss per share.................................. $ (1.04) $ (0.62) $ (2.76) $ (2.09)
Calculation of shares outstanding for computing pro
forma net loss per share:
Shares used in computing net loss per share....... 4,623,930 4,607,253 4,612,812 4,606,943
Adjusted to reflect the effect of the assumed
conversion of Preferred Stock from the date of
issuance(1)..................................... 4,598,080 4,598,080 4,598,080 4,544,536
Shares used in computing pro forma net loss per
share.............................................. 9,222,010 9,205,333 9,210,892 9,151,479
Pro forma net loss per share........................ $ (0.52) $ (0.31) $ (1.38) $ (1.05)
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
</TABLE>
- ------------------------
(1) Series A and B shares
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND STATEMENTS OF CASH
FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
AND NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,818
<SECURITIES> 0
<RECEIVABLES> 500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,044
<PP&E> 3,446
<DEPRECIATION> (1,096)
<TOTAL-ASSETS> 9,486
<CURRENT-LIABILITIES> 2,913
<BONDS> 0
0
40,028
<COMMON> 2,355
<OTHER-SE> (36,764)
<TOTAL-LIABILITY-AND-EQUITY> 9,486
<SALES> 0
<TOTAL-REVENUES> 688
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138
<INCOME-PRETAX> (12,740)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,740)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,740)
<EPS-PRIMARY> (1.38)
<EPS-DILUTED> (1.38)
</TABLE>
