-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VzMHli3lspV4DjyLrSzOHSAy74OldAQoKvwXn+hrioSlgL0GzDibA971h6xY6sch AwfgsG7eSg0aqrjZN2X7+Q== 0000950005-95-000248.txt : 19951017 0000950005-95-000248.hdr.sgml : 19951017 ACCESSION NUMBER: 0000950005-95-000248 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951016 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELIAN HEALTH GROUP INC CENTRAL INDEX KEY: 0000856288 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 954070276 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18244 FILM NUMBER: 95580818 BUSINESS ADDRESS: STREET 1: 9600 BLUE LARKSPUR LANE STREET 2: STE 201 CITY: MONTEREY STATE: CA ZIP: 93940 BUSINESS PHONE: 4086469000 MAIL ADDRESS: STREET 2: 9600 BLUE LARKSPUR LANE CITY: MONTEREY STATE: CA ZIP: 93940 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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 AUGUST 31, 1995 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 2-18244 ------------------- HELIAN HEALTH GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 95-4070276 State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 9600 BLUE LARKSPUR LANE, SUITE 201 93940 MONTEREY, CALIFORNIA (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (408) 646-9000 (Former name, former address and former fiscal year, if changed since las report): NONE 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 proceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No. --- --- The number of shares outstanding of the registrant's Common Stock, $.01 Par Value, as of October 9, 1995 was 5,475,075 shares. ================================================================================ HELIAN HEALTH GROUP, INC. FORM 10-Q QUARTERLY REPORT TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1 - Financial Statements....................................... 1 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........................ 6 PART II - OTHER INFORMATION Item 1 - Legal Proceedings.......................................... 8 Item 2 - Changes in Securities...................................... 8 Item 3 - Defaults Upon Senior Securities............................ 8 Item 4 - Submission of Matters to a Vote of Security Holders........ 8 Item 5 - Other Information.......................................... 8 Item 6 - Exhibits and Reports on Form 8-K........................... 8 HELIAN HEALTH GROUP, INC. CONSOLIDATED BALANCE SHEETS August 31, 1995 NOVEMBER 30, 1994 --------------- ----------------- (Unaudited) ASSETS Current assets Cash and cash equivalents .................. $ 2,796,792 $ 4,118,459 Short-term investments ..................... 2,631,867 1,617,491 Accounts receivable, net of allowance for doubtful accounts of $1,077,781 in 1995 and $1,146,964 in 1994 ......................... 6,480,755 6,854,010 Current portion of notes receivable ........ 173,952 186,671 Inventories ................................ 578,104 508,969 Income taxes receivable .................... 541,930 1,071,930 Deferred income taxes ...................... 1,160,917 1,040,958 Prepaid expenses and other current assets .. 495,340 683,265 ----------- ----------- Total current assets .................. 14,859,657 16,081,753 Investment in affiliated companies ............. 394,763 401,012 Notes receivable ............................... 263,802 398,875 Property and equipment, net .................... 11,662,661 12,655,061 Intangible assets, net ......................... 1,492,061 1,140,472 Other assets, net .............................. 430,788 235,877 ----------- ----------- TOTAL ASSETS ................................... $29,103,732 $30,913,050 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable ........................... $ 681,306 $ 879,260 Accrued compensation and related expenses .. 1,968,941 1,654,247 Other accrued liabilities .................. 421,295 442,215 Payable to Palo Alto Medical Foundation .... 26,675 306,156 Current portion of long-term debt .......... 1,135,309 1,135,178 ----------- ----------- Total current liabilities ............. 4,233,526 4,417,056 Deferred income taxes .......................... 213,000 213,000 Payable to Palo Alto Medical Foundation ........ 150,000 150,000 Long-term debt ................................. 5,307,507 6,103,603 Minority Interest .............................. 1,600 57,439 ----------- ----------- TOTAL LIABILILTIES ............................. 9,905,633 10,941,098 ----------- ----------- STOCKHOLDERS' EQUITY Common stock, $.01 par value, 20,000,000 shares authorized, 5,474,905 shares issued and outstanding for 1995 (5,437,928 in 1994) ... 54,749 54,380 Additional paid-in capital ..................... 15,113,240 14,986,349 Retained earnings .............................. 4,121,030 5,022,143 Less: Treasury stock, at cost, 25,500 shares .. (90,920) (90,920) ----------- ----------- Total stockholders' equity ..................... 19,198,099 19,971,952 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ..... $29,103,732 $30,913,050 =========== =========== 1 HELIAN HEALTH GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended August 31, Nine Months Ended August 31, ---------------------------- ---------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- REVENUES: Patient revenues .............................. $ 8,410,691 $ 9,090,301 $23,148,231 $26,080,035 Management fees and lease income .............. 1,092,831 833,012 3,227,578 2,738,554 Other ......................................... 71,653 -- 203,750 -- ----------- ----------- ----------- ----------- Total revenues .................................. 9,575,175 9.923,313 26,579,559 28,818,589 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Salaries and wages ............................ 3,529,621 3,634,094 10,618,740 10,192,227 Employee benefits ............................. 645,280 582,728 2,115,760 1,730,391 Fees to individuals and organizations ......... 1,090,464 966,638 2,900,409 2,918,729 Supplies and other expenses ................... 703,640 896,250 2,017,173 2,689,732 Purchased services ............................ 630,486 542,501 1,878,572 1,489.996 Building and equipment rent ................... 466,082 398,880 1,453,060 1,221,451 Provision for doubtful accounts ............... 220,931 721,937 769,259 2,072,344 Other operating costs ......................... 917,392 820,186 2,936,896 2,531,662 Depreciation and amortization ................. 572,229 675,955 2,093,637 2,042,093 Employee severance costs ...................... -- -- 866,257 -- ----------- ----------- ----------- ----------- Total costs and expenses ....................... 8,776,125 9,239,169 27,649,763 26,888,625 ----------- ----------- ----------- ----------- OPERATING INCOME (LOSS) ......................... 799,050 684,144 (1,070,204) 1,929,964 Interest income ................................. 93,678 84,139 275,360 212,730 Interest expense ................................ (149,535) (97,035) (454,635) (547,149) ----------- ----------- ----------- ----------- Income (loss) before provision for (benefit from) income taxes and minority interest ........... 743,193 671,248 (1,249,479) 1,595,545 Minority Interest ............................... 15,481 (108,283) (61,149) (454,466) Provision for (benefit from) income taxes ....... 298,360 322,414 (287,217) 844,656 ----------- ----------- ----------- ----------- NET INCOME (LOSS) ............................... $ 429,352 $ 457,117 $ (901,113) $ 1,205,355 =========== =========== =========== =========== Net income (loss) per share ..................... $ 0.08 $ 0.08 $ (0.17) $ 0.22 =========== =========== =========== =========== Shares used in calculation of net income (loss) per share ............... 5,490,488 5,483,635 5,458,923 5,481,111 =========== =========== =========== ===========
2 HELIAN HEALTH GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED AUGUST 31, ------------------------------- 1995 1994 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ............................... $ (901,113) $1,205,355 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization ................ 2,093,521 2,042,093 Provision for doubtful accounts .............. 769,259 2,072,344 Deferred income taxes ........................ (389,959) -- Equity in loss of affiliate .................. 6,249 212,870 Minority interest in consolidated subsidiaries (61,149) (306,335) Changes in operating assets and liabilities, net of effects from acquisition of business: Accounts receivable ........................ (396,004) (2,560,833) Prepaid expenses and other assets .......... (72,635) (231,152) Accounts payable and accrued liabilities ... 101,130 124,801 Income taxes receivable or payable ......... 800,000 (99,858) ---------- ---------- Net cash provided by operating activities ..... 1,949,299 2,459,285 ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ............. (737,279) (389,894) Sales of property and equipment ................. 83,225 -- Purchases of short-term investments, net ........ (1,014,376) (1,216,354) Repayment on notes receivable ................... 147,792 1,278,131 Acquisition of business ......................... (800,000) -- Decrease in intangibles, net .................... 10,248 6,431 ---------- ---------- Net cash used in investing activities ...... (2,310,390) (321,686) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt ...................... (1,106,957) (2,593,541) Issuance of common stock ........................ 127,260 17,704 Proceeds from borrowings of long-term debt ...... 19,121 2,214,000 ---------- ---------- Net cash used in financing activities ...... (960,576) (361,837) ---------- ---------- Net increase (decrease) in cash and cash equivalents (1,321,667) 1,775,762 Cash and cash equivalents at beginning of period ... 4,118,459 1,074,653 ---------- ---------- Cash and cash equivalents at end of period ......... $2,796,792 $2,850,415 ========== ========== 3 HELIAN HEALTH GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (all of which were normal recurring accruals) necessary to present fairly Helian Health Group's consolidated financial position as of August 31, 1995 and November 30, 1994, and the results of operations for the three and nine month periods ended August 31, 1995 and August 31, 1994, which results are not necessarily indicative of results on an annual basis. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities Exchange Commission. These condensed financial statements should be read in conjunction with the financial statements and related notes contained in the Annual Report for the fiscal year ended November 30, 1994 on Form 10-K. 3. The consolidated financial statements include the accounts of Helian and its wholly-owned subsidiaries. The Company consolidates all partially-owned subsidiaries where it possesses the ability to exercise significant influence or control over operating and financial policies of the subsidiary. The equity method of accounting is generally used when the Company has a 20% to 50% interest in other entities. All material intercompany transactions and balances have been eliminated in consolidation. 4. The Company generates revenues principally from the following sources: Patient revenues are recorded when the service is provided to the patient and are recognized net of allowances and contractual adjustments related to third-party payors. Provisions for doubtful accounts are recorded as operating expenses. Management fees and lease income are recorded monthly under agreements with the Surgecenter of Palo Alto, which is managed by the Company. The management fees are based on a percentage of gross revenue and adjusted net income plus all direct costs of Surgecenter personnel. The Company leases furniture, fixtures and equipment and subleases the facility to the Surgecenter. 5. Property and equipment consisted of the following: AUGUST 31, 1995 NOVEMBER 30, 1994 --------------- ----------------- Land and land improvements ................. $ 1,712,156 $ 1,712,156 Building ................................... 4,128,113 3,953,727 Furniture, fixtures and equipment .......... 10,687,315 10,098,507 Leasehold improvements ..................... 2,555,708 2,626,536 ----------- ----------- 19,083,292 18,390,926 Less accumulated depreciation and amortization ............................... 7,420,631 5,735,865 ----------- ----------- Net property and equipment ................. $11,662,661 $12,655,061 =========== =========== 4 6. On August 30, 1995, the Company signed a definitive agreement to be acquired by TheraTx, Incorporated. In exchange for each share of Helian common stock, TheraTx has agreed to issue shares of its common stock at an exchange rate ranging between 0.4063 and 0.4809 shares, based upon the market value of TheraTx common stock prior to the closing of the transaction. In the event the average of the daily last sales price for TheraTx common stock during the ten consecutive trading days immediately prior to the fifth trading day prior to Helian's special meeting of stockholders to consider the proposed merger is less than $12.25, Helian has the right to terminate the agreement and, in that event, TheraTx is required to pay Helian $300,000. The transaction is intended as a tax-free reorganization, will be accounted for as a pooling of interests and is expected to be completed around the end of 1995. The transaction has been approved by the boards of directors of both companies, but remains subject to regulatory approvals, approval by the stockholders of Helian and other customary closing conditions. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company had revenues of $9,575,000 and net income of $429,000 for the quarter ended August 31, 1995, as compared to revenues and net income of $9,923,000 and $457,000, respectively, for the same period of 1994. For the nine months ended August 31, 1995, revenues were $26,580,000 with a net loss of $901,000, as compared to revenues of $28,819,000 and net income of $1,205,000 for the similar period of 1994. Revenues for the nine months were lower primarily as a result of a decrease in average revenue per patient visit, partially offset by an increase in patient visits in most of the Company's operations. During the third quarter of 1995, patient visits increased in most of these same operations as compared to the same period of 1994; however, lower revenue per patient visit more than offset this increase resulting in lower revenues. Average revenue per patient visit decreased for the three and nine months of 1995 as a result of increased patient discounts, which was primarily due to the Company's continued transition into a managed care provider system. Excluding the Surgecenter of Palo Alto, which derives its revenue and net income from a management contract, total patient visits and average revenue per visit were 85,400 and $98, respectively, for the third quarter of 1995 as compared to 79,800 and $114, respectively, for the 1994 quarter. For the nine months of 1995, total patient visits and average revenue per visit were 230,500 and $100, respectively; and 219,900 and $119, respectively, for the 1994 period. The Company expects that profit margins will likely be reduced as the Company, and the health care industry in general, transitions from fee-for-service reimbursement to discounted fee-for-service to a system of capitation or other risk-based reimbursement arrangement. Salaries and wages, as a percentage of revenues, remained constant at 37% for the three months ending August 31, 1995 as compared to 1994, and increased from 35% to 40% for the nine month period of 1995 as compared to the same period in 1994. The increase resulted primarily from hiring additional staff at certain facilities to service increased business, partially offset by converting full time positions to "as needed" per diem positions in other facilities. As a percentage of revenues, employee benefits increased from 5.9% to 6.7% for the third quarter of 1995 compared to the same quarter of 1994. For the nine months ended August 31, 1995, employee benefits increased from 6.0% to 8.0%% as compared to the same nine months of 1994. The increases principally resulted from higher health and life insurance costs in 1995 as compared to 1994. Fees to individuals and organizations increased, as a percentage of revenues, from 9.7% for the three months ended August 31, 1994 to 11.4% for the comparable period of 1995. For the nine months ended August 31, 1994 and August 31, 1995, the costs increased, as a percentage of revenues, from 10.1% to 10.9%, respectively. The increases are a function of increased patient visits due to the company using higher-priced consultants to service increased business. Supplies and other expenses decreased, as a percentage of revenues, from 9.0% to 7.4% for the three months ended August 31, 1994 and 1995, respectively, and decreased from 9.3% to 7.6% for the nine months ended August 31, 1994 and 1995, respectively. Cost containment efforts by the facilities, including enhanced inventory controls, resulted in lower purchases for 1995. The lower costs were partially offset by costs related to increased patient visits. Purchased services increased, as a percentage of revenues, from 5.5% to 6.6% for the quarters ended August 31, 1994 and 1995, respectively, and increased from 5.2% to 7.1% for the nine months of 1994 and 1995, respectively. Provision for doubtful accounts, as a percentage of revenues, decreased from 7.3% for the third quarter of 1994 to 2.3% for the comparable quarter of 1995, and decreased from 7.2% to 2.9% for the nine months ending August 31, 6 1994 and 1995, respectively. The deceases in the provisions resulted from increases in allowances for doubtful accounts at some of the Company's facilities during 1994. Employee severance costs represents a lump sum payment of $800,000 and associated costs related to the resignation of a former officer of the Company. The provision for income taxes, as a percentage of income before income taxes, remained constant at 41% for the third quarters of 1995 and 1994, and for the nine months ending August 31, 1994. The (benefit from) income taxes, as a percentage of (loss) before income taxes, was (24%) for the nine months ending August 31, 1995. The Company's benefit rate of 24% is less than the statutory rate due to the possibility not all net operating losses will provide future tax deductions. LIQUIDITY AND CAPITAL RESOURCES As of August 31, 1995, the Company had working capital of $10,626,000 and a working capital ratio of 3.51 to 1, compared to working capital of $11,665,000 and a working capital ratio of 3.64 to 1 at November 30, 1994. The Company's debt to equity ratio decreased from .36 to 1 to .34 to 1 for the periods ending November 30, 1994 and August 31, 1995, respectively. Cash and cash equivalents decreased by $1,322,000 from $4,118,000 at November 30, 1994 to $2,797,000 at August 31, 1995. The decrease resulted primarily from net investments of $1,014,000 in short-term securities during the period. Operating activities increased cash by $1,949,000, which was offset by $1,014,000 from investing activities (excluding short-term investments) and $961,000 from financing activities. Cash provided from operations in the amount of $1,949,000 included principally depreciation and amortization, income tax refund and provision for doubtful accounts, partially offset by the net loss, changes in operating assets and liabilities and deferred income taxes. Cash used in investing activities in the amount of $2,310,000 consisted primarily of net purchases of short-term investments, the acquisition of an occupational medicine medical center and purchases of property and equipment, offset by repayment on notes receivable and proceeds from sales of property and equipment. Cash used in financing activities in the amount of $961,000 included primarily payments of long-term debt. The Company acquired, on April 3, 1995, a medical center in Fresno, California which specializes in occupational medicine. The $800,000 purchase price was paid in cash at the acquisition date. On April 10, 1995, Thomas D. Wilson resigned as President, Chief Executive Officer, Chairman of the Board and as a director of the Company. In connection with the resignation, the Company recorded $866,000 of severance costs. The Company believes its cash reserves, including cash generated from operations, and the Company's borrowing capacity, are adequate to meet operating cash requirements for at least the next twelve months. 7 PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS None ITEM 2 - CHANGES IN SECURITIES None ITEM 3 - DEFAULTS UPON SENIOR SECURITIES None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5 - OTHER INFORMATION On August 30, 1995, the Company signed a definitive agreement to be acquired by TheraTx, Incorporated. In exchange for each share of Helian common stock, TheraTx has agreed to issue shares of its common stock at an exchange rate ranging between 0.4063 and 0.4809 shares, based upon the market value of TheraTx common stock prior to the closing of the transaction. In the event the average of the daily last sales price for TheraTx common stock during the ten consecutive trading days immediately prior to the fifth trading day prior to Helian's special meeting of stockholders to consider the proposed merger is less than $12.25, Helian has the right to terminate the agreement and, in that event, TheraTx is required to pay Helian $300,000. The transaction is intended as a tax-free reorganization, will be accounted for as a pooling of interests and is expected to be completed around the end of 1995. The transaction has been approved by the boards of directors of both companies, but remains subject to regulatory approvals, approval by the stockholders of Helian and other customary closing conditions. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1(11) Agreement and Plan of Merger with TheraTx, Incorporated and related Stock Options Agreement and Stockholders Agreement. 3.1(1) Restated Certificate of Incorporation of the Company. 3.2(5) Amendment to Certificate of Incorporation of the Company 3.3 By-laws of the Company. 8 10.1(1) Asset Purchase Agreement between AMI Ambulatory Centers, Inc. and Helian Health Group of Georgia, Inc., dated as of December 7, 1987. 10.2(1) 1989 Amended and Restated Stock Option Plan of Helian Health Group, Inc. 10.3(1) Asset Purchase Agreement among AMI Ambulatory Centers, Inc., Howell Industrial Clinic, Inc. Helian Health Group, Inc., and Helian Health Group of Atlanta, Inc. dated August 9, 1988. 10.4(1) Asset Purchase Agreement between Palo Alto Surgecenter Corporation and Palo Alto Medical Foundation for Health Care, Research and Education dated September 22, 1988. 10.5(1) Management Agreement between Palo Alto Surgecenter Corporation and Palo Alto Medical Foundation for Health Care, Research and Education dated September 22, 1988. 10.6(1) Equipment Lease between Palo Alto Surgecenter Corporation and Palo Alto Medical Foundation for Health Care, Research and Education dated September 22, 1988. 10.7(1) Sublease dated September 22, 1988, between Palo Alto Surgecenter Corporation, as sublessor, and Palo Alto Medical Foundation for Health Care, Research and Education, as sublessor, including Consent to Sublease, covering premises at 400 Forest Avenue, Palo Alto, California. 10.8(1) Repurchase Agreement between Palo Alto Surgecenter Corporation and Palo Alto Medical Foundation for Health Care, Research and Education dated September 22, 1988. 10.9(1) Letter Agreement dated October 1, 1987, between Helian Health Group of Miami, Inc. and Kenneth Mikel, Ph.D. regarding development of additional occupational medical facilities. 10.10(1) Recovery Inn(sm) of Los Gatos, a California Limited Partnership, Agreement dated November 18, 1987. 10.11(1) First Amendment to the Limited Partnership Agreement of Recovery Inn(sm) of Los Gatos dated January 15, 1988. 10.12(1) Assignment of General Partnership Interest - Recovery Inn(sm) of Los Gatos to Helian Recovery Corporation, dated January 29, 1988. 10.13(1) Common Stock Purchase Agreement dated November 16, 1987, between Harvey Knoernschild, M.D., Paul Schrupp, Recovery Inns(sm) of America, Inc. and Helian Recovery Corporation. 10.14(1) Assignment Agreement to Stock Purchase Agreement dated June 2, 1989 among Helian Health Group, Inc., Margo Mynderse-Isola and Donald C. Blanding. 10.15(1) Assignment Agreement to Stock Purchase Agreement dated July 14, 1989, among Helian Health Group, Inc., Lori Iaconis and (i) William Hines, (ii) Rose L. Parkes, (iii) Tony M. Schierbeck, and (iv) Kim Richmond. 10.16(1)* Key Managers Incentive Compensation Plan. 10.17(1)* Executive Directors Incentive Compensation Plan. 10.18(1) Stock Purchase Agreement between Helian Health Group, Inc. and Andrew Miller, dated February 1, 1987. 9 10.19(1)* Employment Agreement dated October 8, 1986, as amended, between Helian Health Group, Inc. and Thomas D. Wilson. 10.20(1)* Employment Agreement dated January 1, 1993, between Helian Health Group, Inc. and Andrew Miller. 10.21(1) Stock Option Agreement dated August 1, 1987, between Donald Blanding and Helian Health Group, Inc. 10.22(1) Amendment to Loan Agreement between Helian Health Group, Inc. and Society National Bank. 10.23(1) Term Loan Agreement between Helian Health Group, Inc. and Society National Bank dated October 8, 1986. 10.24(1) Term Loan Agreement between Helian Health Group, Inc. and Society National Bank dated January 19, 1988. 10.25(1) Term Loan Agreement between Helian Health Group, Inc. and Society National Bank dated August 11, 1988. 10.26(1) Security Agreement between Helian Health Group, Inc. and Society National Bank dated October 8, 1986. 10.27(1) Security Agreement between Helian Health Group, Inc. and Society National Bank dated January 19, 1988. 10.28(1) Security Agreement between Helian Health Group, Inc. and Society National Bank dated August 11, 1988. 10.29(1) Pledge Agreement between Helian Health Group, Inc. and Society National Bank dated October 8, 1986. 10.30(1) Amended Pledge Agreement between Helian Health Group, Inc. and Society National Bank dated January 19, 1988. 10.31(1) Amended Pledge Agreement between Helian Health Group, Inc. and Society National Bank dated August 19, 1988. 10.32(1) Waiver Letter dated September 22, 1988, from Society National Bank regarding conditions of Term Loan Agreements. 10.33(1) Lease dated December 20, 1988, between Helian Health Group, Inc., as tenant, and Roger Winslow, as landlord, covering premises at 1000 8th Street, Monterey, California. 10.34(1) Lease dated April 9, 1987, between Austin Occupational Health Center, Inc., as tenant, and Crow- Gottesman-Hill #27, as landlord, covering premises at 2112 Rutland Drive, Suite 180, Austin, Texas. 10.35(1) Lease dated August 15, 1985, including Assignment, between Austin Occupational Health Center, Inc., as tenant, and Dry Doc Building Corporation, as landlord, covering premises at 1213 North IH35, Austin, Texas. 10.36(1) Lease dated September 6, 1984, including Assignments and Assignment, between Helian Health Group of Atlanta, Inc., as tenant, and as successor-in-interest to AMI Ambulatory Centers, Inc. and Howell Industrial Clinic, Inc., and First Union Management, Inc., as landlord, covering premises at 730 Peachtree Building, Atlanta, Georgia. 10.37(1) Lease dated July 12, 1974, including Amendments and Assignments, between Helian Health Group, Inc., as tenant, and as successor-in-interest to Industrial Clinic Professional Corporation and AMI Ambulatory Centers, Inc., and Chestnut Associates, as landlord, covering premises at 3580 Atlanta Avenue, Hapeville, Georgia. 10 10.38(1) Lease dated December 24, 1985, including Assignment, between Helian Health Group of Georgia, Inc., as tenant, and as successor-in-interest to AMI Ambulatory Centers, Inc., and Homart Development Co., as landlord, covering premises at 3490 Piedmont Road, N.E., Atlanta, Georgia. 10.39(1) Lease dated February 26, 1987, between Helian Health Group of Georgia, Inc., as tenant, and Peterson Properties as landlord, covering premises at 6475 Jimmy Carter Blvd., Norcross, Georgia. 10.40(1) Lease dated September 10, 1987, between Tucson Occupational Health Center, as tenant, and The Atrium Associates, as landlord, covering premises at 5099 East Grant Road, Tucson, Arizona. 10.41(1) Lease dated May 2, 1980, including Assignment, between Tucson Occupational Health Center as tenant, and as successor-in-interest to Robert Levitin, M.D. and Marcia Levitin, d/b/a Occupational Medicine Clinic of Tucson, and Lot One, T.B.P., as landlord, covering premises at Lot 1, Tucson Business Yard, Tucson, Arizona. 10.42(1) Lease dated May 7, 1976, including Assignment, between Palo Alto Surgecenter Corporation, as tenant, and Gorman Whitney Development Co., as landlord, covering premises at 400 Forest Avenue, Palo Alto, California. 10.44(1) Deed dated November 18, 1987, for land purchased by Recovery Inn of Los Gatos located in Campbell, California. 10.45(1) Agreement Dated May 22, 1988, between Recovery Inns(sm) of America, Inc. and San Jose Medical Center. 10.46(1)* Employment Agreement dated January 1, 1993, between Helian Health Group, Inc. and Donald C. Blanding. 10.47(5) Amended and Restated 1989 Stock Option Plan of the Company 10.48(1)* Stock Option Agreement dated as of April 1, 1987, between the Company and William A. Hines. 10.49(1) Loan Agreement dated June 27, 1990, between the Company and First Interstate Bank of California. 10.50(1) Security Agreement dated June 27, 1990, between the Company and First Interstate Bank of California. 10.51(1) Installment Note dated June 14, 1990, payable to First Interstate Bank of California. 10.52(1) Revolving Credit Note dated June 14, 1990, payable to First Interstate Bank of California. 10.531 Purchase Agreement dated June 11, 1990, among Well America, a general Partnership, J. Michael Hitt, M.D. and Tucson Occupational Health Center, Inc., a wholly-owned subsidiary of the Company. 10.54(1) Real Estate Purchase Contract and Receipt for Deposit, dated June 1989, between the Company and the Menlo Park Willows, a California Limited Partnership. 10.55(1) Letter Agreement, dated May 29, 1990, between Recovery Inn(sm) of Los Gatos, a California Limited Partnership, and Sanwa Bank California, a California corporation, as Corporate Co-Trustee for Carpenters Pension Trust Fund for Northern California. 10.56(1) Letter Agreement, dated June 6, 1990, between Recovery Inn(sm) of Los Gatos, a California Limited Partnership, and Tokai Bank of California. 11 10.57* Amendment of Employment Agreement For Thomas D. Wilson, dated December 21, 1990, between the Company and Thomas D. Wilson. 10.58(2) Asset Purchase Agreement between Steven C. Schumann, M.D., Inc., Steven C. Schumann, M.D., Helian Health Group of Fresno, Inc., and Helian Health Group, Inc., dated April 1, 1991. 10.59(2) Management Service Agreement by and among Helian Health Group of Fresno, Inc., and Steven C. Schumann, M.D., Inc. 10.60(2) Covenant Not to Compete Agreement dated April 1, 1991, between Helian Health Group of Fresno, Inc., and Steven C. Schumann, M.D. 10.61(2) Consulting Agreement dated April 1, 1991, by and between Helian Health Group, Inc. and Steven C. Schumann, M.D. 10.62(3) Asset Purchase Agreement among Southern Back & Orthopaedic Center, P.C., William D. Cabot and Helian Health Group, Inc. dated June 17, 1991. 10.63(3) Employment Agreement between Rehabilitative Back Center of Atlanta, Inc. and William D. Cabot dated June 17, 1991. 10.64(3) Consulting Agreement between Rehabilitative Back Center of Atlanta, Inc. and William D. Cabot dated June 17, 1991. 10.65(3) Medical Supervisor Agreement between Rehabilitative Back Center of Atlanta, Inc. and William D. Cabot dated June 17, 1991. 10.66* Employment Agreement, dated April 1, 1992, between the Company and J. Spencer Davis. 10.67* Employment Agreement, dated August 1, 1992, between the Company and Michael K. McMillan. 10.68(4) Agreement to Provide Guaranty, dated April 16, 1992, as amended by the First Amendment, between the Company and Jacob Noghreian, Jeremy Cole, Jeffrey Aaronson, John Sherman and John Alexander. 10.69(4) Ground Lease, dated April 17, 1992, between the Company and Recovery Inn of Menlo Park, a California limited partnership. 10.70(4) Master Lease, dated October 25, 1991, between Diagnostic Imaging of Atlanta, L.P., and Norwest Financial Leasing, Inc. 10.71(4) Unconditional Guaranty Agreement, dated November 30, 1992, by the Company to Norwest Financial Leasing, Inc. 10.72(4) Guaranty, dated January 22, 1993, by the Company to MetLife Capital Corporation. 10.73(6) Management Agreement between Salinas Surgery Center and Helian ASC of Salinas, Inc., dated, July 15, 1993. 10.74(6) Partnership Agreement between Helian ASC of Salinas and Concentrated Care, Inc., dated, July 15, 1993 12 10.75(6) Term Loan Agreement between Palo Alto Surgecenter Corporation and MetLife Capital Corporation dated, August 5, 1993. 10.76(6) Term Loan Agreement between Recovery Inn(sm) of Los Gatos, Ltd. and MetLife Capital Corporation dated, August 5, 1993. 10.77(6) Lease dated, March 1, 1993 between Helian Health Group, Inc. and Lightner Place Associates covering premises at 955 Blanco Circle, Suite A, Salinas, California. 10.78(7) Term Loan Agreement between Helian Health Group, Inc., and MetLife Capital Corporation dated, September 14, 1993. 10.79(7) Term Loan Agreement between Salinas Surgery Center and MetLife Capital Corporation dated, November 24, 1993. 10.80(8)* Employment Agreement dated March 26, 1994 between Helian Health Group, Inc. and William A. Hines. 10.81* Employment Agreement dated February 1,1994 between Helian Health Group, Inc. and Leslie J. Arliskas. 10.82(9) Loan Agreement dated May 4 , 1994 between Helian Health Group, Inc. and Sumitomo Bank of California. 10.83(9) Management Agreement dated February 26, 1994 between Helian Health Group, Inc. and Marin General Hospital. 10.84(10) Asset Purchase Agreement by and among Industrial Medical Group, Theodore R. Johstone, M.D., Kathryn Johnstone, R.N., Primary Care Medical Group, Inc., Paul Cohen, M.D., Paul Cohen Family Trust and Helian Health Group of Fresno, Inc. dated March 31, 1995. 10.85* Thomas D. Wilson Resignation Term sheet dated April 9, 1995. - ------------------- * Employment Agreement or Compensatory Plan or Arrangement. 1 Incorporated by reference to Registrant's Registration Statement Number 33-31520 on Form S-1, filed October 11, 1989, Amendment Number 2 thereto filed November 21, 1989, and Post-Effective Amendments Number 1 and Number 2 thereto filed November 22, 1990 and January 16, 1991, respectively. 2 Incorporated by reference to corresponding exhibit number in the Company's Form 8-K filed on April 11, 1991. 3 Incorporated by reference to corresponding exhibit number in the Company's Form 8-K filed on June 24, 1991. 4 Incorporated by reference to corresponding exhibit number in the Company's Form 10-K filed on March 1, 1993. 5 Incorporated by reference to corresponding exhibit number in the Company's Form 10-Q filed on July 14, 1993. 13 6 Incorporated by reference to corresponding exhibit number in the Company's Form 10-Q filed on October 14, 1993. 7 Incorporated by reference to corresponding exhibit number in the Company's Form 10-K filed on February 26, 1994. 8 Incorporated by reference to corresponding exhibit number in the Company's Form 10-Q filed on April 13, 1994. 9 Incorporated by reference to corresponding exhibit number in the Company's Form 10-Q filed on July 14, 1994. 10 Incorporated by reference to corresponding exhibit number in the Company's Form 10-Q filed on July 14, 1995. 11 Incorporated by reference to corresponding exhibit number in the Company's Form 8-K filed on September 1, 1995. (b) Reports on Form 8-K A Form 8-K was filed on September 1, 1995, describing the August 29, 1995 Agreement and Plan of Merger with TheraTx, Incorporated and related Stock Option Agreement and Stockholders Agreement. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HELIAN HEALTH GROUP, INC. OCTOBER 13, 1995 /S/ HERBERT W. FOSTER ------------------------------------------------------ HERBERT W. FOSTER, ACTING CHIEF FINANCIAL OFFICER OCTOBER 13, 1995 /S/ DONALD C. BLANDING -------------------------------------------------------- DONALD C. BLANDING, TREASURER 15 EX-3.3 2 EX-3.3 EXHIBIT 3.3 CERTIFICATE OF SECRETARY I hereby certify: That I am the duly elected and acting Secretary of Helian Health Group, Inc., a Delaware corporation (the "Corporation); and That at a meeting of the Board of Directors duly held on April 25, 1995 the following resolutions were adopted: Amendment of By-laws. - --------------------- WHEREAS, it is in the best interest of the Corporation to amend its By-laws to provide for the office of Chief Executive Officer. RESOLVED, that Article V of the By-laws of the Corporation is hereby amended and restated in its entirety in the form attached hereto as Exhibit A. --------- RESOLVED FURTHER, that the Secretary of the Corporation be, and he hereby is, authorized to certify such amendment as having been adopted at this meeting and that the Secretary be, and he hereby is, directed to execute and insert a Certificate of Secretary in the minute book immediately following the By-laws of the Corporation. IN WITNESS WHEREOF, I have hereunder subscribed my name this 1st day of October, 1995. /s/ Michael K. McMillan ------------------------------------ Michael K. McMillan Secretary 1 EXHIBIT A --------- ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a chief executive officer, a president, a vice-president, a secretary and a treasurer. The board of directors may also choose a chairman of the board, additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a chief executive officer, a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shalldeem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. CHAIRMAN OF THE BOARD Section 6. The chairman of the board, if there shall be such an officer, shall, if present, preside at all meetings of the board of directors, and shall exercise and perform such other powers and duties as may be from time to time assigned to him by the board of directors. CHIEF EXECUTIVE OFFICER Section 7. The chief executive officer shall be the general manager of the corporation and shall, subject to the control of the board of directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence of the chairman of the board, or if there be none, at all meetings of the board of directors. He shall be ex-officio a member of all the standing committees, including the executive committee, if any. He shall have such other powers and duties as may be prescribed by the board of directors. THE PRESIDENT Section 8. Subject to the supervision of the chief executive officer, the president shall have general and active management of the business of the corporation. In the absence or disability of the chief executive officer, if such office is held by another person, the president shall perform all duties of the chief executive officer, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. He shall have such other powers and duties as may be prescribed by the board of directors. Section 9. Both the chief executive officer and the president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law 2 to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 10. In the absence of the chief executive officer and, if such office is held by another person, president or in the event of such officers' inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the chief executive officer and the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the chief executive officer and the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 11. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or chief executive officer, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 12. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 13. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 14. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 15. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. 3 Section 16. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (of if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 4 HELIAN HEALTH GROUP, INC. BY-LAWS ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation 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 MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Los Angeles, State of California, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1987, shall be held on the fifteenth day of May if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called 5 by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty 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 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent 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. 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. 6 ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than three nor more than thirteen. The first board shall consist of three directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors 7 the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, 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, 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 as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their 8 expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 9 THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 10 Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. 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 Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require 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 and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 2. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 3. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, no more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of 11 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. REGISTERED STOCKHOLDERS Section 4. 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 to hold liable for calls and assessments a person registered on its books as the owner of shares, an 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 VII GENERAL PROVISIONS DIVIDENDS Section 1. 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 at any regular or special meeting, pursuant to law. 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 2. 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 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 directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 12 INDEMNIFICATION Section 7. The duly elected directors of the Corporation shall not be held personally liable to the Corporation or its Stockholders for monetary damages for breach of a fiduciary duty as a director, but such liability may be imposed (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 Title 8 of the Delaware Code; or (iv) for any transaction from which the director derived an improper personal benefit. Section 8. (A) The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in and not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of ---- ---------- itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (B) The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court of equity or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court of equity or such other court shall deem proper. (C) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (A) and (B) of this Section Eight or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (D) Any indemnification under subsections (A) and (B) of this Section Eight (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (A) and (B). Such determination shall be made (l) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of the disinterested directors so directs, by independent legal counsel in a written opinion or (3) by the stockholders. 13 (E) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Section Eight. (F) The indemnification and advancement of expenses provided by or granted pursuant to this Section Eight shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, 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 such office. (G) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section Eight shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. (H) The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Section Eight. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 14 -----END PRIVACY-ENHANCED MESSAGE-----