-----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, RUrLI1e6Gvn3kZFJPx+atoJ+qm4CCI4dEoHsE746MNxe6V53dVtXppCciXD+YMJF pOOcMTF0EREwLqra7yEmCw== 0000950135-96-005124.txt : 19961202 0000950135-96-005124.hdr.sgml : 19961202 ACCESSION NUMBER: 0000950135-96-005124 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961126 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSKARYOTIC THERAPIES INC CENTRAL INDEX KEY: 0000885259 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 043027191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21481 FILM NUMBER: 96672790 BUSINESS ADDRESS: STREET 1: 195 ALBANY STREET CITY: CAMBRIDGE STATE: MA ZIP: 02138 BUSINESS PHONE: 6173490200 10-Q 1 TRANSKARYOTIC THERAPIES, INC. 1 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 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 0-21481 TRANSKARYOTIC THERAPIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-3027191 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 195 ALBANY STREET, CAMBRIDGE, MASSACHUSETTS 02139 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 349-0200 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 XXX Class Outstanding at November 26, 1996 Common Shares, $0.01 Par Value 16,616,415 2 Transkaryotic Therapies, Inc. Quarterly Report on Form 10-Q For the Period Ended September 30, 1996 INDEX PART 1. FINANCIAL INFORMATION ITEM 1. CONDENSED FINANCIAL STATEMENTS Condensed balance sheets as of September 30, 1996 and December 31, 1995 Condensed statements of operations for the three and nine months ended September 30, 1996 and 1995 and for the period July 7, 1988 (date of inception) throuth September 30, 1996 Condensed statements of cash flows for the nine months ended September 30, 1996 and 1995 and for the period July 7, 1988 (date of inception) through September 30, 1996 Notes to condensed financial statements ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 4. Submissions of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K 3 PART 1. FINANCIAL INFORMATION TRANSKARYOTIC THERAPIES, INC. (A Company in the Development Stage) CONDENSED BALANCE SHEETS (000's omitted, except share data)
September 30, December 31, 1996 1995 -------------------------- (Unaudited) Note ASSETS Current Assets: Cash and cash equivalents $ 11,401 $ 11,539 Marketable securities 39,159 22,945 Prepaid expenses and other current assets 360 97 -------- -------- Total current assets 50,920 34,581 Property and equipment, net 3,519 3,999 Other assets 1,176 637 -------- -------- $ 55,615 $ 39,217 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilites: Accounts payable $ 709 $ 515 Accrued expenses 936 542 -------- -------- Total current liabilities 1,645 1,057 Long-term portion of deferred rent 112 179 Redeemable Preferred Stock: Class A redeemable preferred stock, $1.00 par value; 3,000 shares authorized, issued and outstanding 4,598 4,440 Stockholders' Equity: Class A preferred stock, $1.00 par value; 3,000 shares authorized, issued and outstanding 3 3 Class B convertible preferred stock, $1.00 par value; 60,000 shares authorized; 49,339 shares issued and outstanding 49 49 Class C convertible preferred stock, $1.00 par value; 1,875,000 shares authorized; 1,015,974 shares issued and outstanding 1,016 1,016 Class D convertible preferred stock, $1.00 par value; 280,367 shares authorized, issued and outstanding 280 280 Class E convertible preferred stock, $1.00 par value; 523,560 shares authorized, issued and outstanding 524 524 Class F convertible preferred stock, $1.00 par value; 1,071,429 shares authorized, issued and outstanding 1,071 1,071 Class G convertible preferred stock, $1.00 par value; 1,136,364, shares authorized; 1,133,589 shares issued and outstanding in 1996; none authorized, issued or outstanding in 1995 1,134 -- Common stock, $.01 par value; 30,000,000 shares authorized: 5,197,627 and 5,197,662 shares issued and outstanding in 1996 and 1995, respectively 52 52 Additional paid-in capital 85,440 58,331 Accretion of redeemable preferred stock dividends (1,598) (1,440) Deficit accumulated during the development stage (33,548) (25,144) Deferred compensation (5,163) (1,244) Unrealized gain (loss) on available-for-sale securities -- 43 -------- -------- Total stockholders' equity 49,260 33,541 -------- -------- $ 55,615 $ 39,217 ======== ======== Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to condensed financial statements. The accompanying notes are an integral part of these financial statements.
4 TRANSKARYOTIC THERAPIES, INC. (A Company in the Development Stage) CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (000's omitted, except share data)
For the Period For the Three Months Ended For the Nine Months Ended July 7, 1988 September 30, September 30, (Date of ------------- ------------- Inception) Through 1996 1995 1996 1995 September 30, 1996 -------------------------- ------------------------- ------------------ License and contract fee revenues from Hoechst Marion Roussel, Inc. (HMRI) $ 1,975 $ 1,700 $ 3,950 $13,400 $ 29,350 Costs and expenses: Research and development 3,503 2,744 10,342 7,950 47,069 General and administrative 1,535 898 3,446 2,635 19,329 ------- ------- ------- ------- -------- Total costs and expenses 5,038 3,642 13,788 10,585 66,398 ------- ------- ------- ------- -------- Income (loss) from operations (3,063) (1,942) (9,838) 2,815 (37,048) Other income (expense): Interest income 646 304 1,434 750 3,893 Interest expense -- -- -- (13) (308) ------- ------- ------- ------- -------- Other income, net 646 304 1,434 737 3,585 ------- ------- ------- ------- -------- Income (loss) before provision for income taxes (2,417) (1,638) (8,404) 3,552 (33,463) Provision for income taxes -- -- -- 85 85 ------- ------- ------- ------- -------- Net income (loss) $(2,417) $(1,638) $(8,404) $ 3,467 $(33,548) ======= ======= ======= ======= ======== Pro forma net income (loss) per share $ (0.17) $ (0.11) $ (0.59) $ 0.24 Shares used in computing pro forma net income (loss) per share 14,255 14,256 14,255 14,636
See accompanying notes to condensed financial statements. The accompanying notes are an integral part of these financial statements. 5 TRANSKARYOTIC THERAPIES, INC. (A Company in the Development Stage) CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (000's omitted)
For the Period For the Nine Months Ended July 7, 1988 September 30, (Date of ------------- Inception) Through 1996 1995 September 30, 1996 -------- -------- ------------------- OPERATING ACTIVITIES Net income (loss) $ (8,404) $ 3,467 $ (33,548) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 1,183 1,094 5,627 Compensation expense related to equity issuances 803 358 1,829 Forgiveness of loan and interest receivable from terminated employee 334 Accrued interest on convertible debt 217 Changes in operating assets and liabilities: (Increase) decrease in prepaid expenses and other current assets (263) 79 (419) Increase (decrease) in accounts payable 194 (109) 709 Increase (decrease) in accrued expenses 327 (80) 1,048 -------- -------- --------- Net cash provided by (used in) operating activities (6,160) 4,809 (24,203) OPERATING ACTIVITIES Sales of marketable securities 42,745 33,471 91,418 Purchases of marketable securities (59,002) (48,322) (130,577) Property and equipment additions (676) (271) (9,050) (Increase) decrease in employee loans 31 (20) (410) License additions (534) 158 (924) (Increase) in other assets (64) (32) (213) -------- -------- --------- Net cash used in investing activities (17,500) (15,016) (49,756) FINANCING ACTIVITIES Sale of Class A redeemable preferred stock (September 1988 and May 1989) 3,000 Sale of Class A preferred stock (February 1990) 3,000 Sale of Class B convertible preferred stock 14,007 Sale of Class C convertible preferred stock 8,075 Sale of Class D convertible preferred stock to HMRI 4,735 Sale of Class E convertible preferred stock to HMRI 9,868 9,868 Sale of Class F convertible preferred stock 14,251 Sale of Class G convertible preferred stock 23,522 23,522 Issuance of convertible debt 5,000 Bank debt proceeds 1,497 Bank debt repayments (1,098) (1,497) Sale of common stock, net -- -- (98) -------- -------- --------- Net cash provided by financing activities 23,522 8,770 85,360 -------- -------- --------- Net increase (decrease) in cash and cash equivalents (138) (1,437) 11,401 Cash and cash equivalents at beginning of period 11,539 2,607 0 -------- -------- --------- Cash and cash equivalents at end of period $ 11,401 $ 1,170 $ 11,401 ======== ======== ========= SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES: Conversion of convertible debt and accrued interest for Class B convertible preferred stock $ 5,218
See accompanying notes to condensed financial statements. The accompanying notes are an integral part of these financial statements. 6 TRANSKARYOTIC THERAPIES, INC. (A Company in the Development Stage) September 30, 1996 Notes to Condensed Financial Statements (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial condition, results of operations and cash flows for the periods presented. The results of operations for the interim period ended September 30, 1996 are not necessarily indicative of the results to be expected for the year ended December 31, 1996. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1995 included in the Company's Registration Statement on Form S-1 as filed with the Securities and Exchange Commission. 2. PUBLIC OFFERING On October 22, 1996, the Company completed an initial public offering of its common stock by selling 2,500,000 shares of its common stock, resulting in net proceeds to the Company of approximately $34,085,000, after deducting estimated expenses of the offering. On the same date, the Company sold 333,333 unregistered shares of its Common Stock to Hoechst Marion Roussel, Inc. (HMRI) for total proceeds of $4,999,995. Concurrent with the completion of the initial public offering, all shares of Class A, B, C, D, E, F and G preferred stock were converted into 8,585,455 shares of Common Stock pursuant to the automatic conversion terms of the Company's Certificate of Incorporation. In connection with these conversions, all such shares of convertible preferred stock were canceled effective October 22, 1996. On July 22, 1996, the Board of Directors, and on September 25, 1996, the stockholders, authorized, subject to completion of the initial public offering, (i) an increase in the authorized shares of Common Stock to 30,000,000 shares and (ii) 10,000,000 shares of undesignated preferred stock, par value of $.01 per share. 7 3. PRO FORMA FINANCIAL INFORMATION The following pro forma stockholders' equity summary as of September 30, 1996 gives effect to the conversion of the convertible preferred stock and issuance of the Common Stock in the Company's initial public offering, and to HMRI, completed on October 22, 1996:
Pro Forma as of September 30, 1996 ------------------ (000's omitted) Stockholders' equity: Undesignated preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding $ 0 Common stock, $.01 par value, 30,000,000 shares authorized; 16,616,415 shares issued and outstanding 166 Additional paid-in capital 131,488 Deficit accumulated in the development stage (33,548) Deferred compensation (5,163) -------- Total stockholders' equity $ 92,943 ========
Pro forma net income (loss) per share is computed using the weighted average number of common shares, including the Common Stock equivalents for convertible preferred shares, assuming conversion at date of issuance, which occurred upon the completion of the Company's initial public offering plus dilutive equivalent shares from stock options and outstanding warrants using the treasury stock method. Pursuant to the requirements of the Securities and Exchange Commission, shares and equivalent shares issued by the Company during the twelve-month period prior to the public offering have been included in the calculations as if they were outstanding for all periods presented whether or not they are anti-dilutive (using the treasury stock method). Historical earnings per share have not been presented since such amounts are not deemed meaningful due to the significant change in the Company's capital structure as a result of the initial public offering. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Transkaryotic Therapies, Inc. is engaged in the development and commercialization of products based on the Company's proprietary Gene Activation and gene therapy technologies. For its initial Gene Activation products, the Company is focusing on currently-marketed proteins that are medically useful, have been approved by health authorities and have achieved significant revenues in major markets. For its gene therapy program, the Company is focusing on the development and commercialization of cell-based products for the long-term treatment of a broad range of chronic human diseases. The Company commenced operations in 1988 and is at an early stage of development. To date, all revenues received by the Company have resulted from research and development agreements, license fees, and interest on invested funds; the Company has not received any revenues from the sale of products and does not expect to receive any such revenues for at least several years. The Company has incurred losses in each year of operation since inception, except 1995, and has accumulated losses since inception through September 30, 1996 of approximately $33,548,000. These losses resulted principally from expenditures under its research and development programs, and the Company expects to incur significant operating losses over the next several years primarily due to expanded research and development efforts, preclinical testing and clinical trials of its product candidates, the acquisition of additional technologies, the establishment of manufacturing capability, and the performance of commercialization activities. In order to commercialize products, the Company will need to develop genetically engineered cells, scale-up manufacturing, complete preclinical and clinical testing and obtain regulatory approval. The Company's success may depend in large part on its ability to obtain patent protection for its processes and potential products in the U.S. and other countries and, if necessary, to defend successfully patent infringement claims that may be brought by competitors against the Company, and to obtain on commercially acceptable terms licenses to use the patents of others in its potential products and processes. The Company's failure to obtain such protection, successfully defend any such claims, and obtain the right to use such licenses could have a material adverse effect on the Company's business. Furthermore, the Company's success will also depend on its ability to obtain FDA approval to market its products. Compliance with applicable government regulations governing each of the Company's potential products will require a significant commitment of time, money, and effort by the Company, and there can be no assurances that any approval will be granted on a timely basis, if at all. 9 Results of operations may vary significantly from quarter to quarter depending on, among other factors, the progress of the Company's research and development efforts, the receipt, if any, of additional license fees and milestone payments, the timing of certain expenses, and the establishment of collaborative research agreements. RESULTS OF OPERATIONS For the Three Months and Nine Months Ended September 30, 1996 and 1995 --------------------------------------------------------------------- Strategic alliance revenues from licenses and contract fees earned from continuing collaborations with Hoechst Marion Roussel, Inc. ("HMRI") totaled $1,975,000 in the third quarter of 1996, an increase of 16%, compared to $1,700,000 for the same period in 1995. For the nine months ended September 30, 1996, strategic alliance revenues from HMRI totaled $3,950,000, a decrease of 70%, compared to $13,400,000 in the same period of 1995. The decrease in 1996 is due to a one-time license fee of $10 million received in the nine months ended September 30, 1995. The Company's total costs and expenses for the third quarter of 1996 increased by 38% to $5,038,000 from $3,642,000 in the comparable period for 1995. Research and development expenses increased 28% to $3,503,000 from $2,744,000, principally due to the growth in the Company's Gene Activation and gene therapy programs, including an increase in the number of employees engaged in research and development activities and an increase in purchased laboratory supplies. Other general and administrative expenses increased 70% in the third quarter of 1996 to $1,535,000 from $898,000 in the comparable 1995 period, principally due to increased legal expenses for patent filings, an increase in accrued employee compensation and a one-time consulting fee of $200,000. For the nine months ended September 30, 1996, total costs and expenses increased by 30% to $13,788,000 from $10,585,000 in the nine months ended September 30, 1995, primarily due to the increase in activities in the Company's Gene Activation and gene therapy programs. Contributing significantly to the increase in expenses were an increase in the number of employees engaged in research and development activities, increased purchases of laboratory supplies, increased equipment depreciation, and an increase in the expense recognized from amortization of deferred compensation from issuances of stock and stock option awards. Interest income increased by 112% to $646,000 in the third quarter ended September 30, 1996 compared to $304,000 in the comparable period in 1995 due to higher cash and marketable securities following the completion of two preferred stock offerings in October and December 1995 and July and August 1996. For the nine months ended September 30, 1996, interest income of $1,434,000 was nearly double the $750,000 interest income for the comparable period of 1995, due to the higher cash and investment balances throughout 1996. Interest expense was zero in 1996 compared to a $13,000 expense incurred in the nine months ended September 30, 1995 prior to the repayment of a bank loan and an equipment lease line of credit. 10 For the third quarter ended September 30, 1996, the Company's net loss totaled $2,417,000, or $0.17 per share, compared to the net loss of $1,638,000, or $0.11 per share, in the comparable period of 1995, primarily due to the increases in expenses. For the nine months ended September 30, 1996, the Company incurred a net loss of $8,404,000, a loss of $0.59 per share, compared to net income in the nine months ended September 30, 1996 of $3,467,000, or $0.24 per share, primarily due to the receipt of one-time up-front license fee revenues in 1995. LIQUIDITY AND SOURCES OF CAPITAL At September 30, 1996, the Company had cash, cash equivalents and marketable securities totaling $50,560,000 compared to $33,484,000 at December 31, 1995. In July and August 1996, the Company sold shares of its Class G Convertible Preferred Stock in a private placement resulting in proceeds of $23,522,000 net of offering costs and expenses. The Company had no material commitments for the acquisition of property and equipment at September 30, 1996. The Company expects to incur substantial additional research and development expenses including continued increases in personnel and costs related to research, preclinical testing and clinical trials, and for capital asset expenditures. On October 22, 1996, the Company completed its initial public offering resulting in proceeds of approximately $34,085,000, after deducting estimated expenses of the offering. In addition, the Company sold 333,333 shares of unregistered Common Stock to Hoechst Marion Roussel, Inc. for an additional proceeds of $4,999,995. At October 31, 1996 the Company held approximately $88,931,000 in cash, cash equivalents and marketable securities. The Company anticipates that the available cash will be adequate to satisfy its operating expenses and capital expenditure requirements, as presently planned, through 1999. The Company intends to seek additional funding as required through collaborative arrangements or through public or private financings, but there can be no assurance that additional financing will be available on acceptable terms, if at all. FORWARD LOOKING STATEMENTS Statements that are not historical facts, including statements about TKT's confidence and strategies and the Company's expectations about future products, technologies and opportunities, market demand or acceptance of future products are forward looking statements that involve risks and uncertainties. These uncertainties include commercialization or technology delays or difficulties; timing 11 and satisfactory completion of clinical trials; patent and proprietary rights risks; changes in governmental regulations; lengthy approval processes; impact of competitive products and prices; development of manufacturing, distribution and marketing capabilities; dependence on collaborative partners; product demand and market acceptance risks; legal, economic and other risks detailed in the Prospectus, dated October 16, 1996, contained in TKT's Registration Statement on Form S-1 (file number 333-10845). 12 Part II. Other Information. Item 1. Legal Proceedings. The Company is currently involved, with respect to the Company's gene therapy technology, in one interference proceeding requested by the Company and declared by the U.S. Patent and Trademark Office (the "PTO"), as more fully described in the Prospectus, dated October 16, 1996, contained in TKT's Registration Statement on Form S-1 (file number 333-10845). The Company is not a party to any other legal proceedings. Item 2. Changes in Securities. (a) Not applicable. (b) Not applicable. (c) Since July 1, 1996, the Registrant issued and sold the following unregistered securities: On July 10, 1996 and August 7, 1996, the Company sold an aggregate of 1,133,589 shares of Class G Convertible Preferred Stock to certain investors at a purchase price of $22.00 per share for aggregate consideration of $24,938,958. All of such shares of Class G Preferred Stock automatically converted into 1,457,559 shares of Common Stock at the closing of the Company's initial public offering on October 22, 1996. On October 22, 1996, the Company sold 333,333 unregistered shares of Common Stock to Hoechst Marion Roussel, Inc. at a purchase price of $15.00 per share for aggregate consideration of $4,999,995. No underwriter was engaged in connection with the foregoing sales of securities. Sales of the shares of Preferred Stock and shares of Common Stock were made in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the "Act"), as transactions not involving any public offering. The Company has reason to believe that all of the foregoing purchasers were familiar with or had access to information concerning the operations and financial condition of the Company, and all of those individuals acquired the shares for investment and not with a view to the distribution thereof. At the time of issuance, all of the foregoing shares of Preferred Stock and Common Stock were deemed to be restricted securities for the purposes of the Act, and the certificates representing such securities bore legends to that effect. Item 4. Submissions of Matters to a Vote of Security Holders. On July 5, 1996, prior to the date the Company's registration statements on Form S-1 and Form 8-A became effective, the Company solicited, by means of a Written Consent of Stockholders, approval for a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation authorizing the designation of the Company's Class G 13 Convertible Preferred Stock ("Class G Stock") consisting of 1,136,364 shares of Class G Stock. After giving effect to the conversion into shares of Common Stock of all outstanding shares of Preferred Stock at the closing of the Company's initial public offering, a total of 7,663,110 shares of Common Stock were voted in favor of the proposals described above, no shares were voted against and 4,690,982 shares were not voted. In addition, on September 25, 1996, also prior to the date the Company's registration statements on Form S-1 and Form 8-A became effective, the Company solicited, by means of a Written Consent of Stockholders, approval for (i) a Certificate of Amendment to the Company's Restated Certificate of Incorporation to increase the number of shares of Common Stock authorized for issuance from 15,000,000 shares to 30,000,000 shares; (ii) a Restated Certificate of Incorporation, to be filed with the Delaware Secretary of State upon the closing of the Company's initial public offering, to (a) authorize a new class of undesignated Preferred Stock, $.01 par value per share, consisting of 10,000,000 shares, the terms and rights of which may be designated from time to time by the Board of Directors; (b) delete Article IV in its entirety and replace it with a new Article IV such that, effective upon the closing of a public offering in which all outstanding shares of Preferred Stock automatically convert to Common Stock, no authorized shares of Preferred Stock shall be reissued; (c) delete Article VII in its entirety and replace it with a new Article VII eliminating the liability of directors, except to the extent that the General Corporation Law of the State of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty; (d) delete Article VIII in its entirety and replace it with a new Article VIII providing for indemnification of directors and officers in the Certificate of Incorporation; (e) delete Article IX and replace it with a new Article IX which eliminates the right of stockholders to act by written consent and establishes a supermajority threshold of 66 2/3% to subsequently repeal or amend Article IX; (f) add a new Article XII which specifies that only the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President), the Board of Directors or the holders of a majority of the capital stock of the Corporation entitled to vote may call a Special Meeting of Stockholders and establishes a supermajority threshold of 66 2/3% to subsequently repeal or amend Article XII; and 14 (g) add a new Article XIII pursuant to which Section 203 of the General Corporation Law of Delaware, as it may be amended from time to time, shall apply to the Corporation; (iii) the Amended and Restated By-Laws of the Company previously approved by the Board of Directors; and (iv) an amendment to the Company's 1993 Long-Term Incentive Plan increasing the number of shares of Common Stock authorized for issuance to 2,250,000 shares (after giving effect to a nine-for-seven stock split declared by the Board of Directors on August 15, 1996). After giving effect to the conversion into shares of Common Stock of all outstanding shares of Preferred Stock at the closing of the Company's initial public offering, a total of 9,932,588 shares of Common Stock were voted in favor of the proposals described above, no shares were voted against and 3,879,063 shares were not voted. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. The Exhibits filed as part of this Form 10-Q are listed on the Exhibit Index immediately preceeding such Exhibits, which Exhibit Index is incorporated herein by reference. (b) Reports on Form 8-K. No reports were filed on Form 8-K during the quarter ended September 30, 1996. 15 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. TRANSKARYOTIC THERAPIES, INC. Date: November 26, 1996 By: /s/ Anthony R. Hall ------------------------------------- Anthony R. Hall Vice President, Finance and Administration, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 16 EXHIBIT INDEX ------------- Exhibit No. Description Page - ----------- ----------- ---- 4.1 Amended and Restated Certificate of Incorporation of the Company 4.2 Amended and Restated By-laws of the Company 11 Computation of Earnings Per Share 27 Financial Data Schedules (EDGAR) EX-4.1 2 AMENDED & RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 4.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF TRANSKARYOTIC THERAPIES, INC. Transkaryotic Therapies, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows: 1. The Corporation filed its original Certificate of Incorporation with the Secretary of State of the State of Delaware on July 7, 1988. A Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 14, 1992, which was subsequently amended on April 16, 1993 and July 1, 1993. A Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on November 5, 1993, which was subsequently amended on May 18, 1994, March 1, 1995, October 26, 1995 and July 9, 1996. 2. At a meeting of the Board of Directors, a resolution was duly adopted, pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, setting forth an Amended and Restated Certificate of Incorporation of the Corporation and declaring said Amended and Restated Certificate of Incorporation advisable. The stockholders of the Corporation duly approved said proposed Amended and Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, and written notice of such consent 2 has been given to all stockholders who have not consented to said restatement. The resolution setting forth the Amended and Restated Certificate of Incorporation is as follows: RESOLVED: That the Certificate of Incorporation of the Corporation be, and hereby is, amended and restated in its entirety so that the same shall read as follows: ARTICLE I. The name of the Corporation is Transkaryotic Therapies, Inc. ARTICLE II. The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III. The nature of the business of the Corporation and the purposes for which it is organized are: 1. To engage in research and development in the field of gene therapy and to pursue various commercial applications of such research; 2. To engage in any other lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware; and 3. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of the State of Delaware or by any other law of the State of Delaware or by this Certificate of Incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation. ARTICLE IV. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 40,000,000 shares, consisting of (i) 30,000,000 shares of Common Stock, $.01 par value per share (the "Common Stock") and (ii) 10,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred Stock"). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation. - 2 - 3 A. COMMON STOCK. 1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series. 2. Voting. The holders of the Common Stock are entitled to one vote for each share held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. 3. Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock. 4. Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding Preferred Stock. B. PREFERRED STOCK. Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided. Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, special voting rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of Delaware. Without limiting the - 3 - 4 generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise specifically provided in this Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. ARTICLE V. Except as otherwise provided in Section 3.2 of Article IV, the number of directors of the Corporation shall be fixed from time to time in the manner provided in the By-laws of the Corporation and may be increased or decreased from time to time in the manner provided in such By-laws. Election of directors need not be by written ballot except and to the extent provided in the By-laws of the Corporation. ARTICLE VI. The Board of Directors of the Corporation is expressly authorized to make, alter, or repeal the By-laws of the Corporation, but such authorization shall not divest the stockholders of the power, nor limit their power, to adopt, amend, or repeal such By-laws. ARTICLE VII. Except to the extent that the General Corporation Law of the State of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. ARTICLE VIII. 1. Actions, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, 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, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee - 4 - 5 benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in this Article, except as set forth in Section 6 below, the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. 2. Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee 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, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, 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, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware or such other court shall deem proper. 3. Indemnification for Expenses of Successful Party. Notwithstanding the other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, he shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits - 5 - 6 or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. 4. Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 4. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. 5. Advance of Expenses. Subject to the provisions of Section 6 below, in the event that the Corporation does not assume the defense pursuant to Section 4 of this Article of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter, provided, however, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as - 6 - 7 authorized in this Article. Such undertaking may be accepted without reference to the financial ability of such person to make such repayment. 6. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the Corporation determines, by clear and convincing evidence, within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of a quorum of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), (b) if no such quorum is obtainable, a majority vote of a committee of two or more disinterested directors, (c) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (d) independent legal counsel (who may be regular legal counsel to the Corporation), or (e) a court of competent jurisdiction. 7. Remedies. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 6. Unless otherwise provided by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee's expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. 8. Subsequent Amendment. No amendment, termination or repeal of this Article or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. - 7 - 8 9. Other Rights. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. 10. Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled. 11. Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss 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 such person against such expense, liability or loss under the General Corporation Law of Delaware. 12. Merger or Consolidation. If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation. 13. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right - 8 - 9 of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. 14. Definitions. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i). 15. Subsequent Legislation. If the General Corporation Law of Delaware is amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. ARTICLE IX. 1. Meetings of the stockholders of the Corporation may be held within or without the State of Delaware, as the By-laws may provide. The books and records of the Corporation may be kept within or without the State of Delaware at such place or places as may be designated from time to time by the By-laws and/or the Board of Directors of the Corporation. 2. Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, the Certificate of Incorporation or the By-Laws of the Corporation, each as amended, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article IX. ARTICLE X. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in manner as the said court directs. If a majority in number representing three-fourths in value of the stockholders or class of stockholders of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all - 9 - 10 the stockholders or class of stockholders, of this Corporation, as the case maybe, and also on this Corporation. ARTICLE XI. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in any manner now or hereafter prescribed by law, and all rights conferred upon stockholders herein are granted subject to such reservation. ARTICLE XII Special meetings of stockholders may be called at any time by only the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President), the Board of Directors or the holders of a majority of the outstanding capital stock of the Corporation entitled to vote. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provision of law, this Certificate of Incorporation or the By-Laws of the Corporation, each as amended, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article XII. ARTICLE XIII Section 203 of the General Corporation Law of Delaware, as it may be amended from time to time, shall apply to the Corporation. IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed hereto and this Amended and Restated Certificate of Incorporation to be signed by its President this 22nd day of October, 1996. TRANSKARYOTIC THERAPIES, INC. By: /s/ Richard F Selden ---------------------------------- Richard F Selden, M.D., Ph.D. President - 10 - EX-4.2 3 AMENDED & RESTATED BY-LAWS 1 EXHIBIT 4.2 TRANSKARYOTIC THERAPIES, INC. AMENDED AND RESTATED BY-LAWS ARTICLE I OFFICERS Transkaryotic Therapies, Inc. (the "Corporation") shall maintain a registered office in the State of Delaware. The Corporation may also have other offices at such other places either within or without the State of Delaware, as the Board of Directors may from time to time designate or the business of the Corporation may require. ARTICLE II STOCKHOLDERS Section 1. Annual Meeting: The annual meeting of Stockholders for the election of Directors and the transaction of any other business as may properly come before such meeting shall be held on the first Monday in June of each year, or as soon after such date as may be practicable, in such City and State and at such time and place as may be designated by the Board of Directors, and set forth in the notice of such meeting. If said day be a legal holiday, said meeting shall be held on the next succeeding business day. At the annual meeting any business may be transacted and any corporate action may be taken, whether stated in the notice of meeting or not, except as otherwise expressly provided by statute or the Certificate of Incorporation Section 2. Special Meetings: Special meetings of the Stockholders for any purpose may be called at any time by the Board of Directors, the Chairman of the Board, or if no Chairman has been elected, by the President and Chief Executive Officer, and shall be called by the Chairman of the Board or, if none, by the President and Chief Executive Officer at the request of the holders of a majority of the outstanding shares of capital stock entitled to vote. Special meetings shall be held at such place or places within or without the State of Delaware as shall from time to time be designated by the Board of Directors and stated in the notice of such meeting. At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting. Section 3. Notice of Meetings: Written notice of the date, time and place of any Stockholders' meeting, whether annual or special, shall be given to each Stockholder entitled to vote thereat, by mailing the same to him at his address as the same appears upon the records or the Corporation not less than ten (10) nor more than sixty (60) days prior to the date of such meeting. Notice of any adjourned meeting need not be given other than by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment. Such further notice, if any, shall be given as may be required by law. 2 Section 4. Waiver of Notice: Notice of meeting need not be given to any Stockholder who submits a signed waiver of notice, in person or by proxy, whether before or after the meeting. The attendance of any Stockholder at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by him. Section 5. Quorum: Any number of Stockholders, together holding at least a majority of the capital stock of the Corporation issued and outstanding and entitled to vote, who shall be present in person or by proxy at any meeting duly called, shall constitute a quorum for all purposes except as may otherwise be provided by law. Section 6. Adjournment of Meetings: If less than a quorum shall attend at the time for which a meeting shall have been called, the meeting may be adjourned from time to time by a majority vote of the Stockholders present or by proxy and entitled to vote thereat, without notice other than by announcement at the meeting until a quorum shall attend. Any meeting at which a quorum is present may also be adjourned in like manner and for such time or upon such call as may be determined by a majority vote of the Stockholders present in person or by proxy and entitled to vote thereat. At any adjourned meeting at which a quorum shall be present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called. Section 7. Voting: Each Stockholder entitled to vote at any meeting may vote either in person or by proxy, duly appointed by instrument in writing subscribed by such Stockholder and bearing a date not more than eleven months prior to said meeting, unless said proxy provides for a longer period. The holders of Common Stock shall be entitled to one vote in respect of each share held on all matters submitted to a vote of shareholders. When a quorum is present at any meeting, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on a matter) shall decide any matter to be voted upon by the Stockholders at such meeting, except when a different vote is required by express provision of law, the Certificate of Incorporation or these By-laws. Any election by Stockholders shall be determined by a plurality of the votes cast by the Stockholders entitled to vote at the election. Section 8. Nomination of Directors: Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nomination for election to the Board of Directors of the Corporation at a meeting of Stockholders may be made by the Board of Directors or by any Stockholder of the Corporation entitled to vote for the election of Directors at such meeting who complies with the notice procedures set forth in this Section 8. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered to mailed by first class United States mail, postage prepaid, to the Secretary, and received not less than 60 days nor more than 90 days prior to such meeting; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given to Stockholders, such nomination shall have been mailed or delivered to the Secretary not later than the close of business of the 10th day following the date on which the notice of the meeting was mailed or such public disclosure was made, whichever - 2 - 3 occurs first. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to be named as a nominee and to serve as a Director if elected); and (b) as to the Stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such Stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such Stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Section 9. Notice of Business at Annual Meetings: 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 an annual meeting by a Stockholder. For business to be properly brought before an annual meeting by a Stockholder, if such business relates to the election of Directors of the Corporation, the procedures in Section 8 must be complied with. If such business relates to any other matter, the Stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a Stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to Stockholders, notice by the Stockholder to be timely must be so received not later than the close of business on the 10th day following the date on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever occurs first. A Stockholder's notice to the Secretary shall set forth as to each matter the Stockholder proposes to bring before the annual meeting (a) 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, (b) the name and address, as they appear on the Corporation's books, of the Stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the Stockholder, and (d) any material interest of the Stockholder in such business. Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 9 and except that any Stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the Corporation's proxy statement for an - 3 - 4 annual meeting of Stockholders shall be deemed to comply with the requirements of this Section 9. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 9, and if he should so determine, the chairman shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted. Section 10. Action Without Meeting: Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken by Stockholders for or in connection with any corporate action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, 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 and shall be delivered to the Corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Each such written consent shall bear the date of signature of each Stockholder who signs the consent. No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a number of Stockholders sufficient to take such action are delivered to the Corporation in the manner specified in this paragraph within sixty days of the earliest dated consent so delivered. If action is taken by consent of Stockholders and in accordance with the foregoing, there shall be filed with the records of the meetings of stockholders the writing or writings comprising such consent. If action is taken by less than unanimous consent of Stockholders, prompt notice of the taking of such action without a meeting shall be given to those who have not consented in writing and a certificate signed and attested to by the Secretary of the Corporation that such notice was given shall be filed with the records of the meetings of stockholders. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the General Corporation Law of the State of Delaware, if such action had been voted upon by the Stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning a vote of Stockholders, that written consent has been given under Section 228 of said General Corporation Law and that written notice has been given as provided in such Section 228. Notwithstanding the foregoing, if at any time the Corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, as amended, for so long as such class is registered, any action by the Stockholders of such class must be taken at an annual or special meeting of Stockholders and may not be taken by written consent. - 4 - 5 Section 11. Organization. The Chairman of the Board, or in his absence the Vice Chairman of the Board designated by the Chairman of the Board, or the President, in the order named, shall call meetings of the Stockholder to order, and shall act as chairman of such meeting; provided, however, that the Board of Directors may appoint any Stockholder to act as chairman of any meeting in the absence of the Chairman of the Board. The Secretary of the Corporation shall act as secretary at all meetings of the Stockholders; but in the absence of the Secretary at any meeting of the Stockholders, the presiding officer may appoint any person to act as secretary of the meeting. ARTICLE III DIRECTORS Section 1. Number and Qualifications: The Board of Directors shall consist of not less than three (3) nor more than seven (7) Directors. The Directors need not be Stockholders. Section 2. Responsibilities: The general management of the affairs of the Corporation shall be vested in the Board of Directors, which may delegate to Officers, employees and to committees of Directors such powers and duties as it may from time to time see fit, subject to the limitations hereinafter set forth, and except as may otherwise be provided by law. Section 3. Election and Term of Office: The Directors shall be elected by the Stockholders at the annual meeting of Stockholders. If the election of Directors shall not be held on the day designated by the By-laws, the Directors shall cause the same to be held as soon thereafter as may be convenient. The Directors chosen at any annual meeting shall hold office except as hereinafter provided, until the next annual election and until the election and qualification of their successors. Section 4. Removal and Resignation of Directors: Any Director may be removed from the Board of Directors, only for cause, by the holders of two-thirds of the shares of outstanding stock entitled to vote at any special meeting of the Stockholders called for that purpose, and the office of such Director shall forthwith become vacant. Any Director may resign at any time. Such resignation shall take effect at the time specified therein, and if no time be specified at the time of its receipt by the Chairman of the Board or if no Chairman has been elected, by the President and Chief Executive Officer, or by the Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless so specified therein. Section 5. Filling of Vacancies: Any vacancy among the Directors, occurring from any cause whatsoever, may be filled by a majority of the remaining Directors, though less than a quorum, provided, however, that the Stockholders removing any Director may at the same meeting fill the vacancy caused by such removal, and provided further, that if the Directors fail to fill any such vacancy, the Stockholders may at any special meeting called for that purpose fill such vacancy. In case of any increase in the number of Directors, the additional Directors may be elected by the Directors in office prior to such increase. Any person elected to fill a vacancy shall hold office, subject to the right of removal as hereinbefore provided, until the next annual election and until the election and qualification of his successor. - 5 - 6 Section 6. Regular Meetings: The Board of Directors shall hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the Stockholders, provided a quorum is present. Other regular meetings may be held at such times as may be determined from time to time by resolution of the Board of Directors. Section 7. Special Meetings: Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, if any, or by the President and Chief Executive Officer. Section 8. Notice and Place of Meetings: Regular meetings of the Board of Directors may be held without notice at such time and place as shall be designated by resolution of the Board of Directors. Notice shall be required, however, for special meetings. Notice of any special meeting shall be sufficiently given if mailed to each Director at his residence or usual place of business at least two (2) days before the day on which the meeting is to be held, or if sent to him at such place by telegraph or cable, or delivered personally or by telephone not later than 24 hours prior to the time at which the meeting is to be held. No notice of the annual meeting shall be required if held immediately after the annual meeting or the Stockholders and if a quorum is present. Notice of a meeting need not be given to any Director who submits a signed waiver of notice before or after the meeting, nor to any Director who attends the meeting without protesting the lack of notice prior thereto or at its commencement. Section 9. Business Transacted at Meetings: Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum shall be present, whether such business or proposed action be stated in the notice of such meeting or not, unless special notice of such business or proposed action shall be required by law. Section 10. Quorum: A majority of the entire Board of Directors shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the Directors present at a meeting at which a quorum is present shall be the acts of the Board of Directors, unless otherwise provided by law, the Certificate of Incorporation or these By-laws. If a quorum is not present at a meeting of the Board of Directors, a majority of the Directors present may adjourn the meeting to such time and place as they may determine without notice other than announcement at the meeting until enough Directors to constitute a quorum shall attend. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any Directors. Section 11. Action Without a Meeting: Any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or committee shall be filed with the minutes of the proceedings of the Board or committee. Section 12. Participation by Telephone: Any one or more members of the Board or any committee thereof may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment allowing all persons participating in - 6 - 7 the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Section 13. Compensation: The Board of Directors may establish by resolution reasonable compensation of all Directors for services to the Corporation as Directors, including a fixed fee, if any, incurred in attending each meeting. Nothing herein contained shall preclude any Director from serving the Corporation in any other capacity, as an Officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV COMMITTEES Section 1. Executive Committee: The Board of Directors, by resolution passed by a majority of the entire Board, may designate three (3) or more Directors to constitute an Executive Committee to hold office at the pleasure of the Board, which Committee shall, during the intervals between meetings of the Board of Directors, have and exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, Subject only to such restrictions or limitations as the Board of Directors may from time to time specify, or as limited by the Delaware General Corporation Law, and shall have power to authorize the seal of the Corporation to be affixed to all instruments which may require it. Any member of the Executive Committee may be removed at any time, with or without cause, by a resolution of a majority of the entire Board of Directors. Any person ceasing to be a Director shall ipso facto cease to be a member of the Executive Committee. Any vacancy in the Executive Committee occurring from any cause whatsoever may be filled from among the Directors by a resolution of a majority of the entire Board of Directors. Section 2. Other Committees: Other committees whose members are to be Directors, may be appointed by the Board of Directors, which committees shall hold office for such time and have such powers and perform such duties as may from time to time be assigned to them by the Board of Directors or the committee appointing them. Any member of such a committee may be removed at any time, with or without cause, by the Board of Directors or the committee appointing such committee. Any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors or the committee appointing such committee. Section 3. Resignation: Any member of a committee may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the Chairman of the Board, if any, the President and Chief Executive Officer or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless so specified therein. Section 4. Quorum: A majority of the members of a committee shall constitute a quorum. The act of a majority of the members of a committee present at any meeting at which a quorum is present shall be the act of such committee. The members of a committee shall act only as a committee, and the individual members thereof shall have no powers as such. - 7 - 8 Section 5. Record of Proceedings: Each committee shall keep a record of its acts and proceedings, and shall report the same to the Board of Directors when and as required by the Board of Directors. Section 6. Organization, Meetings, Notices: A committee may hold its meetings at the principal office of the Corporation, or at any other place upon which a majority of the committee may at any time agree. Each committee may make such rules as it may deem expedient for the regulation and carrying on of its meetings and proceedings, Unless otherwise ordered by the Executive Committees any notice of a meeting of such committee may be given by the Secretary or by the chairman of the committee and shall be sufficiently given if mailed to each member at his residence or usual place of business at least five (5) days before the day on which the meeting is to be held, or if sent to him at such place by telecopy, telegraph or cable, or delivered personally or by telephone not later than 24 hours prior to the time at which the meeting is to be held. Section 7. Compensation: The members of any committee shall be entitled to such compensation as may be established by resolution of the Board of Directors. ARTICLE V OFFICERS Section l. Number: The Officers of the Corporation shall be a President and Chief Executive Officer, a Secretary and a Treasurer, and such Vice Presidents and other Officers as may be appointed in accordance with the provisions of Section 3 of this Article V. The Board of Directors, in its discretion, may also elect a Chairman of the Board of Directors. Section 2. Election, Term of Office and Qualifications: The Officers, except as provided in Section 3 of this Article V, shall be chosen annually by the Board of Directors. Each such Officer shall, except as herein otherwise provided, hold office until the selection and qualification of his successor. Any two or more offices may be held by the same person, except the offices of President and Chief Executive Officer and Secretary. Section 3. Other Officers: Other Officers, including, without limitation, one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers, may from time to time be appointed by the Board of Directors, which other Officers shall have such powers and perform such duties as may be assigned to them by the Board of Directors or the Officer or committee appointing them. All such Officers shall be corporate officers of the Corporation with the power to hind the Corporation by acts within the scope or their authority. Section 4. Removal of Officers: Any Officer of the Corporation may be removed from office, with or without cause, by a vote of a majority of the Board of Directors. Section 5. Resignation: Any Officer of the Corporation may resign at any time. Such resignation shall be in writing and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman of the Board, if any, the President and - 8 - 9 Chief Executive Officer or the Secretary. The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified therein. Section 6. Filling of Vacancies: A vacancy in any office shall be filled by the Board of Directors. Section 7. Compensation: The compensation of the Officers shall be fixed by the Board of Directors, or by any committee upon whom such power may be conferred by the Board of Directors. Section 8. Chairman of the Board of Directors: The Chairman of the Board of Directors, if one is elected, shall be a Director and shall preside at all meetings of the Board of Directors and of the Stockholders at which he shall be present. He shall have power to call special meetings of the Stockholders or of the Board of Directors or of the Executive Committee at any time and shall have such power and perform such other duties as may from time to time be assigned to him by the Board of Directors. Section 9. President and Chief Executive Officer: The President and Chief Executive Officer shall have responsibility for the general direction of the business affairs and property of the Corporation, and of its several Officers, and shall have and exercise all such powers and discharge such duties as usually pertain to the office of President and Chief Executive Officer. He shall have responsibility for the day-to-day affairs of the Corporation, subject to the control of the Board of Directors. He shall perform such duties as may be assigned to him from time to time by the Board of Directors and shall, in the absence of the Chairman of the Board, perform and carry out the functions of the Chairman of the Board. Section 10. Secretary: The Secretary shall attend all meetings of the Board of Directors and of the Stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform like duties for any Committee appointed by the Board. He shall give or cause to be given notice of all meetings of Stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the Corporation and affix it to any instrument when so authorized by the Board of Directors. Section 11. Treasurer: The Treasurer shall have 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 depositaries as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may he ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and Chief Executive Officer and Directors at the regular meetings of the Board, or whenever they may require, an account of all his transactions as Treasurer and of the financial condition of the Corporation. He may be required to give bond for the faithful discharge of his duties. - 9 - 10 ARTICLE VI CAPITAL STOCK Section 1. Issue of Certificates of Stock: Certificates of capital stock shall be in such form as shall be approved by the Board of Directors. They shall be numbered in the order of their issue, and shall be signed by the Chairman of the Board of Directors, the President and Chief Executive Officer or any Vice President, and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary, and the seal of the Corporation or a facsimile thereof shall be impressed, affixed or reproduced thereon. In case any Officer or Officers who shall have signed any such certificate or certificates shall cease to be such Officer or Officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates have not ceased to be such Officer or Officers of the Corporation. Section 2. Registration and Transfer of Shares: The name of each person owning a share of the capital stock or the Corporation shall be entered on the books of the Corporation together with the number of shares held by him, the numbers of the certificates covering such shares and the dates of issue of such certificates. The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their duly authorized attorneys or legal representatives, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment of power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. A record shall be made of each transfer. The Board of Directors may make other and further rules and regulations concerning the transfer and registration of certificates for stock. Section 3. Lost, Destroyed and Mutilated Certificates: The holder of any stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of the Certificates therefor. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it and alleged to have been lost, stolen or destroyed. The Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representatives, to give the Corporation a bond, in such sum not exceeding trouble the value of the stock and with such surety or sureties as they may require, to indemnify it against any claim that may be made against it by reason of the issue of such new certificate and against all other liability in the premises, or may remit such owner to such remedy or remedies as he may have under the laws of the State of Delaware. - 10 - 11 ARTICLE VII DIVIDENDS AND SURPLUS Section 1. General Discretion of Directors: The Board of Directors shall have power to fix and vary the amount to be set aside or reserved as working capital of the Corporation, or as reserves, or for other proper purposes of the Corporation, and, subject to the requirements of the Certificate of Incorporation, to determine whether any part of the surplus or net profits of the Corporation shall be declared in dividends and paid to the Stockholders, and to fix the date or dates for the payment of dividends. ARTICLE VIII MISCELLANEOUS PROVISIONS Section l. Fiscal Year: The fiscal year of the Corporation shall commence on the first day of January and end on the last day of December. Section 2. Corporate Seal: The corporate seal shall be in such form as approved by the Board of Directors and may be altered at its pleasure. The corporate seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced by the Secretary or Assistant Secretary of the Corporation. Section 3. Notices: Except as otherwise expressly provided, any notice required by these By-laws to be given shall be sufficient if given by depositing the same in a post office or letter box in a sealed wrapper with first class postage prepaid thereon and addresses to the person entitled thereto at his address, as the same appears upon the books of the Corporation, or by telecopying, telegraphing or cabling the same to such person at such address; and such notice shall be deemed to be given at the time it was mailed, telecopied, telegraphed or cabled. Section 4. Waiver it Notice: Any Stockholder or Director may at any time, by writing or by telecopy, telegraph or cable, waive any notice required to be given under these By-laws, and if any Stockholder or Director shall be present at any meeting his presence shall constitute a waiver of such notice. Section 5. Contracts, Checks, Drafts: The Board of Directors, except as may otherwise be required by law, may authorize any Officer or Officers, agent or agents, in the name of and on behalf of the Corporation to enter into any contract or execute or deliver any instrument. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such Officer or Officers, agent or agents of the Corporation, and in such manner, as shall be designated from time to time by resolution of the Board of Directors. Section 6. Deposits: All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such bank or banks, trust companies or other depositaries as the Board of Directors may select, and, for the purpose of such deposit, checks, drafts, warrants and other orders for the payment of money which are payable to the order of the Corporation, may be endorsed for deposit, assigned and delivered by any Officer of the Corporation, or by - 11 - 12 such agents of the Corporation as the Board of Directors, the Chairman of the Board, if any, or the President and a Chief Executive Officer may authorize for that purpose. Section 7. Voting Stock of Other Corporations: Except as otherwise ordered by the Board of Directors or the Executive Committee, the Chairman of the Board, if any, or the President and Chief Executive Officer shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the stockholders of any corporation of which the Corporation is a stockholder and to execute a proxy to any other person to represent the Corporation at any such meeting, and at any such meeting the Chairman of the Board, if any, or the President and Chief Executive Officer or the holder of any such proxy, as the case may be, shall possess and may exercise any and all rights and powers incident to ownership of such stock and which, as owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors or the Executive Committee may from time to time confer like powers upon any other person or persons. Section 8. Indemnification of Officers and Directors: The Corporation shall indemnify any and all of its Directors or Officers, who shall serve as an Officer or Director of this Corporation or of any other corporation at the request of this Corporation, to the fullest extent permitted under and in accordance with the laws of the State of Delaware. ARTICLE IX AMENDMENTS Section 1. By the Board of Directors: These By-laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of a majority of the Directors present at any regular or special meeting of the Board of Directors at which a quorum is present. Section 2. By the Stockholders: Except as otherwise provided in Section 3, these Bylaws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at any regular or special meeting of Stockholders, provided notice of such alteration, amendment, repeal or adoption of new by-laws shall have been stated in the notice of such regular or special meeting. Section 3. Certain Provisions: Notwithstanding any other provision of law, the Certificate of Incorporation or these By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with Sections 2, 7, 8, 9, 10 and 11 of Article II, Article III or Article IX of these By-laws. Dated: September 25, 1996. - 12 - EX-11 4 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 - Statement Re: Computation of Earnings (Loss) Per Share - Pro Forma (000's omitted, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1996 1995 1996 1995 ------- ------- ------- ------- Weighted average common shares outstanding 5,197 5,198 5,197 5,196 Effect of preferred stock - assumed converted at date of issuance 5,777 5,777 5,777 5,663 Weighted average common stock equivalent shares resulting from stock options and warrants -- -- -- 496 Effect of common and common stock equivalent shares issued by the Company during the twelve month period immediately preceding the Company's initial public offering in October 1996 (using the treasury stock method) 3,281 3,281 3,281 3,281 ------- ------- ------- ------- Shares used in computing pro forma net income (loss) per share 14,255 14,256 14,255 14,636 ======= ======= ======= ======= Net income (loss) $(2,417) $(1,638) $(8,404) $ 3,467 Pro forma net income (loss) per share $ (0.17) $ (0.11) $ (0.59) $ 0.24
EX-27 5 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 11,400,986 39,159,386 30,812 0 0 50,920,753 8,985,378 5,466,332 55,615,271 1,644,688 0 51,977 4,597,773 4,077,258 45,131,575 55,615,271 0 3,950,000 0 13,788,411 0 0 0 (8,404,249) 0 (8,404,249) 0 0 0 (8,404,249) (.59) (.59)
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