-----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, TPm3IC8oZ1iMAsSHpL44Zy2xR94P2dmtL42hV9IgqsJhrTRh23+YkTaVnSt1GRAw /2OxvR5fGZeGJhPMSl1xMw== 0000950135-96-003385.txt : 19960809 0000950135-96-003385.hdr.sgml : 19960809 ACCESSION NUMBER: 0000950135-96-003385 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRUS RESEARCH INSTITUTE INC CENTRAL INDEX KEY: 0000902010 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 223098869 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20711 FILM NUMBER: 96605584 BUSINESS ADDRESS: STREET 1: 61 MOULTON ST CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6178646232 MAIL ADDRESS: STREET 1: 61 MOULTON ST CITY: CAMBRIDGE STATE: MA ZIP: 02138 10-Q 1 VIRUS RESEARCH INSTITUTE, INC. FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 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 0-20711 - -------------------------------------------------------------------------------- VIRUS RESEARCH INSTITUTE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-3098869 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 61 Moulton Street, Cambridge, MA 02138 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (617) 864-6232 ----------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, address and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ( ) Yes (X) No As of August 2, 1996, there were 8,810,768 shares of Common Stock outstanding. 2 VIRUS RESEARCH INSTITUTE, INC. INDEX
PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements: Balance Sheets as of December 31, 1995 and June 30, 1996................................................................3 Statements of Operations for the Three Months Ended June 30, 1995 and 1996, for the Six Months Ended June 30, 1995 and 1996, and for the Period from Inception through June 30, 1996................4 Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1996 and for the period from Inception through June 30, 1996..............................................5 Notes to Financial Statements .................................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........................................8 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................................12 Item 2. Changes in Securities.........................................................12 Item 3. Defaults upon Senior Securities...............................................12 Item 4. Submission of Matters to a Vote of Security Holders...........................12 Item 5. Other Information.............................................................13 Item 6. Exhibits and Reports on Form 8-K..............................................13 SIGNATURES......................................................................................14
(2) 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VIRUS RESEARCH INSTITUTE, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
DECEMBER 31, JUNE 30, 1995 1996 ------------ ------------ Current assets: Cash and cash equivalents $ 1,180,176 $ 27,061,966 Prepaid expenses 199,097 347,155 Other current assets 34,845 18,245 ------------ ------------ Total current assets 1,414,118 27,427,366 Leasehold improvements and equipment (net of accumulated depreciation and amortization of $1,342,046 at December 31, 1995 and $1,685,709 at June 30, 1996) 1,205,487 1,183,032 Other assets 108,300 84,019 ------------ ------------ Total assets $ 2,727,905 $ 28,694,417 ============ ============ Current liabilities: Notes payable $ 923,315 $ 0 Accounts payable 372,577 135,393 Accrued rent 50,417 22,917 Accrued consulting and research fees 457,712 715,552 Other accrued expenses 259,219 427,930 Deferred revenue 0 137,500 Current portion of lease obligation payable 175,090 147,724 ------------ ------------ Total current liabilities 2,238,330 1,587,016 Lease obligation payable, less current portion 210,842 151,463 Redeemable convertible preferred stock 24,527,073 0 Stockholders' equity (deficit): Common stock -- $.001 par value; 30,000,000 shares authorized; 690,004 shares issued at December 31, 1995 and 8,795,321 shares issued at June 30, 1996 690 8,795 Additional paid-in capital 134,202 51,877,873 Deficit accumulated during the development stage (24,383,232) (24,930,730) ------------ ------------ Total stockholders' equity (24,248,340) 26,955,938 ------------ ------------ Total liabilities and stockholders' equity $ 2,727,905 $ 28,694,417 ============ ============ (deficit)
SEE NOTES TO FINANCIAL STATEMENTS (3) 4 VIRUS RESEARCH INSTITUTE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED CUMULATIVE JUNE 30, JUNE 30, SINCE INCEPTION 1995 1996 1995 1996 (1991) - ------------------------------------------------------------------------------------------------------------ REVENUE: Licensing & option revenue $ 0 $2,500,000 $ 0 $2,520,000 $ 3,990,000 Research & development revenue 157,480 312,500 157,480 837,500 1,926,249 Interest income 32,076 99,465 97,406 111,892 485,342 -------------------------------------------------------------------------- TOTAL REVENUE 189,556 2,911,965 254,886 3,469,392 6,401,591 EXPENSES: Research and development 1,424,048 1,286,648 3,063,251 2,633,634 21,380,607 General & administrative 575,319 567,668 1,139,879 916,476 7,552,631 Depreciation 146,128 175,077 290,880 343,662 1,788,057 Other expense 5,312 63,161 11,983 123,118 611,026 -------------------------------------------------------------------------- TOTAL EXPENSES 2,150,807 2,092,554 4,505,993 4,016,890 31,332,321 -------------------------------------------------------------------------- NET INCOME (LOSS) $(1,961,251) $ 819,411 $(4,251,107) $ (547,498) $(24,930,730) ========================================================================== Net income (loss) per share $ (0.31) $ 0.12 $ (0.67) $ (0.08) ========================================================= Weighted average common shares outstanding 6,390,901 6,864,975 6,390,633 6,451,487
SEE NOTES TO FINANCIAL STATEMENTS (4) 5 VIRUS RESEARCH INSTITUTE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED CUMULATIVE JUNE 30, SINCE INCEPTION 1995 1996 (1991) -------------------------------------------- Cash flows from operating activities: Net Loss $(4,251,107) $ (547,498) $(24,930,730) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation & amortization 290,880 366,412 1,826,589 Conversion of accrued interest to preferred stock 0 46,026 58,373 Changes in operating assets and liabilities: (Increase) decrease in prepaid expenses and other assets (107,933) (107,176) (326,292) Increase (decrease) in accounts payable and accrued expenses 8,509 (8,132) 1,131,792 Increase in deferred revenue 0 137,500 137,500 ------------------------------------------- Net cash (used in) operating activities (4,059,651) (112,868) (22,102,768) Cash flows from investing activities: Capital expenditures (118,708) (321,206) (2,886,186) Other 0 0 (46,182) ------------------------------------------- Net cash (used in) investing activities (118,708) (321,206) (2,932,368) Cash flows from financing activities: Proceeds from notes payable 0 0 7,973,668 Sale & leaseback related to capital acquisitions 0 0 751,311 Principal payments on lease obligations (94,376) (90,745) (600,437) Sale of common stock 162 27,607,712 27,656,605 Sale of preferred stock 0 1,500,140 19,258,613 Offering costs (1,477) (2,701,243) (2,939,044) Founders' shares reacquired 0 0 (846) Purchase of treasury stock 0 0 (2,768) ------------------------------------------- Net cash provided by (used in) financing activities (95,691) 26,315,864 52,097,102 Net increase (decrease) in cash (4,274,050) 25,881,790 27,061,966 Cash and cash equivalents, beginning of period 5,669,490 1,180,176 0 ------------------------------------------- Cash and cash equivalents, end of period $ 1,395,440 $27,061,966 $ 27,061,966 =========================================== Supplemental disclosure of cash flow information: Interest paid during the period $ 11,983 $ 34,492 $ 201,682
SEE NOTES TO FINANCIAL STATEMENTS (5) 6 VIRUS RESEARCH INSTITUTE, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 (1) FINANCIAL STATEMENT PRESENTATION The unaudited financial statements of Virus Research Institute, Inc. (the "Company") herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the results of operations for the interim periods presented. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading. These financial statements and the notes thereto should be read in conjunction with the financial statements and the notes thereto included in the Company's Registration Statement on Form S-1 (Commission File No. 333-3378). The results for the interim periods are not necessarily indicative of the results for the full fiscal year. (2) NET INCOME/(LOSS) PER SHARE Net income/(loss) per common share is based on the weighted average number of common shares outstanding during the periods presented, assuming, where applicable, the automatic conversion of all shares of Series A, B, C, and D redeemable convertible preferred stock then outstanding into 5,415,942 and 5,553,578 shares of common stock at June 30, 1995 and 1996, respectively. Pursuant to the requirements of the SEC, common stock and preferred stock issued during the 12 months immediately preceding the initial public offering, plus shares of common stock that became issuable during the same period pursuant to the grant of common stock options and warrants, have been included in the calculation of weighted average common shares outstanding for the periods prior to those ended June 30, 1996 using the treasury stock method. During June 1996, all shares of Series A, B, C, and D redeemable convertible preferred stock then outstanding were converted to common stock upon the closing of the initial public offering. (3) CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS During June 1996, the Company converted the $1,000,000 notes payable to stockholders and $46,027 of accrued interest into 653,769 shares of Series C redeemable convertible preferred stock which automatically converted into 217,923 shares of common stock upon the closing of the initial public offering discussed in Note 5. (4) SALE OF SERIES D PREFERRED STOCK During April 1996, The Company sold an aggregate of 294,844 shares of Series D redeemable convertible preferred stock for net proceeds of approximately $1,000,000. These preferred shares automatically converted into 98,282 shares of common stock upon the closing of the initial public offering discussed in Note 5. (6) 7 (5) INITIAL PUBLIC OFFERING In June 1996, the company completed an initial public offering of 2,300,000 shares of common stock for $12.00 per share, resulting in net proceeds of approximately $24.7 million. In addition, all outstanding shares of Series A, B, C, and D redeemable convertible preferred stock were automatically converted into 5,553,578 shares of common stock upon the closing of the initial public offering. (7) 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of the Company for the three and six months ended June 30, 1995 and 1996 should be read in conjunction with the accompanying unaudited financial statements and the related notes thereto. This report may contain certain forward looking statements which involve risks and uncertainties. Such statements are subject to certain factors which may cause the Company's plans and results to differ significantly from the plans and results discussed in forward looking statements. Factors that may cause such differences include, but are not limited to, the progress of the Company's research and development programs, the Company's ability to compete successfully with larger companies, risks of failure inherent in product development based on new technologies and novel delivery systems, the company's ability to attract and retain qualified personnel, the Company's ability to enter into and maintain collaborations with third parties, the Company's ability to enter into and progress in clinical trials, the time and costs involved in obtaining regulatory approvals, the costs involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the ability of the Company to establish development and commercialization capacities or relationships, the costs of manufacturing, the Company's ability to obtain additional funds, and those other risks discussed under the heading "Risk Factors" in the Prospectus dated June 5, 1996 included in the Company's Registration Statement on Form S-1, as amended (File No. 333-3378). OVERVIEW Virus Research Institute, Inc. (the "Company") is engaged in the discovery and development of vaccine delivery systems and improved and novel vaccines for adults and children. The Company is developing a portfolio of proprietary vaccine delivery systems designed to improve the efficacy, lower the cost of administration and improve patient compliance for a variety of vaccine products. The Company and its collaborators currently are applying the Company's vaccine delivery systems to develop vaccines for the prevention of influenza, Lyme disease, and H. pylori infections. The Company has entered into long-term collaboration agreements with Pasteur Merieux Serums & Vaccins S.A. (Pasteur Merieux), pursuant to which Pasteur Merieux may utilize the Company's vaccine delivery systems in developing a number of vaccines. The Company is also developing its own proprietary vaccines utilizing antigens licensed exclusively by the Company, including an oral vaccine for rotavirus infection, a gastrointestinal disease of infants, and a vaccine for HSV2, the virus causing genital herpes. The Company is in the development stage and has devoted substantially all of its resources to the research and development of its vaccine delivery systems and vaccine candidates and general and administrative expenses. Through June 30, 1996 the Company has not generated any revenue from product sales, but has received an aggregate of $6,402,000 in revenues from licensing, option and research and development agreements, research and development grants and interest income. There can be no assurance that the Company will receive any such revenue in the future. The Company has incurred losses since inception principally as a result of expenditures under its research and development programs. The Company expects to continue to incur significant operating losses over the next several years due primarily to expanded research and development efforts, preclinical and clinical testing of its product candidates, investment in new technologies, investment in production capabilities for (8) 9 certain product candidates and the performance of commercialization activities. The Company's results of operations may vary significantly from quarter to quarter due to timing of license and milestone payments and other factors. NEW DEVELOPMENTS The Company completed its initial public offering on June 11, 1996 in which it sold 2,300,000 shares of Common Stock at a price of $12.00 per share. The net proceeds to the Company from such sale totaled approximately $24.7 million, a portion of which was used to repay indebtedness and the balance of which will be devoted to research and development activities and for working capital and other general corporate purposes. In July 1996 the Company commenced a Phase I/II clinical trial of its rotavirus vaccine candidate. The clinical trial is a double-blinded, placebo controlled study designed to define the optimal vaccine dose and optimal age for immunization. The Company plans that 120 infants will be enrolled in the study, which is to be conducted at Children's Hospital, Cincinnati, Ohio and Johns Hopkins University, Baltimore, Maryland. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995 The Company's total revenue increased by $2,722,000 to $2,912,000 in the three months ended June 30, 1996 from $190,000 for the same period in 1995. Licensing and option revenue in the 1996 quarter consisted of $2,500,000 for the achievement of a milestone pursuant to an agreement with Pasteur Merieux. The Company reported no licensing and option revenue for the 1995 quarter. Revenue from research and development support agreements increased by $155,000 to $312,000 for the 1996 quarter from $157,000 for the prior year quarter primarily due to funding received pursuant to agreements with Pasteur Merieux and SmithKline Beecham plc. The same quarter for 1995 consisted primarily of $138,000 in research support payments received pursuant to an agreement with SmithKline Beecham plc. Interest income increased by $67,000 to $99,000 for the three months ended June 30, 1996 compared with $32,000 for the 1995 quarter, principally due to an increase in cash and cash equivalents, including the proceeds from the company's initial public offering. The Company's total expenses decreased by $58,000 to $2,093,000 in the three months ended June 30, 1996 from $2,151,000 in the 1995 quarter. Research and development expenses decreased by $137,000 to $1,287,000 in the three months ended June 30, 1996 from $1,424,000 in the prior year quarter principally due to a reduction in outside consulting costs and the conclusion of certain sponsored research agreements. General and administrative expenses decreased $8,000 to $568,000 in the three months ended June 30, 1996 from $576,000 in the 1995 quarter which was the net result of reduced compensation costs and legal costs associated with license agreements and patent filings offset by a foreign tax withholding associated with a milestone payment. Depreciation increased $29,000 to $175,000 in the three months ended June 30, 1996 from $146,000 in the 1995 quarter principally due to the Company's increased investment in laboratory equipment and improvements. Other expenses increased by $58,000 to $63,000 compared with $5,000 for the 1995 quarter, due to increased interest costs associated with certain equipment leases entered into in 1995 and a short term bank loan entered into in 1996. SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995 (9) 10 The Company's total revenue increased by $3,214,000 to $3,469,000 in the six months ended June 30, 1996 from $255,000 for the same period in 1995. Licensing and option revenue in the 1996 period included $2,500,000 for the achievement of a milestone pursuant to an agreement with Pasteur Merieux. The Company reported no licensing and option revenue for the 1995 period. Research and development revenue increased by $679,000 to $837,000 in the current period from $158,000 for the same period last year. The increase was primarily due to funding received pursuant to agreements with Pasteur Merieux and SmithKline Beecham plc. The same period for 1995 consisted primarily of $138,000 in research support payments received pursuant to an agreement with SmithKline Beecham plc. Interest income increased by $15,000 to $112,000 for the six months ended June 30, 1996 compared with $97,000 for the 1995 period, principally due to an increase in cash and cash equivalents, including the proceeds from the company's initial public offering. The Company's total expenses decreased by $490,000 to $4,016,000 in the six months ended June 30, 1996 from $4,506,000 in the 1995 period. Research and development expenses decreased by $430,000 to $2,633,000 in the six months ended June 30, 1996 from $3,063,000 in the prior year period principally due to reduced compensation costs, a reduction in outside consulting costs and the conclusion of certain sponsored research agreements. General and administrative expenses decreased $224,000 to $916,000 in the six months ended June 30, 1996 from $1,140,000 in the 1995 period principally as a result of reduced legal costs associated with license agreements and patent filings offset in part by a foreign tax withholding associated with a milestone payment from a collaborator. Depreciation increased $53,000 to $344,000 in the six months ended June 30, 1996 from $291,000 in the 1995 period principally due to the Company's increased investment in laboratory equipment and improvements. Other expenses increased by $111,000 to $123,000 compared with $12,000 for the 1995 period, due to increased interest costs associated with certain equipment leases entered into in 1995 and a short term bank loan entered into in 1996. LIQUIDITY AND CAPITAL RESOURCES From inception (February 11, 1991) through June 30, 1996, the Company's cash expenditures have exceeded revenues. The Company's operations have been funded principally through the sale of equity, loans from stockholders, equipment lease financing and payments under licensing, options and research and development agreements. Net cash used by the Company's operations since inception was $22,103,000, including $113,000 used by operations in the current year, primarily to fund research and development efforts and its general and administrative expenses. Since inception the Company incurred $2,886,000 in capital expenditures, primarily for leasehold improvements and equipment for the Company's laboratories. During the six months ended June 30, 1996 the Company incurred $321,000 in capital expenditures primarily for improvements to its polymer chemistry laboratory and related facilities. In total, the Company anticipates incurring approximately $750,000 in capital expenditures during 1996 primarily on equipment necessary for the scale up of polyphosphazene manufacturing. From inception through June 30, 1996, the Company raised net proceeds of approximately $51,946,000 through the sale of equity securities, including net proceeds of $24,747,000 from the Company's initial public offering in June 1996. During the period, the Company borrowed an aggregate of $7,974,000 from certain stockholders. Of the amount borrowed, an aggregate of $7,676,000 plus accrued interest has been converted into common stock. In addition, from inception the Company has funded $751,000 of capital expenditures through capital leases, of which $600,000 in principal has been repaid through June 30, 1996. In April 1996, the Company entered into a loan agreement with a (10) 11 bank pursuant to which it borrowed $1,000,000. The principal plus accrued interest on the loan was repaid from the proceeds of the Company's initial public offering. The Company expects to incur substantial additional costs, including those related to research and development activities, preclinical studies, clinical trials, obtaining regulatory approvals, production and the expansion of its facilities. The Company anticipates that its existing funds, together with the proceeds from its initial public offering, and interest earned thereon should be sufficient to funds its operating and capital requirements as currently planned for the next twenty four months. However, the Company's cash requirements may vary materially from those now planned, due to many factors, including, but not limited to, the progress of the Company's research and development programs, the scope and results of preclinical and clinical testing, changes in existing and potential relationships with corporate collaborators, the time and cost in obtaining regulatory approvals, the costs involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the ability of the Company to establish development and commercialization capacities or relationships, the costs of manufacturing and other factors. The Company may need to raise substantial additional funds through additional financings, including public or private equity offerings and collaborations with corporate partners. There can be no assurance that funds will be available on terms acceptable to the Company, if at all. If adequate funds are not available, the Company may be required to delay, scale back, or eliminate certain of its product development programs or to license to others the right to commercialize products or technologies the Company would otherwise seek to develop and commercialize itself, any of which would have a material adverse effect on the Company. (11) 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities. On June 11, 1996, the Company's Series A, B, C and D Convertible Preferred Stock converted into Common Stock in accordance with their terms in conjunction with the closing of the Company's initial public offering. See Item 4 below. For certain changes in the Certificate of Incorporation and By-Laws of the Company, see Item 4 below. The rights of the holders of Common Stock of the Company, after giving effect to all changes described in Item 4 below, are summarized in the Prospectus dated June 5, 1996, included as part of the Registration Statement on Form S-1 (Commission File No. 333-3378) with respect to the Company's initial public offering under the heading "Description of Capital Stock," which is incorporated herein by reference. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders A. The stockholders of the Company acted by written consent in lieu of Special Meeting of Stockholders dated May 8, 1996 pursuant to which the stockholders approved the following matters: (1) one-for-three reverse stock split in order to decrease the number of shares of Common Stock of the Company outstanding prior to the initial public offering; and (2) amendments to the Company's Certificate of Incorporation to effectuate the reverse stock split, increase the authorized capital stock of the Company, and to provide for the automatic conversion of all outstanding shares of Preferred Stock of the Company into Common Stock upon closing of the initial public offering. Each of these matters was approved by the affirmative vote of 1,501,856 shares of Common Stock, 3,883,495 shares of Series A Convertible Preferred Stock, 6,034,483 shares of Series B Convertible Preferred Stock, 4,960,410 shares of Series C Convertible Preferred Stock and 1,003,437 shares of Series D Convertible Preferred Stock. B. The stockholders of the Company acted by written consent in lieu of Special Meeting of Stockholders dated May 31, 1996 pursuant to which the stockholders approved the following matters: (1) amendments to the Company's Certificate of Incorporation to permit stockholders to amend the Company's By-Laws by two-thirds vote and under certain circumstances by majority vote, to expand the procedures by which the Certificate of Incorporation may be amended and to prohibit action by stockholders by written consent; (2) amendments to the Company's By-Laws establishing procedures to call and set stockholder meetings, to bring proposals before such meetings and to nominate candidates for election to the Board of Directors; and (3) amendments to the Company's 1992 Equity Incentive Plan. Each of these matters was approved by the affirmative vote of 1,044,381 shares of Common Stock, 3,883,495 shares of Series A Convertible Preferred Stock, 6,034,483 shares of Series B Convertible (12) 13 Preferred Stock, 5,559,035 shares of Series C Convertible Preferred Stock and 1,062,455 shares of Series D Convertible Preferred Stock. Item 5. Other Information Not applicable Item 6. Exhibits and Reports on form 8-K (a) Exhibits: 3.1 Sixth Restated Certificate of Incorporation of Virus Research Institute, Inc. 3.2 Amended and Restated By-Laws of Virus Research Institute, Inc. 11.1 Statement regarding computation of earnings per share 27.1 Financial Data Schedule (13) 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 7, 1996 VIRUS RESEARCH INSTITUTE, INC. a Delaware Corporation (Registrant) By: /S/ J. Barrie Ward - ------------------------------------------------------------------ J. Barrie Ward Chief Executive Officer By: /S/ William A. Packer - ---------------------------------------------------------- William A. Packer President, Chief Financial Officer By: /S/ David H. Ramsdell - ------------------------------------------------------------------ David H. Ramsdell Principal Accounting Officer (14) EX-3.1 2 CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 SIXTH RESTATED CERTIFICATE OF INCORPORATION OF VIRUS RESEARCH INSTITUTE, INC. VIRUS RESEARCH INSTITUTE, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Delaware General Corporation Law"), hereby certifies as follows: FIRST: The name of the Corporation is Virus Research Institute, Inc. A Certificate of Incorporation of the Corporation originally was filed by the Corporation with the Secretary of State of Delaware on February 12, 1991, a Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on July 16, 1992, a Second Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on October 30, 1992, a Third Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on March 25, 1993, a Certificate of Amendment to the Third Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on March 1, 1994, a Fourth Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on April 8, 1994, a Fifth Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on December 20, 1994 and Certificates of Amendment to the Fifth Restated Certificate of Incorporation were filed on September 26, 1995, January 5, 1996, May 31, 1996 and June 11, 1996. SECOND: This Sixth Restated Certificate of Incorporation only restates and integrates and does not further amend the Fifth Restated Certificate of Incorporation of the Corporation, was duly adopted by the Board of Directors of the Corporation without a vote of stockholders in accordance with the provisions of Section 245 of the Delaware General Corporation Law, and there is no discrepancy between the provisions of the Fifth Restated Certificate of Incorporation and the provisions of the Sixth Restated Certificate of Incorporation. THIRD: The text of the Fifth Restated Certificate of Incorporation of the Corporation, as amended to date, is hereby restated to read in its entirety as follows: ARTICLE I --------- Name ---- The name of the Corporation is Virus Research Institute, Inc. 2 ARTICLE II ---------- Purpose ------- The Corporation is organized to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law. ARTICLE III ----------- Capital Stock -------------- AUTHORIZATION. (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is 35,000,000, consisting of 5,000,000 shares of Preferred Stock, par value $.001 per share (the "Preferred Stock"), and 30,000,000 shares of Common Stock, par value $.001 per share (the "Common Stock"). (b) The Preferred Stock may be issued in any number of series designated by the Board of Directors of the Corporation (the "Board of Directors") pursuant to Section B.1 hereof. PART A. COMMON STOCK --------------------- A.1 DESIGNATION AND AMOUNT. The designation of this class of capital stock shall be "Common Stock," par value $.001 per share ("Common Stock"). The number of authorized shares of Common Stock is 30,000,000. Subject to any other applicable restrictions, 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 Delaware General Corporation Law. A.2 VOTING. Except as provided in this Sixth Restated Certificate of Incorporation or by applicable law, each Common Stockholder shall be entitled to one vote for each share of Common Stock held of record on all matters as to which Common Stockholders shall be entitled to vote, which voting rights shall not be cumulative. In any election of directors, no Common Stockholder shall be entitled to more than one vote per share of Common Stock. A.3 OTHER RIGHTS. Each share of Common Stock issued and outstanding shall be identical in all respects with each other such share, and no dividends shall be paid on any shares of Common Stock unless the same dividend is paid on all shares of Common Stock outstanding at the time of such payment. Except for and subject to those rights expressly granted to the holders of Preferred Stock and except as may be provided by the laws of the State of Delaware, the Common Stockholders shall have all other rights of stockholders, including, without limitation, (a) the right to receive dividends, when and as declared by the Board of Directors, out of assets lawfully available therefor, and (b) in the event of any liquidation, dissolution, winding up or otherwise of the Corporation, the right 2 3 to receive ratably and equally, together with the holders of outstanding shares of any other class or series of stock then having such rights, all the assets and funds of the Corporation remaining after the payment of all debts and liabilities of the Corporation and all preferential amounts to which the holders of Preferred Stock, if any, may be entitled with respect to the distribution of assets in liquidation, as provided herein. PART B. PREFERRED STOCK ------------------------ B.1 DESIGNATION OF SERIES OF PREFERRED STOCK. Subject to any limitations prescribed by law, the Board of Directors is hereby expressly authorized to provide for, designate and issue, out of the authorized but unissued shares of Preferred Stock, one or more other series of Preferred Stock, subject to the terms and conditions set forth herein. Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by resolution of resolutions, the following provisions of the shares of any such series: (a) the designation of such series, the number of shares to constitute such series and the stated value thereof, if different from the par value thereof; (b) whether the shares of such series shall have voting rights or powers, in addition to any voting rights required by law, and, if so, the terms of such voting rights or powers, which may be full or limited; (c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or series; (d) whether the shares of such class or series shall be subject to redemption by the Corporation, and, if so, the times, prices and other conditions of such redemption; (e) the amount or amounts payable upon shares of such class or series upon, and the rights of the holders of such class or series in the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation; (f) whether the shares of such class or series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof; 3 4 (g) whether the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or series of any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and condition of conversion or exchange; (h) the limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or series; (i) the conditions or restrictions, if any, to be effective while any shares of such class or series are outstanding upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such class or series or of any other class or series; and (j) any other powers, designations, preferences and relative, participating, optional or other special rights, and any qualifications, limitations or restrictions thereof. The powers, designations, preferences and relative, participating, optional or other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. The Board of Directors is hereby expressly authorized from time to time to increase (but not above the total number of authorized shares of Preferred Stock) or decrease (but not below the number of shares thereof then outstanding) the number of shares of stock of any series of Preferred Stock designated to any one or more series of Preferred Stock pursuant to this Section B.1. ARTICLE IV ---------- Registered Agent ----------------- The address of the registered office of the Corporation in the State of Delaware is 1013 Centre Road, Wilmington, DE, New Castle County, 19805. The name of the registered agent of the Corporation at such address is The Prentice-Hall Corporation System, Inc. ARTICLE V --------- Board of Directors ------------------ The number of directors of the Corporation shall be such number as from time to time shall be fixed by, or in the manner provided in, the By-laws of the Corporation. Unless and except to the extent that the By-laws of the Corporation otherwise require, the election of directors of the Corporation need not be by written ballot. 4 5 ARTICLE VI ---------- Amendment of By-laws -------------------- Except as otherwise provided by law, the By-laws of the Corporation may be amended or repealed by the Board of Directors. The By-laws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the affirmative vote of at least two-thirds of the votes present and entitled to vote on such amendment or repeal by holders of voting stock, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the votes present and entitled to vote on such amendment or repeal by holders of voting stock, voting together as a single class. ARTICLE VII ----------- Perpetual Existence ------------------- The Corporation is to have perpetual existence. ARTICLE VIII ------------ Amendments and Repeal of Certificate of Incorporation ----------------------------------------------------- The Corporation reserves the right to amend or repeal this Certificate of Incorporation in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. No amendment or repeal of this Certificate of Incorporation shall be made unless the same is first approved by the Board of Directors pursuant to a resolution adopted by the Board of Directors in accordance with Section 242 of the Delaware General Corporation Law, and, except as otherwise provided by law, thereafter approved by the stockholders. Whenever any vote of the holders of voting stock is required, and in addition to any other vote of holders of voting stock that is required by this Certificate of Incorporation or by law, the affirmative vote of a majority of the total votes eligible to be cast by holders of voting stock with respect to such amendment or repeal, voting together a single class, at a duly constituted meeting of stockholders called expressly for such purpose shall be required to amend or repeal any provisions of this Certificate of Incorporation; provided, however, that the affirmative vote of not less than 80% of the total votes eligible to be cast by holders of voting stock, voting together a single class, shall be required to amend or repeal any of the provisions of Article XII or this Article VIII of this Certificate of Incorporation. 5 6 ARTICLE IX ---------- Compromises and Arrangements ---------------------------- Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the 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 the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of the Delaware General Corporation Law or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of the Delaware General Corporation Law, order a meeting of creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, then such compromise or arrangement and such reorganization shall, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all of the stockholders or class of stockholders of the Corporation, as the case may be, and also on the Corporation. ARTICLE X --------- Limitation of Liability ----------------------- A director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that the elimination or limitation of liability is not permitted under the Delaware General Corporation Law as in effect when such liability is determined. No amendment or repeal of this provision shall deprive a director of the benefits hereof with respect to any act or omission occurring prior to such amendment or repeal. ARTICLE XI ---------- Indemnification --------------- The Corporation shall, to the fullest extent permitted by the Delaware General Corporation Law, as amended from time to time, 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, administrative or investigative, by reason of the fact that such person 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, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, from and against all expenses (including attorneys' fees), 6 7 judgments, fines and amounts paid in settlement actually and reasonably incurred by such person or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom. Indemnification may include payment by the Corporation of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding upon receipt of any undertaking by the person indemnified to repay such payment if it is ultimately determined that such person in not entitled to indemnification under this Article, which undertaking may be accepted without reference to the financial ability of such person to make such payments. The Corporation shall not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved by the Board of Directors of the Corporation. The indemnification rights provided in this Article XII (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons. 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. Any person seeking indemnification under this Article shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any amendment or repeal of the provisions of this Article shall not adversely affect any right or protection of a director or officer of the Corporation with respect to any act or omission of much director or officer occurring prior to such amendment or repeal. ARTICLE XII ----------- Stockholder Action ------------------ Any action required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by a written consent of stockholders in lieu thereof. 7 8 I, William A. Packer, President of the Corporation, for the purpose of restating the Corporation's Certificate of Incorporation pursuant to the Delaware General Corporation Law, do make this certificate, hereby declaring and certifying that this is my act and deed on behalf of the Corporation this 31st day of July, 1996. VIRUS RESEARCH INSTITUTE, INC. By: /s/ WILLIAM A PACKER ------------------------------------- WILLIAM A PACKER President 8 EX-3.2 3 BY LAWS OF VIRUS RESEARCH INSTITUTE, INC. 1 EXHIBIT 3.2 AMENDED AND RESTATED BY-LAWS OF VIRUS RESEARCH INSTITUTE, INC. Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1 These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time to time in effect. Section 2. STOCKHOLDERS 2.1 ANNUAL MEETING. The annual meeting of stockholders shall be held at the hour, date and place within the United States which is fixed by the majority of the board of directors, the chairman of the board, if one is elected, or the president, which time, date and place may subsequently be changed at any time by vote of the board of directors. If no annual meeting has been held for a period of thirteen months after the corporation's last annual meeting of stockholders, a special meeting in lieu thereof may be held, and such special meeting shall have, for the purposes of these by-laws or otherwise, all the force and effect of an annual meeting. Any and all references hereafter in these by-laws to an annual meeting or annual meetings also shall be deemed to refer to any special meeting(s) in lieu thereof. 2.2 MATTERS TO BE CONSIDERED AT ANNUAL MEETINGS. At any annual meeting of stockholders or any special meeting in lieu of annual meeting of stockholders (the "Annual Meeting"), only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before such Annual Meeting. To be considered as properly brought before an Annual Meeting, business must be: (a) specified in the notice of meeting, or (b) otherwise properly brought before the meeting (i) by, or at the direction of, the board of directors, (ii) by any holders of record (as of the record date for the meeting in question) of an aggregate of not less than 7 1/2% of the shares of capital stock of the corporation entitled to vote at such meeting (a "7 1/2% Stockholder") or (iii) by any other holder of record (both as of the time notice of such proposal is given by the stockholder as set forth below and as of the record date for the Annual Meeting in question) of any shares of capital stock of the corporation entitled to vote at such Annual Meeting who complies with the requirements set forth in this Section. In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder of record of any shares of capital stock entitled to vote at such Annual Meeting, other than a 7 1/2% Stockholder, such stockholder shall: (i) give timely notice as required by this Section to the secretary of the corporation 2 and (ii) be present at such meeting, either in person or by a representative. For the first Annual Meeting following the initial public offering of common stock of the corporation, a stockholder's notice shall be timely if delivered to, or mailed to and received by, the corporation at its principal executive office not later than the close of business on the later of (A) the 75th day prior to the scheduled date of such Annual Meeting or (B) the 15th day following the day on which public announcement of the date of such Annual Meeting is first made by the corporation. For all subsequent Annual Meetings, a stockholder's notice shall be timely if delivered to, or mailed to and received by, the corporation at its principal executive office not less than 75 days nor more than 120 days prior to the anniversary date of the immediately preceding Annual Meeting (the "Anniversary Date"); provided, however, that in the event the Annual Meeting is scheduled to be held on a date more than 30 days before the Anniversary Date or more than 60 days after the Anniversary Date, a stockholder's notice shall be timely if delivered to, or mailed to and received by, the corporation at its principal executive office not later than the close of business on the later of (A) the 75th day prior to the scheduled date of such Annual Meeting or (B) the 15th day following the day on which public announcement of the date of such Annual Meeting is first made by the corporation. For purposes of these by-laws, "public announcement" shall mean: (i) disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service, (ii) a report or other document filed publicly with the Securities and Exchange Commission (including, without limitation, a Form 8-K), or (iii) a letter or report sent to stockholders of record of the corporation at the time of the mailing of such letter or report. Such a stockholder's notice to the secretary shall set forth as to each matter proposed to be brought before an Annual Meeting: (i) a brief description of the business the stockholder desires to bring before such Annual Meeting and the reasons for conducting such business at such Annual Meeting, (ii) the name and address, as they appear on the corporation's stock transfer books, of the stockholder proposing such business, (iii) the class and number of shares of the corporation's capital stock beneficially owned by the stockholder proposing such business, (iv) the names and addresses of the beneficial owners, if any, of any capital stock of the corporation registered in such stockholder's name on such books, and the class and number of shares of the corporation's capital stock beneficially owned by such beneficial owners, (v) the names and addresses of other stockholders known by the stockholder proposing such business to support such proposal, and the class and number of shares of the corporation's capital stock beneficially owned by such other stockholders, and (vi) any material interest of the stockholder proposing to bring such business before such meeting (or any other stockholders known to be supporting such proposal) in such proposal. If the board of directors or a designated committee thereof determines that any stockholder proposal was not made in a timely fashion in accordance with the provisions of this Section or that the information provided in a stockholder's notice does not 2 3 satisfy the information requirements of this Section in any material respect, such proposal shall not be presented for action at the Annual Meeting in question. If neither the board of directors nor such committee makes a determination as to the validity of any stockholder proposal in the manner set forth above, the presiding officer of the Annual Meeting shall determine whether the stockholder proposal was made in accordance with the terms of this Section. If the presiding officer determines that any stockholder proposal was not made in a timely fashion in accordance with the provisions of this Section or that the information provided in a stockholder's notice does not satisfy the information requirements of this Section in any material respect, such proposal shall not be presented for action at the Annual Meeting in question. If the board of directors, a designated committee thereof or the presiding officer determines that a stockholder proposal was made in accordance with the requirements of this Section, the presiding officer shall so declare at the Annual Meeting and ballots shall be provided for use at the meeting with respect to such proposal. Notwithstanding the foregoing provisions of this by-law, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder with respect to the matters set forth in this by-law, and nothing in this by-law shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. 2.3 SPECIAL MEETINGS. Except as otherwise required by law, special meetings of the stockholders of the corporation may be called only by (a) the board of directors pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office or (b) holders of record of not less than 20% of the shares of capital stock of the corporation entitled to vote at a meeting of stockholders. 2.4 MATTERS TO BE CONSIDERED AT SPECIAL MEETINGS. At any special meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before such meeting. To be considered as properly brought before a special meeting of stockholders, business must be: (a) specified in the notice of meeting, (b) otherwise properly brought before the meeting (i) by, or at the direction of, the board of directors or (ii) by a 7 1/2% Stockholder. 2.5 NOTICE OF MEETINGS; ADJOURNMENTS. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and; in the case of a special meeting, the purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary, or by an officer or person designated by the board of directors, or in the case of a special meeting by the 3 4 officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice. 2.6 QUORUM OF STOCKHOLDERS. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.7 ACTION BY VOTE. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.8 PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of 4 5 a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.9 INSPECTORS. The directors or the person presiding at the meeting may, but need not, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.10 LIST OF STOCKHOLDERS. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1 NUMBER. The number of directors which shall constitute the whole board shall not be less than one nor more than nine in number. Thereafter, within the foregoing limits, the board of directors shall determine the number of directors and the number of directors may be increased at any time or from time to time by the directors by vote of a majority of the directors then in office. The number of directors may be decreased to any number permitted by the foregoing at any time by the directors by vote of a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation or removal of one or more directors. Directors need not be stockholders. 3.2 TENURE. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3 POWERS. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the 5 6 powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4 DIRECTOR NOMINATIONS. Nominations of candidates for election as directors of the corporation at any Annual Meeting may be made only (a) by, or at the direction of, a majority of the board of directors, or (b) by (i) a 7-1/2% Stockholder or (ii) any other holder of record (both as of the time notice of such nomination is given by the stockholder as set forth below and as of the record date for the Annual Meeting in question) of any shares of the capital stock of the corporation entitled to vote at such Annual Meeting who complies with the timing, informational and other requirements hereinafter set forth in this Section. Any stockholder who has complied with the timing, informational and other requirements set forth in this Section and who seeks to make such a nomination, or his, her or its representative, must be present in person at the Annual Meeting. Only persons nominated in accordance with the procedures set forth in this Section shall be eligible for election as directors at an Annual Meeting. Nominations, other than those made by, or at the direction of, the board of directors or by a 7-1/2% Stockholder, shall be made pursuant to timely notice in writing to the secretary of the corporation as set forth in this Section. For the first Annual Meeting following the initial public offering of common stock of the corporation, a stockholder's notice shall be timely if delivered to, or mailed to and received by, the corporation at its principal executive office not later than the close of business on the later of (A) the 75th day prior to the scheduled date of such Annual Meeting or (B) the 15th day following the day on which public announcement of the date of such Annual Meeting is first made by the corporation. For all subsequent Annual Meetings, a stockholder's notice shall be timely if delivered to, or mailed to and received by, the corporation at its principal executive office not less than 75 days nor more than 120 days prior to the Anniversary Date; provided, however, that in the event the Annual Meeting is scheduled to be held on a date more than 30 days before the Anniversary Date or more than 60 days after the Anniversary Date, a stockholder's notice shall be timely if delivered to, or mailed and received by, the corporation at its principal executive office not later than the close of business on the later of (i) the 75th day prior to the scheduled date of such Annual Meeting or (ii) the 15th day following the day on which public announcement of the date of such Annual Meeting is first made by the corporation. Such a stockholder's notice to the secretary shall set forth as to each person whom the stockholder proposes to nominate for election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the corporation's capital stock which are beneficially owned by such person on the date of such stockholder notice, and (iv) the consent of each nominee to serve as a director if elected. A stockholder's notice to the secretary shall further set forth as to the stockholder giving such notice: (i) the name and address, as they appear on the corporation's stock transfer 6 7 books, of such stockholder and of the beneficial owners (if any) of the corporation's capital stock registered in such stockholder's name and the name and address of other stockholders known by such stockholder to be supporting such nominee(s), (ii) the class and number of shares of the corporation's capital stock which are held of record, beneficially owned or represented by proxy by such stockholder and by any other stockholders known by such stockholder to be supporting such nominee(s) on the record date for the Annual Meeting in question (if such date shall then have been made publicly available) and on the date of such stockholder's notice, and (iii) a description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder. If the board of directors or a designated committee thereof determines that any stockholder nomination was not made in accordance with the terms of this Section or that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section in any material respect, then such nomination shall not be considered at the Annual Meeting in question. If neither the board of directors nor such committee makes a determination as to whether a nomination was made in accordance with the provisions of this Section, the presiding officer of the Annual Meeting shall determine whether a nomination was made in accordance with such provisions. If the presiding officer determines that any stockholder nomination was not made in accordance with the terms of this Section or that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section in any material respect, then such nomination shall not be considered at the Annual Meeting in question. If the board of directors, a designated committee thereof or the presiding officer determines that a nomination was made in accordance with the terms of this Section, the presiding officer shall so declare at the Annual Meeting and ballots shall be provided for use at the meeting with respect to such nominee. Notwithstanding anything to the contrary in the second sentence of the second paragraph of this Section, in the event that the number of directors to be elected to the board of directors of the corporation is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors at least 75 days prior to the Anniversary Date, a stockholder's notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if such notice shall be delivered to, or mailed to and received by, the corporation at its principal executive office not later than the close of business on the 15th day following the day on which such public announcement is first made by the corporation. No person shall be elected by the stockholders as a Director of the corporation unless nominated in accordance with the procedures set forth in this Section. Election of Directors at the annual meeting need not be by written ballot, unless otherwise provided by the board of directors or presiding officer at such annual meeting. If written 7 8 ballots are to be used, ballots bearing the names of all the persons who have been nominated for election as Directors at the annual meeting in accordance with the procedures set forth in this Section shall be provided for use at the annual meeting. 3.5 VACANCIES. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the stockholders at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.6 COMMITTEES. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.7 REGULAR MEETINGS. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 8 9 3.8 SPECIAL MEETINGS. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chairman of the board, if any, the president, or by a majority of the directors, reasonable notice thereof being given to each director by the secretary or by the chairman of the board, if any, the president or any one of the directors calling the meeting. 3.9 NOTICE. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.10 QUORUM. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.11 ACTION BY VOTE. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.12 ACTION WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be. 3.13 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 9 10 3.14 COMPENSATION. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 3.15 INTERESTED DIRECTORS AND OFFICERS. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1 ENUMERATION; QUALIFICATION. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any 10 11 two or more offices may be held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 4.2 POWERS. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate. 4.3 ELECTION. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.4 TENURE. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power. 4.5 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND VICE PRESIDENT. The chairman of the board, if any, shall have such duties and powers as shall be designated from time to time by the board of directors. Unless the board of directors otherwise specifies, the chairman of the board, or if there is none the chief executive officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the board of directors. Unless the board of directors otherwise specifies, the president shall be the chief executive officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the president. 4.6 TREASURER AND ASSISTANT TREASURERS. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the board of directors or by the president. If no 11 12 controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and powers of the controller. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer. 4.7 CONTROLLER AND ASSISTANT CONTROLLERS. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller. 4.8 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or the president. Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1 Any director or officer may resign at any time by delivering his resignation in writing to the chairman of the board, if any, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. A director (including persons elected by directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in the election of directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. No director or officer resigning and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation) no director or officer removed shall have any right to any 12 13 compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise; unless, in the case of a resignation, the directors, or, in the case of removal, the body acting on the removal, shall in their or its discretion provide for compensation. Section 6. VACANCIES 6.1 If the office of the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in section 3.5 of these by-laws. Section 7. CAPITAL STOCK 7.1 STOCK CERTIFICATES. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue. 7.2 LOSS OF CERTIFICATES. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1 TRANSFER ON BOOKS. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may 13 14 reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2 RECORD DATE AND CLOSING TRANSFER BOOKS. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1 Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. 14 15 Section 10. EXECUTION OF PAPERS 10.1 Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chairman of the board, if any, the president, a vice president or the treasurer. Section 11. FISCAL YEAR 11.1 The fiscal year of the corporation shall end on the 31st day of December of each year. Section 12. AMENDMENTS 12.1 These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office. The by-laws of the corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the affirmative vote of at least two-thirds of the votes present and entitled to vote on such amendment or repeal by holders of voting stock, voting together as a single class; provided, however, that if the board of directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the votes present and entitled to vote on such amendment or repeal by holders of voting stock, voting together as a single class. 15 EX-11.1 4 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 VIRUS RESEARCH INSTITUTE, INC. (A DEVELOPMENT STAGE COMPANY) COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1995 1996 1995 1996 --------------------------------------------------------- Net income (loss) $(1,961,251) $ 819,411 $(4,251,107) $ (547,498) Shares used in computing net income (loss) per common share: Weighted average common stock outstanding during the period 688,176 1,187,553 687,908 938,800 Conversion of redeemable convertible preferred stock (1) 5,415,942 5,576,644 5,415,942 5,512,687 Dilutive effect of common equivalent shares -- "cheap stock" (2) 286,783 N/A 286,783 N/A Common stock equivalents (3) N/A 100,778 N/A N/A Weighted average common shares --------------------------------------------------------- outstanding 6,390,901 6,864,975 6,390,633 6,451,487 Net income (loss) per common share $(0.31) $ 0.12 $(0.67) $(0.08) (1) Effective with the closing of the Company's initial public offering of common stock, redeemable convertible preferred stock converted into shares of common stock. Accordingly, the equivalent number of weighted average common shares that would have been outstanding during each period presented have been included as outstanding. (2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83, common stock, preferred stock, stock options and warrants issued at prices below the initial public offering price per share ("cheap stock") during the twelve month period immediately preceding the filing of the Company's Registration Statement for its initial public offering have been included as common equivalents for periods prior to the initial public offering. (3) No common stock equivalents have been included in the six month period ended June 30, 1996 as their effect would be antidilutive.
EX-27.1 5 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 27,061,966 0 0 0 0 27,427,366 2,868,741 (1,685,709) 28,694,417 1,587,016 0 8,795 0 0 26,947,143 28,694,417 0 2,911,965 0 0 2,029,393 0 63,161 819,411 0 819,411 0 0 0 819,411 .12 .12
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