<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] 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 0-27030
INFINIUM SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2734036
------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
25 Communications Way, Hyannis, MA 02601
(Address of principal executive offices, including Zip Code)
(508) 778-2000
(Registrant's telephone number, including area code)
----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 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
--- ---
The number of shares outstanding of the registrant's Common Stock on March 31,
1997 was 11,943,996.
================================================================================
<PAGE> 2
INFINIUM SOFTWARE, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheet at September 30, 1996
and March 31, 1997...................................... 3
Condensed Consolidated Statement of Operations for the
three and six months ended March 31, 1996 and 1997...... 4
Condensed Consolidated Statement of Cash Flows for the six
months ended March 31, 1996 and 1997.................... 5
Notes to Condensed Consolidated Financial Statements ...... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 9
PART II - OTHER INFORMATION
ITEMS 1.- 3. Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders.......... 17
ITEM 5. Not applicable
ITEM 6. Exhibits and Reports on Form 8-K............................. 17
SIGNATURES.............................................................. 18
EXHIBIT INDEX........................................................... 19
EXHIBITS................................................................ 20
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFINIUM SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1997
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and marketable securities ............................ $43,337 $39,380
Accounts receivable, less allowance for doubtful accounts of $1,250
and $1,525 at September 30, 1996 and March 31, 1997, respectively .......... 12,354 15,369
Deferred income taxes ....................................................... 2,427 2,716
Prepaid expenses and other current assets ................................... 3,569 4,241
------- -------
Total current assets .................................................. 61,687 61,706
Property and equipment, net ................................................. 6,047 6,109
Capitalized software development costs, net ................................. 6,171 6,419
Goodwill and other intangibles, net ......................................... -- 2,135
Other assets ................................................................ 1,799 1,899
------- -------
Total assets .......................................................... $75,704 $78,268
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................ $ 4,495 $ 3,769
Accrued expenses ............................................................ 7,300 7,805
Income taxes payable ........................................................ 1,368 1,668
Deferred revenue ............................................................ 24,853 26,642
------- -------
Total current liabilities ............................................. 38,016 39,884
Deferred income taxes
2,038 568
------- -------
Stockholders' equity:
Common stock, $.01 par value; authorized 40,000 shares, issued and
outstanding 11,114 and 11,944 shares at September 30, 1996 and
March 31, 1997, respectively ............................................... 111 119
Additional paid-in capital .................................................. 27,394 32,351
Retained earnings ........................................................... 8,145 5,345
Cumulative translation adjustment ........................................... -- 1
------- -------
Total stockholders' equity ............................................ 35,650 37,816
------- -------
Total liabilities and stockholders' equity ............................ $75,704 $78,268
======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
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INFINIUM SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Software license fees ........................... $ 4,710 $ 5,659 $ 9,512 $10,993
Service revenue ................................. 11,795 14,151 23,314 27,097
------- ------- ------- -------
Total revenue ........................... 16,505 19,810 32,826 38,090
------- ------- ------- -------
Operating costs and expenses:
Cost of software license fees ................... 890 1,013 1,825 2,039
Cost of services ................................ 4,052 5,455 8,104 10,177
Research and development ........................ 3,436 4,035 6,802 7,670
Sales and marketing ............................. 5,782 6,820 11,297 13,108
General and administrative ...................... 1,817 1,848 3,446 3,551
Write-off of in-process research and
development acquired (Note 5) ................. -- 6,846 -- 6,846
------- ------- ------- -------
Total operating costs and expenses ...... 15,977 26,017 31,474 43,391
------- ------- ------- -------
Income (loss) from operations ..................... 528 (6,207) 1,352 (5,301)
Other income, net ................................. 334 469 629 995
------- ------- ------- -------
Income (loss) before provision (benefit)
for income taxes ................................ 862 (5,738) 1,981 (4,306)
Provision (benefit) for income taxes .............. 313 (2,007) 713 (1,506)
------- ------- ------- -------
Net income (loss) ................................. $ 549 $(3,731) $ 1,268 $(2,800)
======= ======= ======= =======
Per share data:
Net income (loss) per share ..................... $ 0.05 $ (0.30) $ 0.12 $ (0.23)
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding ..................... 11,254 12,456 10,805 12,120
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 5
INFINIUM SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
MARCH 31, MARCH 31,
1996 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) .................................................. $ 1,268 $ (2,800)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Depreciation and amortization ................................... 2,280 2,832
Allowance for doubtful accounts ................................. 300 210
Deferred income taxes ........................................... 37 (1,759)
Write-off of in-process research and development acquired ....... -- 6,846
Changes in operating assets and liabilities, net of effects
from the acquisition of Time (Open Systems) Limited:
Accounts receivable ......................................... 712 (2,679)
Prepaid expenses and other current assets ................... (1,012) (640)
Other assets ................................................ (136) (100)
Accounts payable ............................................ (146) (999)
Accrued expenses ............................................ 184 (98)
Income taxes payable ........................................ (770) 299
Deferred revenue ............................................ (366) 811
-------- --------
Net cash provided by operating activities ................. 2,351 1,923
-------- --------
Cash flows from investing activities:
Purchase of marketable securities .................................. (29,736) (30,954)
Sale of marketable securities ...................................... 14,253 36,542
Purchase of property and equipment ................................. (1,808) (1,164)
Capitalization of software development costs ....................... (1,696) (1,725)
Acquisition of Time (Open Systems) Limited (Note 5) ................ -- (3,443)
-------- --------
Net cash used for investing activities ..................... (18,987) (744)
-------- --------
Cash flows from financing activities:
Proceeds from initial public offering of common stock .............. 12,827 --
Proceeds from exercise of stock options and employee stock
purchase plan .................................................... 885 451
Proceeds from repayments of notes receivable - stockholders ........ 379 --
-------- --------
Net cash provided by financing activities .................. 14,091 451
-------- --------
Effect of foreign exchange rate changes on cash ...................... -- 1
-------- --------
Net increase (decrease) in cash and cash equivalents ................. (2,545) 1,631
Cash and cash equivalents, beginning of period ....................... 8,161 7,817
-------- --------
Cash and cash equivalents, end of period ............................. $ 5,616 $ 9,448
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE> 6
INFINIUM SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
1. BASIS OF PRESENTATION
The information at March 31, 1996 and 1997 and for the three and six month
periods then ended is unaudited, but includes all adjustments (consisting only
of normal recurring entries) which the Company's management believes to be
necessary for the fair presentation of the financial position, results of
operations, and changes in cash flows for the periods presented. The
accompanying interim financial statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1996. Certain information
and notes normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the Securities and Exchange Commission rules and regulations. Interim results
of operations for the three and six month periods ended March 31, 1997 are not
necessarily indicative of operating results for the full fiscal year.
2. FOREIGN CURRENCY TRANSLATION
As a result of economic factors relating to the Company's UK subsidiaries,
the functional currency of the subsidiaries has been redesignated to the British
Pound effective October 1, 1996. Accordingly, the assets and liabilities of the
UK subsidiaries have been translated into the U.S. dollar at the current
exchange rate, equity at the historical rate and income and expense items at an
average exchange rate for the period. Translation adjustments have been reported
as a cumulative translation adjustment within the equity section of the balance
sheet.
All other foreign subsidiaries and branches have retained the U.S. dollar
as their functional currency. Accordingly, monetary assets and liabilities of
these subsidiaries and branches are translated into the U.S. dollar at the
exchange rate in effect at period end and nonmonetary assets and liabilities are
remeasured at historic exchange rates. Income and expenses are remeasured at the
average exchange rate for the period. Translation gains and losses are reflected
in the consolidated statement of income.
3. NET INCOME PER SHARE
Net income per share is determined by dividing net income applicable to
common stock by the weighted average number of common shares and common
equivalent shares outstanding during the period. Common share equivalents are
computed using the treasury stock method and consist of common stock which may
be issuable upon exercise of outstanding common stock options and warrants to
purchase common stock, when dilutive. Fully diluted per share amounts are not
presented as the effect is not material. The computation of the weighted average
number of shares outstanding for the three months ended March 31, 1996 and 1997
is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common and
common equivalent shares:
Common stock outstanding .......... 9,763 11,901 9,344 11,508
Common stock equivalents .......... 1,491 555 1,461 612
------ ------ ------ ------
11,254 12,456 10,805 12,120
====== ====== ====== ======
</TABLE>
6
<PAGE> 7
INFINIUM SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. NET INCOME PER SHARE, CONTINUED
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per
Share." This Statement establishes and simplifies standards for computing and
presenting earnings per share. SFAS 128 will be effective for the Company's
first quarter of fiscal 1998, and requires restatement of all previously
reported earnings per share data that are presented. Early adoption of this
Statement is not permitted. SFAS 128 replaces primary and fully diluted earnings
per share with basic and diluted earnings per share. The Company expects that
basic earnings per share amounts will be accretive compared to the primary
earnings per share amounts, and diluted earnings per share amounts will not be
materially different from the fully diluted earnings per share amounts.
4. OTHER INCOME, NET
Other income, net consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income........... $363 $ 490 $ 694 $1,038
Foreign exchange loss..... (29) (21) (65) (43)
---- ----- ----- -----
$334 $ 469 $ 629 $ 995
==== ===== ===== =====
</TABLE>
5. ACQUISITION
On January 6, 1997, the Company acquired all of the outstanding capital
stock of Time (Open Systems) Limited ("Time"), a UK-based privately held
software concern which developed and marketed a suite of client/server financial
applications. The transaction was consummated for $2,793 in cash, approximately
770 shares of the Company's common stock which was issued at the closing of the
acquisition and is being held pursuant to an escrow agreement under which the
shares will be released ratably over a three year period and $650 of related
acquisition costs. The value ascribed to the shares issued was $4,514.
The acquisition was accounted for as a purchase. Accordingly, the results
of operations of Time and the fair market values of the acquired assets and
assumed liabilities were included in the Company's financial statements as of
the date of the acquisition. The purchase price was allocated to the acquired
assets and assumed liabilities as follows:
7
<PAGE> 8
INFINIUM SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
5. ACQUISITION, CONTINUED
<TABLE>
<S> <C>
Accounts receivable $ 546
Other current assets 32
Property and equipment 132
In-process research and development 6,846
Acquired software 312
Assembled workforce 468
Goodwill 1,477
Current liabilities (1,856)
-------
$ 7,957
=======
</TABLE>
The amount allocated to in-process research and development was determined
by an independent appraiser and represented technology which had not reached
technological feasibility and had no alternative future use. Accordingly, this
amount of $6,846 was charged to operations at the acquisition date. The amounts
allocated to intangible assets are being amortized on a straight line basis over
their expected useful lives of 2-7 years.
Pro forma statements of operations are not shown as they would not differ
materially from reported results.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
All statements contained herein that are not historical facts, including
but not limited to, statements regarding anticipated future expense levels and
capital requirements, the Company's future product development and marketing
plans, the Company's ability to obtain debt, equity or other financing, the
Company's ability to generate cash from operations, and the Company's ability to
attract and retain employees, are based on current expectations. These
statements are forward looking in nature and involve a number of risks and
uncertainties, as more fully described under "Factors Affecting Future
Performance." Actual results may differ materially from those described in the
forward-looking statements.
RESULTS OF OPERATIONS
Infinium Software, Inc., ("the Company"), formally known as Software 2000,
Inc., was founded in 1981 and offers a broad range of financial management,
human resource management and materials management business software
applications that run on the IBM AS/400 hardware platform. The Company also
offers a specialized manufacturing system designed to manage process
manufacturing operations. The Company's revenue is derived from two sources:
software license fees and service revenue. Software license fees includes
revenue from noncancellable software license agreements entered into between the
Company and its customers with respect to both the Company's products and third
party products distributed by the Company. Software license fee revenue is
recognized upon shipment of the software and when all significant contractual
obligations have been satisfied. The Company's service revenue is comprised of
software maintenance fees and fees for consulting services. Maintenance fees are
billed separately and are recognized ratably over the period of the maintenance
agreement, which is typically one year. Consulting service revenue is recognized
as the services are performed.
As discussed in Note 5 to the condensed consolidated financial statements,
the Company acquired all of the outstanding capital stock of Time (Open Systems)
Limited ("Time"), a UK-based privately held software concern which developed and
marketed a suite of client/server financial application software products (the
"Time Products") in January 1997. The Company expects to introduce the versions
of the Time Products for the Microsoft NT Server platform in North America and
other international markets in mid-1997, upon the completion of additional
product development. These products, along with the Microsoft NT Server-based
Human Resources Management product line now being developed by the Company, will
form the basis for the Company's planned expansion into the emerging market for
business applications designed for Windows NT servers.
The following table sets forth for the periods indicated the Company's
condensed consolidated statement of operations data expressed as a percentage of
total revenue and the percentage of dollar increase period over period for the
three and six months ended March 31, 1996 and 1997.
9
<PAGE> 10
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
---------------------------- --------------------------
% OF TOTAL % OF $ % OF TOTAL % OF $
REVENUE INCREASE REVENUE INCREASE
------- -------- ------- --------
1996 1997 96 TO 97 1996 1997 96 TO 97
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Software license fees .............. 29% 29% 20% 29% 29% 16%
Service revenue .................... 71 71 20 71 71 16
--- --- ------ --- --- ----
Total revenue ................... 100 100 20 100 100 16
--- --- ------ --- --- ----
Operating costs and expenses:
Cost of software license fees ...... 5 5 14 6 5 12
Cost of services ................... 25 28 35 25 27 26
Research and development ........... 21 20 17 21 20 13
Sales and marketing ................ 35 34 18 34 34 16
General and administrative ......... 11 9 2 11 9 3
Write-off of in-process research
and development acquired ......... -- 35 n/a -- 18 n/a
--- --- ------ --- --- ----
Total operating costs and
expenses .................... 97 131 63 96 114 38
--- --- ------ --- --- ----
Income (loss) from operations ........ 3 (31) (1,276) 4 (14) (492)
--- --- ------ --- --- ----
Other income, net .................... 2 2 40 2 3 58
--- --- ------ --- --- ----
Income (loss) before provision
(benefit) for income taxes ......... 5 (29) (766) 6 (11) (317)
Provision (benefit) for income
taxes .............................. 2 (10) (741) 2 (4) (311)
--- --- ------ --- --- ----
Net income (loss) ................... 3% (19)% (780)% 4% (7)% (321)%
=== === ====== === === ====
</TABLE>
Included in operating costs and expenses above, and further discussed in
note 5 to the condensed consolidated financial statements, is a one-time charge
of $6.8 million for the three and six months ended March 31, 1997 as a result of
the write-off of in-process research and development acquired in connection with
the acquisition of Time. On a pro forma basis, exclusive of this one-time
charge, operating costs and expenses would have reported $19.2 million and $36.5
million for the three and six months ended March 31, 1997, respectively,
resulting in a 20% and 16% increase over the same periods a year previous,
respectively, income from operations would have reported $0.6 million and $1.5
million for the three and six months ended March 31, 1997, respectively,
resulting in a 21% and 14% increase over the same periods a year previous,
respectively, and net income would have reported $0.7 million and $1.7 million
for the three and six months ended March 31, 1997, respectively, resulting in an
increase of 31% and 30% over the same periods a year previous, respectively. Net
income per share would have reported an increase of 19% from $0.05 for the
quarter ended March 31, 1996 to $0.06 for the quarter ended March 31, 1997 and a
16% increase from $0.12 for the six months ended March 31, 1996 to $0.14 for the
six months ended March 31, 1997.
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1997
REVENUE. Total revenue, consisting of software license fees and service
revenue, increased 20%, from $16.5 million for the quarter ended March 31, 1996
to $19.8 million for the quarter ended March 31, 1997.
Software license fee revenue increased 20%, from $4.7 million for the
quarter ended March 31, 1996 to $5.7 million for the quarter ended March 31,
1997. The growth was predominately generated from domestic operations which grew
28% over the same period a year ago. The Asia Pacific region also contributed
with 21% growth over the same period a year ago. The Company believes that the
software license fee growth reflects a continued market acceptance of the
products and the efforts of target marketing into the process manufacturing and
healthcare markets.
Service revenue increased 20%, from $11.8 million for the quarter ended
March 31, 1996 to $14.2 million for the quarter ended March 31, 1997. The
Company's service revenue is comprised of software
10
<PAGE> 11
maintenance fees and fees for consulting services. Overall, the increase was
attributable to an increase in the installed base of customers and an increase
in larger consulting service engagements. The following table sets forth a
comparative breakout of the components of service revenue.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
(IN THOUSANDS) % OF $ INCREASE
---------------
1996 1997 96 TO 97
---- ---- --------
<S> <C> <C> <C>
Maintenance fee revenue $ 7,442 $ 8,378 13%
Consulting services revenue 4,353 5,773 33
------- ------- --
Total service revenue $11,795 $14,151 20%
======= ======= ==
</TABLE>
COST OF SOFTWARE LICENSE FEES. Cost of software license fees consists
primarily of the cost of product media, manuals, shipping and amortization
expense related to capitalized software development costs. Cost of software
license fees increased 14%, from $0.9 million for the quarter ended March 31,
1996 to $1.0 million for the quarter ended March 31, 1997. Cost of software
license fees as a percentage of software license fee revenue decreased slightly
from 19% for the quarter ended March 31, 1996 to 18% for the quarter ended March
31, 1997. The decrease as a percentage of software license fees is attributed to
continued decreases in documentation-related expenses offset by an increase of
amortization of capitalized software development costs.
COST OF SERVICES. Cost of services consists of costs to provide training,
technical support and implementation consulting services to licensees of
Infinium Software products. Cost of services increased 35%, from $4.1 million
for the quarter ended March 31, 1996 to $5.5 million for the quarter ended March
31, 1997. Cost of services as a percentage of service revenue increased from 34%
for the quarter ended March 31, 1996 to 39% for the quarter ended March 31,
1997. The increase in the dollar amount of such costs and as a percentage of
service revenue resulted primarily from increased staffing and to an increase in
the use of third party consultants for delivery of consulting services in
response to continued growth in the customer base and to the continued demand
for consulting services.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of engineering personnel costs reduced by capitalized software
development costs and, when applicable, research funding. Research and
development expenses increased 17%, from $3.4 million for the quarter ended
March 31, 1996 to $4.0 million for the quarter ended March 31, 1997. Research
and development spending, defined as research and development expenses before
capitalization of software development costs and, if applicable, research
funding, increased 16%, from $4.3 million for the quarter ended March 31, 1996
to $5.0 million for the quarter ended March 31, 1997. Research and development
spending as a percentage of total revenue was 26% for the quarter ended March
31, 1996 and 25% for the quarter ended March 31, 1997. The increase in research
and development expense and spending was due primarily to increased NT platform
development for the current period. The Company capitalized $0.8 million of
software development costs for each of the quarters ended March 31, 1996 and
1997.
The Company has numerous product development initiatives underway and
anticipates that expenditures in future periods will increase. In addition to
its traditional AS/400 platform efforts, major product initiatives are currently
underway on the Microsoft NT Server platform as a result of the recent
acquisition of Time with respect to financial management applications. The
Company is also making substantial investments to develop a new Human Resources
Management product line designed exclusively for the Microsoft NT Server market.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions, royalties, travel, promotional expenses, and facilities,
computers and communications costs for direct sales offices. Sales and marketing
expenses increased 18%, from $5.8 million for the quarter ended March 31, 1996
to $6.8 million for the quarter ended March 31, 1997. Sales and marketing
expenses as a percentage
11
<PAGE> 12
of total revenue decreased slightly from 35% for the quarter ended March 31,
1996 to 34% for the quarter ended March 31, 1997. The increase in dollar amount
was attributable to increased staffing in the direct sales force and an
expansion of distribution channels in preparation for the launch of the NT
products. The increase was also attributed to the roll-out of the new corporate
identity of Infinium Software from that of Software 2000. Sales and marketing
expenses on an absolute basis and as a percentage of revenue is expected to
continue to increase in the future as a result of these initiatives.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries of executive, administrative, financial and legal
personnel, as well as provisions for doubtful accounts, insurance, investor
relations and outside professional fees. General and administrative expenses was
$1.8 million for the quarters ended March 31, 1996 and 1997. General and
administrative expenses as a percentage of total revenue decreased from 11.0%
for the quarter ended March 31, 1996 to 9% for the quarter ended March 31, 1997.
The decrease as a percent of revenue is attributable to ongoing cost containment
efforts throughout the general and administrative areas.
WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in
Note 5 to the condensed consolidated financial statements, the Company recorded
a one-time charge to operations of $6.8 million for the write-off of in-process
research and development acquired in connection with the acquisition of Time.
PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal,
state and foreign income taxes were $0.3 million and ($2.0) million for the
quarter ended March 31, 1996 and for the quarter ended March 31, 1997,
respectively. The effective tax rates were 36% for the quarter ended March 31,
1996 and 35.0% for the quarter ended March 31, 1997.
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997
REVENUE. Total revenue increased 16%, from $32.8 million for the six months
ended March 31, 1996 to $38.1 million for the six months ended March 31, 1997.
Software license fee revenue increased 16%, from $9.5 million for the six months
ended March 31, 1996 to $11.0 million for the six months ended March 31, 1997.
The software license fee growth reflects a continued market acceptance of the
products and the efforts of target marketing into the process manufacturing and
healthcare markets. Service revenue increased 16%, from $23.3 million for the
six months ended March 31, 1996 to $27.1 million for the six months ended March
31, 1997. The increase was primarily attributable to an increase in the
installed base of customers resulting in an increase in both maintenance revenue
and consulting service revenue.
The following table sets forth a comparative breakout of the components of
service revenue.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------
(IN THOUSANDS) % OF $ INCREASE
---------------
1996 1997 96 TO 97
---- ---- --------
<S> <C> <C> <C>
Maintenance fee revenue $14,466 $16,532 14%
Consulting services revenue 8,848 10,565 19
------- ------- --
Total service revenue $23,314 $27,097 16%
======= ======= ==
</TABLE>
COST OF SOFTWARE LICENSE FEES. Cost of software license fees increased 12%,
from $1.8 million for the six months ended March 31, 1996 to $2.0 million for
the six months ended March 31, 1997. Cost of software license fees as a
percentage of software license fee revenue remained consistent at 19% for the
six months ended March 31, 1996 and 1997.
12
<PAGE> 13
COST OF SERVICES. Cost of services increased 26%, from $8.1 million for the
six months ended March 31, 1996 to $10.2 million for the six months ended March
31, 1997. Cost of services as a percentage of service revenue increased from 35%
for the six months ended March 31, 1996 to 38% for the six months ended March
31, 1997. The increase in the dollar amount of such costs and as a percentage of
service revenue resulted primarily from an increase in the use of third party
consultants for delivery of consulting services into the customer base in
response to continued growth in the customer base and to the continued demand
for consulting services.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 13%,
from $6.8 million for the six months ended March 31, 1996 to $7.7 million for
the six months ended March 31, 1997. Research and development spending, defined
as research and development expenses before capitalization of software
development costs and research funding, increased 13%, from $8.5 million for the
six months ended March 31, 1996 to $9.6 million for the six months ended March
31, 1997. Research and development spending as a percentage of total revenue was
26% for the six months ended March 31, 1996 and 25% for the six months ended
March 31, 1997. The increase in research and development expense and spending
was due primarily to increased NT platform development initiatives during the
current fiscal year. The Company capitalized $1.7 million of software
development costs for each of the six months ended March 31, 1996 and 1997.
SALES AND MARKETING. Sales and marketing expenses increased 16%, from $11.3
million for the six months ended March 31, 1996 to $13.1 million for the six
months ended March 31, 1997. Sales and marketing expenses as a percentage of
total revenue remained consistent at 34% for the six months ended March 31, 1996
and 1997. The increase in dollar amount was attributable to increased staffing
in the direct sales force and an expansion of distribution channels in
preparation for the launch of NT products as well as to the roll-out of the new
corporate identity of Infinium Software from that of Software 2000 during the
second quarter of the current fiscal year.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
3%, from $3.4 million for the six months ended March 31, 1996 to $3.6 million
for the six months ended March 31, 1997. General and administrative expenses as
a percentage of total revenue decreased from 11.0% for the six months ended
March 31, 1996 to 9% for the six months ended March 31, 1997. The increase in
dollar amount of general and administrative expenses related primarily to
additional investor relation costs related to operating as a public company
offset somewhat by a decrease in the provision for doubtful accounts.
WRITE-OFF OF RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in Note 5 to
the condensed consolidated financial statements, the Company recorded a one-time
charge to operations of $6.8 million for the write-off of in-process research
and development acquired in connection with the acquisition of Time.
PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal,
state and foreign income taxes were $0.7 million and ($1.5) million for the six
months ended March 31, 1996 and for the six months ended March 31, 1997,
respectively. The effective tax rates were 36% for the quarter ended March 31,
1996 and 35.0% for the six months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had cash, cash equivalents and marketable
securities of $39.4 million. During the first six months of fiscal 1997, the
Company used a net $4.0 million of cash, cash equivalents and marketable
securities of which $3.4 million was attributed to the acquisition of Time.
Other uses were to fund software development and to purchase computers and
equipment. The principal sources of cash, cash equivalents and marketable
securities was provided by operating activities and proceeds from the exercise
of stock options under the Company's stock option plans and employee stock
purchase plan. In October, 1996, the Company's $5.0 million working capital
revolving line of credit with a bank expired and the Company
13
<PAGE> 14
does not currently plan to negotiate another line. The Company had not made any
borrowings under the facility.
The Company's accounts receivable balance, net of the allowance for
doubtful accounts, was $15.9 million at March 31, 1997 and $12.4 million at
September 30, 1996. Days sales of receivables outstanding ("DSO") was 69 days at
March 31, 1997 compared to 77 days at the end of last quarter. The Company
calculates DSO as accounts receivable, net of allowance for doubtful accounts
divided by the current quarters revenue multiplied by 90. The decrease in DSO
from the prior quarter resulted primarily from collections on accounts
receivable.
Deferred revenue remained consistent at $26.6 million at March 31, 1997 and
December 31, 1996. This was a 7% increase from the $24.9 million at September
30, 1996. The increase in deferred revenue was primarily due to an increase in
deferred license fee revenue and deferred consulting services as a result of
continued growth in the customer base and to the continued demand for consulting
services.
The Company believes that cash, cash equivalents and marketable securities
on hand and cash flows from operations will be sufficient to fund its operations
at least through fiscal 1998. While operating activities may provide cash in
certain periods, to the extent the Company experiences growth in the future, the
Company anticipates that its operating and investing activities may use cash,
and consequently such growth may require the Company to obtain additional
sources of financing. In addition, although there are no current agreements or
negotiations with respect to additional material acquisitions of complementary
businesses, products or technologies, such transactions could, if they were to
occur, require additional sources of financing.
FACTORS AFFECTING FUTURE PERFORMANCE
The Company's quarterly revenue and operating results have varied
significantly in the past and are likely to vary substantially from quarter to
quarter in the future. Such fluctuations may result in volatility in the price
of the Company's Common Stock. Quarterly revenue and operating results may
fluctuate as a result of a variety of factors, including the Company's lengthy
sales cycle, the proportion of revenue attributable to license fees versus
service revenue, changes in the level of operating expenses, demand for the
Company's products, the introduction of new products and product enhancements by
the Company or its competitors, the Company's ability to attract and retain
employees, changes in customer budgets, competitive conditions in the industry
and general economic conditions. Further, the purchase of the Company's products
often involves a significant commitment of capital by its customers with the
attendant delays frequently associated with large capital expenditures and
authorization procedures within an organization. For these and other reasons,
the sales cycles for the Company's products are typically lengthy and subject to
a number of significant risks over which the Company has little or no control.
The Company historically has operated with little software license backlog
because its software products are generally shipped as orders are received. The
Company has often recognized a substantial portion of its revenue in the last
month of the quarter and often in the last week of that month. As a result,
license fees in any quarter are substantially dependent on orders booked and
shipped in the last month or last week of that quarter. Accordingly, a small
variation in the timing of recognition of revenue for specific transactions is
likely to adversely and disproportionately affect the Company's operating
results for a quarter because the Company establishes its expenditure levels on
the basis of its expected future revenue and only a small portion of the
Company's expenses vary with its revenue. Accordingly, the Company believes that
period to period comparisons of results of operations are not necessarily
meaningful and should not be relied upon as indicative of future performance.
The Company's business has experienced and is expected to continue to
experience significant seasonality. In recent years, the Company has had greater
demand for its products in its fourth fiscal quarter and has experienced lower
revenues in its succeeding first and second fiscal quarters. The fluctuations
are caused primarily by customer purchasing patterns and the Company's sales
recognition programs which reward and recognize sales personnel on the basis of
achievement of annual performance
14
<PAGE> 15
quotas. Due to the factors set forth in this section, it is likely that in some
future quarter the Company's operating results will be below the expectations of
the Company and public market analysts and investors. In such event, the price
of the Company's Common Stock would likely be materially adversely affected.
The business applications software market is characterized by rapid
technological change, frequent new product introductions, evolving industry
standards and changes in customer demands. The introduction of products
embodying new technologies and the emergence of new industry standards can
render existing products obsolete and unmarketable. The Company's future success
will depend in part on its ability to enhance existing products and services and
to develop and introduce new products and services to meet changing client
requirements. There can be no assurance that the Company will be successful in
developing and marketing product enhancements or new products that respond to
technological change or evolving industry standards, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products and enhancements, or that any new
products and product enhancements it may introduce will achieve market
acceptance. In addition, there can be no assurance that the Company will not
encounter product development delays in the future or that, despite testing by
the Company, errors will not be found in new products or product enhancements
after commencement of commercial shipments, resulting in loss of market share,
delay in market acceptance, or warranty claims which could have a material
adverse effect upon the Company's business, operating results and financial
condition.
The majority of the Company's products, maintenance and other services
related thereto, are presently designed for users of IBM AS/400 mid-range
computers. Future revenue from licenses of present products and sales of
services and recurring maintenance revenue are therefore dependent on new sales
and continued widespread use of the AS/400 and the continued support of such
computers by IBM. Because the Company's primary current source of revenue comes
from customers using IBM mid-range computers, a significant shift in the way the
Company's customers use computers may have a material adverse effect on the
Company's business. In addition, because the Company's primary product line
requires the use of IBM's OS/400 operating system, the Company may be required
to adapt those products to any changes made in such operating system in the
future. The Company's inability to adapt to future changes in the OS/400
operating system, or delays in doing so, could have a material adverse effect on
the Company's business, operating results and financial condition.
The Company's development and implementation of new human resources
software applications to run on the Microsoft Windows NT servers involve
significant research and development expenditures and more intense competition
from a larger number of competitors. There can be no assurance that the Company
will be successful in developing and marketing these products or will be able to
compete successfully against current or future competitors.
In addition, the Company recently acquired all of the outstanding
capital stock of Time, a company which had developed a suite of client server
financial application software products. Although the Company expects to
introduce enhanced versions of certain of the Time Products in North America
and other international markets in mid-1997, there can be no assurance that it
will complete the product enhancements necessary for such introductions within
that period.
The business applications software market is highly competitive and rapidly
changing. A number of companies offer products similar to the Company's products
and target the same customers as the Company. The Company believes its ability
to compete depends upon many factors within and outside its control, including
the timely development and introduction of new products and product
enhancements, product functionality, performance, price, reliability, customer
service and support, sales and marketing efforts and product distribution. The
Company believes that competition in its industry is undergoing rapid change and
that the barriers to competition between market segments that have previously
existed are decreasing. Due to the relatively low barriers to entry in the
software market, the Company expects additional competition from other
established and emerging companies as the client/server business
15
<PAGE> 16
applications software market continues to develop and expand. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which would have a material adverse effect on the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that competitive pressures will not have a material adverse
effect on the Company's business, operating results, and financial condition.
Revenue from customers outside North America represented 8.7% and 10.6% of
the Company's total revenue in fiscal 1995 and fiscal 1996, respectively. The
Company believes that its revenue and future operating results will depend, in
part, on its ability to increase sales in international markets. There can be no
assurance that the Company will be able to maintain or increase its current
level of international revenue. An important part of the Company's strategy is
to expand its indirect marketing channels in international markets. There can be
no assurance that the Company will be able to attract and retain international
distributors and resellers that will be able to market the Company's products
effectively and will be qualified to provide timely and cost-effective customer
support and service. The inability to attract and retain important distributors
and resellers could materially and adversely affect the Company's international
business, operating results and financial condition. Other risks inherent to the
Company's international business activities generally include unexpected changes
in regulatory requirements, tariffs and other trade barriers, costs and
difficulties of localizing products for foreign countries, lack of acceptance of
localized products in foreign countries, longer accounts receivable payment
cycles, difficulty in managing international operations, potentially adverse tax
consequences including restrictions on the repatriation of earnings, the burdens
of complying with a wide variety of foreign laws and economic instability. There
can be no assurance that such factors would not have a material adverse affect
on the Company's future international revenue, and consequently, on the
Company's business, operating results and financial condition.
16
<PAGE> 17
PART II - OTHER INFORMATION
Items 1 - 3. Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Stockholders was held on
Friday, February 14, 1997.
(b) Manuel Correia and Frederick J. Lizza were elected as Class
I directors at the meeting. The terms of office of Robert A.
Pemberton, Robert P. Schechter, Roland Pampel and R. Stephen
Cheheyl as Class II and Class III directors continued after
the meeting.
(c) At the meeting, the stockholders elected the Company's Class
I Directors as follows:
<TABLE>
<CAPTION>
Broker
------
Name For Against Withheld Abstentions Non-votes
- ---- --- ------- -------- ----------- ---------
<S> <C> <C>
Correia 10,784,402 17,689
Lizza 10,703,127 98,964
</TABLE>
In addition, the stockholders approved the change of the
Company's corporate name to "Infinium Software, Inc."
<TABLE>
<CAPTION>
Broker
------
For Against Withheld Abstentions Non-votes
--- ------- -------- ----------- ---------
<S> <C> <C> <C>
10,637,652 57,744 32,795 73,900
</TABLE>
Finally, the stockholders ratified the selection of the firm of
Price Waterhouse LLP as auditors for the Company for the fiscal year ending
September 30, 1997.
<TABLE>
<CAPTION>
Broker
------
For Against Withheld Abstentions Non-votes
--- ------- -------- ----------- ---------
<S> <C> <C>
10,695,353 91,208 15,530
</TABLE>
Item 5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(i) Articles of Amendment.
Exhibit 3(ii) Third Amended and Restated By-Laws.
Exhibit 4 Stock Certificate.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
On January 21, 1997, the Company filed a Current Report on
Form 8-K, Item 9, reporting the Company's acquisition of all
of the issued share capital of Time (Open Systems) Limited,
a corporation formed under the laws of the United Kingdom,
in exchange for $2,793,450 in cash and 769,867 shares of the
Company's Common Stock (the "Company Shares"). The Company
Shares were issued by the Company pursuant to an exemption
from registration provided by Regulation S under the
Securities Act of 1933.
On February 24, 1997, the Company filed a Current Report on
Form 8-K, Item 5, reporting that the stockholders of the
Company approved an amendment to the Restated Articles of
Organization changing the corporate name to Infinium
Software, Inc. from Software 2000, Inc., effective February
18, 1997. In connection with the change in name, the
Company's Nasdaq National Market ticker symbol was changed
to INFM from SFWR.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Infinium Software, Inc. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: May 14, 1997
INFINIUM SOFTWARE, INC.
by:
/s/ DANIEL J. KOSSMANN
------------------------
Daniel J. Kossmann
Chief Financial Officer
18
<PAGE> 19
INFINIUM SOFTWARE, INC.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
3(i) Articles of Amendment 20
3(ii) Third Amended and Restated By-Laws 24
4 Stock Certificate 37
27 Financial Data Schedule 38
19
<PAGE> 1
[Set on left side of page]
/s/ ????????
- ---------------------
Examiner
/s/ ???????
- ---------------------
Name
Approved
C
P
M
R.A.
- ---------------------
P.C.
FEDERAL IDENTIFICATION
NO. 04-2734036
----------------------
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108-1512
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
We, Frederick J. Lizza , *President/
---------------------------------------------------------------
and Anne Marie Monk , *Clerk/
---------------------------------------------------------------
of Software 2000, Inc. ,
---------------------------------------------------------------
(Exact name of corporation)
located at 25 Communications Way, Drawer 6000, Hyannis, MA 02601 ,
---------------------------------------------------------
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
One (1)
- --------------------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5, and/or 6 being amended)
<TABLE>
<CAPTION>
<S> <C>
of the Articles of Organization were duly adopted at a meeting held on February 14, 1997, by vote of:
------------------
10,637,652 shares of Common Stock of 10,802,091 shares outstanding,
- ----------- ------------------------------ ---------------
(type, class & series, if any)
shares of of shares outstanding, and
- ----------- ------------------------------ ---------------
(type, class & series, if any)
shares of of shares outstanding,
- ----------- ------------------------------ ---------------
(type, class & series, if any)
1**being at lease a majority of each type, class or series outstanding and entitled to vote thereon:/
</TABLE>
Voted: That the name by which the corporation shall be
known is hereby changed to : Infinium Software, Inc.
*Delete the inapplicable words. ** Delete the inapplicable clause.
1 For amendments adopted pursuant to Chapter 156B, Section 70.
2 For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of separate 8 1/2 x
11 sheets of paper with a left margin of at least 1 inch. Additions to more than
one article may be made on a single sheet so long as each article requiring each
addition is clearly indicated.
<PAGE> 2
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- --------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
Common: Common:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Preferred: Preferred:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Change the total authorized to :
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- --------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
Common: Common:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Preferred: Preferred:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
Later effective date: .
-----------------------------------------------
SIGNED UNDER THE PENALTIES OF PERJURY, this 17th day of February, 1997.
--------- ----------- -----
/s/ Frederick J. Lizza , *President/
- -------------------------------------------------------------
/s/ Anne Marie Monk , *Clerk/
- -------------------------------------------------------------
*Delete the inapplicable words.
<PAGE> 4
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
=====================================
I hereby approve the within Articles of Amendment and, the filing fee
in the amount of $100 having been paid, said articles are deemed to
have been filed with me this 18th day of February 1997.
Effective date:
------------------------------------------------------
/s/ WILLIAM FRANCIS GALVIN
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Infinium Software, Inc.
- ---------------------------------------------
Anne Marie Monk, Clerk
- ---------------------------------------------
25 Communications Way
- ---------------------------------------------
Hyannis, MA 02601
<PAGE> 1
INFINIUM SOFTWARE, INC.
****************
THIRD AMENDED AND RESTATED
BY-LAWS
****************
ARTICLE I
---------
Stockholders
------------
1. ANNUAL MEETING. The annual meeting of stockholders shall be held on the
fifteenth (15th) day in February in each year (or if that be a legal holiday in
the place where the meeting is to be held, on the next succeeding full business
day) at 10:00 a.m. unless a different hour is fixed by the Directors or the
President and stated in the notice of the meeting. The purposes for which the
annual meeting is to be held, in addition to those prescribed by law, by the
Articles of Organization of the corporation (the "Articles of Organization") or
by these By-laws, may be specified by the Directors or the President. In the
event an annual meeting has not been held on the date fixed in these By-laws, a
special meeting in lieu of the annual meeting may be held with all the force and
effect of an annual meeting.
2. SPECIAL MEETINGS. Special meetings of stockholders may be called by the
President or by the Directors. Upon written application of one or more
stockholders who hold at least 10% in interest of the capital stock entitled to
vote at a meeting, a special meeting shall be called by the Clerk, or in the
case of the death, absence, incapacity or refusal of the Clerk, by another
officer. Notwithstanding the immediately preceding sentence, if the corporation
has a class of voting stock registered under the Securities Exchange Act of
1934, as amended, upon written application of one or more stockholders who hold
at least 40% in interest of the capital stock entitled to vote at a meeting, a
special meeting shall be called by the Clerk, or in case of the death, absence,
incapacity or refusal of the Clerk, by any other officer.
3. PLACE OF MEETINGS. All meetings of stockholders shall be held at the
principal office of the corporation unless a different place (within or without
Massachusetts, but within the United States) is fixed by the Directors or the
President and stated in the notice of the meeting.
4. NOTICE OF MEETINGS. A written notice of the place, date and hour of all
meetings of stockholders stating the purpose of the meeting shall be given by
the Clerk or an Assistant Clerk or by the person calling the meeting at least
seven days before the meeting or such longer period
<PAGE> 2
-2-
as is required by law to each stockholder entitled to vote thereat and to each
stockholder who under the law, under the Articles of Organization or under these
By-laws, is entitled to such notice, by leaving such notice with such
stockholder or at his or her residence or usual place of business, or by mailing
it, postage prepaid, and addressed to such stockholder at his or her address as
it appears in the records of the corporation. Whenever notice of a meeting is
required to be given a stockholder under any provision of the Massachusetts
Business Corporation Law or of the Articles of Organization or these By-laws, a
written waiver thereof, executed before or after the meeting by such stockholder
or his or her attorney thereunto authorized and filed with the records of the
meeting, shall be deemed equivalent to such notice.
5. NOTICE OF STOCKHOLDER BUSINESS. The following provisions of this Section
5 shall apply to the conduct of business at any meeting of the stockholders. (As
used in this Section 5, the term annual meeting shall include a special meeting
in lieu of annual meeting.)
(a) At any meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) pursuant to the
corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the corporation who is a stockholder of
record at the time of giving of the notice provided for in paragraph (b) of this
Section 5, who shall be entitled to vote at such meeting and who complies with
the notice procedures set forth in paragraph (b) of this Section 5.
(b) For business to be properly brought before any meeting of the
stockholders by a stockholder pursuant to clause (iii) of paragraph (a) of this
By-law, the stockholder must have given timely notice thereof in writing to the
Clerk of the corporation. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the corporation
(i) in the case of any annual meeting, not less than ninety (90) days nor more
than 120 days prior to the date specified in Section 1 above for such annual
meeting, regardless of any postponements, deferrals or adjournments of that
meeting to a later date; provided, however, that if a special meeting in lieu of
annual meeting of stockholders is to be held on a date prior to the date
specified in Section 1 above, and if less than seventy (70) days' notice or
prior public disclosure of the date of such special meeting in lieu of annual
meeting is given or made, notice by the stockholder to be timely must be so
delivered or received not later than the close of business on the tenth day
following the earlier of the date on which notice of the date of such special
meeting in lieu of annual meeting was mailed or the day on which public
disclosure was made of the date of such special meeting in lieu of annual
meeting; and (ii) in the case of a special meeting (other than a special meeting
in lieu of an annual meeting), not later than the tenth day following the
earlier of the day on which notice of the date of the scheduled meeting was
mailed or the day on which public disclosure was made of the date of the
scheduled meeting. A stockholder's notice to the Clerk shall set forth as to
each matter the stockholder proposes to bring before the meeting, (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and address,
as they appear on the corporation's books, of the stockholder proposing such
business, the name and address of the beneficial owner, if any, on whose behalf
the proposal is made, and the name and address of any other stockholders or
beneficial owners known by such stockholder to be supporting such proposal,
(iii) the class and number of shares of the corporation which are owned
<PAGE> 3
-3-
beneficially and of record by such stockholder of record, by the beneficial
owner, if any, on whose behalf the proposal is made and by any other
stockholders or beneficial owners known by such stockholder of record and/or of
the beneficial owner, if any, on whose behalf the proposal is made, in such
proposed business and any material interest of any other stockholders or
beneficial owners known by such stockholder to be supporting such proposal in
such proposed business, to the extent known by such stockholder.
(c) Notwithstanding anything in these By-laws to the contrary, no
business shall be conducted at a meeting except in accordance with the
procedures set forth in these By-laws. The person presiding at the meeting
shall, if the facts warrant, determine that business was not properly brought
before the meeting and in accordance with the procedures prescribed by these
By-laws, and if he should so determine, he shall so declare at the meeting and
any such business not properly brought before the meeting shall not be
transacted. Notwithstanding the foregoing provision of this By-law, a
stockholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended (or any successor provision), and the rules and
regulations thereunder with respect to the matters set forth in this By-law.
(d) This provision shall not prevent the consideration and approval or
disapproval at the meeting of reports of officers, Directors and committees of
the Board of Directors, but, in connection with such reports, no new business
shall be acted upon at such meeting unless properly brought before the meeting
as herein provided.
6. QUORUM. The holders of a majority in interest of all stock issued,
outstanding and entitled to vote at a meeting shall constitute a quorum, but a
lesser number may adjourn any meeting from time to time without further notice;
except that, if two or more classes of stock are outstanding and entitled to
vote as separate classes, then in the case of each such class, a quorum shall
consist of the holders of a majority in interest of the stock of that class
issued, outstanding and entitled to vote.
7. VOTING AND PROXIES. Each stockholder shall have one vote for each share
of stock entitled to vote owned by him or her and a proportionate vote for a
fractional share, unless otherwise provided by the Articles of Organization in
the case that the corporation has two or more classes or series of stock.
Capital stock shall not be voted if any installment of the subscription therefor
has been duly demanded in accordance with the law of the Commonwealth of
Massachusetts and is overdue and unpaid. Stockholders may vote either in person
or by written proxy. Proxies shall be filed with the clerk of the meeting, or of
any adjournment thereof, before being voted. No proxy dated more than six months
before the date named therein shall be valid and no proxy shall be valid after
the final adjournment of such meeting. Notwithstanding the provisions of the
preceding sentence, a proxy coupled with an interest sufficient in law to
support an irrevocable power, including, without limitation, an interest in
shares or in the corporation generally, may be made irrevocable if it so
provides, need not specify the meeting to which it relates, and shall be valid
and enforceable until the interest terminates, or for such shorter period as may
be specified in the proxy. Except as otherwise limited therein, proxies shall
entitle the persons named therein to vote at any adjournment of such meeting but
shall not be valid after final adjournment of such meeting. A proxy with respect
to stock held in
<PAGE> 4
-4-
the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the corporation receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a stockholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
8. ACTION AT MEETING. When a quorum is present, the holders of a majority
of the stock present or represented and voting on a matter (or if there are two
or more classes of stock entitled to vote as separate classes, then in the case
of each such class, the holders of a majority of the stock of that class present
or represented and voting on a matter), except where a larger vote is required
by law, the Articles of Organization or these By-laws, shall decide any matter
to be voted on by the stockholders. Broker non-votes will be counted for
purposes of determining whether a quorum is present on any matter, but will not
be counted as having been voted on any matter for which voting authority is
withheld. Any election of Directors or officers by the stockholders shall be
determined by a plurality of the votes cast by stockholders entitled to vote at
the election. Any such elections shall be by ballot if so requested by any
stockholder entitled to vote thereon. The corporation shall not directly or
indirectly vote any share of its own stock.
9. ACTION WITHOUT MEETING. Any action required or permitted to be taken at
any meeting of the stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent to the action in writing and
the written consents are filed with the records of the meetings of stockholders.
Such consent shall be treated for all purposes as a vote at a meeting.
ARTICLE II
----------
Directors
---------
1. POWERS. The business of the corporation shall be managed by a Board of
Directors who may exercise all the powers of the corporation except as otherwise
provided by law, by the Articles of Organization or by these By-laws. In the
event of vacancy in the Board of Directors, the remaining Directors, except as
otherwise provided by law, may exercise the powers of the full Board until the
vacancy is filled.
2. NUMBER, ELECTION AND QUALIFICATION. A Board of Directors (the "Board")
shall be elected by the stockholders at the annual meeting. The number of
Directors shall be fixed by the stockholders (except as that number may be
enlarged by the Board of Directors acting pursuant to Section 4 of this
Article), but shall be not less than three, except that whenever there shall be
only two stockholders the number of directors shall be not less than two and
whenever there shall be only one stockholder or prior to the issuance of any
stock, there shall be at least one director, and shall be not more than nine.
Notwithstanding the foregoing provisions, if the corporation is a "registered
corporation" within the meaning of Section 50A of the Massachusetts Business
Corporation Law and has not elected, pursuant to paragraph (b) of such Section
50A, to be exempt from the provisions of paragraph (a) of such Section 50A,
then:
<PAGE> 5
-5-
(i) In accordance with paragraph (d), clause (iv) of such Section 50A,
the number of Directors shall be fixed only by vote of the Board of
Directors.
(ii) In accordance with paragraph (a) of such Section 50A, the
Directors of the corporation shall be classified with respect to the time
for which they severally hold office, into three classes, as nearly equal
in number as possible; the term of office of those of the first class
("Class I Directors") to continue until the first annual meeting following
the date the corporation becomes subject to such paragraph (a) and until
their successors are duly elected and qualified; the term of office of
those of the second class ("Class II Directors") to continue until the
second annual meeting following the date the corporation becomes subject to
such paragraph (a) and until their successors are duly elected and
qualified; and the term of office of those of the third class ("Class III
Directors") to continue until the third annual meeting following the date
the corporation becomes subject to such paragraph (a) and until their
successors are duly elected and qualified. At each annual meeting of the
corporation, the successors to the class of directors whose term expires at
that meeting shall be elected to hold office for a term continuing until
the annual meeting held in the third year following the year of their
election and until their successors are duly elected and qualified.
3. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from the enlargement of the Board, may be filled
by the stockholders or, in the absence of stockholder action, by the Directors.
Each such successor shall hold office for the unexpired term of his or her
predecessor and until his or her successor is chosen and qualified or until his
or her earlier death, resignation or removal. Notwithstanding the foregoing
provisions, if the Directors of the corporation are classified with respect to
the time for which they severally hold office pursuant to paragraph (a) of
Section 50A of the Massachusetts Business Corporation Law, as it may be amended
from time to time, any vacancy in the Board of Directors, however occurring,
shall be filled in accordance with the provisions of paragraph (d) of such
Section 50A.
4. ENLARGEMENT OF THE BOARD. The Board of Directors may be enlarged by the
stockholders at any meeting or by vote of a majority of the Directors then in
office. Notwithstanding the foregoing provisions, if the Directors of the
corporation are classified with respect to the time for which they severally
hold office pursuant to paragraph (a) of Section 50A of the Massachusetts
Business Corporation Law, as it may be amended from time to time, the Board of
Directors may be enlarged only in accordance with the provisions of paragraph
(d) of such Section 50A.
5. TENURE. Except as otherwise provided by law, by the Articles of
Organization or by these By-laws, Directors shall hold office until the next
annual meeting of stockholders and until their successors are chosen and
qualified. Any Director may resign by delivering his or her written resignation
to the corporation at its principal office or to the President, Clerk or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
6. REMOVAL. A Director may be removed from office (a) with or without cause
by the vote of the holders of a majority of the shares entitled to vote in the
election of Directors,
<PAGE> 6
-6-
provided that the Directors of a class elected by a particular class of
stockholders may be removed only by the vote of the holders of a majority of the
shares of the particular class of stockholders entitled to vote for the election
of such Directors; or (b) for cause by vote of a majority of the Directors then
in office. A Director may be removed for cause only after a reasonable notice
and opportunity to be heard before the body proposing to remove him or her.
Notwithstanding the foregoing provisions, if the Directors of the corporation
are classified with respect to the time for which they severally hold office
pursuant to paragraph (a) of Section 50A of the Massachusetts Business
Corporation Law, as it may be amended from time to time, the removal of
Directors shall be governed by the provisions of paragraph (c) of such Section
50A.
7. MEETINGS. Regular meetings of the Directors may be held without call or
notice at such places and at such times as the Directors may from time to time
determine, provided that any Director who is absent when such determination is
made shall be given notice of the determination. A regular meeting of the
Directors may be held without a call or notice at the same place as the annual
meeting of stockholders. Special meetings of the Directors may be held at any
time and place designated in a call by the President or two or more Directors.
8. TELEPHONE CONFERENCE MEETINGS. Members of the Board of Directors may
participate in a meeting of the board by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
9. NOTICE OF MEETINGS. Notice of all special meetings of the Directors
shall be given to each Director by the Secretary, or Assistant Secretary, or if
there be no Secretary or Assistant Secretary, by the Clerk, or Assistant Clerk,
or in case of the death, absence, incapacity or refusal of such persons, by the
officer or one of the Directors calling the meeting. Notice shall be given to
each Director in person or by telephone or by telegram sent to his or her
business or home address at least twenty-four hours in advance of the meeting,
or by written notice mailed to his or her business or home address at least
forty-eight hours in advance of the meeting. Notice of a meeting need not be
given to any Director if a written waiver of notice, executed by such Director
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 or her. A notice or waiver of notice of a
Directors' meeting need not specify the purposes of the meeting.
10. QUORUM. At any meeting of the Directors, a majority of the Directors
then in office shall constitute a quorum. Less than a quorum may adjourn any
meeting from time to time without further notice.
11. ACTION AT MEETING. At any meeting of the Directors at which a quorum is
present, a majority of the Directors present may take any action on behalf of
the Board except to the extent that a larger number is required by law or the
Articles of Organization or these By-laws.
12. ACTION BY CONSENT. Any action required or permitted to be taken at any
meeting of the Directors may be taken without a meeting, if all the Directors
consent to the action in writing
<PAGE> 7
-7-
and the written consents are filed with the records of the meetings of
Directors. Such consents shall be treated for all purposes as a vote at a
meeting.
13. COMMITTEES. The Directors may, by vote of a majority of the Directors
then in office, elect from their number an executive or other committees and may
by like vote delegate thereto some or all of their powers except those which by
law, the Articles of Organization or these By-laws they are prohibited from
delegating to such committee. Except as the Directors may otherwise determine,
any such committee may make rules for the conduct of its business, but unless
otherwise provided by the Directors or in 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 Directors.
ARTICLE III
-----------
Officers
--------
1. ENUMERATION. The officers of the corporation shall consist of a
President, a Treasurer, a Clerk, and such other officers, including a Chairman
of the Board of Directors, one or more Vice-Presidents, Assistant Treasurers,
Assistant Clerks, Secretary and Assistant Secretaries as the Directors may
determine.
2. ELECTION. The President, Treasurer and Clerk shall be elected annually
by the Directors at their first meeting following the annual meeting of
stockholders. Other officers may be chosen by the Directors at such meeting or
at any other meeting.
3. QUALIFICATION. The President may, but need not be, a Director. No
officer need be a stockholder. Any two or more offices may be held by the same
person, provided that the President and Clerk shall not be the same person. The
Clerk shall be a resident of Massachusetts unless the corporation has a resident
agent appointed for the purpose of service of process. Any officer may be
required by the Directors to give bond for the faithful performance of his or
her duties to the corporation in such amount and with such sureties as the
Directors may determine.
4. TENURE. Except as otherwise provided by law, by the Articles of
Organization or by these By-laws, the President, Treasurer and Clerk shall hold
office until the first meeting of the Directors following the next annual
meeting of stockholders and until their successors are chosen and qualified; and
all other officers shall hold office until the first meeting of the Directors
following the next annual meeting of stockholders and until their successors are
chosen and qualified, unless a shorter term is specified in the vote choosing or
appointing them. Any officer may resign by delivering his or her written
resignation to the corporation at its principal office or to the President,
Clerk or Secretary, and such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event.
5. REMOVAL. The Directors may remove any officer with or without cause by
vote of a majority of the Directors then in office; provided, that an officer
may be removed for cause only after a reasonable notice and opportunity to be
heard before the Board of Directors.
<PAGE> 8
-8-
6. PRESIDENT, CHAIRMAN OF THE BOARD, AND VICE-PRESIDENT. The President
shall, unless otherwise provided by the Directors, be the chief executive
officer of the corporation and shall, subject to the direction of the Directors,
have general supervision and control of its business. Unless otherwise provided
by the Directors he or she shall preside, when present, at all meetings of
stockholders and, unless a Chairman of the Board has been elected and is
present, of the Directors. If a Chairman of the Board of Directors is elected he
or she shall preside at all meetings of the Board of Directors at which he or
she is present. The Chairman shall have such other powers as the Directors may
from time to time designate. Any Vice-President shall have such powers as the
Directors may from time to time designate.
7. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject to the
direction of the Directors, have general charge of the financial affairs of the
corporation and shall cause accurate books of account to be kept. He or she
shall have custody of all funds, securities, and valuable documents of the
corporation, except as the Directors may otherwise provide. Any Assistant
Treasurer shall have such powers as the Directors may from time to time
designate.
8. CLERK AND ASSISTANT CLERKS. The Clerk shall record all proceedings of
the stockholders in a book to be kept therefor. Unless a transfer agent is
appointed, the Clerk shall keep or cause to be kept in Massachusetts, at the
principal office of the corporation or at his or her office, the stock and
transfer records of the corporation, in which are contained the names of all
stockholders and the record address and the amount of stock held by each. In
case a Secretary is not elected, the Clerk shall record all proceedings of the
Directors in a book to be kept therefor. In the absence of the Clerk from any
meeting of the stockholders, an Assistant Clerk, if one be elected, otherwise a
Temporary Clerk designated by the person presiding at the meeting, shall perform
the duties of the Clerk. Any Assistant Clerk shall have such additional powers
as the Directors may from time to time designate.
9. SECRETARY AND ASSISTANT SECRETARIES. If a Secretary is elected, he or
she shall keep a record of the meetings of the Directors and in his or her
absence, an Assistant Secretary, if one be elected, otherwise a Temporary
Secretary designated by the person presiding at the meeting, shall keep a record
of the meetings of the Directors. Any Assistant Secretary shall have such
additional powers as the Directors may from time to time designate.
10. OTHER POWERS AND DUTIES. Each officer shall, subject to these By-laws,
have in addition to the duties and powers specifically set forth in these
By-laws, such duties and powers as are customarily incident to his or her
office, and such duties and powers as the Directors may from time to time
designate.
ARTICLE IV
----------
Capital Stock
-------------
1. CERTIFICATES OF STOCK. Subject to the provisions of Section 2 below,
each stockholder shall be entitled to a certificate of the capital stock of the
corporation in such form as may be prescribed from time to time by the
Directors. The certificate shall be signed by the President or
<PAGE> 9
-9-
a Vice-President, and by the Treasurer or an Assistant Treasurer; provided,
however, such signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other than a Director, officer or employee of
the corporation. In case any officer who has signed or whose facsimile signature
has been placed on such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he or she were such officer at the time of its issue.
Every certificate issued for shares of stock at a time when such shares are
subject to any restriction on transfer pursuant to the Articles of Organization,
these By-laws or any agreement to which the corporation is a party shall have
the restriction noted conspicuously on the certificate and shall also set forth
on the face or back of the certificate either the full text of the restriction
or a statement of the existence of such restriction and a statement that the
corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge. Every stock certificate issued by the
corporation at a time when it is authorized to issue more than one class or
series of stock shall set forth upon the face or back of the certificate either
the full text of the preferences, voting powers, qualifications and special and
relative rights of the shares of each class and series, if any, authorized to be
issued, as set forth in the Articles of Organization, or a statement of the
existence of such preferences, powers, qualifications, and rights, and a
statement that the corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
2. STOCKHOLDER OPEN ACCOUNTS. The corporation may maintain or caused to be
maintained stockholder open accounts in which may be recorded all stockholders'
ownership of stock and all changes therein. Certificates need not be issued for
shares so recorded in a stockholder open account unless requested by the
stockholder.
3. TRANSFERS. Subject to the restrictions, if any, stated or noted on the
stock certificates, shares of stock may be transferred in the records 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 corporation or its
transfer agent may reasonably require. When such stock certificates are thus
properly surrendered to the corporation or its transfer agent, the corporation
or transfer agent shall cause the records of the corporation to reflect the
transfer of the shares of stock. Except as may be otherwise required by law, by
the Articles of Organization or by these By-laws, the corporation shall be
entitled to treat the record holder of stock as shown in its records as the
owner of such stock for all purposes, including the payment of dividends and the
right to vote with respect thereof, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the corporation of his
or her post office address.
4. RECORD DATE. The Directors may fix in advance a time which shall be not
more than sixty (60) days before the date of any meeting of stockholders or the
date for the payment of any
<PAGE> 10
-10-
dividend or the making of any distribution to stockholders or the last day on
which the consent or dissent of stockholders may be effectively expressed for
any purpose, as the record date for determining the stockholders having the
right to notice of and to vote at such meeting and any adjournment thereof or
the right to receive such dividend or distribution or the right to give such
consent or dissent. In such case only stockholders of record on such record date
shall have such right, notwithstanding any transfer of stock on the books of the
corporation after the record date. Without fixing such record date the Directors
may for any of such purposes close the transfer books for all or any part of
such period.
If no record date is fixed and the transfer books are not closed, the
record date for determining stockholders having the right 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, and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors acts with respect thereto.
5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss, mutilation or
destruction of a certificate of stock, a duplicate certificate may be issued in
place thereof, upon such terms and conditions as the Directors may prescribe.
6. ISSUE OF CAPITAL STOCK. The whole or any part of the then authorized but
unissued shares of each class of stock may be issued at any time or from time to
time by the Board of Directors without action by the stockholders.
7. REACQUISITION OF STOCK. Shares of stock previously issued which have
been reacquired by the corporation, may be restored to the status of authorized
but unissued shares by vote of the Board of Directors, without amendment of the
Articles of Organization.
ARTICLE V
---------
Provisions Relative to Directors,
Officers, Stockholders and Employees
------------------------------------
1. CERTAIN CONTRACTS AND TRANSACTIONS. In the absence of fraud or bad
faith, no contract or transaction by this corporation shall be void, voidable or
in any way affected by reason of the fact that the contract or transaction is
(a) with one or more of its officers, Directors, stockholders or employees, (b)
with a person who is in any way interested in this corporation or (c) with a
corporation, organization or other concern in which an officer, Director,
stockholder or employee of this corporation is an officer, director,
stockholder, employee or in any way interested. The provisions of this section
shall apply notwithstanding the fact that the presence of a Director or
stockholder, with whom a contract or transaction is made or entered into or who
is an officer, director, stockholder or employee of a corporation, organization
or other concern with which a contract or transaction is made or entered into or
who is in any way interested in such contract or transaction, was necessary to
constitute a quorum at the meeting of the Directors (or any authorized committee
thereof) or stockholders at which such contract or transaction was
<PAGE> 11
-11-
authorized and/or that the vote of such Director or stockholder was necessary
for the adoption of such contract or transaction, provided that if said interest
was material, it shall have been known or disclosed to the Directors or
stockholders voting at said meeting on said contract or transaction. A general
notice to any person voting on said contract or transaction that an officer,
Director, stockholder or employee has a material interest in any corporation,
organization or other concern shall be sufficient disclosure as to such officer,
Director, stockholder or employee with respect to all contracts and transactions
with such corporation, organization or other concern. This section shall be
subject to amendment or repeal only by action of the stockholders.
2. INDEMNIFICATION. Each Director and officer of the corporation, and any
person who, at the request of the corporation, serves as a director or officer
of another organization shall be indemnified by the corporation against any
cost, expense (including attorneys' fees), judgment, liability and/or amount
paid in settlement reasonably incurred by or imposed upon him or her in
connection with any action, suit or proceeding (including any proceeding before
any administrative or legislative body or agency), to which he or she may be
made a party or otherwise involved or with which he or she shall be threatened,
by reason of his or her being, or related to his or her status as, a Director or
officer of the corporation or of any other organization, which other
organization he or she serves or has served as director or officer at the
request of the corporation (whether or not he or she continues to be an officer
or Director of the corporation or such other organization at the time such
action, suit or proceeding is brought or threatened), unless such
indemnification is prohibited by the Business Corporation Law of the
Commonwealth of Massachusetts. The foregoing right of indemnification shall be
in addition to any rights to which any such person may otherwise be entitled and
shall inure to the benefit of the executors or administrators of each such
person. The corporation may pay the expenses incurred by any such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit, or proceeding, upon receipt of an undertaking
by such person to repay such payment if it is determined that such person is not
entitled to indemnification hereunder. This section shall not affect any rights
to indemnification to which corporate personnel other than Directors and
officers may be entitled by contract or otherwise under law. This section shall
be subject to amendment or repeal only by action of the stockholders, and any
such amendment or repeal shall not affect the rights arising hereunder prior to
the effective date of the amendment or repeal.
ARTICLE VI
----------
Miscellaneous Provisions
------------------------
1. FISCAL YEAR. Except as from time to time otherwise determined by the
Directors, the fiscal year of the corporation shall be the twelve (12) months
ending the last day of September. Following any change in the fiscal year
previously adopted, a certificate of such change, signed under the penalties of
perjury by the Clerk or an Assistant Clerk, shall be filed forthwith with the
state secretary.
2. SEAL. The seal of this corporation shall, subject to alteration by the
Directors, bear its name, the word "Massachusetts", and the year of its
incorporation.
<PAGE> 12
-12-
3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts,
bonds, notes and other obligations authorized to be executed by an officer of
the corporation in its behalf shall be signed by the President, any Vice
President or the Treasurer except as the Directors may generally or in
particular cases otherwise determine.
4. VOTING OF SECURITIES. Except as the Directors may otherwise designate,
the President or Treasurer may waive notice of, and appoint any person or
persons to act as proxy or attorney in fact for this corporation (with or
without power of substitution) at any meeting of stockholders or shareholders of
any other corporation or organization, the securities of which may be held by
the corporation.
5. CORPORATE RECORDS. The original, or attested copies, of the Articles of
Organization, By-laws and records of all meetings of incorporators and
stockholders, and the stock and transfer records, which shall contain the names
of all stockholders and the record address and the amount of stock held by each,
shall be kept in Massachusetts at the principal office of the corporation or at
an office of its transfer agent or of the Clerk or of its resident agent. Said
copies and records need not all be kept in the same office. They shall be
available at all reasonable times to the inspection of any stockholder for any
proper purpose but not to secure a list of stockholders or other information for
the purpose of selling said list or information or copies thereof or of using
the same for a purpose other than in the interest of the applicant, as a
stockholder, relative to the affairs of the corporation.
6. ARTICLES OF ORGANIZATION. All references in these By-laws to the
Articles of Organization shall be deemed to refer to the Restated Articles of
Organization of the corporation, as amended and in effect from time to time.
7. AMENDMENTS. These By-laws, to the extent provided in these By-laws, may
be amended or repealed, in whole or in part, and new By-laws adopted either (a)
by the stockholders at any meeting of the stockholders by the affirmative vote
of the holders of at least a majority in interest of the capital stock present
and entitled to vote, provided that notice of the proposed amendment or repeal
or of the proposed making of new By-laws shall have been given in the notice of
such meeting, or (b) if so authorized by the Restated Articles of Organization,
by the Board of Directors at any meeting of the Board by the affirmative vote of
a majority of the Directors then in office, but no amendment or repeal of a
By-law shall be voted by the Board of Directors and no new By-law shall be made
by the Board of Directors which alters the provisions of these By-laws with
respect to removal of Directors, or the election of committees by Directors and
the delegation of powers thereto, nor shall the Board of Directors make, amend
or repeal any provision of the By-laws which by law, the Restated Articles of
Organization or the By-laws requires action by the stockholders. Not later than
the time of giving notice of the meeting of stockholders next following the
making, amending, or repealing by the Directors of any By-law, notice thereof
stating the substance of such change shall be given to all stockholders entitled
to vote on amending the By-laws. Any By-law or amendment of a By-law made the
Board of Directors may be amended or repealed by the stockholders by affirmative
vote as above provided in this Section 7.
<PAGE> 13
-13-
8. 1987 MASSACHUSETTS CONTROL SHARE ACQUISITION ACT. The 1987 Massachusetts
Control Share Acquisition Act, Chapter 110D of the Massachusetts General Laws,
as it may be amended from time to time, shall not apply to the corporation.
<PAGE> 1
Exhibit 4
Stock Certificate
The form of the Company's stock certificate was modified as follows:
(a) The name `Software 2000, Inc.' was replaced with the name `Infinium
Software, Inc.' everywhere it appeared.
(b) The `Software 2000' logo was replaced with the `Infinium Software'
logo, including the words `Infinium Software" in capital letters, and
an ellipse with the letter `i'.
(c) In the stock certificate number box, the initial letters have been
replaced with the letters `INF'.
(d) The cusip number has been changed to `45662Y 10 9'.
(e) The following legend has been added to the back of the certificate:
"The Company is authorized to issue more than one class or series of
stock. Upon written request the Company will furnish without charge to
each stockholder a copy of the powers, designations, preferences and
relative, participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations
or restrictions of such preferences and/or rights."
37
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<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
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<SECURITIES> 29,932
<RECEIVABLES> 16,894
<ALLOWANCES> 1,525
<INVENTORY> 0
<CURRENT-ASSETS> 61,706
<PP&E> 24,485
<DEPRECIATION> 18,376
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0
0
<COMMON> 119
<OTHER-SE> 37,697
<TOTAL-LIABILITY-AND-EQUITY> 78,268
<SALES> 0
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<OTHER-EXPENSES> 30,965
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<INCOME-PRETAX> (4,306)
<INCOME-TAX> (1,506)
<INCOME-CONTINUING> (2,800)
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