<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
--------------------------------------------
Commission File Number 0-21041
OBJECT DESIGN, INC.
-------------------
(Exact name of registrant as specified in its charter)
DELAWARE 02-0424252
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 MALL ROAD, BURLINGTON, MA 01803
---------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 674-5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
----- -----
The number of shares outstanding of the registrant's common stock as of August
31, 1996 was 26,362,384
Page 1 of 33
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OBJECT DESIGN, INC.
INDEX TO FORM 10-Q
Part I - Financial Information Page
- ------------------------------ ----
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations
for the three months and six months ended
June 30, 1996 and June 30, 1995 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and June 30, 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information
- ---------------------------
Legal Proceedings 10
Submission of Matters to a Vote of Security Holders 10
Exhibits and Reports on Form 8-K
Exhibits:
Amended and Restated Certificate of Incorporation 11
Amended and Restated By-laws 16
Statement Regarding Computation of Net Income per Share 31
Financial Data Schedule 32
Signatures 33
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OBJECT DESIGN, INC.
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,253 $ 2,465
Marketable securities 3,455 1,488
Accounts receivable, less allowances of $420
and $592 at June 30, 1996 and
December 31, 1995 respectively 7,797 7,631
Accounts receivable - related parties 174 433
Prepaid expenses and other current assets 862 445
-------- --------
Total current assets 15,541 12,462
Marketable securities 734 748
Property and equipment, net 3,303 3,569
Other assets 663 375
-------- --------
Total assets $ 20,241 $ 17,154
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current portion of long-term obligations $ 548 $ 733
Accounts payable 1,629 1,622
Accrued expenses 2,785 2,251
Accrued compensation 1,829 1,806
Deferred revenue 4,725 5,640
Deferred revenue - related parties 154 1,400
-------- --------
Total current liabilities 11,670 13,452
Long-term obligations 223 476
Redeemable convertible preferred stock, $.01 par
value; 16,837,521 shares authorized at
December 31, 1995 and 19,004,188 shares
authorized at June 30, 1996; 16,236,654 shares
issued and outstanding at December 31, 1995 and
17,891,654 shares issued and outstanding at
June 30, 1996 and no shares on a pro forma
basis (liquidation preference $36,400,430,
and $51,295,430 at December 31, 1995 and
June 30, 1996, respectively) 41,898 35,982
Commitments and contingencies
Stockholders' deficit:
Common stock, $.001 par value; 22,500,000 shares
authorized at December 31, 1995 and 30,166,667
shares authorized at June 30, 1996; 2,373,786
shares issued at December 31, 1995 and 5,349,500
shares issued at June 31, 1996 5 2
Additional paid-in capital 1,361 1,673
Accumulated deficit (33,625) (34,053)
Net unrealized holding loss on marketable securities (29) (13)
Cumulative translation adjustment (269) (43)
Treasury stock of 18,900 shares, at cost - -
Advances to stockholders (887) (200)
Unearned compensation (106) (122)
-------- --------
Total stockholders' deficit (33,550) (32,756)
Total liabilities and stockholders'
deficit $ 20,241 $ 17,154
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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OBJECT DESIGN, INC.
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Software $ 5,717 $ 4,198 $11,329 $ 9,170
Services 2,556 2,571 4,924 5,218
Related party software and services 926 317 1,941 719
-------------------- --------------------
Total revenues 9,199 7,086 18,194 15,107
Cost of revenues:
Cost of software 285 263 784 606
Cost of services 1,660 1,747 3,358 3,404
Cost of related party software
and services 38 182 248 346
-------------------- --------------------
Total cost of revenues 1,983 2,192 4,390 4,356
Gross profit 7,216 4,894 13,804 10,751
Operating expenses:
Selling and marketing 4,243 4,998 7,926 9,829
Research and development 1,822 2,218 3,626 4,441
General and administrative 910 1,077 1,821 1,996
Restructuring charges - 1,239 - 1,239
-------------------- --------------------
Total operating expenses 6,975 9,532 13,373 17,505
Operating income (loss) 241 (4,638) 431 (6,754)
Other income, net 42 18 21 138
Income (loss) before provision
for income taxes 283 (4,620) 452 (6,616)
Provision for income taxes - - 24 -
-------------------- --------------------
Net income (loss) $ 283 $(4,620) $ 428 $(6,616)
==================== ====================
Accretion of redeemable common stock (666) - (999) -
-------------------- --------------------
Net loss available to common
stockholders (Note B) $ (383) $(4,620) $ (571) $(6,616)
==================== ====================
Net loss per common and common
equivalent shares (Note B) $ 0.03 $ (0.48) $ (0.05) $ (0.69)
==================== ====================
Weighted average number of common and
common equivalent shares
outstanding (Note B) 12,631 9,532 10,441 9,532
==================== ====================
Pro forma income (loss) per common and
common equivalent shares (Note B) $ 0.01 $ (0.18) $ 0.02 $ (0.26)
==================== ====================
Pro forma weighted average number of common
and common equivalent shares outstanding
(Note B) 29,438 25,768 27,259 25,768
==================== ====================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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OBJECT DESIGN, INC.
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Six Months Ended
June 30,
---------------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 428 $(4,620)
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Depreciation and amortization 880 834
Bad debt expense 112 131
Restructuring charges - 1,239
Other 8 -
Net changes in operating assets and
liabilities:
Accounts receivable (19) 2,136
Prepaids and other current assets (418) (212)
Other assets (295) (10)
Accounts payable 7 739
Accrued expenses 557 (3,550)
Deferred revenue (2,161) 432
------- -------
Net cash used for operating activities (901) (2,881)
------- -------
Investing activities:
Capital expenditures (614) (832)
Purchases of marketable securities (3,466) (509)
Proceeds from maturity of available for sale
marketable securities 1,500 903
Proceeds from sale of available for sale
marketable securities - 1,127
Purchase of minority interest (53) -
------- -------
Net cash (used) provided for investing
activities (2,633) 689
------- -------
Financing activities:
Proceeds from issuance of redeemable
convertible preferred stock 4,917 -
Proceeds from exercise of stock options 70 65
Principal payments on long-term borrowings (429) (172)
Principal payments on capital lease
obligations (9) 54
------- -------
Net cash provided (used) for financing
activities 4,549 (53)
Effect of exchange rate changes on cash (227) 62
------- -------
Net change in cash and cash equivalents 788 (2,183)
Cash and cash equivalents, beginning of year 2,465 3,225
------- -------
Cash and cash equivalents, end of period $ 3,253 $ 1,042
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
The condensed consolidated financial statements include the accounts of Object
Design, Inc. (the "Company") and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated. In the opinion of
management, the accompanying condensed consolidated financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the Securities
and Exchange Commission rules and regulations. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company's registration
statement on Form S-1 (SEC file No. 333-05241), as declared effective on July
23, 1996 (the "Registration Statement").
B. Net Income (Loss) per Common and Common Equivalent Share
Net income (loss) per common share is based upon the weighted average number of
common shares and common equivalent shares outstanding. Common equivalent shares
are included in the per share calculations where the effect of their inclusion
would be dilutive.
In accordance with Securities and Exchange Commission Staff Accounting Bulletin
No. 83 ("SAB No. 83"), all common and common equivalent shares issued during the
twelve month period prior to the date of the initial filing of the Registration
Statement have been included in the calculations as if they were outstanding for
all periods. As permitted under SAB No. 83, common equivalent shares, which
consist of stock options, were determined using the treasury stock method and
the initial public offering price of $10.00 per share.
Pro forma net income (loss) per common share has been computed in the same
manner except that all outstanding shares of Preferred Stock that were
convertible into common stock upon the effectiveness of the initial public
offering ("IPO") are treated as having been converted into Common Stock at the
date of the original issuance. Net income (loss) per common share on a pro
forma basis, is the same as net income (loss) per common share on a
supplementary basis.
C. Subsequent event
During July 1996, the Company completed its IPO and sold an aggregate of
3,000,000 shares of common stock at $7.00 per share, resulting in net proceeds
to the Company, after underwriting commissions and other costs, of approximately
$18,530,000. The company repaid its term debt with the proceeds of the offering
of approximately $580,000. In addition, upon closing of the IPO, all outstanding
shares of Preferred Stock were automatically converted into shares of common
stock. At June 30, 1996, accrued expenses included approximately $507,164 of
deferred costs incurred in connection with the Company's IPO.
The Company has invested the balance of the IPO proceeds after repayment of its
term debt in short term commercial paper and government mutual funds and is
accounting for these investments in accordance with Statement of Financial
Accounting Standards ("SFAS")
6
<PAGE> 7
No. 115 Accounting for Certain Investments in Debt and Equity Securities. The
effect of accounting for these available "for sale" securities is not expected
to have a material impact on the financial position and results of operations of
the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
TOTAL REVENUES. The Company's total revenues increased 29.8 % from $7.1 million
for the three months ended June 30, 1995 to $9.2 million for the three months
ended June 30, 1996. The Company's total revenues increased 20 % from $15.1
million for the six month period ended June 30, 1995 to $18.2 million for the
six months ended June 30, 1996. This growth for the three and six month periods
resulted primarily from unit volume increases in Objectstore database software
licenses, as well as increases in related party revenues, as discussed below.
SOFTWARE REVENUES. Software revenues increased 36.2% from $4.2 million for the
three month period ended June 30, 1995 to $5.7 million for the three month
period ended June 30, 1996. Software revenues increased 23.5 % from $9.2 million
for the six month period ended June 30, 1995 to $11.3 million for the six month
period ended June 30, 1996. These increases were primarily due to increased unit
volume sales of Objectstore database software licenses.
SERVICE REVENUES. Service revenues were $2.6 million for each of the three month
periods ended June 30, 1995 and June 30, 1996. Service revenues decreased 5.6%
from $5.2 million for the six month period ended June 30, 1995 to $4.9 million
for the six month period ended June 30, 1996. The decrease was due to a
reduction in billable consulting activity as a result of the Company's
realignment of the focus of its technical support staff more toward non-billable
customer deployment support.
RELATED PARTY SOFTWARE AND SERVICES. Revenues from related parties increased
192.4 % from $.3 million for the three month period ended June 30, 1995 to $.9
million for the three month period ended June 30, 1996. Revenues from related
parties increased 170% from $.7 million for the six month period ended June 30,
1995 to $1.9 million for the six months ended June 30, 1996. The increase in
both cases was primarily the result of recognition of deferred revenue
attributable to a joint product development project with International Business
Machines ("IBM"), which was being accounted for by the percentage of completion
method. This project was terminated in the first half of 1996, and the Company
has discontinued its joint product development activity with IBM.
COST OF SOFTWARE. Cost of software was $.3 million for each of the three month
periods ended June 30, 1995 and June 30, 1996. Cost of software increased 29%
from $.6 million for the six month period ended June 30, 1995 to $.8 million for
the six month period ended June 30, 1996. This increase was attributable
primarily to increases in direct costs related to increases in revenues and to
an increase in royalties related to third party software.
7
<PAGE> 8
COST OF SERVICES. Cost of services was $1.7 million for each of the three month
periods ended June 30, 1995 and June 30, 1996. Cost of services was $3.4 million
for each of the six month periods ended June 30, 1995 and June 30, 1996.
SELLING AND MARKETING EXPENSE. Selling and marketing expense decreased 15% from
$5.0 million for the three month period ended June 30, 1995 to $4.2 million for
the three month period ended June 30, 1996. Selling and marketing expense
decreased 19.4% from $9.8 million for the six month period ended June 30, 1995
to $7.9 million for the six month period ended June 30, 1996. The decrease in
each case reflects the effects of the Company's restructuring in the second half
of 1995 and related headcount reductions. The Company intends to expand its
direct sales force and significantly increase its expenditures on marketing
focused on the Internet opportunity throughout 1996.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense decreased
17.9% from $2.2 million for the three month period ended June 30,1995 to $1.8
million for the three month period ended June 30, 1996. Research and development
expense decreased 18.4% from $4.4 million for the six month period ended June
30, 1995 to $3.6 million for the six month period ended June 30, 1996. The
decreases reflect the effects of the Company's restructuring and headcount
reductions in the second half of 1995. The Company expects that research and
development expense will increase in dollar amount in future periods as the
Company continues to enhance ObjectStore and its current related products to
support the Company's introduction of new products for the Internet.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense decreased
15.5% from $1.1 million for the three months ended June 30, 1995 to $.9 million
for the three months ended June 30, 1996. General and administrative expense
decreased 8.7% from $2.0 million for the six month period ended June 30, 1995 to
$1.8 million for the six months ended June 30, 1996. In each case, the decrease
was due to the effect of the Company's expense reduction program in the second
half of 1995, partially offset by increases in consulting fees and some
temporary duplication in personnel costs associated with the Company's strategic
realignment and transition in senior management in late 1995 and early 1996.
RESTRUCTURING CHARGES. Restructuring charges in the three months ended June 30,
1995 consisted primarily of severance payments and costs related to
consolidation of the Company's facilities in connection with its restructuring
and strategic realignment in the second and third quarters of 1995.
PROVISION FOR INCOME TAXES. The Company's effective tax rate of 5% for the six
months ended June 30, 1996 reflects a federal alternative minimum tax provision
in the first quarter of 1996. The effective tax rate in all periods presented is
lower than the statutory rate principally due to the utilization of net
operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES. Prior to its IPO in July, 1996 the Company had
financed its operations through a combination of sales of Preferred Stock, bank
lines of credit and capital and operating leases. During July, 1996 the Company
completed its IPO and sold an aggregate of 3,000,000 shares of common stock at
$7.00 per share resulting in net proceeds to the Company, after underwriting
commissions and other costs of approximately $18,530,000.
As of June 30, 1996, the Company had cash and cash equivalents of $3.3 million.
During the six month period ended June 30, 1996, the Company had net income of
$.3 million and generated a net cash increase of $.8 million. The Company's
operating activities used cash
8
<PAGE> 9
of $1.0 million and $2.9 million in the six month period ended June 30, 1996 and
1995, respectively. In the six month period ended June 30, 1996, the Company's
improved results of operations were more than offset by a $2.2 million decrease
in the amount of cash received in the form of prepaid license fees, primarily
from IBM, which was recorded as deferred revenue.
The Company's investing activities used $2.6 million of cash in the six month
period ended June 30, 1996, compared with cash provided by investing activities
of $.7 million in the corresponding period of 1995. This increase was
attributable primarily to net purchases of marketable securities of $1.9 million
in the six month period ended June 30, 1996. These uses of cash were more than
offset by the $4.6 million in cash provided by the Company's financing
activities in the six month period ended June 30, 1996. The increase in cash
during the six month period ended June 30, 1996 was attributable primarily to a
sale of $4.9 million of convertible Preferred Stock in February 1996.
The Company is in discussions with the First National Bank of Boston for a new
$2.0 million line of credit. The Company intends to use the line for letters of
credit from time to time. There can be no assurances that the Company will enter
into such a new credit facility.
The Company believes that the net proceeds from the IPO, together with current
cash, cash equivalents and marketable securities, its capital leases and funds
generated from operations, if any, will provide adequate liquidity to meet the
Company's capital and operating requirements through at least 1997.
9
<PAGE> 10
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings, either outstanding or pending with
respect to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
As previously disclosed in the Company's Registration Statement, the
stockholders of the Company approved by written consent in July 1996 an Amended
and Restated Certificate of Incorporation and Amended and Restated By-laws
included in this Quarterly Report on Form 10-Q as Exhibits 3.3 and 3.5
respectively. Each of these became effective on July 26, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
3.3* Amended and Restated Certificate of Incorporation
3.5* Amended and Restated By-laws
11.1 Statement Regarding Computation of Net Income per Share
27 Financial Data Schedule
b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1996
* Incorporated by reference to the similarly numbered Exhibits to the
Registration Statement.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Object
Design, Inc. has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized, on September 3, 1996.
OBJECT DESIGN, INC.
(REGISTRANT)
SEPTEMBER 3, 1996 BY: /s/ Robert N. Goldman
----------------------------------------
ROBERT N. GOLDMAN
PRESIDENT, CHAIRMAN OF THE BOARD
SEPTEMBER 3, 1996 BY: /s/ Lacey P. Brandt
----------------------------------------
LACEY P. BRANDT
CHIEF FINANCIAL OFFICER
<PAGE> 1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OBJECT DESIGN, INC.
The following Amended and Restated Certificate of Incorporation (i) amends
and restates the provisions of the Certificate of Incorporation of Object
Design, Inc. (the "Corporation") originally filed with the Secretary of State of
the State of Delaware on June 21, 1988, as amended and restated to date; (ii)
supersedes the Certificate of Incorporation and all amendments thereto and
restatements thereof; and (iii) has been duly proposed by the Board of Directors
of the Corporation and duly adopted by the stockholders of the Corporation in
accordance with the provisions of Sections 228, 242 and 245 of the Delaware
General Corporation Law.
FIRST: The name of the corporation (the "Corporation") is Object
Design, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, and
the name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature of the business or purpose to be conducted or
promoted is as follows:
To develop, license, purchase, sell, lease and market object oriented data
base management systems and associated programming environmental tools for the
creation and maintenance of object oriented applications, to engage in the
development, licensing and marketing of, and to otherwise deal with, computer
software products and applications generally, and to conduct or engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 205,000,000, consisting of (i)
200,000,000 shares of Common Stock, $.001 par value per share ("Common Stock"),
and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation:
<PAGE> 2
A. COMMON STOCK.
-------------
1. GENERAL. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and qualified by the rights of the
holders of the Preferred Stock of any series as may be designated by the Board
of Directors upon any issuance of the Preferred Stock of any series.
2. VOTING. The holders of Common Stock will be entitled to one vote
per share on all matters to be voted on by the stockholders of the Corporation.
There shall be no cumulative voting.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential liquidation rights of any then
outstanding Preferred Stock.
B. PREFERRED STOCK.
----------------
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. No share of
Preferred Stock that is redeemed, purchased or acquired by the Corporation may
be reissued except as otherwise provided herein or by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided herein, in any
such resolution or resolutions, or by law.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided by law or by this Amended and
Restated Certificate of Incorporation, no vote of the holders of the Preferred
Stock or Common Stock shall be a prerequisite to the issuance of any shares of
any series of the
-2-
<PAGE> 3
Preferred Stock authorized by and complying with the conditions of the Amended
and Restated Certificate of Incorporation, the right to have such vote being
expressly waived by all present and future holders of the capital stock of the
Corporation.
FIFTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided that:
(a) Subject to the limitations and exceptions, if any, contained in
the by-laws of the Corporation, the by-laws may be adopted, amended or repealed
by the Board of Directors of the Corporation.
(b) Elections of directors need not be by written ballot.
(c) Subject to any applicable requirements of law, the books of the
Corporation may be kept outside the State of Delaware at such location as may be
designated by the Board of Directors or in the by-laws of the Corporation.
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The Corporation shall indemnify each person who at any time is,
or shall have been a director or officer of the Corporation, and is threatened
to be or is made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is, or was, a director or officer of the Corporation, or
served at the request of the Corporation as a director, officer, employee,
trustee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement incurred in connection with any such action, suit
or proceeding to the maximum extent permitted by the General Corporation Law of
the State of Delaware. The foregoing right of indemnification shall in no way be
exclusive of any other rights of indemnification to which any such director or
officer may be entitled, under any by-law, agreement, vote of directors or
stockholders or otherwise. No amendment to or repeal of the provisions of this
paragraph shall deprive a person of the benefit of this paragraph with respect
to any act or failure to act of such director occurring prior to such amendment
or repeal.
EIGHTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors
-3-
<PAGE> 4
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders of this Corporation, as the case
may be, and also on this Corporation.
NINTH: To the maximum extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended, no
director of the Corporation shall be personally liable to the Corporation or to
any of its stockholders for monetary damages arising out of such director's
breach of fiduciary duty as a director of the Corporation. No amendment to or
repeal of the provisions of this paragraph shall apply to or have any effect on
the liability or the alleged liability of any director of the Corporation with
respect to any act or failure to act of such director occurring prior to such
amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute and this
Amended and Restated Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ELEVENTH: Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly constituted annual or special
meeting of stockholders and may not be effected by any consent in writing by
such stockholders. Notwithstanding any other provisions of law, this Amended and
Restated Certificate of Incorporation or the by-laws of the Corporation, each as
amended, and notwithstanding the fact that a lesser percentage may be specified
by law, the affirmative vote of the holders of at least seventy-five percent
(75%) of the shares of capital stock of the Corporation issued and outstanding
and entitled to vote shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article ELEVENTH.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned, being the duly elected and acting
President of Object Design, Inc., does hereby declare that this Amended and
Restated Certificate of Incorporation has been duly adopted by the Board of
Directors and the stockholders of this Corporation in accordance with the
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware. The undersigned does hereby affirm, under the penalties of
perjury, that this instrument is the act and deed of the Corporation and the
facts herein set forth are true and correct. I have accordingly hereunto set my
hand this day of , 1996.
OBJECT DESIGN, INC.
By:
--------------------------------
Its President
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ADOPTED AS OF 7/26/96
AMENDED AND RESTATED
BY-LAWS OF
OBJECT DESIGN, INC.
Section 1. CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1 These by-laws are subject to the certificate of incorporation of the
corporation. In these by-laws, references to the certificate of incorporation
and by-laws mean the provisions of the certificate of incorporation and the
by-laws as are from time to time in effect.
Section 2. OFFICES
2.1 REGISTERED OFFICE. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
2.2 OTHER OFFICES. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
Section 3. STOCKHOLDERS
3.1 LOCATION OF MEETINGS. All meetings of the stockholders shall be held
at such place either within or without the State of Delaware as shall be
designated from time to time by the board of directors. Any adjourned session of
any meeting shall be held at the place designated in the vote of adjournment.
3.2 ANNUAL MEETING. The annual meeting of stockholders shall be held at
10:00 a.m. on the fourth Wednesday in May in each year (unless that day be a
legal holiday at the place where the meeting is to be held, in which case the
meeting shall be held at the same hour on the next succeeding day not a legal
holiday) (the "Specified Date"), or at such other date and time as shall be
designated from time to time by the board of directors, at which the
stockholders shall elect a board of directors and transact such other business
as may be required by law or these by-laws or as may properly come before the
meeting.
3.3 SPECIAL MEETING IN PLACE OF ANNUAL MEETING. If the election for
directors shall not be held on the day designated by these by-laws, the
directors shall cause the election to be held as soon thereafter as convenient,
and to that end, if the annual meeting is omitted on the day herein provided
therefor or if the election of directors shall not be held thereat, a special
meeting of the stockholders may be held in place of such omitted meeting or
election, and any business transacted or election held at such special meeting
shall have the same effect as if transacted or held at the annual meeting, and
in such case all references in these by-laws to the annual meeting of the
stockholders, or to the annual election of directors, shall be deemed to refer
to or include such special meeting. Any such special meeting shall be called and
the purposes thereof shall be specified in the call, as provided in Section 3.4.
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3.4 NOTICE OF ANNUAL MEETING. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting. Such notice may specify the business
to be transacted and actions to be taken at such meeting. No action shall be
taken at such meeting unless such notice is given, or unless waiver of such
notice is given by the holders of outstanding stock having not less than the
minimum number of votes necessary to take such action at a meeting at which all
shares entitled to vote thereon were voted. Prompt notice of all action taken in
connection with such waiver of notice shall be given to all stockholders not
present or represented at such meeting.
3.5 OTHER SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by law or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
board of directors. Such request shall state the purpose or purposes of the
proposed meeting and business to be transacted at any special meeting of the
stockholders. Business transacted at any special meeting of stockholders shall
be limited to matters relating to the purpose or purposes stated in the notice
of meeting.
3.6 NOTICE OF SPECIAL MEETING. Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting, to each stockholder entitled to vote
at such meeting. No action shall be taken at such meeting unless such notice is
given, or unless waiver of such notice is given by the holders of outstanding
stock having not less than the minimum number of votes necessary to take such
action at a meeting at which all shares entitled to vote thereon were voted.
Prompt notice of all action taken in connection with such waiver of notice shall
be given to all stockholders not present or represented at such meeting.
3.7 NOTICE OF STOCKHOLDER BUSINESS AT ANNUAL MEETING. The following
provisions of this Section shall apply to the conduct of business at any annual
meeting of the stockholders. (As used in this Section 3.7, the term annual
meeting shall include a special meeting in lieu of an annual meeting.)
(a) At any annual 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 Section 3.7(b), who
is entitled to vote at such meeting and who has complied with the notice
procedures set forth in Section 3.7(b).
(b) For business to be properly brought before any annual meeting
of the stockholders by a stockholder pursuant to clause (iii) of 3.7(a), the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation not
less than sixty (60) days prior to the date for such annual meeting, regardless
of any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if the annual meeting of stockholders is to be held on a
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date prior to the Specified Date, and if less than seventy (70) days' notice or
prior public disclosure of the date of such annual or special 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 (10th) day following the
earlier of the date on which notice of the date of such meeting was mailed or
the day on which public disclosure was made of the date of such meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the 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
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 to be supporting
such proposal, and (iv) any material interest of 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 an annual meeting except in accordance with the
procedures set forth in this Section 3.7. The person presiding at the annual
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 provisions of this Section 3.7, 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
Section 3.7.
(d) This provision shall not prevent the consideration and approval
or disapproval at an annual 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.
3.8 STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the
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time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
3.9 QUORUM OF STOCKHOLDERS. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise required by
law, or by the certificate of incorporation or by these by-laws. Except as
otherwise provided by law, no stockholder present at a meeting may withhold his
shares from the quorum count by declaring his shares absent from the meeting.
3.10 ADJOURNMENT. Any meeting of stockholders may be adjourned from time
to time to any other time and to any other place at which a meeting of
stockholders may be held under these by-laws, which time and place shall be
announced at the meeting, by a majority of votes cast upon the question, whether
or not a quorum is present. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
3.11 PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, objecting
to or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. Except as provided by
law, a revocable proxy shall be deemed revoked if the stockholder is present at
the meeting for which the proxy was given. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally. The authorization of a proxy may but need not be limited to specified
action, provided, however, that if a proxy limits its authorization to a meeting
or meetings of stockholders, unless otherwise specifically provided such proxy
shall entitle the holder thereof to vote at any adjourned session but shall not
be valid after the final adjournment thereof.
3.12 INSPECTORS. The directors or the person presiding at the meeting
may, but need not, appoint one or more inspectors of election and any substitute
inspectors to act at the meeting or any adjournment thereof. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
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election or vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspectors shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them.
3.13 ACTION BY VOTE. When a quorum is present at any meeting, whether
the same be an original or an adjourned session, a plurality of the votes
properly cast for election to any office shall elect to such office and a
majority of the votes properly cast upon any question other than an election to
an office shall decide the question, except when a larger vote is required by
law, by the certificate of incorporation or by these by-laws. No ballot shall be
required for any election unless requested by a stockholder present or
represented at the meeting and entitled to vote in the election.
3.14 NO ACTION BY CONSENT. Any action required or permitted to be taken
by the stockholders of the corporation must be effected at a duly constituted
annual or special meeting of such stockholders and may not be effected by any
consent in writing by such stockholders.
Section 4. DIRECTORS
4.1 NUMBER. The number of directors which shall constitute the whole
board shall not be less than two nor more than nine, except that whenever there
shall be only one stockholder, such number shall be not less than one. Within
the foregoing limits, the number of directors shall be determined by resolution
of the board of directors and may be increased or decreased at any time or from
time to time by the directors by vote of a majority of directors then in office,
except that any such decrease by vote of the directors shall only be made to
eliminate vacancies existing by reason of the death, resignation or removal of
one or more directors. The directors shall be elected at the annual meeting of
the stockholders, except as provided in Section 4.7 of these by-laws. Directors
need not be stockholders.
4.2 TENURE. Except as otherwise provided by law, by the certificate of
incorporation or by these by-laws, each director shall hold office until the
next annual meeting and until his successor is elected and qualified, or until
he sooner dies, resigns, is removed or becomes disqualified.
4.3 CLASSES OF DIRECTORS. The board of directors shall be and is divided
into three classes: Class I, Class II and Class III, each having as nearly as
possible the same number of directors. If a fraction is contained in the
quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class III, and if such fraction is two-thirds, one of the extra directors shall
be a member of Class II and the other shall be a member of Class III, unless
otherwise provided from time to time by resolution adopted by the board of
directors.
4.4 TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; provided, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting in 1997; each initial
director in Class II shall serve for a term ending on the
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date of the annual meeting in 1998; and each initial director in Class III shall
serve for a term ending on the date of the annual meeting in 1999; and provided
further, that the term of each director shall be subject to the election and
qualification of his successor and to his earlier death, resignation or removal.
4.5 ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (a) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
and (b) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the board of directors among the
three classes of directors so as to ensure that the classes have as nearly as
possible the same number of directors. To the extent possible, consistent with
the foregoing rule, any newly created directorships shall be added to those
classes whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the board of directors.
4.6 POWERS. The business of the corporation shall be managed by or under
the direction of the board of directors which shall have and may exercise all
the powers of the corporation and do all such lawful acts and things as are not
by law, the certificate of incorporation or these by-laws directed or required
to be exercised or done by the stockholders.
4.7 VACANCIES. Any vacancy in the board of directors, however occurring,
including a vacancy resulting from an enlargement of the board, shall be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the sole remaining director. When one or more directors shall
resign from the board, effective at a future date, a majority of the directors
then in office, including those who have resigned, shall have power to fill such
vacancy or vacancies, the vote or action by writing thereon to take effect when
such resignation or resignations shall become effective. A director elected to
fill a vacancy shall hold office until the next election of the class for which
such director has been chosen, subject to the election and qualification of his
successor and to his earlier death, resignation or removal. The directors shall
have and may exercise all their powers notwithstanding the existence of one or
more vacancies in their number, subject to any requirements of law or of the
certificate of incorporation or of these by-laws as to the number of directors
required for a quorum or for any vote or other actions.
4.8 NOMINATION OF DIRECTORS. The following provisions of this Section
4.8 shall apply to the nomination of persons for election to the board of
directors at any annual meeting or special meeting of stockholders.
(a) Nominations of persons for election to the board of directors of
the corporation at any annual meeting or special meeting of stockholders may be
made (i) by or at the direction of the board of directors or (ii) by any
stockholder of the corporation who is a stockholder of record at the time of
giving of notice provided for in Section 4.8(b), who is
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entitled to vote for the election of directors at the meeting and who has
complied with the notice procedures set forth in Section 4.8(b).
(b) Nominations by stockholders shall be made pursuant to timely
notice in writing to the Secretary of the corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation, not less than sixty (60) days
prior to the date for the annual meeting, regardless of any postponements,
deferrals or adjournments of that meeting to a later date; provided, however,
that if the annual meeting of stockholders or a special meeting in lieu thereof
is to be held on a date prior to the Specified Date, and if less than seventy
(70) days' notice or prior public disclosure of the date of such annual or
special 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
(10th) day following the earlier of the day on which notice of the date of such
annual or special meeting was mailed or the day on which public disclosure was
made of the date of such annual or special meeting. Such stockholder's notice
shall set forth (i) as to each person whom the stockholder proposes to nominate
for election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, or pursuant to any other then
existing statute, rule or regulation applicable thereto (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (ii) as to the stockholder giving the notice
(A) the name and address, as they appear on the corporation's books, of such
stockholder and (B) the class and number of shares of the corporation which are
beneficially owned by such stockholder and also which are owned of record by
such stockholder; and (iii) as to the beneficial owner, if any, on whose behalf
the nomination is made, (A) the name and address of such person and (B) the
class and number of shares of the corporation which are beneficially owned by
such person. The corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the corporation to determine
the eligibility of such proposed nominee as a director. At the request of the
board of directors, any person nominated by the board of directors for election
as a director shall furnish to the Secretary of the corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee.
(c) No person shall be eligible for election as a director of the
corporation at any annual meeting or special meeting of stockholders unless
nominated in accordance with the procedures set forth in this Section 4.8. The
person presiding at the meeting shall, if the facts warrant, determine that a
nomination was not made in accordance with the procedures prescribed by these
by-laws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded. Notwithstanding the foregoing
provisions of this Section 4.8, 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.
4.9 COMMITTEES. The board of directors may, by vote of a majority of
the whole board, (a) designate, change the membership of or terminate the
existence of any committee
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or committees, each committee to consist of one or more of the directors; (b)
designate one or more directors as alternate members of any such committee who
may replace any absent or disqualified member at any meeting of the committee;
and (c) determine the extent to which each such committee shall have and may
exercise the powers and authority of the board of directors in the management of
the business and affairs of the corporation, including the power to authorize
the seal of the corporation to be affixed to all papers which require it and the
power and authority to declare dividends or to authorize the issuance of stock;
excepting, however, such powers which by law, by the certificate of
incorporation or by these by-laws they are prohibited from so delegating. In the
absence or disqualification of any member of such committee and his alternate,
if any, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member. Except as the board of
directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the board or such rules, its
business shall be conducted as nearly as may be in the same manner as is
provided by these by-laws for the conduct of business by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the board of directors upon request.
4.10 REGULAR MEETING. Regular meetings of the board of directors may be
held without call or notice at such place within or without the State of
Delaware and at such times as the board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of the stockholders.
4.11 SPECIAL MEETINGS. Special meetings of the board of directors may be
held at any time and at any place within or without the State of Delaware
designated in the notice of the meeting, when called by the president, or by
one-third or more in number of the directors, reasonable notice thereof being
given to each director by the secretary or by the president or by any one of the
directors calling the meeting.
4.12 NOTICE. It shall be reasonable and sufficient notice to a director
to send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting, addressed to him at his usual or last
known business or residence address or to give notice to him in person or by
telephone at least twenty-four hours before the meeting. Notice of a meeting
need not be given to any director if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
director who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. Neither notice of a meeting nor a waiver
of a notice need specify the purposes of the meeting.
4.13 QUORUM. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, at any meeting of the
directors a majority of the directors then in office shall constitute a quorum.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each director so
disqualified, provided that a quorum shall not in any case be less than one-
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third of the total number of directors constituting the whole board. Any meeting
may be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
4.14 ACTION BY VOTE. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, when a quorum is present at
any meeting the vote of a majority of the directors present shall be the act of
the board of directors.
4.15 ACTION WITHOUT A MEETING. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting if all the members of the board or of such
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the records of the meetings of the board or of such
committee. Such consent shall be treated for all purposes as the act of the
board or of such committee, as the case may be.
4.16 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Unless otherwise
restricted by the certificate of incorporation or these by-laws, members of the
board of directors or of any committee thereof may participate in a meeting of
such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Such participation shall constitute presence in
person at such meeting.
4.17 COMPENSATION. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix from time to time the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the board of
directors and the performance of their responsibilities as directors and may be
paid a fixed sum for attendance at each meeting of the board of directors and/or
a stated salary as director. No such payment shall preclude any director from
serving the corporation or its parent or subsidiary corporations in any other
capacity and receiving compensation therefor. The board of directors may also
allow compensation for members of special or standing committees for service on
such committees.
4.18 INTERESTED DIRECTORS AND OFFICERS.
(a) No contract or transaction between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of the corporation's directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith authorizes
the contract or transaction by the
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affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the stockholders.
(b) Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or of a
committee which authorizes the contract or transaction.
4.19 RESIGNATION OR REMOVAL OF DIRECTORS. Directors of the corporation
may be removed only for cause by the affirmative vote of the holders of at least
two-thirds of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at an election of directors. Any director may
resign at any time by delivering his resignation in writing to the president or
the secretary or to a meeting of the board of directors. Such resignation shall
be effective upon receipt unless specified to be effective at some other time;
and without in either case the necessity of its being accepted unless the
resignation shall so state. No director resigning and (except where a right to
receive compensation shall be expressly provided in a duly authorized written
agreement with the corporation) no director removed shall have any right to
receive compensation as such director for any period following his resignation
or removal, or any right to damages on account of such removal, whether his
compensation be by the month or by the year or otherwise; unless in the case of
a resignation, the directors, or in the case of removal, the body acting on the
removal, shall in their or its discretion provide for compensation.
Section 5. NOTICES
5.1 FORM OF NOTICE. Whenever, under the provisions of law, or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, such notice may be given by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Unless written notice by mail is required by law, written notice may also be
given by telegram, cable, telecopy, commercial delivery service, telex or
similar means, addressed to such director or stockholder at his address as it
appears on the records of the corporation, in which case such notice shall be
deemed to be given when delivered into the control of the persons charged with
effecting such transmission, the transmission charge to be paid by the
corporation or the person sending such notice and not by the addressee. Oral
notice or other in-hand delivery (in person or by telephone) shall be deemed
given at the time it is actually given.
-10-
<PAGE> 11
5.2 WAIVER OF NOTICE. Whenever notice is required to be given under the
provisions of law, the certificate of incorporation or these by-laws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any meeting of the stockholders, directors or members of a
committee of the directors need be specified in any written waiver of notice.
Section 6. OFFICERS AND AGENTS
6.1 ENUMERATION; QUALIFICATION. The officers of the corporation shall be
a president, a treasurer, a secretary and such other officers, if any, as the
board of directors from time to time may in its discretion elect or appoint
including without limitation one or more vice presidents. Any officer may be,
but none need be, a director or stockholder. Any two or more offices may be held
by the same person. Any officer may be required by the board of directors to
secure the faithful performance of his duties to the corporation by giving bond
in such amount and with sureties or otherwise as the board of directors may
determine.
6.2 POWERS. Subject to law, to the certificate of incorporation and to
the other provisions of these by-laws, each officer shall have, in addition to
the duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such additional duties and powers as the board of
directors may from time to time designate.
6.3 ELECTION. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting or by written consent. At any time or from time to
time, the directors may delegate to any officer their power to elect or appoint
any other officer or any agents.
6.4 TENURE. Each officer shall hold office until the first meeting of the
board of directors following the next annual meeting of the stockholders and
until his successor is elected and qualified unless a shorter period shall have
been specified in terms of his election or appointment, or in each case until he
sooner dies, resigns, is removed or becomes disqualified. Each agent of the
corporation shall retain his authority at the pleasure of the directors, or the
officer by whom he was appointed or by the officer who then holds agent
appointive power.
6.5 PRESIDENT AND VICE PRESIDENTS. The president shall be the chief
executive officer and shall have direct and active charge of all business
operations of the corporation and shall have general supervision of the entire
business of the corporation, subject to the control of the board of directors.
He shall preside at all meetings of the stockholders and of the board of
directors at which he is present, except as otherwise voted by the board of
directors.
-11-
<PAGE> 12
The president or treasurer shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
Any vice presidents shall have such duties and powers as shall be
designated from time to time by the board of directors or by the president.
6.6 TREASURER AND ASSISTANT TREASURERS. The treasurer shall be the chief
financial officer of the corporation and shall be in charge of its funds and
valuable papers, and shall have such other duties and powers as may be assigned
to him from time to time by the board of directors or by the president.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.
6.7 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the stockholders, of the board of directors and of committees of
the board of directors in a book or series of books to be kept therefor and
shall file therein all writings of, or related to, action by stockholder or
director consent. In the absence of the secretary from any meeting, an assistant
secretary, or if there is none or he is absent, a temporary secretary chosen at
the meeting, shall record the proceedings thereof. Unless a transfer agent has
been appointed, the secretary shall keep or cause to be kept the stock and
transfer records of the corporation, which shall contain the names and record
addresses of all stockholders and the number of shares registered in the name of
each stockholder. The secretary shall have such other duties and powers as may
from time to time be designated by the board of directors or the president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
secretary.
6.8 RESIGNATION AND REMOVAL. Any officer may resign at any time by
delivering his resignation in writing to the president or the secretary or to a
meeting of the board of directors. Such resignation shall be effective upon
receipt unless specified to be effective at some other time, and without in any
case the necessity of its being accepted unless the resignation shall so state.
The board of directors may at any time remove any officer either with or without
cause. The board of directors may at any time terminate or modify the authority
of any agent. No officer resigning and (except where a right to receive
compensation shall be expressly provided in a duly authorized written agreement
with the corporation) no officer removed shall have any right to any
compensation as such officer for any period following his resignation or
removal, or any right to damages on account of such removal, whether his
compensation be by the month or by the year or otherwise; unless in the case of
a resignation, the directors, or in the case of removal, the body acting on the
removal, shall in their or its discretion provide for compensation.
-12-
<PAGE> 13
6.9 VACANCIES. If the office of the president or the treasurer or the
secretary becomes vacant, the directors may elect a successor by vote of a
majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that office may
choose a successor. Each such successor shall hold office for the unexpired term
of his predecessor, and in the case of the president, the treasurer and the
secretary until his successor is chosen and qualified, or in each case until he
sooner dies, resigns, is removed or becomes disqualified.
Section 7. CAPITAL STOCK
7.1 STOCK CERTIFICATES. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by-laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the
president or a vice-president and (i) the treasurer or an assistant treasurer or
(ii) the secretary or an assistant secretary. Any of or all the signatures on
the certificate may be a facsimile. In case an officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the time
of its issue.
7.2 LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 8. TRANSFER OF SHARES OF STOCK
8.1 TRANSFER ON BOOKS. Subject to any restrictions with respect to the
transfer of shares of stock, shares of stock may be transferred on the books of
the corporation by the surrender to the corporation or its transfer agent of the
certificate therefor properly endorsed or accompanied by a written assignment
and power of attorney properly executed, with necessary transfer stamps affixed,
and with such proof of the authenticity of signature as the board of directors
or the transfer agent of the corporation may reasonably require. Except as may
be otherwise required by law, by the certificate of incorporation or by these
by-laws, the corporation shall be entitled to treat the record holder of stock
as shown on its books as the owner of such stock for all purposes, including the
payment of dividends and the right to receive notice and to vote or to give any
consent with respect thereto and to be held liable for such calls and
assessments, if any, as may lawfully be made thereon, regardless of any
transfer, pledge or other disposition of such stock until the shares have been
properly transferred on the books of the corporation.
-13-
<PAGE> 14
It shall be the duty of each stockholder to notify the corporation of his
post office address.
Section 9. GENERAL PROVISIONS
9.1 RECORD DATE. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action to which
such record date relates. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting. If no record date is fixed,
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held;
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed; and
(c) 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 adopts the resolution relating to such purpose.
9.2 DIVIDENDS. Dividends upon the capital stock of the corporation may be
declared by the board of directors at any regular or special meeting or by
written consent, pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock, subject to the provisions of the certificate of
incorporation.
9.3 PAYMENT OF DIVIDENDS. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
9.4 CHECKS. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
-14-
<PAGE> 15
9.5 FISCAL YEAR. The fiscal year of the corporation shall begin on the
first day of January in each year and shall end on the last day of December next
following, unless otherwise determined by the board of directors.
9.6 SEAL. The board of directors may, by resolution, adopt a corporate
seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
Section 10. INDEMNIFICATION
10.1 It being the intent of the corporation to provide maximum protection
available under the law to its officers and directors, the corporation shall
indemnify its officers and directors to the full extent the corporation is
permitted or required to do so by the General Corporation Law of Delaware.
Section 11. AMENDMENTS
11.1 BY THE BOARD OF DIRECTORS. These by-laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the board of
directors at which a quorum is present.
11.2 BY THE STOCKHOLDERS. Notwithstanding any other provision of these
by-laws, and notwithstanding the fact that a lesser percentage may be specified
by law, these by-laws may be altered, amended or repealed or new by-laws may be
adopted by the affirmative vote of the holders of at least seventy-five percent
(75%) of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular or special meeting of
stockholders, provided notice of such alteration, amendment, repeal or adoption
of new by-laws shall have been stated in the notice of such regular or special
meeting.
-15-
<PAGE> 1
OBJECT DESIGN, INC.
<TABLE>
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) Exhibit 11.1
PER COMMON AND COMMON EQUIVALENT SHARE
(in thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Historical - Primary:
Weighted average issued common
stock outstanding 5,267 2,168 3,077 2,168
Weighted average cheap stock (2) 7,364 7,364 7,364 7,364
Weighted average common stock
equivalents - - - -
Less: assumed purchases of
treasury shares - - - -
----------------------- -----------------------
Weighted average number of
common and common
equivalent shares outstanding 12,631 9,532 10,441 9,532
======================= =======================
Net income (loss) $ 283 $(4,620) $428 $(6,616)
Less: accretion of redeemable convertible
preferred stock to redemption value (666) - (999) -
----------------------- -----------------------
Net income (loss) available to common
stockholders $ (383) $(4,620) $ (571) $(6,616)
======================= =======================
Net income (loss) per common and
common equivalent share $(0.03) $ (0.48) $(0.05) $ (0.69)
Pro forma(1):
Weighted average issued common
and preferred stock outstanding (1) 21,504 19,325
Weighted average cheap stock (2) 7,364 7,364
Weighted average common stock
equivalents 710 710
Less: assumed purchases of treasury
shares (139) (139)
------ ------
Weighted average number of
common and common
equivalent shares outstanding 29,439 27,259
====== ======
Net income (loss) $ 283 $ 428
Net income (loss) per share $ 0.01 $ 0.02
====== ======
<FN>
Notes:
(1) All shares of convertible preferred stock are considered, on a pro forma basis, to be common stock and are included
using the if-converted method on the dates of their original issuance.
(2) In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 83, issuances of common stock,
common stock equivalents and Series J Preferred Stock within one year prior of the initial filing of the registration
statement, at share prices below the assumed initial public offering price of $10.00 per share are considered to have
been made in anticipation of the contemplated public offering for which this registration statement was prepared.
Accordingly, these stock issuances are treated as if issued and outstanding, using the treasury stock method for
options, since the inception of the Company.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 3,253
<SECURITIES> 3,455
<RECEIVABLES> 7,797
<ALLOWANCES> 420
<INVENTORY> 0
<CURRENT-ASSETS> 15,541
<PP&E> 3,303
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,241
<CURRENT-LIABILITIES> 11,670
<BONDS> 223
<COMMON> 5
41,898
0
<OTHER-SE> (33,555)
<TOTAL-LIABILITY-AND-EQUITY> 20,241
<SALES> 13,270
<TOTAL-REVENUES> 18,194
<CGS> 1,032
<TOTAL-COSTS> 4,390
<OTHER-EXPENSES> 13,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 452
<INCOME-TAX> 24
<INCOME-CONTINUING> 428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 428
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
