<PAGE>
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 November 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 000-24659
CYBERIAN OUTPOST, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1419111
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
23 North Main Street-PO Box 636, Kent, Connecticut 06757
(Address of principal executive offices) (Zip Code)
(860) 927-2050
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 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of December 31, 1999, the registrant had 23,632,668 shares of common stock,
par value $.01 per share, outstanding.
<PAGE>
CYBERIAN OUTPOST, INC
INDEX
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
Part I--Financial Information:
Item 1. Financial Statements:
Balance Sheets, November 30, 1999 (Unaudited) and February 28,
1999..................................................................................... 3
Statements of Operations, Three and Nine Months Ended November 30, 1999 (Unaudited)
and November 30, 1998 (Unaudited)........................................................ 4
Statements of Cash Flows, Nine Months Ended November 30, 1999 (Unaudited)
and November 30, 1998 (Unaudited)........................................................ 5
Notes to Financial Statements (Unaudited)................................................ 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................... 7
Part II--Other Information
Item 2. Changes in Securities and Use of Proceeds............................................... 12
Item 6. Exhibits and Reports on Form 8-K........................................................ 13
Signature............................................................................................. 14
Exhibit Index......................................................................................... 15
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CYBERIAN OUTPOST, INC.
Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
November 30, February 28,
1999 1999
---- ----
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents.................................................... $ 12,122 $ 26,828
Short-term investments....................................................... 14,993 28,735
Accounts receivable, net 3,497 3,441
Inventories.................................................................. 14,031 5,750
Prepaid expenses and other current assets.................................... 2,005 365
-------- --------
Total current assets...................................................... 46,648 65,119
Property and equipment, net.................................................... 8,812 5,937
Investment in joint venture.................................................... 2,515 --
Other assets................................................................... 569 408
-------- --------
Total assets.............................................................. $ 58,544 $ 71,464
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of capital lease obligations................................. $ 688 $ 501
Accounts payable............................................................. 18,482 8,985
Accrued expenses............................................................. 4,416 2,779
-------- --------
Total current liabilities................................................. 23,586 12,265
Capital lease obligations, excluding current portion........................... 875 778
-------- --------
Total liabilities......................................................... 24,461 13,043
Stockholders' equity:
Common stock................................................................. 236 230
Additional paid-in capital................................................... 93,701 92,319
Accumulated other comprehensive loss......................................... (43) (106)
Accumulated deficit.......................................................... (59,811) (34,022)
-------- --------
Total stockholders' equity................................................ 34,083 58,421
-------- --------
Total liabilities and stockholders' equity................................ $ 58,544 $ 71,464
======== ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Statements of Operations
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
----------- ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales ................................................... $43,167 $23,515 $112,536 $ 52,110
Cost of sales................................................. 38,083 21,145 99,819 47,020
------- ------- -------- --------
Gross profit................................................ 5,084 2,370 12,717 5,090
Operating expenses:
Sales and marketing......................................... 9,556 8,650 27,071 17,962
General and administrative.................................. 2,738 1,354 7,955 3,445
Technology and development.................................. 1,609 928 5,036 2,518
------- ------- -------- --------
Total operating expenses................................. 13,903 10,932 40,062 23,925
------- ------- -------- --------
Operating loss.............................................. (8,819) (8,562) (27,345) (18,835)
Other income, net............................................. 276 933 1,556 1,429
------- ------- -------- --------
Net loss.................................................... (8,543) (7,629) (25,789) (17,406)
Accretion of premium on preferred stock....................... -- -- -- (210)
Dividends applicable to preferred stockholders................ -- -- -- (613)
------- ------- -------- --------
Net loss applicable to common stockholders.................. $(8,543) $(7,629) $(25,789) $(18,229)
Basic and diluted net loss per share.......................... $ (0.36) $ (0.34) $ (1.11) $ (1.34)
======= ======= ======== ========
Weighted average shares outstanding........................... 23,559 22,298 23,277 13,640
======= ======= ======== ========
Pro forma basic and diluted net loss per share................ $ (0.89)
========
Pro forma weighted average shares outstanding................. 19,515
========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Statements of Cash Flows
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
November 30,
--------------------------
1999 1998
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net loss.................................................................... $(25,789) $(17,406)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization.............................................. 2,730 607
Issuance of common stock options to employees.............................. 51 483
Equity in net income of joint venture (15) --
Loss on sales and maturities of short-term investments..................... 221 --
Increase in operating assets:
Accounts receivable....................................................... (56) (2,675)
Inventories............................................................... (8,281) (3,459)
Prepaid expenses and other assets......................................... (1,801) (1,367)
Increase in operating liabilities:
Accounts payable.......................................................... 9,497 6,811
Accrued expenses.......................................................... 1,637 3,132
-------- --------
Net cash used in operating activities.................................... (21,806) (13,874)
-------- --------
Cash flows from investing activities:
Investment in joint venture................................................. (2,500) --
Purchases of property and equipment......................................... (4,877) (3,146)
Purchases of short-term investments......................................... (10,781) --
Proceeds from sales and maturities of short-term investments................ 24,365 --
-------- --------
Net cash provided by (used in) investing activities...................... 6,207 (3,146)
-------- --------
Cash flows from financing activities:
Repayment of notes payable.................................................. -- (2,000)
Repayment of capital lease obligations...................................... (444) (121)
Proceeds from issuance of common stock warrants............................. -- 545
Proceeds from issuance of redeemable preferred stock........................ -- 13,658
Proceeds from issuance of common stock...................................... 1,337 65,499
-------- --------
Net cash provided by financing activities................................ 893 77,581
-------- --------
Net increase (decrease) in cash and cash equivalents......................... (14,706) 60,561
Cash and cash equivalents at the beginning of period......................... 26,828 7,325
-------- --------
Cash and cash equivalents at the end of period............................... $ 12,122 $ 67,886
======== ========
Supplemental disclosure of cash paid for interest and taxes:
Interest.................................................................... $ 98 $ 42
======== ========
Taxes....................................................................... $ 159 $ 4
======== ========
</TABLE>
See accompanying notes to financial statements.
Supplemental disclosure of non-cash transactions:
During the nine month period ended November 30, 1999, we acquired office
equipment and incurred capital lease obligations of $729,000.
During the nine month period ended November 30, 1998, we (i) increased the
Redeemable Series C Convertible Preferred Stock and decreased additional paid-in
capital by $823,000 to record accumulated dividends of $613,000 and accretion of
$210,000 on the Redeemable Series C Convertible Preferred Stock, (ii) acquired
office equipment and incurred capital lease obligations of $200,000, (iii)
converted a $750,000 debenture into 163,043 shares of Series B Convertible
Preferred Stock, and (iv) converted all redeemable and convertible preferred
stock to common stock, effective on our initial public offering date.
5
<PAGE>
Notes to Financial Statements
(Unaudited)
November 30, 1999
1. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. In the opinion of management, all adjustments
(consisting primarily of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine month periods ended November 30, 1999 are not necessarily indicative of
the results that may be expected for the year ending February 29, 2000.
2. We completed an initial public offering of our common stock on August 5, 1998
(the "IPO"). A total of 4,000,000 shares of common stock were sold by us to
the public at a price of $18.00 per share. The underwriting discount was
$1.26 per share. The net proceeds after the underwriting discount and other
IPO expenses were $65,499,000. Concurrent with the IPO, all of the shares of
our Redeemable Series C Convertible Preferred Stock, and Series A and Series
B Convertible Preferred Stock (the "Convertible Stock"), were converted
into shares of common stock at a ratio of three shares of common stock for
each share of Convertible Stock. As such, the 3,778,949 shares of Convertible
Stock outstanding were converted into 11,336,847 shares of common stock.
3. Net loss per share is presented under Statement of Financial Accounting
Standards No. 128, "Earnings per Share" (SFAS 128). In accordance with the
pronouncement, the net loss applicable to common stockholders includes the
accretion of and dividends on the Series C Redeemable Convertible Preferred
Stock through the date of conversion to common stock. Weighted average shares
outstanding includes the common stock resulting from the conversion of the
Convertible Stock from the date of conversion through the end of the period.
Pro forma net loss per share has been computed under SFAS 128, except that it
reflects the conversion of the Convertible Stock as of the beginning of the
earliest period presented or date of issuance, whichever is later. Therefore,
the pro forma net loss per share does not include the accretion of or
dividends on the Series C Redeemable Convertible Preferred Stock. The pro
forma weighted average shares outstanding includes the common stock resulting
from the conversion of the Convertible Stock as of the beginning of the
earliest period presented or the date of issuance, whichever is later.
4. Comprehensive Loss
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
November 30, November 30, November 30, November 30,
------------ ------------ ------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
The components of comprehensive loss, net of tax,
are as follows:
Net loss............................................... $(8,543) $(7,629) $(25,789) $(17,406)
Other comprehensive loss, net of tax:
Change in unrealized holding loss in 203 -- 63 --
available for sale securities ------- ------- -------- --------
Other comprehensive loss........................... 203 -- 63 --
------- ------- -------- --------
Comprehensive loss..................................... $(8,340) $(7,629) $(25,726) $(17,406)
======= ======= ======== ========
</TABLE>
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion of our financial condition and results of operations
should be read in conjunction with our Financial Statements, including the Notes
thereto, included elsewhere in this Form 10-Q.
Overview
Cyberian Outpost, Inc. ("Outpost.com") is a leading global Internet-only
retailer featuring over 170,000 consumer technology and related products for
home and office, a full range of electronics in the [email protected] store
and innovative gifts in the [email protected] store. With 465,000 customers
world-wide, we offer an online "superstore" at www.Outpost.com that provides
one-stop shopping for domestic and international customers, 24 hours a day,
seven days a week. Our online store features an easy to navigate interface,
extensive product information, powerful search capabilities, and competitive
pricing. We have been recently ranked #1 in Computing by Forrester Research, #1
in Service by Bizrate and Best in Category by Fortune Magazine.
Although we have grown rapidly since our inception in 1995, we continue to
incur significant net losses. We believe that in order to continue our growth
and expansion, operating expenses will increase as a result of the financial
commitments required to further develop multiple marketing channels and enhance
our Web site's features and functionality. As such, we expect to continue to
incur losses and generate negative cash flows from operations for the near term.
Our ability to achieve profitability is dependent upon our ability to
substantially increase net sales and to continue to broaden our range of product
offerings that have higher margins. There can be no assurance that sufficient
revenues will be generated from the sale of our products to enable us to reach
or maintain profitability on a quarterly or annual basis. Although we have
experienced significant revenue growth since inception, such growth rates are
not necessarily sustainable at historic levels. In view of the rapidly evolving
nature of our business, we believe that period-to-period comparisons of our
operating results, including our gross profit and operating expenses as
percentage of net sales, are not necessarily meaningful and should not be relied
upon as an indication of future performance.
We believe that the key factor affecting our long-term financial success is
our ability to attract and retain customers in a cost effective manner.
Currently, we seek to expand our customer base and encourage repeat buying
through the addition of new product categories and the use of multiple sales and
marketing programs. Such programs include: (i) our True Price policy, which
includes free overnight shipping (ii) brand development, (iii) online and
offline marketing and promotional campaigns, (iv) linking programs with targeted
Web sites, (v) personalized direct marketing programs designed to generate
repeat sales from existing customers and (vi) alliances with Internet content
providers and portal sites.
Factors that may affect our operating results include the frequency of new
product releases, success of business alliances, mix of product sales and
seasonality of sales typically experienced by retailers. Sales in the technology
and consumer electronics industry are significantly affected by the release of
new products. Infrequent or delayed new product releases, when they occur,
negatively impact the overall growth in computer retail sales. Gross profit
margins for technology and consumer electronics vary widely, with computer
hardware generally having the lowest gross profit margins. While we have some
ability to affect our product mix through effective upselling and cross-selling
of high margin products, our sales mix will vary from period to period and our
gross margins will fluctuate accordingly.
International sales are denominated in U.S. dollars and, therefore, those
sales are not affected by foreign currency translation. However, foreign
currency fluctuations may affect demand for our products.
7
<PAGE>
Recent Events
On October 1, 1999, we formed a 50/50 joint venture, [email protected], with
Tweeter Home Entertainment Group, Inc. ("Tweeter"), a leading specialty retailer
of upscale audio and video consumer electronics products. [email protected]
markets and brands a fully authorized Internet consumer electronics retail
destination. We believe this joint venture leverages and integrates the core
strengths of both companies, applying our leading-edge Internet technology, Web
merchandising expertise and operational infrastructure and Tweeter's powerful
relationships with top manufacturers and its world-class training organization,
which is directed toward delivering a positive customer experience. The joint
venture is accounted for under the equity method of accounting.
We announced an alliance with Brookstone, Inc., a nationwide specialty
retailer of unique and innovative consumer products. We also entered a co-
marketing alliance and exclusive e-commerce partnership with Sandbox.com, a
leading provider of internet-based sports and financial games. Under the terms
of the agreement, we became Sandbox's exclusive e-commerce partner and will
operate the Sandbox Buyers Club, which includes co-branded stores featuring
computer hardware, software, gaming and electronics products, as well as
Sandbox.com licensed sports merchandise. In addition, an alliance with furniture
retailer Shop121.com adds top grade computer desks and hutches as well as
ergonomic gaming chairs to our store. The alliances noted above are part of our
e-Business Services strategy.
Results of Operations: Three and Nine Months Ended November 30, 1999 and 1998
Net Sales: Net sales are comprised of product sales, net of returns and
allowances, from the sale of computer hardware, software and accessories,
specialty consumer products and advertising revenue derived from hardware
manufacturers and software publishers that pay for promotional placements on our
Web site. Net sales increased by $19.7 million from $23.5 million for the
quarter ended November 30, 1998 to $43.2 million for the quarter ended November
30, 1999. In addition, net sales increased by $60.4 million from $52.1 million
in the nine months ended November 30, 1998 to $112.5 million in the nine months
ended November 1999. In both of these periods, these increases were primarily a
result of increases in our customer base and repeat purchases from existing
customers. Revenues from advertising and other sources in the three and nine
month periods ended November 30, 1999 and 1998 were not material.
Cost of Sales: Cost of sales consists of the cost of the merchandise we sell.
Cost of sales increased by $17.0 million from $21.1 million in the quarter ended
November 30, 1998 to $38.1 million in the quarter ended November 30, 1999 as a
result of the growth in product sales. Our gross profit increased by $2.7
million from $2.4 million in the quarter ended November 30, 1998 to $5.1 million
in the quarter ended November 30, 1999, due to the increase in our revenues. As
a percentage of sales, our gross margin was 11.8% and 10.1% in the quarters
ended November 30, 1999 and 1998, respectively. The increase in gross margin
percentage was attributable to an improvement in our product mix, adhering more
closely to manufacturers' minimum advertised pricing policies, and improved
marketing and merchandising strategies.
Cost of sales increased by $52.8 million from $47.0 million in the nine month
period ended November 30, 1998 to $99.8 million in the nine month period ended
November 30, 1999 as a result of our product sales growth. Our gross profit
increased by $7.6 million from $5.1 million in the nine months ended November
30, 1998 to $12.7 million in the nine months ended November 30, 1999 as a result
of the growth in our revenue. As a percentage of sales, our gross margin was
11.3% and 9.8% in the nine months ended November 30, 1999 and 1998,
respectively.
Sales and Marketing: Sales and marketing expenses consist primarily of online
and offline advertising and promotion costs, distribution and shipping costs,
sales, marketing and customer service personnel and related expenditures, and
fees paid to strategic partners. Sales and marketing expenses increased by $0.9
million from $8.7 million for the quarter ended November 30, 1998 to $9.6
million for the quarter ended November 30, 1999. This increase was due to higher
shipping, warehouse and other direct selling expenses related to the increase in
sales volumes. As a percentage of net sales, sales and marketing expense
decreased from 36.8% for the quarter ended November 30, 1998 to 22.1% for the
quarter ended November 30, 1999. Sales and marketing expenses increased by $9.1
million from $18.0 million in the nine month period ended November 30, 1998, to
$27.1 million in the nine month period ended November 30, 1999. This increase
was due to higher shipping, warehouse and other direct selling expenses related
to the increase in sales volumes, higher
8
<PAGE>
advertising and promotion expenses related to building brand recognition and
increasing sales, and the growth of the sales and marketing staff. As a
percentage of net sales, sales and marketing expenses decreased from 34.5% in
the nine months ended November 30, 1998 to 24.1% in the nine months ended
November 30, 1999. The percentage decreases in both periods resulted from our
ability to leverage sales and marketing expenses such that net sales increased
at a higher rate than those expenses.
General and Administrative: General and administrative expense includes
administrative, finance and purchasing personnel and related costs, general
office and depreciation expenses, as well as professional fees. General and
administrative expense increased by $1.3 million from $1.4 million for the
quarter ended November 30, 1998 to $2.7 million for the quarter ended November
30, 1999. As a percentage of net sales, general and administrative expenses
increased from 5.8% in the quarter ended November 30, 1998 to 6.3% in the
quarter ended November 30, 1999. General and administrative expense increased
by $4.6 million from $3.4 million in the nine month period ended November 30,
1998 to $8.0 million in the nine month period ended November 30, 1999. As a
percentage of net sales, general and administrative expenses increased from 6.6%
in the nine months ended November 30, 1998 to 7.1% in the nine months ended
November 30, 1999. The increases in general and administrative expense in both
periods were primarily the result of increases in depreciation, administrative
personnel, office expenses associated with such personnel, and professional
fees.
Technology and Development: Technology and development expense includes
systems personnel and related costs, software support, technology development
costs, Web site hosting and communications expenditures. Technology and
development expense increased by $0.7 million from $0.9 million for the quarter
ended November 30, 1998 to $1.6 million in the quarter ended November 30, 1999.
As a percentage of net sales, technology and development expense decreased from
3.9% for the quarter ended November 30, 1998 to 3.7% for the quarter ended
November 30, 1999. Technology and development expenses increased by $2.5 million
from $2.5 million in the nine month period ended November 30, 1998 to $5.0
million in the nine month period ended November 30, 1999. As a percentage of
sales, technology and development expenses decreased from 4.8% in the nine
months ended November 30, 1998 to 4.5% in the nine months ended November 30,
1999. The dollar increases in technology and development expense in both periods
were primarily a result of systems and software upgrades and enhancements
required to support the growth in visitors to our Web site, as well as increases
in systems personnel to maintain and improve our Web site and technology
infrastructure. The percentage decreases in both periods resulted from our
ability to leverage technology and development expenses such that net sales
increased at a higher rate than those expenses.
Other Income, Net: Other income, net consists of interest income we earned on
short-term investments and overnight investments of our cash balances in money
market accounts and equity in the net income of [email protected], offset by
interest expense attributable to lease financing agreements. Other income, net
decreased by $657,000 from $933,000 for the quarter ended November 30, 1998 to
$276,000 for the quarter ended November 30, 1999 primarily as a result of lower
interest income because of lower short-term investment balances in the current
quarter. Other income, net increased by $127,000 from $1,429,000 in the nine
month period ended November 30, 1998 to $1,556,000 in the nine month period
ended November 30, 1999. This change was primarily the result of interest
income from short-term investment of our cash balances resulting from our sale
of common stock through our initial public offering completed on August 5, 1998.
Net Loss: As a result of the foregoing factors, we incurred a net loss of $8.5
million and $25.8 million in the three and nine month periods ended November 30,
1999, respectively.
Liquidity and Capital Resources
We used $21.8 million in cash to fund operations during the nine months ended
November 30, 1999. During this period, our principal operating cash requirements
were to fund our net loss and for increases in inventories, prepaid expenses and
other assets, partially offset by increases in accounts payable and accrued
expenses. In addition, we generated $6.2 million from investment activities
during the nine months ended November 30, 1999, consisting of proceeds from the
sale and maturities of short-term investments of $24.4 million, offset by
purchases
9
<PAGE>
of short-term investments of $10.8 million and of property and equipment of $4.9
million and by an investment in a joint venture of $2.5 million. We also
generated $0.9 million from financing activities during the nine months ended
November 30, 1999 from the proceeds from issuing common stock, primarily to
Tweeter, partially offset by the repayment of capital lease obligations.
As of November 30, 1999, we had $12.1 million in cash and cash equivalents and
$15.0 million in short-term investments compared to $26.8 million in cash and
cash equivalents and $28.7 million in short-term investments as of February 28,
1999. As of November 30, 1999, our material capital commitments consisted of
$1.6 million in obligations outstanding under capital leases.
In November 1999, our "flooring" credit agreement with Deutsche Financial
Services Corporation ("DFS") was increased from $7.0 million to $12.0 million.
Pursuant to this agreement, DFS may, at its option, extend credit to us from
time to time to purchase inventory from DFS approved vendors or for other
purposes. Under this agreement, we can purchase inventory from certain vendors
and elect to have these vendors invoice DFS instead of us. DFS pays this invoice
and in turn bills us on a periodic basis throughout the month. If we pay this
note within 30 days, we pay no interest. If the note remains outstanding after
30 days, we must pay a .25% fee and interest accrues at a variable rate based on
the prime rate plus 2.5%. If the note remains outstanding after 181 days,
interest begins to accrue at the prime rate plus 6.5%. To date, we have paid all
notes within 30 days and have incurred no interest expense under this facility.
As a result of increasing our line to $12.0 million, the amount of cash
instruments pledged was increased from $2.5 million to $4.5 million. This
pledge, in addition to all of our assets, secures this facility. As of November
30, 1999, we had an outstanding balance of $8.3 million under this facility.
We plan to continue to aggressively expand our marketing efforts and customer
acquisition initiatives. We will fund these initiatives and our ongoing
operations through current cash, cash equivalents and short term investments,
and we anticipate selling additional equity or debt securities within the next
six to nine months. The sale of additional equity or convertible debt securities
could result in additional dilution to our stockholders. There can be no
assurance that financing will be available in amounts or on terms acceptable to
us, if at all.
As of February 28, 1999, we had a net operating loss ("NOL") carryforward of
approximately $32.8 million, which begins to expire in February 2011. The
utilization of the NOL carryforward will be limited pursuant to the Tax Reform
Act of 1986, due to cumulative changes in ownership in excess of 50%.
Year 2000 Compliance
The "Year 2000 Issue" arose because many existing computer programs use only
the last two digits to refer to a year. Therefore, these computer programs may
recognize a year that ends in "00" as the Year 1900 rather than the Year 2000.
We use a significant number of computer software programs and operating
systems in our internal operations, including applications used in order
processing, inventory management, distribution, financial business systems and
various administrative functions. To determine the effect, if any, of the Year
2000 Issue on our operations, we began a comprehensive audit of our internal
information systems in June 1998 to determine if they are able to correctly
interpret the upcoming Year 2000. We established a Year 2000 Project Team that,
together with external consultants, developed a process for addressing the Year
2000 Issue. This process included performing an inventory, completing an
assessment, and performing remediation and testing procedures of all mission-
critical information systems and equipment that contain embedded technology, as
well as obtaining assurances from all mission-critical third-parties that
substantially affect our ability to take, process and fulfill orders, gather and
process financial information, or otherwise significantly impact the customer
experience. These procedures were successfully completed in December 1999.
During our review and testing, we encountered no significant unresolved
problems, nor did we identify any non-compliant systems that needed to be
replaced or significantly modified. Additionally, we have not experienced any
significant problems subsequent to December 31, 1999. We therefore believe that
our principal information systems correctly define the Year 2000. To date, the
costs incurred to conduct the review of our internal information systems and to
identify the impact of the Year 2000 Issue on third parties have been
immaterial.
10
<PAGE>
Forward-Looking Statements
This report may contain forward-looking statements. Such statements are based
on management's current expectations and are subject to a number of factors and
uncertainties that could cause actual results or outcomes to differ materially
from those described in such forward-looking statements. These statements
address or may address the following subjects: customer growth and retention;
sales growth; our expansion of marketing efforts and customer acquisition
initiatives; our anticipated sale of equity or debt securities; the potential
positive impact on our operations of the joint venture and strategic alliances;
and the impact of the Year 2000 Issue. We caution investors that there can be no
assurance that actual results, outcomes or business conditions will not differ
materially from those projected or suggested in such forward-looking statements
as a result of various factors, including, among others, our limited operating
history, unpredictability of future revenues and operating results, the
continued growth of online commerce, risks associated with international sales,
system failure and capacity constraints and competitive pressures. For further
information, refer to the more specific factors and uncertainties discussed
throughout this report.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities and Use of Proceeds
In connection with our initial public offering, we sold 4,000,000 shares of
Common Stock, par value $.01 per share, and received net offering proceeds of
approximately $65.5 million. On July 30, 1998, the Securities and Exchange
Commission declared our Registration Statement on Form S-1 (File No. 333-55819)
effective. The following table sets forth our cumulative use of the net offering
proceeds as of November 30, 1999:
<TABLE>
<S> <C>
Building, leasehold improvements and facilities........................... $ 1,700,000
Computers, software and office equipment.................................. 6,600,000
Investment in joint venture............................................... 2,500,000
Repayment of indebtedness................................................. 500,000
Working capital........................................................... 26,300,000
Temporary investments..................................................... 15,000,000
Cash and cash equivalents................................................. 12,100,000
All other purposes, net................................................... 800,000
</TABLE>
The foregoing use of net proceeds does not represent a material change in the
use of net proceeds described in the Registration Statement.
12
<PAGE>
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5. Other Information. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
<TABLE>
<S> <C>
Exhibit No. 3.1............ Restated Bylaws of Cyberian Outpost, Inc.
Exhibit No. 10.1........... Employment Agreement dated September 29, 1999
between Robert Bowman and Cyberian Outpost, Inc.
Exhibit No. 11............. Computation of Loss per Share
Exhibit No. 27............. Financial Data Schedule
</TABLE>
(B) Reports on Form 8-K. Not Applicable
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: January 14, 2000
CYBERIAN OUTPOST, INC.
By: /s/ Katherine N. Vick
-------------------------------------------------
Katherine N. Vick
Executive Vice President for Business Development &
Chief Financial Officer
(Principal Accounting and Financial Officer)
14
<PAGE>
CYBERIAN OUTPOST, INC.
EXHIBIT INDEX
Exhibit
-------
3.1 Restated Bylaws of Cyberian Outpost, Inc.
10.1 Employment Agreement dated September 29, 1999 between Robert
Bowman and Cyberian Outpost, Inc.
11 Computation of Loss Per Share
27 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
CYBERIAN OUTPOST, INC.
RESTATED BY-LAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall fix each year.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, special meetings of stockholders of the Corporation
may be called only by the Board of Directors pursuant to a resolution adopted by
a majority of the total number of directors authorized. Special meetings of the
stockholders may be held at such place within or without the State of Delaware
as may be stated in such resolution.
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation, as amended and restated from time to time).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
-1-
<PAGE>
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes is required, a majority of the shares of
such class or classes present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting or
the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
Section 5. Organization and Conduct of Business.
The Chairman of the Board of Directors or, in his or her absence, the Chief
Executive Officer of the Corporation or, in his or her absence, the President
or, in his or her absence, such person as the Board of Directors may have
designated, shall call to order any meeting of the stockholders and shall
preside at and act as chairman of the meeting. In the absence of the Secretary
of the Corporation, the secretary of the meeting shall be such person as the
chairman of the meeting appoints. The chairman of any meeting of stockholders
shall determine the order of business and the procedures at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as he or she deems to be appropriate.
Section 6. Intentionally Omitted.
Section 7. Notice of Stockholder Business and Nominations.
A. Annual Meetings of Stockholders.
Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Section, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.
B. Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
notice of meeting given pursuant to Section 2 above. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected (a) by or at the direction of
the Board of Directors or (b) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by any stockholder
of the Corporation who is a stockholder of record at the time of
-2-
<PAGE>
giving of notice of the special meeting, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.
C. Certain Matters Pertaining to Stockholder Business and Nominations.
(1) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph A of this
Section or a special meeting pursuant to paragraph B of this Section, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation and such other business must otherwise be a proper matter for
stockholder action. To be timely, a stockholder's notice pertaining to an annual
meeting shall be delivered to the Secretary at the principal executive offices
of the Corporation not later than the close of business on the sixtieth (60) day
nor earlier than the close of business on the ninetieth (90th) day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
-------- -------
that in the event that the date of the annual meeting is more than thirty (30)
days before or more than sixty (60) days after such an anniversary date, notice
by the stockholder to be timely must be so delivered not earlier than the close
of business on the ninetieth (90) day prior to such annual meeting and not later
than the close of business on the later of the sixtieth (60th) day prior to such
annual meeting or the close of business on the tenth (10th) day following the
day on which public announcement of the date of such meeting is first made by
the Corporation. Such stockholder's notice for an annual meeting or a special
meeting shall set forth: (a) 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, in each case, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation that are owned beneficially and held of record by
such stockholder and such beneficial owner. A stockholder shall also comply with
all applicable requirements of the Exchange Act (or any successor provision),
and the rules and regulations thereunder with respect to the matters set forth
in these By-Laws.
(2) Notwithstanding anything in the second sentence of paragraph C
(1) of this Section to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement by the Corporation naming all of the nominees
for director or specifying the size of the increased Board of Directors at least
seventy (70) days prior to the first anniversary of the preceding year's annual
meeting (or, if the annual meeting is held more than thirty (30) days before or
sixty (60) days after such anniversary date, at least seventy (70) days prior to
such annual meeting), a stockholder's notice
-3-
<PAGE>
required by this Section shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive office of the Corporation
not later than the close of business on the tenth (10th) day following the day
on which such public announcement is first made by the Corporation.
(3) In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the stockholder's notice required by paragraph C(1) of
this Section shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting nor later than the close of business on the later of the
sixtieth (60th) day prior to such special meeting, or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
D. General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Section. Except as otherwise provided by law or these By-Laws, the chairman
of the meeting shall have the power and duty to determine whether a nomination
or any business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this Section
and, if any proposed nomination or business is not in compliance herewith, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section shall be deemed to affect any rights (i)
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
Section 8. Proxies and Voting.
-4-
<PAGE>
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this Section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by voice vote. Any vote not taken by voice
shall be taken by ballots, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedure established for the meeting. The Corporation may, and to the extent
required by law, shall, in advance of any meeting of stockholders, appoint one
or more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at
a meeting of stockholders, the person presiding at the meeting may, and to the
extent required by law, shall, appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
Except as otherwise provided in the terms of any class or series of
Preferred Stock of the Corporation, all elections at any meeting of stockholders
shall be determined by a plurality of the votes cast, and except as otherwise
required by law, all other matters determined by stockholders at a meeting shall
be determined by a majority of the votes cast affirmatively or negatively.
Section 9. Action Without Meeting.
Any action required or permitted to be taken by the stockholders of the
Corporation may be effected only at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by written consent.
Section 10. Stock List.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) 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.
-5-
<PAGE>
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
-6-
<PAGE>
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number, Election, Tenure and Qualification.
A. The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directions.
B. Subject to the rights of the holders of any series of Preferred Stock
then outstanding to elect additional directors under specified circumstances,
the number of directors shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the Board.
C. On or prior to the Effective Time, as defined in Article FOURTH of
the Corporation's Restated Certificate of Incorporation, the Board of Directors
of the Corporation shall divide the directors into three classes, as nearly
equal in number as reasonably possible, with the term of office of the first
class to expire at the annual meeting of stockholders or any special meeting in
lieu thereof in 1999, the term of office of the second class to expire at the
annual meeting of stockholders or any special meeting in lieu thereof in 2000,
and the term of office of the third class to expire at the annual meeting of
stockholders or any special meeting in lieu thereof in 2001. At each annual
meeting of stockholders or special meeting in lieu thereof following such
initial classification, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders or special meeting in lieu thereof after their
election and until their successors are duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any series of Preferred Stock then
outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director.
In the event of any increase or decrease in the authorized number of directors,
(i) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably 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 newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. In the
-7-
<PAGE>
event of a vacancy in the Board of Directors, the remaining directors, except as
otherwise provided by law, may exercise the powers of the full Board of
Directors until the vacancy is filled.
Section 3. Resignation and Removal.
Any director may resign at any time upon written notice to the Corporation
at its principal place of business or to the Chairman of the Board, Chief
Executive Officer, President 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. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time only for cause. A director
may be removed for cause by the holders of a majority of the shares of the
Corporation then entitled to vote at an election of a director and only after a
reasonable notice and opportunity to be heard before the stockholders.
Section 4. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
written notice of each regular meeting shall not be required.
Section 5. Special Meetings.
Special meetings of the Board of Directors may be called by the Chairman of
the Board of Directors or the Chief Executive Officer, and shall be called by
the Secretary if requested by a majority of the Board of Directors, and shall be
held at such place, on such date, and at such time as he or she or they shall
fix. Notice of the place, date, and time of each such special meeting shall be
given to each director by whom it is not waived by mailing written notice not
less than three (3) days before the meeting or orally, by telegraph, telex,
cable or telecopy given not less than twenty-four (24) hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6. Quorum.
At any meeting of the Board of Directors, a majority of the total number of
members of the Board of Directors shall constitute a quorum for all purposes.
If a quorum shall fail to attend any meeting, a majority of those present may
adjourn the meeting to another place, date, or time, without further notice or
waiver thereof.
Section 7. Action by Consent.
Unless otherwise restricted by the Certificate of Incorporation or these By-
Laws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or committee, as the case may
-8-
<PAGE>
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Section 8. Participation in Meetings By Conference Telephone.
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 and such participation shall
constitute presence in person at such meeting.
Section 9. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
Section 10. Powers.
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as
it may determine, of written obligations of every kind,
negotiable or non-negotiable, secured or unsecured, to borrow
funds and guarantee obligations, and to do all things necessary
in connection therewith;
(4) To remove any officer of the Corporation with or without cause,
and from time to time to devolve the powers and duties of any
officer upon any other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and
agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers,
employees and agents of the Corporation and its subsidiaries as
it may determine;
-9-
<PAGE>
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and,
(8) To adopt from time to time regulations, not inconsistent with
these By-Laws, for the management of the Corporation's business
and affairs.
-10-
<PAGE>
Section 11. Compensation of Directors.
Directors, as such, may receive, pursuant to a resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation to the fullest extent
authorized by law. In the absence or disqualification of any member of any
committee and any alternate member in his or her place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may by unanimous vote appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting and conducting
its business and shall act in accordance therewith, except as otherwise provided
herein or required by law. Adequate provision shall be made for notice to
members of all meetings; one-third (1/3) of the members of any committee shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
-11-
<PAGE>
ARTICLE IV - OFFICERS
Section 1. Enumeration.
The officers of the Corporation shall consist of a Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer, Treasurer,
Secretary and such other officers as the Board of Directors or the Chief
Executive Officer may determine, including, but not limited to, a Chief
Technology Officer, and one or more Vice Presidents, Assistant Treasurers and
Assistant Secretaries.
Section 2. Election.
The Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer, Treasurer and the Secretary shall be elected annually by the
Board of Directors at their first meeting following the annual meeting of the
stockholders. The Board of Directors or the Chief Executive Officer, may, from
time to time, elect or appoint such other officers as it or he or she may
determine, including, but not limited to, a Chief Technology Officer, and one or
more Vice Presidents, Assistant Treasurers and Assistant Secretaries.
Section 3. Qualification.
The Chairman of the Board, if any, and any Vice Chairman appointed to act in
the absence of the Chairman, if any, shall be elected by and from the Board of
Directors, but no other officer need be a director. Two or more offices may be
held by any one person. If required by vote of the Board of Directors, an
officer shall give bond to the Corporation for the faithful performance of his
or her duties, in such form and amount and with such sureties as the Board of
Directors may determine. The premiums for such bonds shall be paid by the
Corporation.
Section 4. Tenure and Removal.
Each officer elected or appointed by the Board of Directors shall hold
office until the first meeting of the Board of Directors following the next
annual meeting of the stockholders and until his or her successor is elected or
appointed and qualified, or until he or she dies, resigns, is removed or becomes
disqualified, unless a shorter term is specified in the vote electing or
appointing said officer. Each officer appointed by the Chief Executive Officer,
shall hold office until his or her successor is elected or appointed and
qualified, or until he or she dies, resigns, is removed or becomes disqualified,
unless a shorter term is specified by any agreement or other instrument
appointing such officer. Any officer may resign by giving written notice of his
or her resignation to the Chief Executive Officer, the President, or the
Secretary, or to the Board of Directors at a meeting of the Board, and such
resignation shall become effective at the time specified therein. Any officer
elected or appointed by the Board of Directors may be removed from office with
or without cause only by vote of a majority of the directors. Any officer
appointed by the Chief
-12-
<PAGE>
Executive Officer may be removed with or without cause by the Chief Executive
Officer or by vote of a majority of the directors.
Section 5. Chairman of the Board.
The Chairman of the Board, if any, shall preside at all meetings of the
Board of Directors and stockholders at which he or she is present and shall have
such authority and perform such duties as may be prescribed by these By-Laws or
from time to time be determined by the Board of Directors.
Section 6. Chief Executive Officer.
The Chief Executive Officer shall be the chief executive officer of the
Corporation and shall, subject to the direction of the Board of Directors, have
general supervision and control of its business. Unless otherwise provided by
resolution of the Board of Directors, in the absence of the Chairman of the
Board, the Chief Executive Officer shall preside at all meetings of the
stockholders and, if a director, meetings of the Board of Directors. The Chief
Executive Officer shall have general supervision and direction of all of the
officers, employees and agents of the Corporation. The Chief Executive Officer
shall also have the power and authority to determine the duties of all officers,
employees and agents of the Corporation, shall determine the compensation of any
officers whose compensation is not established by the Board of Directors and
shall have the power and authority to sign all stock certificates, contracts and
other instruments of the Corporation which are authorized.
Section 7. President.
Except for meetings at which the Chief Executive Officer or the Chairman of
the Board, if any, presides, the President shall, if present, preside at all
meetings of stockholders, and if a director, at all meetings of the Board of
Directors. The President shall, subject to the control and direction of the
Chief Executive Officer and the Board of Directors, have and perform such powers
and duties as may be prescribed by these By-Laws or from time to time be
determined by the Chief Executive Officer or the Board of Directors. The
President shall have power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized. In the absence of a Chief
Executive Officer, the President shall be the chief executive officer of the
Corporation and shall, subject to the direction of the Board of Directors, have
general supervision and control of its business and shall have general
supervision and direction of all of the officers, employees and agents of the
Corporation.
Section 8. Vice Presidents.
The Vice Presidents, if any, in the order of their election, or in such
other order as the Board of Directors or the Chief Executive Officer may
determine, shall have and perform the powers and duties of the President (or
such of the powers and duties as the Board of Directors or the Chief Executive
Officer may determine) whenever the President is absent or unable to act. The
Vice
-13-
<PAGE>
Presidents, if any, shall also have such other powers and duties as may from
time to time be determined by the Board of Directors or the Chief Executive
Officer.
Section 9. Chief Financial Officer, Treasurer and Assistant Treasurers.
The Chief Financial Officer shall also be the Treasurer. The Chief
Financial Officer and/or Treasurer shall, subject to the control and direction
of the Board of Directors and the Chief Executive Officer, have and perform such
powers and duties as may be prescribed in these By-Laws or be determined from
time to time by the Board of Directors and the Chief Executive Officer. All
property of the Corporation in the custody of the Chief Financial Officer and/or
Treasurer shall be subject at all times to the inspection and control of the
Board of Directors and the Chief Executive Officer. The Chief Financial Officer
and/or Treasurer shall have the responsibility for maintaining the financial
records of the Corporation. The Chief Financial Officer and/or Treasurer shall
make such disbursements of the funds of the Corporation as are authorized and
shall render from time to time an account of all such transactions and of the
financial condition of the Corporation. Unless otherwise voted by the Board of
Directors or by the Chief Executive Officer, each Assistant Treasurer, if any,
shall have and perform the powers and duties of the Chief Financial Officer
and/or Treasurer whenever the Chief Financial Officer and/or Treasurer is absent
or unable to act, and may at any time exercise such of the powers of the Chief
Financial Officer and/or Treasurer, and such other powers and duties, as may
from time to time be determined by the Board of Directors or the Chief Executive
Officer.
Section 10. Secretary and Assistant Secretaries.
The Board of Directors or the Chief Executive Officer shall appoint a
Secretary and, in his or her absence, an Assistant Secretary. Unless otherwise
directed by the Board of Directors, the Secretary or, in his or her absence, any
Assistant Secretary, shall attend all meetings of the directors and stockholders
and shall record all votes of the Board of Directors and stockholders and
minutes of the proceedings at such meetings. The Secretary or, in his or her
absence, any Assistant Secretary, shall notify the directors of their meetings,
and shall have and perform such other powers and duties as may from time to time
be determined by the Board of Directors. If the Secretary or an Assistant
Secretary is elected but is not present at any meeting of directors or
stockholders, a temporary Secretary may be appointed by the directors or the
Chief Executive Officer at the meeting
Section 11. Bond.
If required by the Board of Directors, any officer shall give the
Corporation a bond in such sum and with such surety or sureties and upon such
terms and conditions as shall be satisfactory to the Board of Directors,
including without limitation a bond for the faithful performance of the duties
of his office and for the restoration to the Corporation of all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his control and belonging to the Corporation.
-14-
<PAGE>
Section 12. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors or the Chief Executive
Officer, the Chief Financial Officer and/or Treasurer shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by the Chairman of the Board of Directors, Chief
Executive Officer, or the President or a Vice President, and by the Chief
Financial Officer and/or Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary, certifying the number of shares owned by him or her.
Any or all of the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of this Article of these By-
Laws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Date.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, 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, and, for determining stockholders entitled to
receive payment of
-15-
<PAGE>
any dividend or other distribution or allotment of rights or to exercise any
rights of change, conversion or exchange of stock or for any other purpose, the
record date shall be at the close of business on the day on which the Board of
Directors adopts a resolution relating thereto.
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.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
Section 6. Interpretation.
The Board of Directors shall have the power to interpret all of the terms
and provisions of these By-Laws, which interpretation shall be conclusive.
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mail,
postage paid, or by sending such notice by courier service, prepaid telegram or
mailgram, or telecopy, cable, or telex. Any such notice shall be addressed to
such stockholder, director, officer, employee or agent at his or her last known
address as the same appears on the books of the Corporation. The time when such
notice is received, if hand delivered, or dispatched, if delivered through the
mail or by courier, telegram, mailgram, telecopy, cable, or telex shall be the
time of the giving of the notice.
Section 2. Waiver of Notice.
A written waiver of any notice, signed by a stockholder, director, officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed
-16-
<PAGE>
equivalent to the notice required to be given to such stockholder, director,
officer, employee or agent. Neither the business nor the purpose of any meeting
need be specified in such a waiver. Attendance of a director or stockholder at a
meeting without protesting prior thereto or at its commencement the lack of
notice shall also constitute a waiver of notice by such director or stockholder.
ARTICLE VII -INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification.
Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved (including, without limitation, as a witness) in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "Indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith; provided, however, that,
except as provided in Section 3 of this Article with respect to proceedings to
enforce rights to indemnification or as otherwise required by law, the
Corporation shall not be required to indemnify or advance expenses to any such
Indemnitee in connection with a proceeding (or part thereof) initiated by such
Indemnitee unless such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation.
Section 2. Right to Advancement of Expenses.
The right to indemnification conferred in Section 1 of this Article shall
include the right to be paid by the Corporation the expenses (including
attorney's fees) incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, an advancement of expenses incurred by an Indemnitee in his
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such Indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such Indemnitee is
not entitled to be indemnified for such expenses
-17-
<PAGE>
under this Section 2 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this Article shall be
contract rights and such rights shall continue as to an Indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators. Any repeal or
modification of any of the provisions of this Article shall not adversely affect
any right or protection of an Indemnitee existing at the time of such repeal or
modification.
Section 3. Right of Indemnitees to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty (20) days, the Indemnitee
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
or in a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Indemnitee shall also be entitled
to be paid the expenses of prosecuting or defending such suit. In (i) any suit
brought by the Indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the Indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the Indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its board of directors, independent
legal counsel, or its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall create a presumption that the Indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the Indemnitee, be a defense to such suit. In any suit brought by
the Indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
Indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article or otherwise shall be on the Corporation.
Section 4. Non-Exclusivity of Rights.
The rights to indemnification and to the advancement of expenses conferred
in this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, the Corporation's Certificate of
Incorporation as amended from time to time, these By-Laws, any agreement, any
vote of stockholders or disinterested directors or otherwise.
Section 5. Insurance.
-18-
<PAGE>
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 6. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
ARTICLE VIII - CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties.
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 its
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
the votes of such director or officer are counted for such purpose, if:
(a) The material facts as to his or her relationship or interest and as
to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his or her 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
(c) 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.
Section 2. Quorum.
-19-
<PAGE>
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.
ARTICLE IX - MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these By-Laws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year.
Except as otherwise determined by the Board of Directors from time to time,
the fiscal year of the Corporation shall end on the last day of December of each
year.
Section 5. Time Periods.
In applying any provision of these By-Laws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
Section 6. Pronouns.
-20-
<PAGE>
Whenever the context may require, any pronouns used in these By-Laws shall
include the corresponding masculine, feminine or neuter forms.
ARTICLE X - AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of a
majority of the whole Board or by the stockholders by the affirmative vote of
seventy percent (70%) of the outstanding voting power of the then-outstanding
shares of capital stock of the Corporation, entitled to vote generally in the
election of directors, at any meeting at which a proposal to amend or repeal
these By-Laws is properly presented.
-21-
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as September 29, 1999 (the "Effective Date"),
is by and between ROBERT A. BOWMAN, (the "Executive") and Cyberian Outpost,
Inc., a Connecticut corporation with its principal offices at 23 N. Main Street,
Kent, Connecticut 06757 (the "Company");
WHEREAS the Company wishes to employ the services of the Executive for the
period and upon the terms and conditions hereinafter set forth, and Executive
desires to serve in such capacities upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and Executive hereby agree as follows:
1. Employment.
----------
(a) The Company will employ the Executive, and the Executive agrees to be
employed by the Company, as President and Chief Executive Officer of the
Company. Executive will have the responsibilities, duties and authority
commensurate with his position as President and Chief Executive Officer.
(b) Executive shall devote his full business time and energies to the
business and affairs of the Company; provided, however, that nothing contained
in this Paragraph 1(b) shall be deemed to prevent or limit his right to: (i) own
not more than one percent (1%) of the securities of a company that is publicly
traded on a securities exchange or over-the-counter market ( a "Public
Company"), provided that Executive does not otherwise have any relationship with
such company; (ii) make passive investments aggregating to not more than ten
percent (10%) of the securities of any entity that is not a Public Company and
is not engaged in a competing business with the Company and with respect to
which he is not obligated or required to, and which he does not in fact, devote
any substantial efforts which interfere with his fulfillment of his duties
hereunder; (iii) subject to the prior approval of the Board of Directors of the
Company (the "Board"), to serve as a member on the Board of Directors, Board of
Trustees or other similar body of other corporations, trade associations,
professional associations or entities; and (iv) continue to serve on the Boards
of any corporations, trade associations, professional associations or other
entities or maintain his current investments as of the Effective Date, as listed
on a disclosure letter dated September 19, 1999 provided to the Company by
counsel to the Executive.
(c) Notwithstanding the provisions of Paragraph 1(b) hereof, Executive may
(i) maintain his current ownership of approximately twenty-two percent (22%) of
the outstanding shares of iContact.com, Inc. ("iContact.com"); (ii) until the
earlier to occur of the expiration of six (6) months from the date hereof or the
commencement of employment of a new Chief Executive Officer at iContact.com,
perform limited duties as the Executive Chairman thereof, consisting primarily
of assisting in the identification and hiring of such Chief Executive Officer
and the transition of responsibility to such new Chief Executive Officer; and
(iii) after the
<PAGE>
expiration of the period set forth in Paragraph 1(c)(ii) hereof, remain as non-
executive Chairman of iContact.com; provided, however, that Executive shall not
permit any work or activity for iContact.com at any time to interfere with his
duties or responsibilities to the Company.
2. Term of Employment.
------------------
(a) Executive's employment hereunder shall commence on EMPLOYMENT
COMMENCEMENT DATE (the "Commencement Date") and continue until the second
anniversary thereof, subject to extension in accordance with the provisions of
the following paragraph, unless terminated earlier in accordance with the terms
hereof (the "Employment Term").
(b) On each two-year anniversary of the Commencement Date, Executive's
employment hereunder shall be automatically extended for a period ending on the
second anniversary of such date, unless earlier terminated in accordance with
the terms hereof, and unless either Executive or the Company shall have given
written notice to the other of a desire that such automatic extension not occur,
which notice was given no later than thirty (30) days prior to the relevant
anniversary of the Commencement Date. If either party gives such notice and
absent earlier termination in accordance with the terms hereof, the Termination
Date (as defined below) shall be the last day of the Employment Term.
As used herein, "Termination Date" shall mean the last date of Executive's
employment, as determined in accordance with the terms of this Agreement.
3. Compensation.
------------
(a) Base Salary. In consideration for Executive's services under this
Agreement, Executive will be paid (i) during the period commencing on the
Commencement Date and ending on the first anniversary thereof, salary at an
annual salary rate of two hundred thousand dollars ($200,000.00) and (ii) during
the twelve (12) month period commencing on the first anniversary of the
Commencement Date and each twelve (12) month period commencing on each
anniversary of the Commencement Date thereafter during the Employment Term, at
an annual salary rate as determined by the Board or its Compensation Committee,
but in any event at least equal to the annual salary rate in effect immediately
preceding the commencement of the twelve (12) month period in question.
Executive's annual salary rate in effect from time to time is referred to herein
as the "Base Salary." Executive's Base Salary shall be paid in periodic
installments at such times as salaries are generally paid to other senior
executives of the Company.
(b) Bonus Plans. In addition to Executive's Base Salary, Executive shall
be entitled to participate in any bonus plans which the Company provides or may
establish for the benefit of its senior executives pursuant to which he may be
paid any such discretionary bonus payments as the Board or its Compensation
Committee shall determine in recognition of Executive's and the Company's
performance. In accordance with this provision, the Executive may earn a bonus
of up to 40% of the Base Salary during the Company's fiscal year ended February
28, 2000, prorated for the portion of the fiscal year employed, payable as soon
as possible thereafter and to
-2-
<PAGE>
be tied to performance goals to be set by the Compensation Committee, based on a
proposal to be submitted by management of the Company to the Compensation
Committee.
4. Benefits and Reimbursement of Expenses.
--------------------------------------
(a) Vacation. Executive shall be entitled to four (4) weeks of vacation
in the twelve (12) month period commencing on the Commencement Date and ending
on the first anniversary thereof and each twelve (12) month period thereafter
during the Employment Term (an "Employment Year"). All vacation days shall be
taken at such time or times reasonably calculated so as not to interfere with
the business of the Company. If Executive does not use his vacation leave in any
Employment Year, he may carry the unused days over from year to year on a
cumulative basis.
(b) Employee Benefit Plans and Other Benefits. Executive shall also be
entitled to participate in any employee benefit plans which the Company from
time to time provides or may establish for the benefit of its senior executives
(including, without limitation, group life, medical, and other insurance,
retirement, pension, profit-sharing and similar plans), as such plans may be
amended from time to time.
(c) Reimbursement of Expenses. Executive shall be entitled to
reimbursement for all ordinary and reasonable out-of-pocket business expenses
which are reasonably incurred by him in furtherance of the Company's business in
accordance with reasonable policies adopted from time to time by the Company.
The Company will also provide Executive with a monthly allowance to partially
offset the cost of acquisition and maintenance of a first class automobile for
use by Executive primarily in connection with the performance by him of his
duties under this Agreement.
(d) Life Insurance. Subject to the Executive's being insurable at
standard rates, during the Employment Term, the Company will provide One Million
Dollars ($1,000,000.00) of term life insurance for Executive, with Executive's
designee as beneficiary.
5. Termination upon Death or Disability.
-------------------------------------
(a) Executive's employment by the Company shall terminate upon his death,
or upon fifteen (15) days prior written notice from the Company if, by virtue of
total and permanent disability (as hereinafter defined), Executive is unable to
perform his duties hereunder.
(b) Executive shall be considered to be totally and permanently disabled
hereunder if for reasons involving mental or physical illness or physical injury
Executive is unable to or fails to perform a substantial portion of his duties
hereunder for a period of one hundred eighty (180) consecutive calendar days or
more. The determination that, by virtue of total and permanent disability,
Executive is unable to perform a substantial portion of his duties hereunder
shall be made by a physician chosen by the Company and reasonably satisfactory
to Executive (or his legal representative). The cost of such examination shall
be borne by the Company. Executive shall submit to such examination upon the
Company's request.
-3-
<PAGE>
(c) For purposes of this Paragraph 5, the Termination Date in the event of
death shall be the date of death and in the event of total and permanent
disability shall be the date fifteen (15) days after the Company's written
notice to Executive that the physician referenced to above in Paragraph 5(b) has
made a determination of Executive's total and permanent disability in accordance
with Paragraph 5(b) above.
6. Termination by the Executive. Executive's employment may be
-----------------------------
terminated by him, by giving a Notice of Termination, as follows: (a) at any
time by written notice of at least sixty (60) days to the Company and; (b) at
any time by written notice for a "Constructive Termination". The Termination
Date in the event of any such termination shall be the date set forth in the
Notice of Termination.
As used herein, a "Constructive Termination" shall mean: (i) a failure of
the Company to comply with any provision of this Agreement which failure, if
capable of remedy, has not been cured within thirty (30) days after notice of
such noncompliance has been given by the Executive to the Company, provided that
any notice of termination hereunder shall be given within ninety (90) days after
the end of such thirty (30) day period; or (ii) a material change by the Company
in Executive's authority, functions, duties or responsibilities which materially
adversely affects his position with the Company or causes it to become of less
responsibility, scope or importance, provided that such material change is not
in connection with a termination of Executive's employment hereunder for Cause;
or (iii) a proposal by the Company to relocate the Executive's principal place
of employment to a location which is outside of the State of Connecticut or the
greater New York City metropolitan area.
7. Termination by the Company.
--------------------------
(a) Termination Events. Executive's employment may be terminated at any
time by the Company (i) with Cause (in accordance with Paragraph (b) below) by a
Notice of Termination to Executive, effective immediately unless a later date is
otherwise stated in such notice, which date shall be the Termination Date
therefor, (ii) without Cause at any time, by a Notice of Termination to
Executive, effective sixty (60) days after the date given, except as Executive
and the Company may otherwise agree, which date of effectiveness shall be the
Termination Date therefor, or (iii) for total and permanent disability in
accordance with Paragraph 5.
(b) Definition of "Cause". For purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder upon: (i) the
continued and willful failure by Executive to substantially perform his duties
hereunder (other than any such failure resulting from his incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination by Executive for a Constructive
Termination); (ii) the willful engaging by Executive in misconduct which is
materially injurious to the Company's business or reputation, monetarily or
otherwise; (iii) the willful violation by Executive of any material provision of
this Agreement; or (iv) Executive's conviction of an act of fraud or
embezzlement against the Company. Executive shall not be deemed to have been
terminated for Cause unless (1) reasonable notice has been delivered to him
setting forth the reasons for the Company's intention to terminate for Cause,
and (2) a period of twenty (20) days has elapsed since delivery of such notice
during which Executive was afforded an opportunity to
-4-
<PAGE>
cure, if capable of remedy, the reasons for the Company's intention to terminate
for Cause. No action or failure to act by Executive shall be deemed willful
under this Paragraph if Executive believed in good faith that such conduct was
in, or not opposed to, the best interest of the Company.
8. Notice of Termination. Any termination of Executive's employment by
---------------------
the Company or by Executive (other than as a result of death) shall be
communicated by written notice of termination to the other party hereto in
accordance with Paragraph 16(a) (a "Notice of Termination").
-5-
<PAGE>
9. Payments of Compensation Upon Termination or Expiration.
-------------------------------------------------------
(a) Without Cause, Expiration Occasioned by Company or Constructive
Termination. In the event Executive's employment hereunder is terminated by the
Company without Cause under Paragraph 7, or if Executive's employment is
terminated by Executive for a Constructive Termination, or if the Company gives
Executive written notice under Paragraph 2(b) above that the Employment Term
shall not be extended, Executive shall be entitled to a lump-sum payment payable
within thirty (30) days of the Termination Date equal to (i) the greater of the
amount of Base Salary that, absent early termination by the Company without
Cause or by Executive for a Constructive Termination, would have been paid from
the Termination Date through the remainder of the then current Employment Term,
or one year of Base Salary, plus (ii) to the extent earned and not already paid,
any bonus payable pursuant to Paragraph 3 for the prior fiscal year.
Furthermore, in such event, Executive shall be entitled to the continuation of
benefits set forth in Paragraph 11 below.
(b) For Cause, by Executive other than for Constructive Termination, or
upon Death or Total and Permanent Disability. In the event the Company shall
terminate Executive's employment for Cause, or Executive shall terminate his
employment for other than Constructive Termination, or Executive gives written
notice under Paragraph 2(b) of his desire to end the automatic extension of the
Employment Term, or in the event of the death or total and permanent disability
of Executive pursuant to Paragraph 5, then Executive shall be entitled as of the
Termination Date to no additional compensation under this Agreement, except as
provided in Paragraph 12 or as otherwise provided under the benefit plans of the
Company.
(c) Termination following a Change of Control. In the event that,
following a Change of Control (as defined below) of the Company, (i) Executive's
employment hereunder is terminated by the Company without Cause under Paragraph
7, or (ii) Executive's employment is terminated by Executive for a Constructive
Termination, or (iii) if the Company gives Executive written notice under
Paragraph 2(b) above that the Employment Term shall not be extended, Executive
shall be entitled to a lump-sum payment payable within thirty (30) days of the
expiration of the Employment Term equal to the sum of (i) three (3) times the
annual Base Salary rate in effect immediately prior to such Termination Date,
plus (ii) to the extent earned and not already paid, any bonus payable pursuant
to Paragraph 3 for the prior fiscal year. Furthermore, in such event, Executive
shall be entitled to the continuation of benefits set forth in Paragraph 11
below.
As used herein, a "Change of Control" shall be deemed to have occurred upon
the occurrence of any of the following:
(i) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of the
Company;
(ii) individuals who, as of the date hereof, constitute the entire Board of
Directors of the Company (the "Incumbent Directors") cease for any reason
to constitute at least a majority of the Board of Directors (hereinafter
referred to as a "Board Change"), provided that any individual becoming a
director subsequent to the date hereof whose election or
-6-
<PAGE>
nomination for election was approved by a vote of at least a majority of
the then Incumbent Directors shall be, for purposes of this provision,
considered as though such individual were an Incumbent Director; or
(iii) any consolidation or merger of the Company (including, without
limitation, a triangular merger) where the shareholders of the Company,
immediately prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own, directly or
indirectly, shares representing in the aggregate more than fifty percent
(50%) of the combined voting power of all the outstanding securities of the
corporation issuing cash or securities in the consolidation or merger (or
of its ultimate parent corporation, if any); or
(iv) any transaction of the type described in subsection (iii) above
where (A) the percentage referred to is more than 80% of the combined
voting power of all the outstanding securities and where (B) within three
(3) months of such transaction Executive is not serving as chief executive
officer of the combined company or group of companies and reporting only to
the Board of Directors of the parent company; or
(v) any "person," as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (or any successor provision)
(the "Exchange Act") (other than Darryl Peck, the Company, any employee
benefit plan of the Company or any entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
together with all "affiliates" and "associates" (as such terms are defined
in Rule 12b-2 under the Exchange Act or any successor provision) of such
person, shall become the "beneficial owner" or "beneficial owners" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor
provision), directly or indirectly, of securities of the Company
representing in the aggregate (A) in the event the Company is not a
"Reporting Company" (meaning a Company that is subject to the reporting
requirements of the Exchange Act and has registered shares of a class of
equity securities pursuant to Section 12(g) or 12(b) of the Exchange Act),
fifty percent (50%) or more or (B) in the event the Company is a Reporting
Company, twenty-five percent (25%) or more of either (1) the then
outstanding shares of common stock of the Company or (2) the combined
voting power of all then outstanding securities of the Company having the
right under ordinary circumstances to vote in an election of the Board of
Directors of the Company.
10. Equity Compensation. On the date hereof, the Company shall grant to
-------------------
Executive an option (which shall, in the discretion of Executive, be either a
non-qualified option or an incentive option within the meaning of Section 422 of
the Internal Revenue Code ("Section 422") (or any combination thereof), provided
that any incentive option must comply with all applicable provisions of Section
422) to purchase one million two hundred thousand (1,200,000) shares of the
common stock of the Company pursuant to the Company's 1998 Employee, Director
and Consultant Stock Plan at a per share exercise price equal to the market
price of the Company's common stock as quoted on the NASDAQ National Market as
of the close of business on the day prior to the Effective Date. The option will
have a term of ten years. The option will become exercisable for ten percent
(10%) of the shares as of the Commencement
-7-
<PAGE>
Date, thirty percent (30%) twelve (12) months after the Commencement Date, and
the remainder of the option will become exercisable in eighteen (18) equal
monthly installments following such twelve (12) month period in accordance with
the terms of the option agreement. In the event of a Change of Control after the
Effective Date, the option will become fully exercisable. The form of option
agreement is attached hereto as Exhibit A.
---------
11. Continuation of Benefits. In the event Executive's employment
------------------------
hereunder is terminated by Executive for a Constructive Termination or by the
Company without Cause or if the Company gives Executive written notice under
Paragraph 2(b) above that the Employment Term shall not be extended, then
a. should Executive properly elect and otherwise qualify for
continuation of medical coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and in effect on the date of the
Executive's termination of employment hereunder ("COBRA"), and make the payments
required by COBRA, the Company shall reimburse Executive, upon submission of
reasonable documentation of such payments, for the cost thereof for the
applicable COBRA period but not exceeding eighteen (18) months; and
b. as to any other Benefit Plan or Benefit described under paragraph 4(b)
above, should Executive be eligible to continue group coverage or participation
under the terms of such plans or program, as in effect on the date of the
Executive's termination of employment, the Company shall bear the cost thereof
for a period of eighteen (18) months from the Termination Date, provided that,
should continuation under the Company's group plan not be available, the Company
shall purchase reasonably comparable individual coverage, if available, at its
expense, and provided further, that the Company under no circumstances shall be
liable to expend more than one hundred twenty percent (120%) of the cost of
providing coverage for Executive under such Benefit Plan or Benefit while he was
employed by the Company.
12. Accrued Compensation. In the event of any termination of Executive's
--------------------
employment for any reason, Executive (or his estate) shall be paid such portion
of Executive's Base Salary as has accrued by virtue of his employment during the
period prior to termination and has not yet been paid, together with any amounts
for accrued but unused vacation time and for expense reimbursement and similar
items which have been properly incurred in accordance with the provisions hereof
prior to termination and have not yet been paid. Such amounts shall be paid
within thirty (30) days of the Termination Date.
13. Confidential Information. The Executive shall not use for his own
------------------------
advantage or disclose any proprietary or confidential information relating to
the business operations or properties of the Company or any other entity
directly or indirectly controlled by the Company (each an "Affiliate") or any of
their respective customers, suppliers, servicers, licensors or licensees, unless
such information has become public through no fault of the Executive, and
provided that such information may be disclosed (i) as required pursuant to
court order or other legal proceeding or (ii) as Executive determines is
reasonably necessary, to his legal and other advisors. Upon termination of the
Executive's employment, the Executive will surrender and deliver to the Company
all documents and information of every kind relating to or connected
-8-
<PAGE>
with the Company or any Affiliate and their respective businesses, customers,
suppliers, servicers, landlords, licensors and licensees.
14. Non-compete.
-----------
(a) During Executive's employment under this Agreement or otherwise and
for a period of one (1) year after the Termination Date, Executive will not,
without the express written consent of the Company, anywhere in the United
States or any territory or possession thereof or in any foreign country in which
the Company was active as of the Termination Date: (i) compete (as defined
below) with the Company or any Affiliate; or (ii) otherwise interfere with,
disrupt or attempt to interfere with or disrupt the relationship between the
Company or an Affiliate and any person or business that was a customer,
supplier, lessor, licensor, contractor or employee of the Company or such
Affiliate on the Termination Date or within two (2) years prior to the
Termination Date. In addition, for a period of one (1) year after the
Termination Date, Executive will not, directly or indirectly, solicit or
endeavor to entice away from the Company any of its employees.
(b) The term "compete" as used in this Paragraph 14 means directly or
indirectly, or by association with any entity or business, either as a
proprietor, partner, employee, agent, consultant, director, officer, shareholder
or in any other capacity or manner to solicit for hire, hire, sell to, rent
from, or otherwise conduct (i) any business related to the Internet-based retail
sale of computer hardware, software or peripherals or (ii) any other material
business actively engaged in by the Company at the Termination Date or (iii) any
other material business which the Company has made, and is then continuing to
make, substantial plans to conduct at the Termination Date and which the Company
is actively engaged in within three (3) months following the Termination Date;
provided, however, that (ii) and (iii) above shall not include any business
conducted by the Company solely through an entity with which the Company entered
into a transaction that constituted a Change of Control (as defined in Paragraph
9 hereof) within three (3) months of the Termination Date).
(c) The foregoing shall not prohibit Executive from becoming an employee
or consultant of iContact.com following the Termination Date provided that the
terms of the agreement (referenced in Paragraph 17 hereof) between the Company
and iContact.com are not violated by such employment or consultancy and provided
that iContact.com is not otherwise in violation of any term of that agreement.
In addition, the foregoing shall not prohibit Executive from owning not more
than one percent (1%) of the securities of a company that is publicly traded on
a securities exchange or over-the-counter market, provided that Executive does
not otherwise have any relationship with such company.
15. Indemnification; Insurance. During the period of Executive's
--------------------------
employment hereunder and thereafter, the Company agrees to indemnify Executive
in his capacity as an officer and director of the Company to the maximum extent
permitted under applicable state law, and, without limiting the foregoing, the
Company will pay all expenses incurred by Executive in accordance with Section
145(e) of the Delaware General Corporation Law; this provision will survive the
termination of this Agreement. Further, if available upon payment of a
reasonable
-9-
<PAGE>
premium as determined by the Board, the Company will secure standard Director
and Officer Liability Insurance covering Executive in his capacity as an officer
and director of the Company to the extent such insurance is secured for other
senior executives of the Company.
16. General.
-------
(a) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy, (iii) sent by overnight courier, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company: Cyberian Outpost, Inc.
23 N. Main Street
Kent, Connecticut 06757
Attn: Darryl Peck
If to Executive: Robert A. Bowman
to the address on file with the Company
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, (iii) if sent by overnight courier, on
the next business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in
-10-
<PAGE>
the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
(e) Parties. This Agreement is personal and shall in no way be subject to
assignment by Executive. This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns either by merger,
operation of law, consolidation, assignment, purchase or other acquisition of a
controlling interest in the business of the Company, and shall be binding upon
and shall inure to the benefit of Executive, his heirs, executors,
administrators, personal and legal representatives, distributees, devisees,
legatees, successors and permitted assigns. As used in this Agreement, "the
Company" shall mean the Company as hereinbefore defined and any successor as
aforesaid.
(f) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof.
(g) Jurisdiction and Service of Process. Any legal action or proceeding
with respect to this Agreement shall be brought in the courts of the State of
Connecticut or of the United States of America for the District of Connecticut.
By execution and delivery of this Agreement, each of the parties hereto accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the party at its address set forth in Paragraph 16(a)
hereof.
(h) Severability. The parties intend this Agreement to be enforced as
written. However, if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(i) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.
(j) No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party
-11-
<PAGE>
receiving such notice or demand to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the party
giving such notice or demand to any other or further action in any circumstances
without such notice or demand.
(k) Expenses. The Company will reimburse the Executive for his reasonable
legal fees in connection with the negotiation of this Agreement.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
CYBERIAN OUTPOST, INC.
By: /s/ Darryl Peck
--------------------
Title: Chairman of the Board of Directors
/s/ Robert A. Bowman
-------------------------
Robert A. Bowman
-12-
<PAGE>
EXHIBIT 11
CYBERIAN OUTPOST, INC.
Computation of Loss per Share
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
------------------- -----------------------
1999 1998 1999 1998
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Basic and diluted: $ (8,543) $ (7,629) $ (25,789) $ (18,229)
======== ======== ========= =========
Net loss applicable to common stockholders.......... 23,559 22,298 23,277 13,640
======== ======== ========= =========
Basic and diluted weighted average shares
outstanding........................................ $ (0.36) $ (0.34) $ (1.11) $ (1.34)
======== ======== ========= =========
Basic and diluted loss per share....................
Pro forma basic and diluted:
Pro forma net loss applicable to common
stockholders....................................... $ (17,406)
=========
Basic and diluted weighted average shares
outstanding........................................ 19,515
=========
Basic and diluted pro forma loss per share.......... $ (0.89)
=========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-29-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 12,122
<SECURITIES> 14,993
<RECEIVABLES> 3,947
<ALLOWANCES> 450
<INVENTORY> 14,031
<CURRENT-ASSETS> 46,648
<PP&E> 12,847
<DEPRECIATION> 4,035
<TOTAL-ASSETS> 58,544
<CURRENT-LIABILITIES> 23,586
<BONDS> 875
0
0
<COMMON> 236
<OTHER-SE> 33,847
<TOTAL-LIABILITY-AND-EQUITY> 58,544
<SALES> 112,536
<TOTAL-REVENUES> 112,536
<CGS> 99,819
<TOTAL-COSTS> 40,062
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> (25,789)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,789)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,789)
<EPS-BASIC> (1.11)
<EPS-DILUTED> (1.11)
</TABLE>
