<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: APRIL 1, 2000
COMMISSION FILE NUMBER: 000-30027
------------------------
MOLDFLOW CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 04-3406763
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
91 HARTWELL AVENUE, LEXINGTON, MA 02421
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(781) 674-0085
(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 / / NO /X/
There were 9,269,547 shares of our common stock, par value $0.01,
outstanding on May 4, 2000.
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<PAGE>
MOLDFLOW CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED APRIL 1, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
Part I--FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of April 1,
2000 and June 30, 1999................................ 3
Condensed Consolidated Statements of Income for the
three months ended April 1, 2000 and April 3, 1999 and
for the nine months ended April 1, 2000 and April 3,
1999.................................................. 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended April 1, 2000 and April 3,
1999.................................................. 5
Notes to Condensed Consolidated Financial
Statements............................................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations................................. 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................... 18
Part II--OTHER INFORMATION
Item 1. Legal Proceedings................................... 19
Item 2. Changes in Securities and Use of Proceeds........... 19
Item 4. Submission of Matters to a Vote of Securities
Holders................................................... 20
Item 6. Exhibits and Reports on Form 8-K.................... 21
Signatures.................................................. 22
Exhibit Index............................................... 23
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOLDFLOW CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 1, JUNE 30,
2000 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $39,740 $ 1,240
Accounts receivable, net.................................. 5,815 4,444
Prepaid expenses and other current assets................. 1,424 906
------- -------
Total current assets.................................... 46,979 6,590
Fixed assets, net........................................... 2,979 3,110
Investments................................................. 4,330 67
Other assets................................................ 297 480
------- -------
Total assets.............................................. $54,585 $10,247
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt obligations.................................. $ 1,344 $ 1,023
Accounts payable.......................................... 1,775 1,422
Accrued expenses.......................................... 4,735 2,835
Deferred revenue.......................................... 4,022 3,418
------- -------
Total current liabilities............................... 11,876 8,698
Other long-term liabilities................................. 40 279
------- -------
Total liabilities....................................... 11,916 8,977
------- -------
Stockholders' equity:
Convertible preferred stock............................... -- 12,366
Common stock.............................................. 91 6
Additional paid-in capital................................ 47,026 5
Accumulated deficit....................................... (9,130) (11,713)
Accumulated other comprehensive income.................... 4,682 606
------- -------
Total stockholders' equity.............................. 42,669 1,270
------- -------
Total liabilities and stockholders' equity.............. $54,585 $10,247
======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
MOLDFLOW CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- -------------------
APRIL 1, APRIL 3, APRIL 1, APRIL 3,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software licenses..................................... $4,594 $3,555 $11,245 $ 8,830
Services.............................................. 2,489 1,845 7,342 5,814
------ ------ ------- -------
Total revenue....................................... 7,083 5,400 18,587 14,644
------ ------ ------- -------
Costs and expenses:
Cost of software licenses revenue..................... 163 116 485 284
Cost of services revenue.............................. 233 363 724 968
Research and development.............................. 939 1,031 2,648 2,785
Selling and marketing................................. 3,363 2,526 9,174 7,141
General and administrative............................ 1,244 1,065 3,521 2,800
Litigation............................................ 255 150 785 150
------ ------ ------- -------
Total operating expenses............................ 6,197 5,251 17,337 14,128
------ ------ ------- -------
Income from operations.................................. 886 149 1,250 516
Interest income (expense), net.......................... (16) 8 (54) (77)
Other income (loss), net................................ 1,703 (19) 1,638 (41)
------ ------ ------- -------
Income before income taxes.......................... 2,573 138 2,834 398
Provision for income taxes.............................. 423 62 251 119
------ ------ ------- -------
Net income.......................................... $2,150 $ 76 $ 2,583 $ 279
====== ====== ======= =======
Net income per common share:
Basic............................................... $ 2.69 $ 0.25 $ 5.06 $ 1.13
Diluted............................................. $ 0.33 $ 0.01 $ 0.40 $ 0.05
Shares used in computing net income per common share:
Basic............................................... 800 304 510 246
Diluted............................................. 6,532 6,173 6,383 5,992
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
MOLDFLOW CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------
APRIL 1, APRIL 3,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 2,583 $ 279
Adjustments to reconcile to net cash provided by (used in)
operating activities:
Gain on sale of long term investment.................... (1,744) --
Loss on disposal of fixed assets........................ 40 18
Depreciation and amortization........................... 567 672
Provision for doubtful accounts......................... 13 18
Foreign exchange losses................................. 42 141
Changes in assets and liabilities:
Accounts receivable................................... (1,452) (738)
Prepaid expenses, other current assets and
inventories......................................... (567) 211
Accounts payable...................................... 411 186
Accrued expenses...................................... 1,769 (1,229)
Deferred revenue...................................... 607 383
Other assets.......................................... (241) (131)
------- -------
Net cash provided by (used in) operating
activities........................................ 2,028 (190)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets................................. (519) (818)
Proceeds from sale of long term investment................ 1,779 --
Proceeds from fixed asset disposals....................... 4 9
------- -------
Net cash provided by (used in) investing
activities........................................ 1,264 (809)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on bank notes payable.......................... 1,450 605
Payments on bank notes payable............................ (1,010) (109)
Payments on capital lease obligations..................... (117) (174)
Proceeds from issuance of common stock.................... 34,729 1
------- -------
Net cash provided by financing activities........... 35,052 323
------- -------
Effect of exchange rate changes on cash and cash
equivalents............................................... 156 26
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 38,500 (650)
Cash and cash equivalents, beginning of period.............. 1,240 1,700
------- -------
Cash and cash equivalents, end of period.................... $39,740 $ 1,050
======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND NATURE OF BUSINESS
Moldflow Corporation ("Moldflow" or the "Company") was incorporated in
Delaware, USA in January 1997 as the successor corporation to Moldflow
International Pty. Ltd., an Australian corporation. The Company was formed to
design, develop, manufacture and market computer software applications for the
design, engineering and manufacture of injection molded plastic parts and, as
such, revenues are derived from the plastic design and manufacturing industry.
The Company sells its products primarily to customers in the United States,
Europe, Asia and Australia.
The accompanying unaudited consolidated financial statements include the
accounts of Moldflow Corporation and its wholly owned subsidiaries. The
consolidated financial statements have been prepared by the Company in
accordance with the rules and regulations of the Securities and Exchange
Commission regarding interim financial reporting. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the year ended June 30, 1999 included in the Company's Registration
Statement on Form S-1, as amended (File No. 333-95289). The June 30, 1999
consolidated balance sheet was derived from the Company's audited consolidated
financial statements. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
those of a normal recurring nature, necessary for a fair presentation of results
for the interim periods presented. The results of operations for the three and
nine month periods ended April 1, 2000 are not necessarily indicative of the
results to be expected for any future period or the full fiscal year.
The Company's fiscal year end is June 30. During the fiscal year, the
Company follows a schedule in which each interim quarterly period ends on the
Saturday of the thirteenth full week of the reporting period.
2. NET INCOME PER COMMON SHARE
The Company computes net income per common share in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provisions of SFAS 128 and SAB 98, basic earnings per common share is computed
by dividing net income available to common stockholders by the weighted-average
number of common shares outstanding. Diluted earnings per common share is
computed by dividing net income by the weighted-average number of common shares
outstanding and, when dilutive, all potential common equivalent shares
outstanding including convertible preferred stock, restricted stock, options and
warrants. The dilutive effect of options and warrants to purchase common stock
is determined under the treasury stock method using the average fair value of
common stock for the period. The following table presents the calculation for
both basic and diluted net income per common share:
6
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. NET INCOME PER COMMON SHARE (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
------------------- -------------------
APRIL 1, APRIL 3, APRIL 1, APRIL 3,
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income.................................................. $2,150 $ 76 $2,583 $ 279
====== ====== ====== ======
Weighted average shares used in computing net income per
common share-basic........................................ 800 304 510 246
------ ------ ------ ------
Effect of dilutive securities:
Restricted stock.......................................... 145 247 175 213
Stock options and warrants................................ 343 133 291 93
Convertible preferred stock............................... 5,244 5,489 5,407 5,440
------ ------ ------ ------
Dilutive potential common shares........................ 5,732 5,869 5,873 5,746
------ ------ ------ ------
Weighted average shares used in computing net income per
common share-diluted...................................... 6,532 6,173 6,383 5,992
====== ====== ====== ======
Net income per common share-basic........................... $ 2.69 $ 0.25 $ 5.06 $ 1.13
Net income per common share-diluted......................... $ 0.33 $ 0.01 $ 0.40 $ 0.05
</TABLE>
3. CAPITAL STOCK
The Board of Directors and stockholders approved a 2.4-to-1 reverse stock
split of the Company's common stock which became effective on March 23, 2000.
All share and per share information in the accompanying consolidated financial
statements has been retroactively restated to reflect this reverse stock split.
During the quarter, the Moldflow Corporation 2000 Stock Option and Incentive
Plan and the Moldflow Corporation Employee Stock Purchase Plan were approved by
the Board of Directors and stockholders. Under these plans, the Company may
grant up to 2,000,000 shares of common stock and 500,000 shares of common stock,
respectively.
On March 27, 2000, all outstanding shares of convertible preferred stock
automatically converted to shares of common stock.
On March 31, 2000, the Company completed an initial public offering of
common stock, which resulted in the issuance of 3,000,000 shares of common
stock. Proceeds to the Company, net of underwriting discount and costs of the
offering, were $34.7 million. Additionally, on March 31, 2000, the authorized
capital stock of the Company was increased to 60,000,000 shares of common stock
and 5,000,000 shares of preferred stock, each with a par value of $0.01 per
share.
4. INVESTMENTS
In January 2000, the Company sold a portion of its minority investment in an
Indian software company, as a selling shareholder in that company's initial
public offering of common stock in India. This sale resulted in a realized gain
to the Company of $1.7 million, which was recorded as other income. At April 1,
2000, the Company's remaining investment has been categorized as long-term
7
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
available-for-sale securities, as defined by SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Accordingly, the investment
is carried at fair market value, with unrealized holding gains recorded as a
component of other comprehensive income in stockholders' equity.
5. COMPREHENSIVE INCOME
As required, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income" on July 1, 1998. Under SFAS No. 130, the Company is required to display
comprehensive income and its components as part of the Company's full set of
financial statements. The measurement and presentation of net income did not
change. Comprehensive income is comprised of net income and other comprehensive
income. Other comprehensive income includes certain changes in equity that are
excluded from net income, such as cumulative foreign currency translation
adjustments. Other comprehensive income for the three and nine month periods
ended April 1, 2000 includes an unrealized holding gain on the Company's
minority investment in an Indian software company. It is management's opinion
that this unrealized gain is subject to a number of risks, including the risk
that there may not be an active trading market for the remaining shares,
currency fluctuation, foreign exchange controls imposed by foreign governments,
and other potential risks that may cause this gain to never be fully realized.
The following table presents the calculation of comprehensive income:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
------------------- -------------------
APRIL 1, APRIL 3, APRIL 1, APRIL 3,
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income.................................................. $2,150 $ 76 $2,583 $ 279
Other comprehensive income (loss):
Unrealized holding gain on investment..................... 4,298 -- 4,298 --
Foreign currency translation adjustment................... (257) 205 (222) (139)
------ ------ ------ ------
Other comprehensive income (loss)......................... 4,041 205 4,076 (139)
Comprehensive income........................................ $6,191 $ 281 $6,659 $ 140
====== ====== ====== ======
</TABLE>
8
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. SEGMENT AND GEOGRAPHIC INFORMATION
The following table presents the Company's revenues and net fixed assets by
geographic segment:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
------------------- -------------------
APRIL 1, APRIL 3, APRIL 1, APRIL 3,
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE FROM UNAFFILIATED CUSTOMERS:
Asia/Australia
Software licenses..................................... $1,814 $1,014 $ 3,685 $ 1,903
Services.............................................. 704 450 2,021 1,338
------ ------ ------- -------
Total Asia/Australia................................ 2,518 1,464 5,706 3,241
------ ------ ------- -------
USA
Software licenses..................................... 877 1,064 2,917 2,816
Services.............................................. 880 693 2,525 2,313
------ ------ ------- -------
Total USA........................................... 1,757 1,757 5,442 5,129
------ ------ ------- -------
Europe
Software licenses..................................... 1,903 1,478 4,643 4,111
Services.............................................. 905 701 2,796 2,163
------ ------ ------- -------
Total Europe........................................ 2,808 2,179 7,439 6,274
------ ------ ------- -------
Consolidated
Software licenses..................................... 4,594 3,556 11,245 8,830
Services.............................................. 2,489 1,844 7,342 5,814
------ ------ ------- -------
Total Consolidated.................................. $7,083 $5,400 $18,587 $14,644
====== ====== ======= =======
FIXED ASSETS, NET (AS OF PERIOD END):
Asia/Australia.......................................... $2,322 $2,236 $ 2,322 $ 2,236
USA..................................................... 318 404 318 404
Europe.................................................. 339 386 339 386
------ ------ ------- -------
Total Consolidated.................................. $2,979 $3,026 $ 2,979 $ 3,026
====== ====== ======= =======
</TABLE>
7. SUBSEQUENT EVENTS
On April 13, 2000, the Company completed the acquisition of Advanced CAE
Technology, Inc., which does business as "C-Mold." The purchase price, including
transaction costs, was $11.2 million in cash.
On April 13, 2000, the underwriters of the Company's initial public offering
exercised their option to purchase an additional 450,000 shares of common stock,
of which 181,656 shares were issued by the Company. The proceeds to the Company,
net of underwriting discount, were $2.2 million.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
21E of the Securities Exchange Act of 1934, as amended. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future results of operations or
of our financial condition, or state other "forward-looking" information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or control and that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those discussed as
a result of various factors, including those factors described in "Important
Factors That May Affect Future Results" beginning on page 16 and the factors
discussed under the caption "Risk Factors" in our final prospectus dated
March 27, 2000, as filed with the Securities and Exchange Commission. Readers
should not place undue reliance on our forward-looking statements, and the
Company assumes no obligation to update any forward-looking statements.
BUSINESS OVERVIEW
Our primary business is the development, sale and support of software
applications for the plastics industry, and more specifically, for the design
and manufacture of plastic injection molded parts. Our products allow a product
designer or engineer to simulate the manufacture of a plastic part to determine
and maintain the optimal part design and manufacturing conditions throughout the
manufacturing process.
We develop software products internally and through cooperative research
relationships with a number of public and private educational and research
organizations around the world. Prior to June 1997, our products consisted
solely of our Moldflow Plastics Insight (MPI) series for in-depth mold design.
Since then, we have introduced two new product lines. Our Moldflow Plastics
Adviser (MPA) Series for part design and high-level mold design was introduced
in fiscal 1997 and our Moldflow Plastics Xpert (MPX) Series for production
set-up and production monitoring was introduced in fiscal 1999. We have also
introduced additional modules of our MPI product series since June 1997.
We sell our products and services internationally through our direct sales
operations in twelve countries. In addition, we sell through a network of
distributors and value-added resellers, and through distribution arrangements
with developers of other design software products.
We generate revenue from two principal sources:
- license fees for our packaged software products, and
- services revenue derived from maintenance and support services related to
our software products, consulting, training and material testing.
In February 2000, the Company signed a definitive agreement to acquire
Advanced CAE Technologies, Inc., which does business as "C-Mold", for
$11.0 million in cash. The acquisition, which will be accounted for using the
purchase method of accounting, was completed on April 13, 2000.
10
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth statement of operations data for the periods
indicated as a percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
------------------- -------------------
APRIL 1, APRIL 3, APRIL 1, APRIL 3,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software licenses......................................... 64.9% 65.8% 60.5% 60.3%
Services.................................................. 35.1 34.2 39.5 39.7
----- ----- ----- -----
Total revenue........................................... 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Cost of software licenses revenue......................... 2.3 2.1 2.6 1.9
Cost of services revenue.................................. 3.3 6.7 3.9 6.6
Research and development.................................. 13.3 19.1 14.2 19.0
Selling and marketing..................................... 47.5 46.8 49.4 48.8
General and administrative................................ 17.6 19.7 18.9 19.1
Litigation................................................ 3.6 2.8 4.2 1.0
----- ----- ----- -----
Total operating expenses................................ 87.6 97.2 93.2 96.4
----- ----- ----- -----
Income from operations...................................... 12.4 2.8 6.8 3.6
Interest income (expense), net.............................. (0.2) 0.1 (0.3) (0.5)
Other income (loss), net.................................... 24.2 (0.4) 8.8 (0.4)
----- ----- ----- -----
Income before income taxes.............................. 36.4 2.5 15.3 2.7
Provision for income taxes.................................. 6.0 1.1 1.4 0.8
----- ----- ----- -----
Net income.............................................. 30.4% 1.4% 13.9% 1.9%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED APRIL 1, 2000 COMPARED TO THREE MONTHS ENDED APRIL 3, 1999
REVENUE. Total revenue increased by 31%, or $1.7 million, to $7.1 million
for the three months ended April 1, 2000, from $5.4 million for the three months
ended April 3, 1999. In the same period, software licenses revenue increased by
29%, or $1.0 million, to $4.6 million. The increase in software licenses revenue
was primarily attributable to an increase in the number of our direct sales
force and increased levels of customer demand, particularly in Japan and Korea.
Revenue from software licenses accounted for 65% of total revenue during the
three-month period ended April 1, 2000, compared to 66% during the three-month
period ended April 3, 1999. Services revenue increased by 35%, or $644,000, to
$2.5 million for the three months ended April 1, 2000 from $1.8 million for the
three-month period ended April 3, 1999. This increase was due primarily to an
increase in the amount of revenue derived from maintenance and support contracts
resulting from the growth in our software licenses revenue and our
installed-user base in 1999 and the current fiscal year. No customer accounted
for more than 10% of the total revenue during the three-month periods ended
April 1, 2000 and April 3, 1999.
COST OF REVENUE. The cost of software licenses revenue increased 41%, or
$47,000, to $163,000 for the three months ended April 1, 2000 from $116,000 for
the three months ended April 3, 1999. This increase was primarily attributable
to increased personnel costs. The cost of services revenue decreased 36%, or
$130,000 from $363,000 for the three months ended April 3, 1999 to $233,000 for
the three months ended April 1, 2000. This decrease resulted from the continued
redirection of field technical
11
<PAGE>
personnel from largely passive roles of customer hotline and maintenance
services to active field roles in pre-sales and customer retention programs,
which costs are included in selling and marketing.
RESEARCH AND DEVELOPMENT. Research and development expenses decreased 9%,
or $92,000, to $939,000 for the three months ended April 1, 2000 from
$1.0 million for the three months ended April 3, 1999. This decrease was
attributable to lower costs incurred for development tools and travel expenses.
SELLING AND MARKETING. Selling and marketing expenses increased 33%, or
$837,000, to $3.4 million for the three months ended April 1, 2000 from
$2.5 million for the three months ended April 3, 1999. This growth was due
principally to the continued redirection of field technical personnel to
pre-sales support roles. To a lesser extent, the increase was due to an increase
in the number of the direct sales force, an increase in sales commissions and an
increase in spending for promotional activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
17%, or $179,000, to $1.2 million for the three months ended April 1, 2000 from
$1.1 million for the three months ended April 3, 1999. This resulted from the
additional accounting and stockholder communication costs incurred as a result
of our becoming a public company. To a lesser extent, this increase was due to
increased management compensation expenses related to operating performance.
LITIGATION. Litigation expenses increased 70%, or $105,000, to $255,000 for
the three months ended April 1, 2000 from $150,000 for the three months ended
April 3, 1999. These litigation expenses consisted of legal costs incurred to
pursue our claims regarding theft of our trade secrets and to defend against
counterclaims. The litigation was suspended during the period, and upon the
closing of our acquisition of C-Mold, all related claims were dismissed. As a
result, we anticipate no further significant litigation costs to be incurred in
connection with this action.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
300%, or $24,000, to a net expense of $16,000 in the three months ended
April 1, 2000 from net income of $8,000 for the three months ended April 3,
1999. In 1999, the Company had been receiving interest payments on restricted
cash balances.
OTHER INCOME (LOSS), NET. Other income (loss), net increased $1.7 million,
to $1.7 million in the three months ended April 1, 2000 from a loss of $19,000
for the three months ended April 3, 1999. This increase was due to a realized
gain on the sale of a portion of our minority investment in a software company
in connection with that company's initial public offering in India in
March 2000.
PROVISION FOR INCOME TAXES. The provision for income taxes increased 582%,
or $361,000, to $423,000 in the three months ended April 1, 2000 from $62,000
for the three months ended April 3, 1999. This increase was due primarily to the
tax impact from the gain realized on the sale of an investment noted above.
NINE MONTHS ENDED APRIL 1, 2000 COMPARED TO NINE MONTHS ENDED APRIL 3, 1999
REVENUE. Total revenue increased by 27%, or $3.9 million, to $18.6 million
for the nine months ended April 1, 2000, from $14.6 million for the nine months
ended April 3, 1999. In the same period, software licenses revenue increased by
27%, or $2.4 million, to $11.2 million. The increase in software licenses
revenue was primarily attributable to an increase in sales, resulting from an
increase in the number of our direct sales force and to an increase in customer
demand, resulting in part, from the improvement in the economic conditions in
Asia. Revenue from software licenses accounted for 60% of total revenue during
the nine-month period ended April 1, 2000. This is relatively unchanged compared
to the corresponding period ended April 3, 1999. Services revenue increased by
26%, or $1.5 million, to $7.3 million for the nine months ended April 1, 2000
from $5.8 million for the nine-month period ended April 3, 1999. This increase
was due primarily to an increase in the amount of revenue derived
12
<PAGE>
from maintenance and support contracts resulting from the growth in our software
licenses revenue and our installed-user base in 1999 and the current fiscal
year. No customer accounted for 10% or more of the total revenue during the
nine-month period ended April 1, 2000 and one customer accounted for 10% of
total revenue during the nine-month period ended April 3, 1999.
COST OF REVENUE. The cost of software licenses revenue increased 71%, or
$201,000, to $485,000 for the nine months ended April 1, 2000 from $284,000 for
the nine months ended April 3, 1999. This increase was primarily attributable to
increased personnel costs. The cost of services revenue decreased 25%, or
$244,000 from $968,000 for the nine months ended April 3, 1999 to $724,000 for
the nine months ended April 1, 2000. This decrease resulted from the strategic
redirection of field technical personnel from largely passive roles of customer
hotline and maintenance services to active field roles in pre-sales and customer
retention programs, which costs are included in selling and marketing.
RESEARCH AND DEVELOPMENT. Research and development expenses decreased 5%,
or $137,000, to $2.6 million for the nine months ended April 1, 2000 from
$2.8 million for the nine months ended April 3, 1999. This decrease was
attributable to lower costs incurred for development tools, research
sponsorships and travel expenses.
SELLING AND MARKETING. Selling and marketing expenses increased 28%, or
$2.1 million, to $9.2 million for the nine months ended April 1, 2000 from
$7.1 million for the nine months ended April 3, 1999. This growth was due
principally to the continued redirection of field technical personnel to
pre-sales support roles. To a lesser extent, the increase was due to an increase
in the number of the direct sales force and an increase in spending for
promotional activities in connection with the rollout of new products.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
26%, or $721,000, to $3.5 million for the nine months ended April 1, 2000 from
$2.8 million for the three months ended April 3, 1999. This resulted from the
cost of additional finance and administrative personnel hired in the second half
of fiscal 1999. To a lesser extent, this increase was due to additional
accounting and stockholder communication costs incurred as a result of our
becoming a public company and increased management compensation expenses related
to operating performance.
LITIGATION. Litigation expenses increased 423%, or $635,000, to $785,000
for the nine months ended April 1, 2000 from $150,000 for the nine months ended
April 3, 1999. These litigation expenses consisted of legal costs incurred to
pursue our claims regarding theft of our trade secrets and to defend against
counterclaims. The litigation was suspended during the period, and upon the
closing of our acquisition of C-Mold, all related claims were dismissed. As a
result, we anticipate no further significant litigation costs to be incurred in
connection with this action.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
30%, or $23,000, to a net expense of $54,000 in the nine months ended April 1,
2000 from a net expense of $77,000 for the nine months ended April 3, 1999. This
was due primarily to a decrease in interest expense resulting from the reduction
in the amount of outstanding borrowings under our domestic and foreign revolving
credit lines.
OTHER INCOME (LOSS), NET. Other income (loss), net increased $1.7 million,
to income of $1.6 million in the nine months ended April 1, 2000 from a loss of
$41,000 for the nine months ended April 3, 1999. This increase was due to a gain
realized on the sale of a portion of our minority investment in a software
company in connection with that company's initial public offering in India.
PROVISION FOR INCOME TAXES. The provision for income taxes increased 111%,
or $132,000, to $251,000 in the nine months ended April 1, 2000 from $119,000
for the nine months ended April 3, 1999. This increase was due primarily to the
tax impact from the gain realized on the sale of our
13
<PAGE>
investment, net of the impact of a tax rebate of prior tax withholdings received
during the nine-month period ended April 1, 2000.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed our operations and met our capital expenditure
requirements primarily through sales of our capital stock, stockholder loans,
funds generated from operations and borrowings from lending institutions. In
March 2000, we completed our initial public offering of common stock. As of
April 1, 2000, our primary sources of liquidity consisted of our total cash and
cash equivalents balance of $39.7 million and available borrowings of $713,000
under our $3.3 million domestic and foreign revolving lines of credit, which are
secured by substantially all of our assets. As of April 1, 2000, the balance
outstanding on our lines of credit was $1.3 million. This balance was repaid in
April 2000. Borrowings under our lines of credit are subject to a borrowing base
of 80% of eligible domestic accounts receivable, 30% of eligible foreign
accounts receivable, and 90% of a standby letter of credit issued by an
Australian bank. The assets of our Australian subsidiary secure the standby
letter of credit. Interest on these lines of credit is payable monthly at rates
of prime plus 1.25% and prime plus 1.5% for the domestic and foreign lines,
respectively. The standby letter of credit is subject to a fee of 0.5% per
annum.
Net cash provided by operating activities was $2.0 million for the nine
months ended April 1, 2000. During the corresponding period ended April 3, 1999,
net cash of $190,000 was used in operating activities. Cash was provided by
operations in 2000 through increases in net income, deferred maintenance and
support contract revenues, accounts payable, and accrued expenses, offset by an
increase in accounts receivable, and by non-cash depreciation and amortization
charges included in net income. Cash was used in operations in 1999 through
reductions in accrued expenses and increases in accounts receivable.
Net cash provided by investing activities was $1.3 million for the
nine-month period ended April 1, 2000 and net cash used in investing activities
was $809,000 for the nine-month period April 3, 1999. Net cash provided by
investing activities reflects primarily the proceeds from the sale of our
minority investment in an Indian software company of $1.7 million. The Company's
remaining investment has been categorized as long-term available-for-sale
securities. Accordingly, the investment is carried at fair market value, with
unrealized holding gains recorded as a component of our other comprehensive
income in stockholders' equity. It is management's opinion that this unrealized
gain is subject to a number of risks that may cause this gain to never be fully
realized. Net cash used for investing activities reflects amounts used for
purchases of property and equipment, primarily for computers, networking and
materials laboratory test equipment to support our global product development
activities, and to enable data communications among our worldwide development,
sales, customer support and administrative organizations.
Net cash provided by financing activities was $35.1 million and $323,000 for
the nine-month periods ended April 1, 2000 and April 3, 1999, respectively. Net
cash provided by financing activities reflects primarily the cash generated by
the initial public offering of our common stock in March 2000, which provided
$34.7 million in net proceeds to the Company, and borrowings from lending
institutions, net of the repayment of debt obligations. In addition, during
April 2000, the underwriters of the Company's initial public offering exercised
their option to purchase an additional 450,000 shares, of which 181,656 shares
were issued by the Company. The proceeds received by the Company, net of
underwriting discount, were $2.2 million.
We believe that our current cash, cash equivalents, and available lines of
credit will be sufficient to meet our anticipated cash needs for working capital
and capital expenditures for at least the next 12 months following the date of
this Quarterly Report. On a long-term basis or to complete acquisitions in the
short term, we may require additional external financing through credit
facilities,
14
<PAGE>
sales of additional equity or other financing vehicles. There can be no
assurance that such financing can be obtained on favorable terms, if at all.
YEAR 2000 ISSUES
As of April 1, 2000, we are unaware of any problems that have arisen with
respect to year 2000 issues in our current products, our internal computer
systems or in the computer systems of our vendors. Prior to January 1, 2000, we
conducted a comprehensive review of the potential impact that the change in the
date to the year 2000 would have on our current products and computer systems.
Based on this review, we determined that all of our current products and major
computer systems are able to recognize and appropriately process dates
commencing in the year 2000. Our historical costs to assess our year 2000
readiness have not been significant. The majority of the costs required to
complete our year 2000 compliance process were incurred as part of our normal
capital asset acquisition program, and would have been incurred without
consideration of year 2000 issues. We are not currently able to estimate the
final aggregate cost of addressing the year 2000 issue, because funds may be
required as a result of future findings. However, given the lack of any problems
related to the year 2000 since the year change, we do not anticipate that we
will experience any material problems related to the year 2000 in the future. As
a result, we do not expect costs associated with these problems to have an
adverse effect on our business and financial results.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
SFAS 133, as amended by SFAS 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000, with earlier application encouraged.
We do not currently use derivative instruments and, therefore, we have not yet
determined the impact that the adoption of SFAS 133 will have on our financial
position or results of operations if we use these instruments.
In December 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-9, "Modification of SOP No. 97-2, Software
Revenue Recognition, with Respect to Certain Transaction" ("SOP 98-9"). SOP 98-9
amends SOP 97-2 to require recognition of revenue using the "residual method" in
circumstances outlined in SOP 98-9. Under the residual method, revenue is
recognized as follows: (1) the total fair value of undelivered elements, as
indicated by vendor specific objective evidence, is deferred and subsequently
recognized in accordance with the relevant sections of SOP 97-2 and (2) the
difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
The Company has adopted SOP 98-9 and it has not had a significant impact on our
results of operations or financial position.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions
involving Stock Compensation--an interpretation of APB Opinion No. 25." FIN
No. 44 clarifies the application of APB Opinion No. 25 and among other issues
clarifies the following: the definition of an employee for purposes of applying
APB Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 is
effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific
events that occurred after either December 15, 1998 or January 12, 2000. The
Company does not expect the application of FIN No. 44 to have a material impact
on the Company's financial position or results of operations.
15
<PAGE>
EUROPEAN UNION CURRENCY CONVERSION
On January 1, 1999, eleven member nations of the European Economic and
Monetary Union began using a common currency, the Euro. For a three-year
transition period ending June 30, 2002, both the Euro and each of the currencies
for such member countries will remain in circulation. After June 30, 2002, the
Euro will be the sole legal tender for those countries. The adoption of the Euro
will affect many financial systems and business applications as the commerce of
those countries may be transacted both in the Euro and the existing national
currency during the transition period. Significant portions of our revenue have
been historically generated in Europe. Of the eleven countries currently using
the Euro, we have subsidiary operations in Belgium, France, Germany, Italy and
the Netherlands. We have assessed the potential impact of the Euro conversion in
a number of areas, particularly on our pricing and other marketing strategies.
Although we do not currently expect that the conversion, either during or after
the transition period, will have an adverse effect on our operations or
financial condition, the conversion has only recently been implemented and there
can be no assurance that it will not have some unexpected adverse impact.
IMPACT OF INFLATION
We believe that our revenue and results of operations have not been
significantly impacted by inflation during the past three fiscal years.
IMPORTANT FACTORS THAT MAY AFFECT FUTURE RESULTS
IF WE EXPERIENCE DELAYS IN INTRODUCING NEW PRODUCTS OR IF OUR EXISTING OR NEW
PRODUCTS DO NOT ACHIEVE MARKET ACCEPTANCE, WE MAY LOSE REVENUE.
Our industry is characterized by rapid technological advances, evolving
industry standards, changes in end-user requirements, intense competition,
technically complex products, frequent new product introductions, and evolving
offerings by product manufacturers.
We believe our future success will depend, in part, on our ability to
anticipate or adapt to these factors and to offer on a timely basis products
that meet customer demands. For example, the introduction of new products and
services embodying new technologies and the emergence of new industry standards
can render our existing products obsolete. The development of new or enhanced
products is a complex and uncertain process requiring the anticipation of
technological and market trends. We may experience design, manufacturing,
marketing and other difficulties that could delay or prevent our development,
introduction or marketing of new products and enhancements and result in
unexpected expenses.
Our growth and profitability also will depend upon our ability to expand the
use and market penetration of our existing product lines as well as new products
we introduce. Market acceptance of our products will depend in part on our
ability to demonstrate the cost-effectiveness, ease of use and technological
advantages of our products over competing products.
WE MAY EXPERIENCE DIFFICULTY ACHIEVING SALES TARGETS, MAKING TIMELY PRODUCT
RELEASES OR OTHERWISE OPERATING OUR BUSINESS IF WE ARE UNABLE TO ATTRACT OR
RETAIN KEY PERSONNEL.
In order to grow our business, we will have to hire additional employees in
various countries. Our future success, therefore, will depend, in part, on
attracting and retaining additional qualified management, marketing and
technical personnel. We do not know whether we will be successful in hiring or
retaining qualified personnel. Competition for personnel throughout the software
industry is intense.
IF WE BECOME SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WE COULD
INCUR SIGNIFICANT EXPENSES AND WE COULD BE PREVENTED FROM OFFERING SPECIFIC
PRODUCTS OR SERVICES.
16
<PAGE>
Our products include proprietary intellectual property. We may become
subject to claims that we infringe on the proprietary rights of others. In the
United States, a significant number of software and business method patents have
been issued over the past decade and the holders of these patents have been
actively seeking out potential infringers. If any element of our products or
services violates third-party proprietary rights, we might not be able to obtain
licenses on commercially reasonable terms to continue offering our products or
services without substantial re-engineering and any effort to undertake such
re-engineering might not be successful. In addition, any claim of infringement
could cause us to incur substantial costs defending against the claim, even if
the claim is invalid, and could distract our management from our business. Any
judgment against us could require us to pay substantial damages and could also
include an injunction or other court order that could prevent us from offering
our products and services.
OUR FINANCIAL CONDITION OR RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY
INTERNATIONAL BUSINESS RISKS.
The majority of our employees, including sales, support and research and
development personnel, are located outside of the United States. In addition, a
majority of our sales come from outside the United States. Conducting business
outside of the United States is subject to numerous risks, including:
- decreased liquidity resulting from longer accounts receivable collection
cycles typical of foreign countries,
- decreased revenue on foreign sales resulting from possible foreign
currency exchange and conversion issues,
- lower productivity resulting from difficulties managing our sales, support
and research and development operations across many countries,
- lost revenue resulting from difficulties associated with enforcing
agreements and collecting receivables through foreign legal systems,
- lost revenue resulting from the imposition by foreign governments of trade
protection measures, and
- higher cost of sales resulting from import or export licensing
requirements.
OUR ACQUISITION OF C-MOLD MAY RESULT IN LOST REVENUE CAUSED BY BUSINESS
DISRUPTIONS AND MISSED OPPORTUNITIES CAUSED BY THE DISTRACTION OF OUR
MANAGEMENT.
On April 13, 2000, we acquired Advanced CAE Technology, Inc., a software
company doing business as C-Mold, for a total purchase price of $11.2 million
dollars. The value of C-Mold may be less than the purchase price. If we are
unable to effectively integrate C-Mold's products, personnel and systems, our
business and operating results will likely suffer. We expect this integration to
place a significant burden on our management team. Further, we cannot guarantee
that we will realize any of the benefits or strategic objectives we are seeking
to obtain by acquiring C-Mold. In connection with accounting for the acquisition
of C-Mold, we will record a significant amount of goodwill and other intangible
assets, the amortization of which will adversely affect our results of
operations in future periods.
WE HAVE MORE LIMITED FINANCIAL AND OTHER RESOURCES THAN MANY OF OUR COMPETITORS
AND POTENTIAL COMPETITORS AND MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST
THEM.
We operate in a highly competitive environment and may not be able to
successfully compete. Companies in our industry and entities in similar
industries could decide to focus on the development of software solutions for
the design, analysis and manufacturing of injection molded plastic parts. Many
of these entities have substantially greater financial, research and
development, manufacturing and
17
<PAGE>
marketing resources than we do. Increased competition may result in price
reductions, reduced profitability and loss of market share.
OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND AS A
RESULT PERIOD-TO-PERIOD COMPARISONS OF OUR RESULTS OF OPERATIONS ARE NOT
NECESSARILY MEANINGFUL AND SHOULD NOT BE RELIED UPON AS INDICATORS OF FUTURE
PERFORMANCE.
We have experienced significant fluctuations in our results of operations on
a quarterly basis. In particular, we have historically experienced lower revenue
in our first fiscal quarter as compared with the preceding quarter as a result
of seasonal factors, which decrease demand for our products in our first fiscal
quarter.
WE MAY HAVE DIFFICULTY MANAGING THE EXPANSION OF OUR OPERATIONS, WHICH COULD
RESULT IN DAMAGE TO CUSTOMER RELATIONSHIPS OR DELAYED BILLING OR COLLECTION OF
REVENUE.
The implementation of our business strategy could result in a period of
rapid growth in the number of our employees and the scope of our operations. In
addition, through the acquisition of C-Mold, we have further expanded the number
of employees and facilities. Rapid expansion could place a significant strain on
our senior management team and our operational, financial and other resources as
we attempt to expand our operations in multiple locations around the world. We
may have difficulty effectively managing the budgeting, forecasting, global
hiring and other business control issues presented by such a rapid expansion.
This could, among other things, adversely affect our relationships with our
customers and result in delays in billing and collections of revenue from our
customers and increased costs.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We develop our products in research centers in Australia, the United Kingdom
and the United States. We sell our products globally through our direct sales
force and indirect distributor channels. As a result, our financial results are
affected by factors such as changes in foreign currency exchange rates and weak
economic conditions in foreign markets. In the future, we expect to increase our
international operations in our existing markets and in geographic locations
where we do not have any operations now.
We collect amounts representing a substantial portion of our revenues and
pay amounts representing a substantial portion of our operating expenses in
foreign currencies. As a result, changes in currency exchange rates from time to
time may affect our operating results. Currently, we do not engage in hedging
transactions designed to reduce our exposure to changes in currency exchange
rates, although we may do so in the future. We cannot assure you, however, that
any efforts we may make in the future to hedge our exposure to currency exchange
rate changes will be successful.
18
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In February 1999, Moldflow Corporation and Moldflow Pty. Ltd. filed suit in
the United States District Court for the Northern District of New York against a
former employee, Leonid K. Antanovskii, and his then-current employer, C-Mold.
We sought immediate and permanent injunctive relief and monetary damages arising
from the alleged theft and misappropriation of some of our trade secrets. In
March 1999, C-Mold filed counterclaims against us alleging that we had violated
federal antitrust laws, committed defamation and trade libel and tortiously
interfered with C-Mold's prospective business advantage. All aspects of the
litigation were held in abeyance upon agreement of the parties, in connection
with the pending acquisition of C-Mold. Following the closing of the acquisition
on April 13, 2000 all aspects of the litigation were dismissed. For the three
and nine-month periods ended April 1, 2000, we incurred litigation expenses of
$255,000 and $785,000, respectively.
From time to time, we may be involved in various claims and legal
proceedings arising in the ordinary course of business. We are not currently a
party to any such claims or proceedings which, if decided adversely to us, would
either individually or in the aggregate have a material adverse effect on our
business, financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the securities issued by the
Company during the reporting period that were not registered under the
Securities Act of 1933, as amended (the "Act"). There was no public offering in
any such transaction based on the private nature of the transactions and we
believe that each transaction was exempt from the registration requirements of
the Act, by reason of Section 4(2) of the Act or Rule 701 promulgated
thereunder.
(i) In fiscal January 2000, we issued 3,821 shares of common stock upon the
exercise of previously granted stock options at an aggregate exercise
price of $1,703.52
(ii) In fiscal February 2000, we issued 5,568 shares of common stock upon
the exercise of previously granted stock options at an aggregate exercise
price of $2,266.56
(iii) In fiscal March 2000, we issued 5,588 shares of common stock upon the
exercise of previously granted stock options at an aggregate exercise
price of $2,339.76.
USE OF PROCEEDS FROM REGISTERED SECURITIES
1) The effective date of the Securities Act registration statement for which
the use of proceeds information is being disclosed was March 27, 2000, and
the Commission file number assigned to the registration statement is
333-95289.
2) The offering commenced as of March 28, 2000.
3) The offering did not terminate before any securities were sold.
4) (i) As of the date of the filing of this report, the offering has
terminated and 3,450,000 of the securities registered were sold.
(ii) The names of the managing underwriters are Adams, Harkness &
Hill, Inc. and A.G. Edwards & Sons, Inc.
(iii) Our common stock, par value $0.01 per share, was the class of
securities registered.
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<PAGE>
(iv) We registered 3,450,000 shares of our common stock (which includes
450,000 shares solely to cover over-allotments, of which 268,344 shares
were offered by selling shareholders), having an aggregate price of the
offering amount registered of $44,850,000 million. As of the date of
the filing of this report, 3,450,000 of the total shares registered
have been sold at an aggregate offering price of $44,850,000.
(v) From March 27, 2000 to the date hereof, a reasonable estimate of the
amount of expenses incurred by us in connection with the issuance and
distribution of the securities totaled $4.5 million, which consisted of
direct payments of: (i) $1.2 million in legal, accounting and printing
fees (reasonable estimate); (ii) $2.9 million in underwriters discount,
fees and commissions; and (iii) $0.4 million in miscellaneous expenses
(reasonable estimate). No payments for such expenses were made to
(i) any of our directors, officers, general partners or their
associates, (ii) any person(s) owning 10% or more of any class of our
equity securities or (iii) any of our affiliates.
(vi) Our net offering proceeds after deducting our total expenses were
$36.9 million.
(vii) We used approximately $11.2 million of the net proceeds to fund the
acquisition of C-Mold on April 13, 2000. No payments out of the net
proceeds were made to (i) any of our directors, officers, general
partners or their associates, (ii) any person(s) owning 10% or more of
any class of our equity securities or (iii) any of our affiliates.
(viii) The uses of proceeds described do not represent a material change in
the use of proceeds described in our prospectus.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 24, 2000, the Company held a Special Meeting of Stockholders.
The stockholders voted, either in person or by proxy, on the following matters:
(i) To approve and adopt a Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the Company,
(ii) To approve and adopt a Second Amended and Restated Certificate of
Incorporation of the Company,
(iii) To approve and adopt a Third Amended and Restated Certificate of
Incorporation of the Company,
(iv) To approve and adopt the Company's 2000 Stock Option and Incentive
Plan, and
(v) To approve and adopt the Company's Employee Stock Purchase Plan.
The results of the stockholder vote were as follows:
PROPOSAL 1:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
---------- -------- ---------
<S> <C> <C> <C>
Common and Preferred Stock (voting as a single class)....... 14,522,008 125 --
Common Stock................................................ 1,349,727 125 --
Class C Preferred Stock..................................... 13,172,281 -- --
</TABLE>
20
<PAGE>
PROPOSAL 2:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
---------- -------- ---------
<S> <C> <C> <C>
Common and Preferred Stock (voting as a single class)....... 14,522,133 -- --
Common Stock................................................ 1,349,852 -- --
Class C Preferred Stock..................................... 13,172,281 -- --
</TABLE>
PROPOSAL 3:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
---------- -------- ---------
<S> <C> <C> <C>
Common and Preferred Stock (voting as a single class)....... 14,522,133 -- --
Common Stock................................................ 1,349,852 -- --
Class C Preferred Stock..................................... 13,172,281 -- --
</TABLE>
PROPOSAL 4:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
---------- -------- ---------
<S> <C> <C> <C>
Common and Preferred Stock (voting as a single class)....... 14,522,133 --
</TABLE>
PROPOSAL 5:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
---------- -------- ---------
<S> <C> <C> <C>
Common and Preferred Stock (voting as a single class)....... 14,522,133 -- --
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<C> <S>
(a) Exhibits:
3.1 Third Amended and Restated Certificate of Incorporation of
Moldflow Corporation
3.2 Second Amended and Restated By-laws of Moldflow Corporation
27.1 Financial Data Schedule
(b) Reports on Form 8-K
</TABLE>
On April 26, 2000 the Company filed a report on Form 8-K reporting in Item 2
the completion of the acquisition of Advanced CAE Technology, Inc. (d/b/a
C-Mold) on April 13, 2000. The report on Form 8-K also included the financial
statements required by Item 7 which were incorporated by reference to the
Consolidated Financial Statements of Advanced CAE Technology Inc. and the
Unaudited Pro Forma Combined Financial Information for Moldflow Corporation
which were included in Amendment No. 4 to Registration Statement on Form S-1,
Registration No. 333-95289 of Moldflow Corporation, filed with the Securities
and Exchange Commission on March 24, 2000.
21
<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.
<TABLE>
<CAPTION>
<S> <C>
MOLDFLOW CORPORATION
/s/ MARC J. L. DULUDE
--------------------------------------------
By: Marc J. L. Dulude
Title: President and Chief Executive Officer
MOLDFLOW CORPORATION
/s/ SUZANNE E. ROGERS
--------------------------------------------
By: Suzanne E. Rogers
Title: Vice President of Finance and
Administration and Chief Financial
Officer (Principal Financial Officer)
Date: May 12, 2000
</TABLE>
22
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
3.1 Third Amended and Restated Certificate of Incorporation of
Moldflow Corporation
3.2 Second Amended and Restated By-laws of Moldflow Corporation
27.1 Financial Data Schedule
</TABLE>
23
<PAGE>
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MOLDFLOW CORPORATION
Moldflow Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Moldflow Corporation. The date of the
filing of its original Certificate of Incorporation with the Secretary of State
of the State of Delaware was January 15, 1997 (the "Original Certificate").
2. This Third Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the provisions of the Second
Amended and Restated Certificate of Incorporation that was filed with the
Secretary of State of the State of Delaware on March 27, 2000 (the "Second
Amended and Restated Certificate"), and was duly adopted in accordance with the
provisions of Sections 242 and 245 of the Delaware General Corporation Law (the
"DGCL").
3. The text of the Second Amended and Restated Certificate is hereby
amended and restated in its entirety to provide as herein set forth in full.
ARTICLE I
The name of the Corporation is Moldflow Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is c/o The Corporation Trust Company, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the DGCL.
<PAGE>
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is sixty-five million (65,000,000) shares, of which (i)
sixty million (60,000,000) shares shall be a class designated as common stock,
par value $.01 per share (the "Common Stock"), and (ii) five million (5,000,000)
shares shall be a class designated as undesignated preferred stock, par value
$.01 per share (the "Undesignated Preferred Stock").
The number of authorized shares of the class of Undesignated Preferred
Stock may from time to time be increased or decreased (but not below the number
of shares outstanding) by the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock entitled to vote, without a vote of the
holders of the Undesignated Preferred Stock (except as otherwise provided in any
certificate of designations of any series of Undesignated Preferred Stock).
The powers, preferences and rights of, and the qualifications,
limitations and restrictions upon, each class or series of stock shall be
determined in accordance with, or as set forth below in, this Article IV.
A. COMMON STOCK
Subject to all the rights, powers and preferences of the Undesignated
Preferred Stock and except as provided by law or in this Article IV (or in any
certificate of designations of any series of Undesignated Preferred Stock):
(a) the holders of the Common Stock shall have the exclusive
right to vote for the election of directors of the Corporation (the "Directors")
and on all other matters requiring stockholder action, each outstanding share
entitling the holder thereof to one vote on each matter properly submitted to
the stockholders of the Corporation for their vote; PROVIDED, HOWEVER, that,
except as otherwise required by law, holders of Common Stock, as such, shall not
be entitled to vote on any amendment to this Certificate (or on any amendment to
a certificate of designations of any series of Undesignated Preferred Stock)
that alters or changes the powers, preferences, rights or other terms of one or
more outstanding series of Undesignated Preferred Stock if the holders of such
affected series are entitled to vote, either separately or together as a class
with the holders of one or more other such series, on such amendment pursuant to
this Certificate (or pursuant to a certificate of designations of any series of
Undesignated Preferred Stock) or pursuant to the DGCL;
(b) dividends may be declared and paid or set apart for payment
upon the Common Stock out of any assets or funds of the Corporation legally
available for the payment of dividends, but only when and as declared by the
Board of Directors of the Corporation (the "Board of Directors") or any
authorized committee thereof; and
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(c) upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock.
B. UNDESIGNATED PREFERRED STOCK
The Board of Directors or any authorized committee thereof is expressly
authorized, to the fullest extent permitted by law, to provide for the issuance
of the shares of Undesignated Preferred Stock in one or more series of such
stock, and by filing a certificate pursuant to applicable law of the State of
Delaware, to establish or change from time to time the number of shares of each
such series, and to fix the designations, powers, including voting powers, full
or limited, or no voting powers, preferences and the relative, participating,
optional or other special rights of the shares of each series and any
qualifications, limitations and restrictions thereof.
ARTICLE V
STOCKHOLDER ACTION
1. ACTION WITHOUT MEETING. Except as otherwise provided herein, any
action required or permitted to be taken by the stockholders of the Corporation
at any annual or special meeting of stockholders of the Corporation must be
effected at a duly called annual or special meeting of stockholders and may not
be taken or effected by a written consent of stockholders in lieu thereof.
2. SPECIAL MEETINGS. Except as otherwise required by statute and
subject to the rights, if any, of the holders of any series of Undesignated
Preferred Stock, special meetings of the stockholders of the Corporation may be
called only by the Board of Directors acting pursuant to a resolution approved
by the affirmative vote of a majority of the Directors then in office. Only
those matters set forth in the notice of the special meeting may be considered
or acted upon at a special meeting of stockholders of the Corporation.
ARTICLE VI
DIRECTORS
1. GENERAL. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors except as otherwise
provided herein or required by law.
2. ELECTION OF DIRECTORS. Election of Directors need not be by written
ballot unless the By-laws of the Corporation (the "By-laws") shall so provide.
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3. NUMBER OF DIRECTORS; TERM OF OFFICE. The number of Directors of the
Corporation shall be fixed solely and exclusively by resolution duly adopted
from time to time by the Board of Directors. The Directors, other than those who
may be elected by the holders of any series of Undesignated Preferred Stock,
shall be classified, with respect to the term for which they severally hold
office, into three classes, as nearly equal in number as reasonably possible.
The initial Class I Directors of the Corporation shall be A. Roland Thomas,
Charles D. Yie and Robert P. Schechter; the initial Class II Directors of the
Corporation shall be Julian H. Beale and Marc J. L. Dulude; and the initial
Class III Directors of the Corporation shall be Roger Brooks and Richard A.
Charpie. The initial Class I Directors shall serve for a term expiring at the
annual meeting of stockholders to be held in 2000, the initial Class II
Directors shall serve for a term expiring at the annual meeting of stockholders
to be held in 2001, and the initial Class III Directors shall serve for a term
expiring at the annual meeting of stockholders to be held in 2002. At each
annual meeting of stockholders, 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 after their election. Notwithstanding
the foregoing, the Directors elected to each class shall hold office until their
successors are duly elected and qualified or until their earlier resignation or
removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Certificate, the holders of any one or more series of
Undesignated Preferred Stock shall have the right, voting separately as a series
or together with holders of other such series, to elect Directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate and any certificate of designations applicable
thereto.
4. VACANCIES. Subject to the rights, if any, of the holders of any
series of Undesignated Preferred Stock to elect Directors and to fill vacancies
in the Board of Directors relating thereto, any and all vacancies in the Board
of Directors, however occurring, including, without limitation, by reason of an
increase in size of the Board of Directors, or the death, resignation,
disqualification or removal of a Director, shall be filled solely and
exclusively by the affirmative vote of a majority of the remaining Directors
then in office, even if less than a quorum of the Board of Directors, and not by
the stockholders. Any Director appointed in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of
Directors in which the new directorship was created or the vacancy occurred and
until such Director's successor shall have been duly elected and qualified or
until his or her earlier resignation or removal. Subject to the rights, if any,
of the holders of any series of Undesignated Preferred Stock to elect Directors,
when the number of Directors is increased or decreased, the Board of Directors
shall, subject to Article VI.3 hereof, determine the class or classes to which
the increased or decreased number of Directors shall be apportioned; PROVIDED,
HOWEVER, that no decrease in the number of Directors shall shorten the term of
any incumbent Director. In the event of a vacancy in the Board of Directors, the
remaining Directors, except as otherwise provided by law, shall exercise the
powers of the full Board of Directors until the vacancy is filled.
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5. REMOVAL. Subject to the rights, if any, of any series of
Undesignated Preferred Stock to elect Directors and to remove any Director whom
the holders of any such stock have the right to elect, any Director (including
persons elected by Directors to fill vacancies in the Board of Directors) may be
removed from office (i) only with cause and (ii) only by the affirmative vote of
the holders of 75% or more of the shares then entitled to vote at an election of
Directors. At least forty-five (45) days prior to any meeting of stockholders at
which it is proposed that any Director be removed from office, written notice of
such proposed removal and the alleged grounds thereof shall be sent to the
Director whose removal will be considered at the meeting.
ARTICLE VII
LIMITATION OF LIABILITY
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (a) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the DGCL or (d) for any transaction
from which the Director derived an improper personal benefit. If the DGCL is
amended after the effective date of this Certificate to authorize corporate
action further eliminating or limiting the personal liability of Directors, then
the liability of a Director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the DGCL, as so amended.
Any repeal or modification of this Article VII by either of (i) the
stockholders of the Corporation or (ii) an amendment to the DGCL, shall not
adversely affect any right or protection existing at the time of such repeal or
modification with respect to any acts or omissions occurring before such repeal
or modification of a person serving as a Director at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENT OF BY-LAWS
1. AMENDMENT BY DIRECTORS. Except as otherwise provided by law, the
By-laws of the Corporation may be amended or repealed by the Board of Directors
by the affirmative vote of a majority of the Directors then in office.
2. AMENDMENT BY STOCKHOLDERS. The By-laws of the Corporation may be
amended or repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose as provided in the By-laws, by the
affirmative vote of at least 75% of the shares present in person or represented
by proxy at such meeting and entitled to vote on such amendment or repeal,
voting together as a single class; PROVIDED, HOWEVER, that if the Board of
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Directors recommends that stockholders approve such amendment or repeal at such
meeting of stockholders, such amendment or repeal shall only require the
affirmative vote of the majority of the shares present in person or represented
by proxy at such meeting and entitled to vote on such amendment or repeal,
voting together as a single class.
ARTICLE IX
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend or repeal this Certificate
in the manner now or hereafter prescribed by statute and this Certificate, and
all rights conferred upon stockholders herein are granted subject to this
reservation. Whenever any vote of the holders of voting stock is required to
amend or repeal any provision of this Certificate, and in addition to any other
vote of holders of voting stock that is required by this Certificate or by law,
such amendment or repeal shall require the affirmative vote of the majority of
the outstanding shares entitled to vote on such amendment or repeal, and the
affirmative vote of the majority of the outstanding shares of each class
entitled to vote thereon as a class, at a duly constituted meeting of
stockholders called expressly for such purpose; PROVIDED, HOWEVER, that the
affirmative vote of not less than 75% of the outstanding shares entitled to vote
on such amendment or repeal, and the affirmative vote of not less than 75% of
the outstanding shares of each class entitled to vote thereon as a class, shall
be required to amend or repeal any provision of Article V, Article VI, Article
VII or Article IX of this Certificate.
[End of Text]
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<PAGE>
THIS THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION is
executed as of this 31st day of March, 2000.
MOLDFLOW CORPORATION
By: /s/ MARC J.L. DULUDE
-------------------------------------
Marc J. L. Dulude
President and Chief Executive Officer
<PAGE>
SECOND AMENDED AND RESTATED
BY-LAWS
OF
MOLDFLOW CORPORATION
(the "Corporation")
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of stockholders (any such
meeting being referred to in these By-laws as an "Annual Meeting") shall be held
at the hour, date and place within or without the United States which is fixed
by the Board of Directors, which time, date and place may subsequently be
changed at any time by vote of the Board of Directors. If no Annual Meeting has
been held for a period of thirteen months after the Corporation's last Annual
Meeting, a special meeting in lieu thereof may be held, and such special meeting
shall have, for the purposes of these By-laws or otherwise, all the force and
effect of an Annual Meeting. Any and all references hereafter in these By-laws
to an Annual Meeting or Annual Meetings also shall be deemed to refer to any
special meeting(s) in lieu thereof.
SECTION 2. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be
considered by the stockholders may be made at an Annual Meeting (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 By-law, who is entitled to vote at the
meeting, who is present (in person or by proxy) at the meeting and who
complies with the notice procedures set forth in this By-law. In
addition to the other requirements set forth in this By-law, for any
proposal of business to be considered at an Annual Meeting, it must be
a proper subject for action by stockholders of the Corporation under
Delaware law.
(2) For nominations or other business to be properly brought
before an Annual Meeting by a stockholder pursuant to clause (c) of
paragraph (a)(1) of this By-law, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to
<PAGE>
the Secretary at the principal executive offices of the Corporation not
later than the close of business on the ninetieth (90th) day nor
earlier than the close of business on the one hundred twentieth (120th)
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 advanced by more than thirty (30) days before or
delayed by more than sixty (60) days after such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier
than the close of business on the one hundred twentieth (120th) day
prior to such Annual Meeting and not later than the close of business
on the later of the ninetieth (90th) day prior to such Annual Meeting
or the tenth (10th) day following the day on which public announcement
of the date of such meeting is first made. Notwithstanding anything to
the contrary provided herein, for the first Annual Meeting following
the initial public offering of common stock of the Corporation, a
stockholder's notice shall be timely if delivered to the Secretary at
the principal executive offices of the Corporation not later than the
close of business on the later of the ninetieth (90th) day prior to the
scheduled date of such Annual Meeting or the tenth (10th) day following
the day on which public announcement of the date of such Annual Meeting
is first made or sent by the Corporation. Such stockholder's notice
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 in an election
contest, or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Rule 14a-11 thereunder (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, any material
interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made, and the names and
addresses of other stockholders known by the stockholder proposing such
business to support such proposal, and the class and number of shares
of the Corporation's capital stock beneficially owned by such other
stockholders; and (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 which are owned
beneficially and of record by such stockholder and such beneficial
owner.
(3) Notwithstanding anything in the second sentence of
paragraph (a)(2) of this By-law 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 naming all
of the nominees for director or specifying the size of the increased
Board of Directors made by the Corporation at least eighty-five (85)
days prior to the first anniversary of the preceding year's Annual
Meeting, a stockholder's
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notice required by this By-law 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 offices 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.
(b) GENERAL.
(1) Only such persons who are nominated in accordance with the
provisions of this By-law shall be eligible for election and to serve
as directors and only such business shall be conducted at an Annual
Meeting as shall have been brought before the meeting in accordance
with the provisions of this By-law. The Board of Directors or a
designated committee thereof shall have the power to determine whether
a nomination or any business proposed to be brought before the meeting
was made in accordance with the provisions of this By-law. If neither
the Board of Directors nor such designated committee makes a
determination as to whether any stockholder proposal or nomination was
made in accordance with the provisions of this By-law, the presiding
officer of the Annual Meeting shall have the power and duty to
determine whether the stockholder proposal or nomination was made in
accordance with the provisions of this By-law. If the Board of
Directors or a designated committee thereof or the presiding officer,
as applicable, determines that any stockholder proposal or nomination
was not made in accordance with the provisions of this By-law, such
proposal or nomination shall be disregarded and shall not be presented
for action at the Annual Meeting.
(2) For purposes of this By-law, "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 By-law, 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 in this By-law. Nothing in this By-law shall be
deemed to affect any rights of (i) stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) the holders of any series of
Undesignated Preferred Stock to elect directors under specified
circumstances.
SECTION 3. SPECIAL MEETINGS. Except as otherwise required by statute
and subject to the rights, if any, of the holders of any series of Undesignated
Preferred Stock, special meetings of the stockholders of the Corporation may be
called only by the Board of Directors acting pursuant to a resolution approved
by the affirmative vote of a majority of the Directors
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<PAGE>
then in office. Only those matters set forth in the notice of the special
meeting may be considered or acted upon at a special meeting of stockholders
of the Corporation.
SECTION 4. NOTICE OF MEETINGS; ADJOURNMENTS. A written notice of each
Annual Meeting stating the hour, date and place of such Annual Meeting shall be
given not less than ten (10) days nor more than sixty (60) days before the
Annual Meeting, to each stockholder entitled to vote thereat by delivering such
notice to such stockholder or by mailing it, postage prepaid, addressed to such
stockholder at the address of such stockholder as it appears on the
Corporation's stock transfer books. Such notice shall be deemed to be given when
hand delivered to such address or deposited in the mail so addressed, with
postage prepaid.
Notice of all special meetings of stockholders shall be given in the
same manner as provided for Annual Meetings, except that the written notice of
all special meetings shall state the purpose or purposes for which the meeting
has been called.
Notice of an Annual Meeting or special meeting of stockholders need not
be given to a stockholder if a written waiver of notice is signed before or
after such meeting by such stockholder or if such stockholder attends such
meeting, unless such attendance was for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any Annual Meeting or special meeting of stockholders need
be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously
scheduled Annual Meeting or special meeting of stockholders and any record date
with respect thereto, regardless of whether any notice or public disclosure with
respect to any such meeting has been sent or made pursuant to Section 2 of this
Article I of these By-laws or otherwise. In no event shall the public
announcement of an adjournment, postponement or rescheduling of any previously
scheduled meeting of stockholders commence a new time period for the giving of a
stockholder's notice under Section 2 of this Article I of these By-laws.
When any meeting is convened, the presiding officer may adjourn the
meeting if (a) no quorum is present for the transaction of business, (b) the
Board of Directors determines that adjournment is necessary or appropriate to
enable the stockholders to consider fully information which the Board of
Directors determines has not been made sufficiently or timely available to
stockholders, or (c) the Board of Directors determines that adjournment is
otherwise in the best interests of the Corporation. When any Annual Meeting or
special meeting of stockholders is adjourned to another hour, date or place,
notice need not be given of the adjourned meeting other than an announcement at
the meeting at which the adjournment is taken of the hour, date and place to
which the meeting is adjourned; provided, however, that if the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote thereat and each stockholder who,
by law or under the
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Certificate of Incorporation of the Corporation (as same may hereafter be
amended and/or restated, the "Certificate") or these By-laws, is entitled to
such notice.
SECTION 5. QUORUM. A majority of the shares entitled to vote, present
in person or represented by proxy, shall constitute a quorum at any meeting of
stockholders. If less than a quorum is present at a meeting, the holders of
voting stock representing a majority of the voting power present at the meeting
or the presiding officer may adjourn the meeting from time to time, and the
meeting may be held as adjourned without further notice, except as provided in
Section 5 of this Article I. At such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally noticed. The stockholders present at a duly constituted
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 6. VOTING AND PROXIES. Stockholders shall have one vote for
each share of stock entitled to vote owned by them of record according to the
stock ledger of the Corporation, unless otherwise provided by law or by the
Certificate. Stockholders may vote either (i) in person, (ii) by written proxy
or (iii) by a transmission permitted by Section 212 of the Delaware General
Corporation Law (the "DGCL"). Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission permitted by Section 212 of
the DGCL may be substituted for 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. Proxies shall be filed in accordance with the
procedures established for the meeting of stockholders. Except as otherwise
limited therein or as otherwise provided by law, proxies authorizing a person to
vote at a specific meeting shall entitle the persons authorized thereby to vote
at any adjournment of such meeting, but they shall not be valid after final
adjournment of such meeting. A proxy with respect to stock held in the name of
two or more persons shall be valid if executed by or on behalf of any one of
them unless at or prior to the exercise of the proxy the Corporation receives a
specific written notice to the contrary from any one of them.
SECTION 7. ACTION AT MEETING. When a quorum is present at any meeting
of stockholders, any matter before any such meeting (other than an election of a
director or directors) shall be decided by a majority of the votes properly cast
for and against such matter, except where a larger vote is required by law, by
the Certificate or by these By-laws. Any election of directors by stockholders
shall be determined by a plurality of the votes properly cast on the election of
directors. The Corporation shall not directly or indirectly vote any shares of
its own stock; provided, however, that the Corporation may vote shares which it
holds in a fiduciary capacity to the extent permitted by law.
SECTION 8. STOCKHOLDER LISTS. The Secretary or an Assistant Secretary
(or the Corporation's transfer agent or other person authorized by these By-laws
or by law) shall
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<PAGE>
prepare and make, at least ten (10) days before every Annual Meeting or special
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (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.
The list shall also be produced and kept at the hour, date and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
SECTION 9. PRESIDING OFFICER. The Chairman of the Board, if one is
elected, or if not elected or in his or her absence, the President, shall
preside at all Annual Meetings or special meetings of stockholders and shall
have the power, among other things, to adjourn such meeting at any time and from
time to time, subject to Sections 5 and 6 of this Article I. The order of
business and all other matters of procedure at any meeting of the stockholders
shall be determined by the presiding officer.
SECTION 10. INSPECTORS OF ELECTIONS. The Corporation 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
presiding officer shall appoint one or more inspectors to act at the meeting.
Any inspector may, but need not, be an officer, employee or agent of the
Corporation. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall perform such duties as are required by the DGCL,
including the counting of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors. The presiding officer may review all
determinations made by the inspectors, and in so doing the presiding officer
shall be entitled to exercise his or her sole judgment and discretion and he or
she shall not be bound by any determinations made by the inspectors. All
determinations by the inspectors and, if applicable, the presiding officer,
shall be subject to further review by any court of competent jurisdiction.
ARTICLE II
DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors except as otherwise
provided by the Certificate or required by law.
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SECTION 2. NUMBER AND TERMS. The number of directors of the Corporation
shall be fixed solely by resolution duly adopted from time to time by the Board
of Directors. The directors shall hold office in the manner provided in the
Certificate.
SECTION 3. QUALIFICATION. No director need be a stockholder of the
Corporation.
SECTION 4. VACANCIES. Vacancies in the Board of Directors shall be
filled in the manner provided in the Certificate.
SECTION 5. REMOVAL. Directors may be removed from office in the manner
provided in the Certificate.
SECTION 6. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, if one is elected, the President or
the Secretary. A resignation shall be effective upon receipt, unless the
resignation otherwise provides.
SECTION 7. REGULAR MEETINGS. The regular annual meeting of the Board of
Directors shall be held, without notice other than this Section 7, on the same
date and at the same place as the Annual Meeting following the close of such
meeting of stockholders. Other regular meetings of the Board of Directors may be
held at such hour, date and place as the Board of Directors may by resolution
from time to time determine and publicize by means of reasonable notice given to
any director who is not present at the meeting at which such resolution is
adopted.
SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called, orally or in writing, by or at the request of a majority of the
directors, the Chairman of the Board, if one is elected, or the President. The
person calling any such special meeting of the Board of Directors may fix the
hour, date and place thereof.
SECTION 9. NOTICE OF MEETINGS. Notice of the hour, date and place of
all special meetings of the Board of Directors shall be given to each director
by the Secretary or an Assistant Secretary, or in case of the death, absence,
incapacity or refusal of such persons, by the Chairman of the Board, if one is
elected, or the President or such other officer designated by the Chairman of
the Board, if one is elected, or the President. Notice of any special meeting of
the Board of Directors shall be given to each director in person, by telephone,
or by facsimile, electronic mail or other form of electronic communication, sent
to his or her business or home address, at least twenty-four (24) hours in
advance of the meeting, or by written notice mailed to his or her business or
home address, at least forty-eight (48) hours in advance of the meeting. Such
notice shall be deemed to be delivered when hand delivered to such address, read
to such director by telephone, deposited in the mail so addressed, with postage
thereon prepaid if mailed, dispatched or transmitted if faxed, telexed or
telecopied, or when delivered to the telegraph company if sent by telegram.
7
<PAGE>
A written waiver of notice signed before or after a meeting by a
director and filed with the records of the meeting shall be deemed to be
equivalent to notice of the meeting. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because such meeting is not lawfully
called or convened. Except as otherwise required by law, by the Certificate or
by these By-laws, neither the business to be transacted at, nor the purpose of,
any meeting of the Board of Directors need be specified in the notice or waiver
of notice of such meeting.
SECTION 10. QUORUM. At any meeting of the Board of Directors, a
majority of the total number of directors then in office shall constitute a
quorum for the transaction of business, but if less than a quorum is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time, and the meeting may be held as adjourned without further notice, except
as provided in Section 9 of this Article II. Any business which might have been
transacted at the meeting as originally noticed may be transacted at such
adjourned meeting at which a quorum is present. For purposes of this section,
the total number of directors includes any unfilled vacancies on the Board of
Directors.
SECTION 11. ACTION AT MEETING. At any meeting of the Board of Directors
at which a quorum is present, the vote of a majority of the directors present
shall constitute action by the Board of Directors, unless otherwise required by
law, by the Certificate or by these By-laws.
SECTION 12. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent thereto in writing. Such written
consent shall be filed with the records of the meetings of the Board of
Directors and shall be treated for all purposes as a vote at a meeting of the
Board of Directors.
SECTION 13. MANNER OF PARTICIPATION. Directors may participate in
meetings of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these By-laws.
SECTION 14. COMMITTEES. The Board of Directors, by vote of a majority
of the directors then in office, may elect from its number one or more
committees, including, without limitation, an Executive Committee, a
Compensation Committee, a Stock Option Committee and an Audit Committee, and may
delegate thereto some or all of its powers except those which by law, by the
Certificate or by these By-laws may not be delegated. Except as the Board of
Directors may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Board of Directors
or in such
8
<PAGE>
rules, its business shall be conducted so far as possible in the same manner as
is provided by these By-laws for the Board of Directors. All members of such
committees shall hold such offices at the pleasure of the Board of Directors.
The Board of Directors may abolish any such committee at any time. Any committee
to which the Board of Directors delegates any of its powers or duties shall keep
records of its meetings and shall report its action to the Board of Directors.
SECTION 15. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as shall be determined by a majority of the
Board of Directors, or a designated committee thereof, provided that directors
who are serving the Corporation as employees and who receive compensation for
their services as such, shall not receive any salary or other compensation for
their services as directors of the Corporation.
ARTICLE III
OFFICERS
SECTION 1. ENUMERATION. The officers of the Corporation shall consist
of a President, a Treasurer, a Secretary and such other officers, including,
without limitation, a Chairman of the Board of Directors, a Chief Executive
Officer and one or more Vice Presidents (including Executive Vice Presidents or
Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries, as the Board of Directors may determine.
SECTION 2. ELECTION. At the regular annual meeting of the Board of
Directors following the Annual Meeting, the Board of Directors shall elect the
President, the Treasurer and the Secretary. Other officers may be elected by the
Board of Directors at such regular annual meeting of the Board of Directors or
at any other regular or special meeting.
SECTION 3. QUALIFICATION. No officer need be a stockholder or a
director. Any person may occupy more than one office of the Corporation at any
time. Any officer may be required by the Board of Directors to give bond for the
faithful performance of his or her duties in such amount and with such sureties
as the Board of Directors may determine.
SECTION 4. TENURE. Except as otherwise provided by the Certificate or
by these By-laws, each of the officers of the Corporation shall hold office
until the regular annual meeting of the Board of Directors following the next
Annual Meeting and until his or her successor is elected and qualified or until
his or her earlier resignation or removal.
SECTION 5. RESIGNATION. Any officer may resign by delivering his or her
written resignation to the Corporation addressed to the President or the
Secretary, and such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
9
<PAGE>
SECTION 6. REMOVAL. Except as otherwise provided by law, the Board of
Directors may remove any officer with or without cause by the affirmative vote
of a majority of the directors then in office.
SECTION 7. ABSENCE OR DISABILITY. In the event of the absence or
disability of any officer, the Board of Directors may designate another officer
to act temporarily in place of such absent or disabled officer.
SECTION 8. VACANCIES. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 9. PRESIDENT. The President shall, subject to the direction of
the Board of Directors, have general supervision and control of the
Corporation's business. If there is no Chairman of the Board or if he or she is
absent, the President shall preside, when present, at all meetings of
stockholders and of the Board of Directors. The President shall have such other
powers and perform such other duties as the Board of Directors may from time to
time designate.
SECTION 10. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one is
elected, shall preside, when present, at all meetings of the stockholders and of
the Board of Directors. The Chairman of the Board shall have such other powers
and shall perform such other duties as the Board of Directors may from time to
time designate.
SECTION 11. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, if
one is elected, shall have such powers and shall perform such duties as the
Board of Directors may from time to time designate.
SECTION 12. VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS. Any Vice
President (including any Executive Vice President or Senior Vice President) and
any Assistant Vice President shall have such powers and shall perform such
duties as the Board of Directors or the Chief Executive Officer may from time to
time designate.
SECTION 13. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall,
subject to the direction of the Board of Directors and except as the Board of
Directors or the Chief Executive Officer may otherwise provide, have general
charge of the financial affairs of the Corporation and shall cause to be kept
accurate books of account. The Treasurer shall have custody of all funds,
securities, and valuable documents of the Corporation. He or she shall have such
other duties and powers as may be designated from time to time by the Board of
Directors or the Chief Executive Officer.
Any Assistant Treasurer shall have such powers and perform such duties
as the Board of Directors or the Chief Executive Officer may from time to time
designate.
10
<PAGE>
SECTION 14. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
record all the proceedings of the meetings of the stockholders and the Board of
Directors (including committees of the Board) in books kept for that purpose. In
his or her absence from any such meeting, a temporary secretary chosen at the
meeting shall record the proceedings thereof. The Secretary shall have charge of
the stock ledger (which may, however, be kept by any transfer or other agent of
the Corporation). The Secretary shall have custody of the seal of the
Corporation, and the Secretary, or an Assistant Secretary, shall have authority
to affix it to any instrument requiring it, and, when so affixed, the seal may
be attested by his or her signature or that of an Assistant Secretary. The
Secretary shall have such other duties and powers as may be designated from time
to time by the Board of Directors or the Chief Executive Officer. In the absence
of the Secretary, any Assistant Secretary may perform his or her duties and
responsibilities.
Any Assistant Secretary shall have such powers and perform such duties
as the Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 15. OTHER POWERS AND DUTIES. Subject to these By-laws and to
such limitations as the Board of Directors may from time to time prescribe, the
officers of the Corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors or the Chief Executive
Officer.
ARTICLE IV
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to
a certificate of the capital stock of the Corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the Chairman of the Board of Directors, the President or a Vice
President and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary. The Corporation seal and the signatures by the
Corporation's officers, the transfer agent or the registrar may be facsimiles.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the time of its issue. Every certificate
for shares of stock which are subject to any restriction on transfer and every
certificate issued when the Corporation is authorized to issue more than one
class or series of stock shall contain such legend with respect thereto as is
required by law.
SECTION 2. TRANSFERS. Subject to any restrictions on transfer and
unless otherwise provided by the Board of Directors, shares of stock may be
transferred only on the books of
11
<PAGE>
the Corporation by the surrender to the Corporation or its transfer agent of the
certificate theretofore properly endorsed or accompanied by a written assignment
or power of attorney properly executed, with transfer stamps (if necessary)
affixed, and with such proof of the authenticity of signature as the Corporation
or its transfer agent may reasonably require.
SECTION 3. RECORD HOLDERS. Except as may otherwise be required by law,
by the Certificate or by these By-laws, the Corporation shall be entitled to
treat the record holder of stock as shown on its books as the owner of such
stock for all purposes, including the payment of dividends and the right to vote
with respect thereto, regardless of any transfer, pledge or other disposition of
such stock, until the shares have been transferred on the books of the
Corporation in accordance with the requirements of these By-laws.
SECTION 4. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date: (a) in the case of
determination of stockholders entitled to vote at any meeting of stockholders,
shall, unless otherwise required by law, not be more than sixty nor less than
ten (10) days before the date of such meeting and (b) in the case of any other
action, shall not be more than sixty (60) days prior to such other action. If no
record date is fixed: (i) 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 (ii) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
INDEMNIFICATION
SECTION 1. DEFINITIONS. For purposes of this Article:
12
<PAGE>
(a) "Corporate Status" describes the status of a person who is serving
or has served (i) as a Director of the Corporation, (ii) as an Officer of the
Corporation, or (iii) as a director, partner, trustee, officer, employee or
agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
request of the Corporation. For purposes of this Section 1(a), an Officer or
Director of the Corporation who is serving or has served as a director, partner,
trustee, officer, employee or agent of a Subsidiary shall be deemed to be
serving at the request of the Corporation;
(b) "Director" means any person who serves or has served the
Corporation as a director on the Board of Directors of the Corporation;
(c) "Disinterested Director" means, with respect to each Proceeding in
respect of which indemnification is sought hereunder, a Director of the
Corporation who is not and was not a party to such Proceeding;
(d) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of expert witnesses, private investigators and
professional advisors (including, without limitation, accountants and investment
bankers), travel expenses, duplicating costs, printing and binding costs, costs
of preparation of demonstrative evidence and other courtroom presentation aids
and devices, costs incurred in connection with document review, organization,
imaging and computerization, telephone charges, postage, delivery service fees,
and all other disbursements, costs or expenses of the type customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, settling or otherwise
participating in, a Proceeding;
(e) "Non-Officer Employee" means any person who serves or has served as
an employee or agent of the Corporation, but who is not or was not a Director or
Officer;
(f) "Officer" means any person who serves or has served the Corporation
as an officer appointed by the Board of Directors of the Corporation;
(g) "Proceeding" means any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, inquiry,
investigation, administrative hearing or other proceeding, whether civil,
criminal, administrative, arbitrative or investigative; and
(h) "Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture, trust or other entity of which the Corporation
owns (either directly or through or together with another Subsidiary of the
Corporation) either (i) a general partner, managing member or other similar
interest or (ii) (A) 50% or more of the voting power of the voting capital
equity interests of such corporation, partnership, limited liability company,
joint venture or other entity, or (B) 50% or more of the outstanding voting
capital stock or other
13
<PAGE>
voting equity interests of such corporation, partnership, limited liability
company, joint venture or other entity.
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Subject to the
operation of Section 4 of this Article V of these By-laws, each Director and
Officer shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the DGCL, 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 any and
all Expenses, judgments, penalties, fines and amounts reasonably paid in
settlement that are incurred by such Director or Officer or on such Director's
or Officer's behalf in connection with any threatened, pending or completed
Proceeding or any claim, issue or matter therein, which such Director or Officer
is, or is threatened to be made, a party to or participant in by reason of such
Director's or Officer's Corporate Status, if such Director or Officer acted in
good faith and in a manner such Director or Officer reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The rights of indemnification provided by this Section 2 shall
continue as to a Director or Officer after he or she has ceased to be a Director
or Officer and shall inure to the benefit of his or her heirs, executors,
administrators and personal representatives. Notwithstanding the foregoing, the
Corporation shall indemnify any Director or Officer seeking indemnification in
connection with a Proceeding initiated by such Director or Officer only if such
Proceeding was authorized by the Board of Directors of the Corporation, unless
such Proceeding was brought to enforce an Officer or Director's rights to
Indemnification or, in the case of Directors, advancement of Expenses under
these By-laws in accordance with the provisions set forth herein.
SECTION 3. INDEMNIFICATION OF NON-OFFICER EMPLOYEES. Subject to the
operation of Section 4 of this Article V of these By-laws, each Non-Officer
Employee may, in the discretion of the Board of Directors of the Corporation, be
indemnified by the Corporation to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended, against any or all Expenses,
judgments, penalties, fines and amounts reasonably paid in settlement that are
incurred by such Non-Officer Employee or on such Non-Officer Employee's behalf
in connection with any threatened, pending or completed Proceeding, or any
claim, issue or matter therein, which such Non-Officer Employee is, or is
threatened to be made, a party to or participant in by reason of such
Non-Officer Employee's Corporate Status, if such Non-Officer Employee acted in
good faith and in a manner such Non-Officer Employee reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The rights of indemnification provided by this Section 3 shall
exist as to a Non-Officer Employee after he or she has ceased to be a
Non-Officer Employee and shall inure to the benefit of his or her heirs,
personal representatives, executors and administrators. Notwithstanding the
foregoing, the Corporation may indemnify any Non-Officer Employee seeking
indemnification in connection with a Proceeding initiated by such Non-Officer
14
<PAGE>
Employee only if such Proceeding was authorized by the Board of Directors of the
Corporation.
SECTION 4. GOOD FAITH. Unless ordered by a court, no indemnification
shall be provided pursuant to this Article V to a Director, to an Officer or to
a Non-Officer Employee unless a determination shall have been made that such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect to
any criminal Proceeding, such person had no reasonable cause to believe his or
her conduct was unlawful. Such determination shall be made by (a) a majority
vote of the Disinterested Directors, even though less than a quorum of the Board
of Directors, (b) a committee comprised of Disinterested Directors, such
committee having been designated by a majority vote of the Disinterested
Directors (even though less than a quorum), (c) if there are no such
Disinterested Directors, or if a majority of Disinterested Directors so directs,
by independent legal counsel in a written opinion, or (d) by the stockholders of
the Corporation.
SECTION 5. ADVANCEMENT OF EXPENSES TO DIRECTORS PRIOR TO FINAL DISPOSITION.
(a) The Corporation shall advance all Expenses incurred by or on behalf
of any Director in connection with any Proceeding in which such Director is
involved by reason of such Director's Corporate Status within ten (10) days
after the receipt by the Corporation of a written statement from such Director
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by such Director and shall be preceded
or accompanied by an undertaking by or on behalf of such Director to repay any
Expenses so advanced if it shall ultimately be determined that such Director is
not entitled to be indemnified against such Expenses.
(b) If a claim for advancement of Expenses hereunder by a Director is
not paid in full by the Corporation within ten (10) days after receipt by the
Corporation of documentation of Expenses and the required undertaking, such
Director may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and if successful in whole or in part,
such Director shall also be entitled to be paid the expenses of prosecuting such
claim. The failure of the Corporation (including its Board of Directors or any
committee thereof, independent legal counsel, or stockholders) to make a
determination concerning the permissibility of such advancement of Expenses
under this Article V shall not be a defense to the action and shall not create a
presumption that such advancement is not permissible. The burden of proving that
a Director is not entitled to an advancement of expenses shall be on the
Corporation.
(c) 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
15
<PAGE>
expenses upon a final adjudication that the Director has not met any applicable
standard for indemnification set forth in the DGCL.
SECTION 6. ADVANCEMENT OF EXPENSES TO OFFICERS AND NON-OFFICER
EMPLOYEES PRIOR TO FINAL DISPOSITION.
(a) The Corporation may, at the discretion of the Board of Directors of
the Corporation, advance any or all Expenses incurred by or on behalf of any
Officer and Non-Officer Employee in connection with any Proceeding in which such
is involved by reason of the Corporate Status of such Officer or Non-Officer
Employee upon the receipt by the Corporation of a statement or statements from
such Officer or Non-Officer Employee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
such Officer and Non-Officer Employee and shall be preceded or accompanied by an
undertaking by or on behalf of such to repay any Expenses so advanced if it
shall ultimately be determined that such Officer or Non-Officer Employee is not
entitled to be indemnified against such Expenses.
(b) 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 Officer or
Non-Officer Employee has not met any applicable standard for indemnification set
forth in the DGCL.
SECTION 7. CONTRACTUAL NATURE OF RIGHTS.
(a) The foregoing provisions of this Article V shall be deemed to be a
contract between the Corporation and each Director and Officer entitled to the
benefits hereof at any time while this Article V is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any
Proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
(b) If a claim for indemnification of Expenses hereunder by a Director
or Officer is not paid in full by the Corporation within sixty (60) days after
receipt by the Corporation of a written claim for indemnification, such Director
or Officer may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and if successful in whole or in part,
such Director or Officer shall also be entitled to be paid the expenses of
prosecuting such claim. The failure of the Corporation (including its Board of
Directors or any committee thereof, independent legal counsel, or stockholders)
to make a determination concerning the permissibility of such indemnification
under this Article V shall not be a defense to the action and shall not create a
presumption that such indemnification is not permissible. The burden of proving
that a Director or Officer is not entitled to indemnification shall be on the
Corporation.
16
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(c) In any suit brought by a Director or Officer to enforce a right to
indemnification hereunder, it shall be a defense that such Director or Officer
has not met any applicable standard for indemnification set forth in the DGCL.
SECTION 8. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and
advancement of Expenses set forth in this Article V shall not be exclusive of
any other right which any Director, Officer, or Non-Officer Employee may have or
hereafter acquire under any statute, provision of the Certificate or these
By-laws, agreement, vote of stockholders or Disinterested Directors or
otherwise.
SECTION 9. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, Officer or Non-Officer Employee
against any liability of any character asserted against or incurred by the
Corporation or any such Director, Officer or Non-Officer Employee, or arising
out of any such person's Corporate Status, whether or not the Corporation would
have the power to indemnify such person against such liability under the DGCL or
the provisions of this Article V.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
SECTION 2. SEAL. The Board of Directors shall have power to adopt and
alter the seal of the Corporation.
SECTION 3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without director action may
be executed on behalf of the Corporation by the Chairman of the Board, if one is
elected, the President or the Treasurer or any other officer, employee or agent
of the Corporation as the Board of Directors or Executive Committee may
authorize.
SECTION 4. VOTING OF SECURITIES. Unless the Board of Directors
otherwise provides, the Chairman of the Board, if one is elected, the President
or the Treasurer may waive notice of and act on behalf of this Corporation, or
appoint another person or persons to act as proxy or attorney in fact for this
Corporation with or without discretionary power and/or power of substitution, at
any meeting of stockholders or shareholders of any other corporation or
organization, any of whose securities are held by this Corporation.
17
<PAGE>
SECTION 5. RESIDENT AGENT. The Board of Directors may appoint a
resident agent upon whom legal process may be served in any action or proceeding
against the Corporation.
SECTION 6. CORPORATE RECORDS. The original or attested copies of the
Certificate, By-laws and records of all meetings of the incorporators,
stockholders and the Board of Directors and the stock transfer books, which
shall contain the names of all stockholders, their record addresses and the
amount of stock held by each, may be kept outside the State of Delaware and
shall be kept at the principal office of the Corporation, at the office of its
counsel or at an office of its transfer agent or at such other place or places
as may be designated from time to time by the Board of Directors.
SECTION 7. CERTIFICATE. All references in these By-laws to the
Certificate shall be deemed to refer to the Amended and Restated Certificate of
Incorporation of the Corporation, as amended and in effect from time to time.
SECTION 8. AMENDMENT OF BY-LAWS.
(a) AMENDMENT BY DIRECTORS. Except as provided otherwise by law, these
By-laws may be amended or repealed by the Board of Directors by the affirmative
vote of a majority of the directors then in office.
(b) AMENDMENT BY STOCKHOLDERS. These By-laws may be amended or repealed
at any Annual Meeting, or special meeting of stockholders called for such
purpose, by the affirmative vote of at least 75% of the shares present in person
or represented by proxy at such meeting and entitled to vote on such amendment
or repeal, voting together as a single class; provided, however, that if the
Board of Directors recommends that stockholders approve such amendment or repeal
at such meeting of stockholders, such amendment or repeal shall only require the
affirmative vote of the majority of the shares present in person or represented
by proxy at such meeting and entitled to vote on such amendment or repeal,
voting together as a single class. Notwithstanding the foregoing, stockholder
approval shall not be required unless mandated by the Certificate, these
By-laws, or other applicable law.
Adopted January 20, 2000 and effective as of March 27, 2000.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MOLDFLOW CORPORATION CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JAN-02-2000
<PERIOD-END> APR-01-2000
<CASH> 39,740
<SECURITIES> 0
<RECEIVABLES> 6,071
<ALLOWANCES> (256)
<INVENTORY> 177
<CURRENT-ASSETS> 46,979
<PP&E> 6,923
<DEPRECIATION> (3,944)
<TOTAL-ASSETS> 54,585
<CURRENT-LIABILITIES> 11,876
<BONDS> 0
0
0
<COMMON> 91
<OTHER-SE> 42,578
<TOTAL-LIABILITY-AND-EQUITY> 54,585
<SALES> 7,083
<TOTAL-REVENUES> 7,083
<CGS> 396
<TOTAL-COSTS> 6,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 2,573
<INCOME-TAX> 423
<INCOME-CONTINUING> 2,150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,150
<EPS-BASIC> 2.69
<EPS-DILUTED> 0.33
</TABLE>
