<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number 0-9992
KLA-TENCOR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2564110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 Rio Robles
San Jose, California
95134
(Address of principal executive offices)
(Zip Code)
468-4200
(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 Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No_____
As of April 29, 1997 there were 51,711,809 shares of the registrant's
Common Stock, $0.001 par value, outstanding.
<PAGE> 2
KLA-TENCOR CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1 Financial Statements (unaudited)
Condensed Consolidated Interim Balance Sheets at
March 31, 1997 and June 30, 1996 . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Interim Statements of Operations for
the Three and Nine Month Periods Ended March 31, 1997
and March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Interim Statements of Cash Flows
for the Nine Months Ended March 31, 1997 and 1996 . . . . . . . . . . . 5
Notes to Condensed Consolidated Interim Financial Statements . . . . . . 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II OTHER INFORMATION
- ------- -----------------
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 2 Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3 Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . 12
Item 5 Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
(In thousands) 1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 149,573 $ 109,404
Short-term investments 11,003 14,279
Accounts receivable, net 122,027 203,470
Inventories 118,289 132,377
Deferred income taxes 27,909 27,246
Other current assets 14,756 6,783
--------- ---------
Total current assets 443,557 493,559
Land, property and equipment, net 73,428 71,825
Marketable securities 257,795 137,728
Other assets 13,512 9,660
--------- ---------
Total assets $ 788,292 $ 712,772
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 2,115 $ 3,111
Accounts payable 19,732 27,330
Income taxes payable 34,762 34,595
Other current liabilities 113,725 104,167
--------- ---------
Total current liabilities 170,334 169,203
--------- ---------
Deferred income taxes 6,316 6,320
--------- ---------
Commitments and contingencies
Stockholders' equity:
Common stock and additional paid-in capital 285,377 277,943
Retained earnings 328,789 259,777
Treasury stock (581) (581)
Net unrealized loss on investments (1,181) (131)
Cumulative translation adjustment (762) 241
--------- ---------
Total stockholders' equity 611,642 537,249
--------- ---------
Total liabilities and stockholders' equity $ 788,292 $ 712,772
========= =========
</TABLE>
See accompanying notes to condensed consolidated interim financial statements.
3
<PAGE> 4
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
(In thousands, except per share amounts) 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $157,761 $187,494 $473,586 $502,320
-------- -------- -------- --------
Costs and expenses:
Cost of sales 75,322 85,215 224,508 227,239
Engineering, research and
development 22,046 20,942 62,212 54,599
Selling, general and administrative 29,622 33,655 94,368 90,957
-------- -------- -------- --------
126,990 139,812 381,088 372,795
-------- -------- -------- --------
Income from operations 30,771 47,682 92,498 129,525
Interest income and other, net 5,144 2,033 12,065 9,504
-------- -------- -------- --------
Income before income taxes 35,915 49,715 104,563 139,029
Provision for income taxes 12,211 17,898 35,551 50,051
-------- -------- -------- --------
Net income $ 23,704 $ 31,817 $ 69,012 $ 88,978
======== ======== ======== ========
Net income per share $ 0.44 $ 0.61 $ 1.30 $ 1.70
======== ======== ======== ========
Shares used in computing net income
per share 53,830 52,170 53,014 52,321
</TABLE>
See accompanying notes to condensed consolidated interim financial statements.
4
<PAGE> 5
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
(In thousands) 1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 69,012 $ 88,978
Adjustments required to reconcile net income to cash
provided by/(used in) operations:
Depreciation and amortization 16,385 10,700
Deferred income taxes (667) --
Changes in assets and liabilities:
Accounts receivable 81,443 (97,958)
Inventories 14,088 (51,205)
Other assets (11,825) 4,718
Accounts payable (7,598) 16,954
Income taxes payable 167 6,869
Other current liabilities 9,558 34,757
--------- ---------
Cash provided by operating activities 170,563 13,813
--------- ---------
Cash flows from investing activities:
Capital expenditures (17,988) (27,321)
Purchases of short and long-term available
for sale securities (391,890) (374,289)
Sales and maturities of short and long-term
available for sale securities 274,049 361,085
--------- ---------
Cash used for investing activities (135,829) (40,525)
--------- ---------
Cash flows from financing activities:
Short-term borrowings, net (996) (2,487)
Payment of current portion of long-term debt -- (20,000)
Issuance of common stock, net 7,434 4,786
--------- ---------
Cash provided by/(used in) financing activities 6,438 (17,701)
--------- ---------
Effect of exchange rate changes (1,003) (1,020)
--------- ---------
Increase/(decrease) in cash and cash equivalents 40,169 (45,433)
Cash and cash equivalents at beginning of period 109,404 92,059
--------- ---------
Cash and cash equivalents at end of period $ 149,573 $ 46,626
========= =========
Cash paid during the period for:
Interest $ 365 $ 841
Income taxes $ 34,599 $ 43,924
</TABLE>
See accompanying notes to condensed consolidated interim financial statements.
5
<PAGE> 6
KLA-TENCOR CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
Note 1 In the opinion of the Company's management, the unaudited
condensed consolidated interim financial statements include all
adjustments (consisting only of adjustments that are of a normal
recurring nature) necessary for a fair statement of results. The
results for the quarter ended March 31, 1997, are not necessarily
indicative of results to be expected for the entire year. This
financial information should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended June 30,
1996. The financial statements presented in this Form 10-Q
represent financial results of KLA Instruments Corporation on a
historical basis only, without giving effect to the merger (see
Note 2).
Note 2 On April 30, 1997, a wholly-owned subsidiary of the Company merged
into Tencor Instruments, a manufacturer of wafer defect
inspection, software-based yield management, film measurement, and
metrology systems used in semiconductor manufacturing. In
connection with the merger, the Company changed its name to
KLA-Tencor Corporation and increased its number of authorized
shares to 251,000,000. The Company issued approximately 32
million shares of Common Stock for all the outstanding Common
Stock and options of Tencor Instruments on the basis of one share
of the Company's Common Stock for one share of Tencor Instruments.
The merger will be accounted for as a pooling of interests.
The following summary, prepared on a pro forma basis, combines the
results of operations of the Company and Tencor Instruments as if
the merger had been effective as of the beginning of each of the
periods presented (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $252,346 $293,777 $755,641 $792,528
Net income $ 36,995 $ 52,068 $104,794 $146,182
Net income per share $ 0.43 $ 0.62 $ 1.23 $ 1.73
Weighted average shares
outstanding 86,643 83,891 85,149 84,264
</TABLE>
The pro forma combined results are presented for illustrative
purposes only and are not necessarily indicative of what actually
would have occurred if the acquisition had been in effect for the
entire periods presented. In addition, the pro forma results are
not intended to be a projection of future results.
Note 3 Inventories (in thousands):
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
-------- --------
<S> <C> <C>
Systems raw materials $ 17,559 $ 33,521
Customer service spares 22,529 13,614
Work-in-process 53,033 47,012
Demonstration equipment 25,167 38,230
-------- --------
$118,289 $132,377
======== ========
</TABLE>
6
<PAGE> 7
Note 4 In August 1996, the Compensation Committee of the Board of
Directors authorized the Company to re-price stock options issued
during the period August 1994 through August 1996, which had
exercise prices well above the August 1996 trading prices of the
Company's Common Stock. This re-pricing was done in the form of
an exchange, whereby eligible optionees could cancel their current
options in exchange for new options with exercise prices at the
fair market value on the date of grant.
Note 5 The Company has entered into an agreement with a bank to sell,
with recourse, certain of its trade receivables. The amount of
proceeds received was approximately $35 million and $80 million,
respectively, for the three and nine month periods ended March 31,
1997. As of March 31, 1997, approximately $41 million of the
factored trade receivables remains uncollected by the bank.
Note 6 Engineering, research and development expenditures were net of
external funding of $3.3 million and $11.0 million for the three
and nine month periods ended March 31, 1997, respectively.
Note 7 Net income per share is computed using the weighted average number
of common and common equivalent shares outstanding during the
respective periods, including the assumed net shares issuable upon
exercise of stock options.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share." The Statement redefines earnings per share under
generally accepted accounting principles, and will be effective
for the Company's fiscal year ending June 30, 1998. Under the new
standard, primary earnings per share will be replaced by basic
earnings per share and fully diluted earnings per share will be
replaced by diluted earnings per share. If the Company had
adopted this Statement for the three and nine month periods ended
March 31, 1997 and March 31, 1996, the Company's earnings per
share would have been as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings per share:
Basic $ 0.46 $ 0.63 $ 1.35 $ 1.76
Diluted $ 0.44 $ 0.61 $ 1.30 $ 1.70
</TABLE>
7
<PAGE> 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion and analysis may contain forward-looking statements
that reflect the Company's current judgment regarding the matters addressed by
such statements. Because such statements apply to future events, they are
subject to risks and uncertainties that could cause actual results to differ.
Important factors that could cause actual results to differ are described in
the following discussion and are particularly noted under "Risk Factors" on
page 10.
RECENT DEVELOPMENTS
On April 30, 1997, a wholly-owned subsidiary of the Company merged into Tencor
Instruments, a manufacturer of wafer defect inspection, software-based yield
management, film measurement, and metrology systems used in semiconductor
manufacturing. In connection with the merger, the Company changed its name to
KLA-Tencor Corporation and increased its number of authorized shares to
251,000,000. The Company issued approximately 32 million shares of Common
Stock for all the outstanding Common Stock and options of Tencor Instruments on
the basis of one share of the Company's Common Stock for one share of Tencor
Instruments. The merger will be accounted for as a pooling of interests.
RESULTS OF OPERATIONS
Net Sales Net sales were $157.8 million and $473.6 million for the three and
nine month periods ended March 31, 1997, respectively, compared to $187.5
million and $502.3 million for the same periods of the prior fiscal year, which
represents a decrease of 15.9% and 5.7% for the respective periods. The
decrease in net sales, both on a quarter on quarter and year on year basis, is
primarily attributed to the slowdown in the semiconductor manufacturing
industry's capital spending levels. While average selling prices remained
relatively consistent during the three and nine month periods ended March 31,
1997, compared to the same periods of the prior fiscal year, overall unit
shipment volumes decreased, which was primarily associated with the wafer
inspection products.
Gross Margin Gross margins were 52.3% and 52.6% of net sales, respectively,
for the three and nine month periods ended March 31, 1997, compared to 54.6%
and 54.8% of net sales for the same periods of the prior fiscal year. Gross
margins decreased as a result of a change in the product mix as wafer
inspection products with higher relative gross margins decreased as a
percentage of total Company revenues. Additionally, wafer inspection gross
margins decreased as a result of unit volume inefficiencies and new product
introduction costs. These effects were partially offset by rising gross
margins in reticle inspection and metrology products as a result of higher unit
volume efficiencies and lower installation and warranty costs.
Engineering, Research and Development Engineering, research and development
expenses were $22.0 million and $62.2 million for the three and nine month
periods ended March 31, 1997, respectively, compared to $20.9 million and $54.6
million for the same periods of the prior fiscal year. As a percentage of net
sales, engineering, research and development expenses increased to 14.0% and
13.1% for the three and nine month periods ended March 31, 1997, compared to
11.2% and 10.9% for the same periods of the prior fiscal year. Engineering,
research and development expenses consist primarily of employee
compensation-related costs, project material, and other costs associated with
the Company's ongoing efforts for product development and enhancements to
existing products. The increase is attributable to increases in headcount, as
well as increases in other new product spending including expenses related in
part to the next generation reticle inspection products. Engineering, research
and development expenditures were
8
<PAGE> 9
net of external funding of $3.3 million and $11.0 million for the three and
nine month periods ended March 31, 1997, respectively.
Selling, General and Administrative Selling, general and administrative (SG&A)
expenses were $29.6 million and $94.4 million for the three and nine month
periods ended March 31, 1997, respectively, compared to $33.7 million and $91.0
million for the same periods of the prior fiscal year. As a percentage of net
sales, SG&A increased to 18.8% and 19.9%, respectively, for the three and nine
month periods ended March 31, 1997, compared to 17.9% and 18.1% for the same
periods of the prior fiscal year. The increase during both comparative periods
is due in part to increases in headcount, and increases in the Company's
investment in its customer group sales and applications resources worldwide.
SG&A also included sales representative commissions of approximately $3 million
and $12 million, respectively, for the three and nine month periods ended March
31, 1997, which related to orders previously taken by the Company's former
representative in Japan but which shipped during the respective periods.
Interest Income and Other Interest income and other, net, increased $3.1
million and $2.6 million, respectively, for the three and nine month periods
ended March 31, 1997, compared to the same periods of the prior fiscal year.
These increases are due primarily to slightly higher yields on higher cash and
investment balances.
Provision for Income Taxes The Company's effective tax rate decreased to 34%
for the nine months ended March 31, 1997, compared to 36% for the same period
of the prior fiscal year. This decrease is due primarily to the benefits
associated with reinstatement of the federal research and development tax
credit.
The IRS is currently auditing the Company's federal income tax returns for
fiscal years 1985 through 1992. The Company has received a notice of proposed
tax deficiency for such years. The Company filed a tax protest letter with the
IRS on June 10, 1996, in response to the IRS notice. Management believes
sufficient taxes have been provided in prior years and that the ultimate
outcome of the IRS audit will not have a material adverse impact on the
Company's financial position or results of operations.
Liquidity and Capital Resources Cash, cash equivalents, short-term investments
and marketable securities balances increased $157 million to $418 million
during the nine month period ended March 31, 1997. Cash generated from
operations for the nine month period was $170.6 million, derived primarily from
net income and reductions in accounts receivable. The decrease in accounts
receivable is due in part to an agreement the Company has with a bank to factor
certain of its accounts receivable. During the nine months ended March 31,
1997, approximately $80 million of the Company's accounts receivable were
factored.
The Company's capital expenditures during the nine month period ended March 31,
1997 were primarily in facilities improvements, new computers, manufacturing
tooling to improve production efficiencies, and engineering equipment to
support the Company's expanding research and development efforts.
The Company believes that success in its industry requires substantial capital
in order to maintain the flexibility to take advantage of opportunities as they
may arise. Accordingly, the Company may, from time to time, as market and
business conditions warrant, invest in or acquire businesses, products, or
technologies which it believes complement its overall business strategy.
Borrowings under the Company's credit facilities, or public offerings of equity
or debt securities, are available if the need arises. The sale of additional
equity or convertible debt securities could result in additional dilution to
the Company's stockholders.
9
<PAGE> 10
RISK FACTORS
Fluctuations in Quarterly Operating Results The Company's quarterly operating
results have fluctuated in the past and may fluctuate in the future. The
Company's operating results are dependent on many factors, including the
economic conditions in the semiconductor industry, the size and timing of the
receipt of orders from customers, customer cancellations or delays of
shipments, the Company's ability to develop, introduce, and market new and
enhanced products on a timely basis, the introduction of new products by its
competitors, changes in average selling prices and product mix, and exchange
rate fluctuations, among others. There can be no assurance that one or more of
these factors will not adversely impact the Company's quarterly operating
results.
Current Slowdown and Volatility in the Semiconductor Equipment Industry The
Company's business depends and will depend in the future upon the capital
equipment expenditures of semiconductor manufacturers, which in turn depend on
the current and anticipated market demand for integrated circuits and products
utilizing integrated circuits. The semiconductor industry has been cyclical in
nature and historically has experienced periodic downturns. The semiconductor
industry is presently experiencing a slowdown in terms of product demand and
volatility in terms of product pricing. This slowdown and volatility has
caused the semiconductor industry to reduce purchases of semiconductor
manufacturing equipment and construction of new fabrication facilities. There
can be no assurance that this slowdown will not continue. Even during periods
of reduced revenues, in order to remain competitive, the Company will be
required to continue to invest in research and development and to maintain
extensive ongoing worldwide customer service and support capability which could
adversely affect its financial results.
Dependence on New Products and Processes; Rapid Technological Change Rapid
technological changes in semiconductor manufacturing processes subject the
semiconductor manufacturing equipment industry to increased pressure to
maintain technological parity with deep submicron process technology. The
Company believes that its future success will depend in part upon its ability
to develop, manufacture and successfully introduce new products with improved
capabilities and to continue to enhance existing products. Due to the risks
inherent in transitioning to new products, the Company will be required to
accurately forecast demand for new products while managing the transition from
older products. If new products have reliability or quality problems, reduced
orders, higher manufacturing costs, delays in acceptance of and payment for new
products and additional service and warranty expense may result. In the past,
the Company has experienced some delays as well as reliability and quality
problems in connection with product introductions, resulting in some of these
consequences. There can be no assurance that the Company will successfully
develop and manufacture new products, or that new products introduced by the
Company will be accepted in the marketplace. If the Company does not
successfully introduce new products, the Company's results of operations will
be materially adversely affected.
In addition, the Company expects to continue to make significant investments in
research and development. There can be no assurance that future technologies,
processes or product developments will not render the Company's current product
offerings obsolete or that the Company will be able to develop and introduce
new products or enhancements to its existing products which satisfy customer
needs in a timely manner or achieve market acceptance. The failure to do so
could adversely affect the Company's business.
Highly Competitive Industry The semiconductor equipment industry is highly
competitive. The Company has experienced and expects to continue to face
substantial competition throughout the world. The Company believes that to
remain competitive, it will require significant financial resources in order to
offer a broad range of products, to maintain customer service and support
10
<PAGE> 11
centers worldwide, and to invest in product and process research and
development. The Company believes that the semiconductor equipment industry is
becoming increasingly dominated by large manufacturers, who have the resources
to support customers on a worldwide basis. Many of these competitors have
substantially greater financial resources and more extensive engineering,
manufacturing, marketing and customer service and support capabilities than the
Company. In addition, there are smaller emerging semiconductor equipment
companies which provide innovative technology. No assurance can be given that
the Company will be able to compete successfully worldwide.
Importance of International Sales International sales accounted for 65%, 69%
and 68% of the Company's net sales for fiscal years 1994, 1995 and 1996,
respectively. The Company expects that international sales will continue to
represent a significant percentage of its net sales. The future performance of
the Company will be dependent, in part, upon its ability to continue to compete
successfully in Asia, one of the largest areas for the sale of yield management
and process monitoring equipment. International sales and operations may be
adversely affected by imposition of governmental controls, restrictions on
export technology, political instability, trade restrictions, changes in
tariffs and the difficulties associated with staffing and managing
international operations. In addition, international sales may be adversely
affected by the economic conditions in each country. The net sales and income
from the Company's international business may be affected by fluctuations in
currency exchange rates. Although the Company attempts to manage near term
currency risks through "hedging," there can be no assurance that such efforts
will be adequate. These factors could have a material adverse effect on the
Company's future business and financial results.
11
<PAGE> 12
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2 CHANGES IN SECURITIES
Not Applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5 OTHER EVENTS
Not Applicable.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Articles of Incorporation
3.2 Bylaws
11.1 Calculation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Form 8-K on January 22, 1997 announcing
the signing on January 14, 1997 of an Agreement and Plan of
Reorganization with Tencor Instruments.
12
<PAGE> 13
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.
KLA-TENCOR CORPORATION
(Registrant)
May 13, 1997 JON D. TOMPKINS
- ------------------------ ------------------------
Date Jon D. Tompkins
Chief Executive Officer
13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION.
- ------- ------------
3.1 Amended and Restated Articles of Incorporation
3.2 Bylaws
11.1 Calculation of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
KLA INSTRUMENTS CORPORATION
KLA Instruments Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is KLA Instruments Corporation,
and the name under which the corporation was originally incorporated is KLA
Corporation. The date of filing its original Certificate of Incorporation with
the Secretary of State was July 9, 1975.
The amendment to the corporation's Certificate of
Incorporation set forth was approved by the corporation's Board of Directors
and stockholders and was duly adopted in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
2. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby amended and restated to read as herein set
forth in full:
"FIRST: The name of the corporation (hereinafter called the
"corporation") is KLA-Tencor Corporation.
SECOND: The address, including street, number, city and county, of
the registered office of the corporation in the State of Delaware is 1209
Orange Street, City of Wilmington, County of New Castle, and the name of the
registered agent of the corporation in the State of Delaware at such address is
The Corporation Trust Company.
THIRD: The nature of the business and of the purposes to be conducted
and promoted by the corporation is as follows:
To manufacture, purchase or otherwise acquire, import and export,
invest in, own, mortgage, pledge, sell, assign, and transfer or otherwise
dispose of, trade, deal in and deal with goods, wares, merchandise and personal
property of every kind, nature and description, both on its own account and for
others.
<PAGE> 2
To render services of every kind, nature and description (including,
but not limited to, consulting, financial, engineering, research and similar or
related services) both on its own account and for others.
To develop, obtain, purchase or otherwise acquire, and to hold, own,
use, sell, limit or otherwise dispose of processes, formulae, inventions and
devices of every kind, nature and description, whether patented or not; and to
apply for and obtain letters patent under the laws of the United States or of
any foreign country.
To borrow or lend money, and to make and issue notes, bonds,
debentures, obligations, and evidences of indebtedness of all kinds, whether
secured by mortgage, pledge, or otherwise, without limit as to amount, and to
secure the same by mortgage, pledge, or otherwise and generally to make and
perform agreements and contracts of every kind and description.
To subscribe for, take, acquire, hold, sell, exchange and deal in
shares, stock, bonds, obligations and securities of any corporation,
government, authority or company; to form, promote, subsidize and assist
companies, syndicates, or partnerships of all kinds, and to finance and
refinance the same; and to guarantee the obligations of other persons, firms,
or corporations.
In general, to do any act necessary or incidental to the conduct of
said businesses and in the transaction thereof, to carry on any other business,
whether manufacturing or otherwise, and to do any other thing permitted by all
present and future laws of the State of Delaware applicable to business
corporations.
FOURTH: The aggregate number of shares of stock which the corporation
shall have authority to issue shall be 251,000,000 shares, with the par value
of each of such shares being $0.001. These shares shall be divided into the
following classes:
(1) 250,000,000 shares shall be designated as Common Stock; and
(2) 1,000,000 shares shall be designated as Preferred Stock.
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences, and
rights of the shares of each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of Preferred Stock may
be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the then
outstanding shares of Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the certificate or certificates establishing the series of
Preferred Stock.
FIFTH: The name and the mailing address of the incorporator are as
follows:
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Name Mailing Address
--------------------- ---------------------
R.G. Dickerson 229 South State Street
Dover, Delaware
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction with the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors and/or of the stockholders or class of stockholders of this
corporation; as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. (a) The business and affairs of the corporation shall be
managed by or under the direction of the Board of Directors. In addition to
the powers and authority expressly conferred upon them by the General
Corporation Law of the State of Delaware or by this Certificate of
Incorporation or the By-Laws of the corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation.
(b) The number of directors shall initially be 6 and,
thereafter, shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board for adoption).
(c) The directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class to expire at the 1990 annual meeting of stockholders, the term of
office of the second class to expire at the 1991 annual meeting of stockholders
and the term of office of the third class to expire at the 1992 annual meeting
of
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stockholders. At each annual meeting of stockholders following such initial
classification and election, directors shall be elected to succeed those
directors whose terms expires for a term of office to expire at the third
succeeding annual meeting of stockholders after their election. All directors
shall hold office until the expiration of the term for which elected, and until
their respective successors are elected, except in the case of the death,
resignation, or removal of any director.
(d) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification or other cause (other than removal from office by a vote of
stockholders) may be filled only by a majority vote of the directors then in
office, though less than a quorum, and directors so chosen shall hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires. No decrease in
the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
(e) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least a majority of the voting
power of all of the then outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors, voting together as a
single class. Vacancies in the Board of Directors resulting from such removal
may be filled by (i) a majority of the directors then in office, though less
than a quorum, or (ii) the stockholders at a special meeting of the
stockholders properly called for that purpose, by the vote of the holders of a
majority of the shares entitled to vote at such special meeting. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires.
2. After the original or other By-Laws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the By-Laws of the corporation may
be exercised by the Board of Directors of the corporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the certificate of incorporation shall entitle the holder thereof
to the right to vote, at any meeting of stockholders except as the provisions
of paragraph (c)(2) of Section 242 of the General Corporation Law of the State
of Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
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4. Any action required or permitted to be taken by the
stockholders of the corporation must be effected at a duly called annual or
special meeting of stockholders of the corporation and may not be effected by
any consent in writing by such stockholders.
NINTH: The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities and other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inspected in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH:
1. (a) In addition to any affirmative vote required
by law or this certificate of incorporation, and except as otherwise expressly
provided in paragraph 2 of this Article ELEVENTH:
(i) any merger or consolidation of the
corporation or any Subsidiary (as hereinafter defined) with (a) any Interested
Shareholder (as hereinafter defined) or (b) any other corporation (whether or
not itself an Interested Shareholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of an Interested
Shareholder; or
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction of a series of
transactions) to or with any Interested Shareholder or any Affiliate of any
Interested Shareholder of any assets of the corporation or any Subsidiary
having an aggregate fair market value of $1,000,000 or more; or
(iii) the issuance or transfer by the
corporation or any Subsidiary (in one transaction or a series of transactions)
of any securities of the corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in exchange for
cash, securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more; or
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<PAGE> 6
(iv) the adoption of any plan or proposal
for the liquidation or dissolution of the corporation proposed by or on behalf
of an Interested Shareholder or any Affiliate of any Interested Shareholder; or
(v) any reclassification of securities
(including any reverse stock split), or recapitalization of the corporation, or
any merger or consolidation of the corporation with any of its subsidiaries or
any other transaction (whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class of
equity or convertible securities of the corporation or any Subsidiary which is
directly or indirectly owned by an Interested Shareholder or any Affiliate of
any Interested Shareholder; shall require the affirmative vote of the holders
of at least 80% of the then outstanding shares of capital stock of the
corporation authorized to be issued from time to time under Article FOURTH of
this certificate of incorporation (the "Voting Stock"), voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or in any agreement with any national securities exchange or otherwise.
Notwithstanding any other provision of this certificate of incorporation to the
contrary, for purposes of this Article ELEVENTH, each share of the Voting Stock
shall have one vote.
(b) The term "Business Combination" as used in
this Article ELEVENTH shall mean any transaction which is referred to in any
one or more of clauses (i) through (v) of subparagraph (a) of this paragraph 1.
2. The provisions of paragraph 1 of this Article ELEVENTH shall
not be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as if required by law and
any other provision of this certificate of incorporation, if all of the
conditions specified in the following subparagraph (a) are met:
(a) The Business Combination shall have been approved by
a majority of the Continuing Directors (as hereinafter defined): provided,
however, that such approval shall only be effective if obtained at a meeting at
which a Continuing Director Quorum (as hereinafter defined) is present.
3. For the purposes of this Article ELEVENTH:
(a) The term "person" shall mean any individual, firm,
corporation or other entity.
(b) The term "Interested Shareholder" shall mean any
person (other than the corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit plan of the
corporation or any Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity) who or which:
(i) is the beneficial owner (as hereinafter
defined) of more than five percent of the Voting Stock; or
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(ii) is an Affiliate (as hereinafter defined) of
the corporation and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of five percent or more of the
Voting Stock; or
(iii) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Interested
Shareholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933, as amended.
(c) A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or indirectly;
or
(ii) which such person or any of its Affiliates or
Associates has, directly or indirectly, (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of Voting Stock.
(d) For the purposes of determining whether a person is
an Interested Shareholder pursuant to subparagraph (b) of this paragraph 3, the
number of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned through application of subparagraph (c) of this paragraph 3 may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(e) The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1984.
(f) The term "Subsidiary" means any corporation of which
a majority of any class of equity security is owned, directly or indirectly,
by the corporation; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in subparagraph (b) of this paragraph 3,
the term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the corporation.
(g) The term "Continuing Director" means any member of
the Board of Directors of the corporation (the "Board") who is unaffiliated
with the Interested Shareholder and was a
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member of the Board prior to the time that the Interested Shareholder became an
Interested Shareholder, and any successor of a Continuing Director who is
unaffiliated with the Interested Shareholder or is recommended or elected to
succeed a Continuing Director by a majority of Continuing Directors, provided
that such recommendation or election shall only be effective if made at a
meeting at which a Continuing Director Quorum is present.
(h) The term "Continuing Director Quorum" means four
Continuing Directors capable of exercising the powers conferred upon them under
the provisions of the certificate of incorporation or By-Laws of the
corporation or by law.
4. Notwithstanding any other provisions of this certificate of
incorporation or the By-Laws of the corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this certificate of
incorporation or the By-Laws of the corporation), the affirmative vote of the
holders of 80% or single class, shall be required to amend or repeal, or adopt
any provisions inconsistent with, this Article ELEVENTH.
TWELFTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith of which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article
TWELFTH by the stockholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at the time of
such repeal or modification."
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IN WITNESS WHEREOF, said KLA Instruments Corporation has caused this
certificate to be signed by Kenneth Levy, its Chief Executive Officer, and
attested by Larry W. Sonsini, its Secretary, this 30th day of April, 1997.
KLA INSTRUMENTS CORPORATION
By: /s/ Kenneth Levy
---------------------------------
Kenneth Levy
Chief Executive Officer
ATTEST:
By: /s/ Larry W. Sonsini
------------------------------------------
Larry W. Sonsini
Secretary
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<PAGE> 1
Exhibit 3.2
KLA-TENCOR CORPORATION,
A DELAWARE CORPORATION
BY-LAWS
ORIGINALLY ADOPTED: JUNE 12, 1989
AS AMENDED: APRIL 30, 1997
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the
stockholders, for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held at such place, on such date, and at such time as the
Board of Directors shall each year fix, which date shall be within thirteen
months subsequent to the last annual meeting of stockholders.
Section 2. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes prescribed in the notice of the
meeting, may be called only by the Board of Directors and shall be held at such
place, on such date, and at such time as they shall fix. Business transacted
at special meetings shall be confined to the purpose or purposes stated in the
notice.
Section 3. Notice of Meetings. Written notice of the place,
date, and time of all meetings of the stockholders shall be given, not less
than ten (10) nor more than sixty to each stockholder entitled to vote at such
meeting, except as otherwise provided herein or required by law (meaning, here
and hereinafter, as required from time to time by the Delaware General
Corporation Law or the Certificate of Incorporation of the Corporation). When a
meeting is adjourned to another place, date
<PAGE> 2
or time, written notice need not be given of the adjourned meeting if the
place, date and time thereof are announced at the meeting at which the
adjournment is taken; provided, however, that if the date of any adjourned
meeting is more than thirty (30) days after the date for which the meeting was
originally noticed, or if a new record date is fixed for the adjourned meeting,
written notice of the place, date, and time of the adjourned meeting shall be
given in conformity herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original meeting.
Section 4. Quorum. At any meeting of the stockholders, the
holders of a majority of all of the shares of the stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date or time.
If a notice of any adjourned special meeting of stockholders is sent
to all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, then, provided that those present hold
more than 33-1/3% of the shares entitled to vote, those present at such
adjourned meeting shall constitute a quorum, and all matters shall be
determined by a majority of the votes cast at such meeting.
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* Section 5. Conduct of the Stockholders' Meeting. At every
meeting of the stockholders, the Chairman of the Board of the Corporation, or
in his absence the Chief Executive Officer of the Corporation, or in his
absence the President of the Corporation, or in his absence the Vice President
designated by the Chairman of the Board or the Chief Executive Officer, or in
the absence of such designation any Vice President, or in the absence of the
Chairman of the Board, Chief Executive Officer, President or any Vice President
a chairman chosen by the majority of the voting shares represented in person or
by proxy, shall act as chairman of the meeting. The Secretary of the
Corporation or a person designated by the chairman shall act as Secretary of
the meeting. Unless otherwise approved by the chairman, attendance at the
Stockholders' Meeting shall be restricted to stockholders of record, persons
authorized in accordance with Section 8 of these By-Laws to act by proxy, and
officers of the Corporation.
Section 6. Conduct of Business. The Chairman shall call the
meeting to order, establish the agenda, and conduct the business of the meeting
in accordance herewith or, at the Chairman's discretion, in accordance with the
wishes of the stockholders in attendance.
The Chairman shall also conduct the meeting in an orderly manner, rule
on the precedence of, and procedure on, motions and other procedural matters,
and exercise discretion with respect to such procedural matters with fairness
and good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion
in general or on remarks by any one stockholder. Should any person in
attendance become unruly or obstruct the meeting proceedings, the Chairman
shall have the power to have such person removed from participation.
Notwithstanding anything in these By-Laws to the contrary, no business shall be
__________________________________
* As amended April 30, 1997.
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conducted at any meeting except in accordance with the procedures set forth in
this Section 6, Section 7 below and Section 11 of Article II below. The
Chairman of any meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 6, Section 7 below and Section
11 of Article II below, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted.
Section 7. Notice of Stockholder Business. At an annual or
special meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought
before a meeting, business must be (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(b) properly brought before the meeting by or at the direction of the Board of
Directors, (c) if at an annual meeting, properly brought before the meeting by
a stockholder, or (d) if at a special meeting, if, and only if, the notice of a
special meeting provides for business to be brought before the meeting by
stockholders, properly brought before the meeting by a stockholder.
For business to be properly brought before a meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation no later than the date upon which stockholder proposals to be
included in the Corporation's Proxy Statement must be received by the
Corporation under the requirements of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder.
A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual or special meeting
(a) a brief description of the business desired
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to be brought before the annual or special meeting and the reasons for
conducting such business at the annual or special meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, (d) any material interest of
the stockholder in such business and (e) such other information relating to the
stockholder or the proposal as is required to be disclosed under the rules of
the Securities and Exchange Commission governing the solicitation of proxies
with respect to such proposal, whether or not such proxies are in fact
solicited by the stockholder.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at an annual or special meeting except in accordance with
the procedures set forth in this Section 7. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that business was
not properly brought before the meeting and in accordance with the provisions
of this Section 7, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
Section 8. Proxies and Voting. At any meeting of the
stockholders, every stockholder entitled to vote may vote in person or by proxy
authorized by an instrument in writing filed in accordance with the procedure
established for meeting. No stockholder may authorize more than one proxy for
his shares.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his or her name on the record date for the
meeting, except as otherwise provided herein or required by law.
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All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law or By-Laws, all other matters shall be
determined by a majority of the votes cast.
Section 9. Stock List. A complete list of stockholders entitled
to vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing address of each such stockholder and the number of
shares registered in his or her name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
Section 10. Elimination of Written Consent. Any action required
or permitted to be taken by the stockholders of the corporation must be
effected at a duly called annual or special meeting of
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stockholders of the corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE II
BOARD OF DIRECTORS
* Section 1. Number and Term of Office. The number of directors
shall initially be twelve (12) and, thereafter, shall be fixed from time to
time exclusively by the Board of Directors pursuant to a resolution adopted by
a majority of the total number of authorized directors (whether or not there
exists any vacancies in previously authorized directorships at the time any
such resolution is presented to the Board for adoption). The directors shall
be divided into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 1990
annual meeting of stockholders, the term of office of the second class to
expire at the 1991 annual meeting of stockholders and the term of office of the
third class to expire at the 1992 annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, directors shall be elected to succeed those directors whose term
expire for a term of office to expire at the third succeeding annual meeting of
stockholders after their election. All directors shall hold office until the
expiration of the term for which elected and until their successors are
elected, except in the case of the death, resignation or removal of any
director.
Section 2. Vacancies and Newly Created Directorships. Subject
to the rights of the holders of any series of Preferred Stock then outstanding,
newly created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors
__________________________________
* As amended April 30, 1997.
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resulting from death, resignation, retirement, disqualification or other cause
(other than removal from office by a vote of stockholders) may be filled only
by a majority vote of the directors then in office, though less than a quorum,
and directors so chosen shall hold office for a term expiring at the annual
meeting of stockholders at which the term of office of the class to which they
have been elected expires. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
Section 3. Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any directors, or the entire Board
of Directors, may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of at least a majority of the
voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class. Vacancies in the Board of Directors resulting from
such removal may be filled by (i) a majority of the directors then in office,
though less than a quorum, or (ii) the stockholders at a special meeting of the
stockholders properly called for that purpose, by the vote of the holders of a
majority of the shares entitled to vote at such special meeting. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place or places, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall not be
required.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by one-third of the directors then in office (rounded
up to the nearest whole number), the Chairman
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of the Board or by the chief executive officer and shall be held at such place,
on such date, and at such time as they or he shall fix. Notice of the place,
date, and time of each such special meeting shall be given each director by
whom it is not waived by mailing written notice not fewer than five (5) days
before the meeting or by telecopying or delivering by overnight courier service
the same not fewer than twenty-four (24) hours before the meeting. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6. Quorum. At any meeting of the Board of Directors, a
majority of the total number of authorized Directors shall constitute a quorum
for all purposes. If a quorum shall fail to attend any meeting, a majority of
those present may adjourn the meeting to another place, date, or time, without
further notice or waiver thereof.
Section 7. Participation in Meetings by Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and such participation shall constitute
presence in person at such meeting.
Section 8. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the
vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
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<PAGE> 10
Section 9. Powers. The Board of Directors may, except as
otherwise required by, law, exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation, including, without
limiting the generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance
with law;
(2) To purchase or otherwise acquire any property, rights
or privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in
such form as it may determine, of written obligations of every kind, negotiable
or non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation with or
without cause, and from time to time to devolve the powers and duties of any
officer upon any other person for the time being;
(5) To confer upon any officer of the Corporation the
power to appoint, remove and suspend subordinate officers, employees and
agents;
(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors, officers, employees and
agents of the Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not
inconsistent with these By-Laws, for the management of the Corporation's
business and affairs.
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<PAGE> 11
Section 10. Compensation of Directors. Directors, as such, may
receive, pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.
Section 11. Nomination of Director Candidates. Subject to the
rights of holders of any class or series of Preferred Stock then outstanding,
nominations for the election of directors may be made by the Board of Directors
or any nominating or proxy committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of Directors generally who
complies with the notice and procedural requirements of this Section 11. All
nominees for election to the Board shall satisfy the qualification requirements
for membership on the Board of Directors of the Corporation established by any
nominating committee designated by the Board, which requirements shall be
designed to evaluate, without limitation, the following:
(a) The applicability of the Candidate's business
experience and knowledge to the Corporation's business, including any technical
skills, industry contacts or other special qualifications which would make the
Candidate a valuable member of the Board.
(b) The resulting balance of knowledge and experience
which would exist on the Board if the Candidate were elected in light of the
business experience and knowledge of the other persons likely to be elected to
the Board.
(c) The Candidate's other business interests and
commitments and the extent to which such interests and commitments are
inconsistent or incompatible with such Candidate's effective board membership,
including the extent to which the Nominating Committee believes that such
Candidate's membership on the Board may be detrimental to the long-term
interests of the
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<PAGE> 12
Corporation and to the maximization of the value of the Corporation's
stockholders' investment in the Corporation.
In addition to any other applicable requirements, any such stockholder
nomination shall be made only pursuant to timely notice in writing to the
Secretary of the Corporation setting forth such stockholder's intent to make a
nomination or nominations. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal offices of the Corporation
not later than the date on which stockholder proposals to be included in the
proxy statement with respect to any annual or special meeting must be received
by the Corporation under the requirements of the Securities Exchange Act of
1934, as amended, and the rules promulgated thereunder.
Each such notice by a stockholder shall set forth: (a) the name and
address, as they appear on the Corporation's stock register, of the stockholder
who intends to make the nomination; (b) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote for the
election of Directors on the date of such notice and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) the name, age, business and residence address and
principal occupation of each person the stockholder proposes to nominate for
election as a director; (e) such other information regarding the stockholder
and each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, whether or not proxies are in fact
solicited for the election of such person; and (f) the signed consent of each
nominee to serve as a director of the Corporation if so elected.
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<PAGE> 13
The Corporation or any nominating committee designated by the Board of
Directors may require any proposed nominee to furnish such other information as
may reasonably be required by the Corporation or such committee to determine
the qualification of such nominee for election as a director of the
Corporation.
In the event that a person is validly designated as a nominee in
accordance with this Section 11 and shall thereafter become unable or unwilling
to stand for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee as the case may be, may designate a
substitute nominee; provided, however, that (i) in the case of the persons
nominated by a stockholder, such a substitution may only be made if a written
notice to the Secretary setting forth such information regarding such
substitute nominee as would have been required to be delivered to the Secretary
pursuant to this Section 11 had such substitute nominee been initially proposed
as a nominee is received by the Corporation at its principal executive offices
not less than thirty (30) days before the date of the election at which the
initial nominee was nominated to stand or (ii) in the case of persons nominated
by the Board of Directors the substitute nominee must be designated not less
than thirty (30) days before the date of the election at which the initial
nominee was nominated to stand.
If the chairman of the meeting for the election of Directors
determines that a nomination of any candidate for election as a Director at
such meeting was not made in accordance with the applicable provisions of this
Section 11, such nomination shall be void; provided, however, that nothing in
this Section 11 shall be deemed to limit any voting rights upon the occurrence
of dividend arrearages, provided to holders of Preferred Stock pursuant to the
Preferred Stock designation for any series of Preferred Stock.
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<PAGE> 14
ARTICLE III
COMMITTEES
Section 1. Committees of the Board of Directors. The Board of
Directors, by a resolution passed by a vote of a majority of the whole Board,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating,
if it desires, other directors as alternate members who may replace any absent
or disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may by unanimous vote appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business. Each committee may determine
the procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings;
one-third of the authorized members shall constitute a quorum unless the
committee shall consist of one or two members, in which event one member shall
constitute a quorum; and all
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<PAGE> 15
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
ARTICLE IV
OFFICERS
* Section 1. Generally. The officers of the Corporation shall
consist of a Chairman of the Board, a Chief Executive Officer, a President, one
or more Vice Presidents, a Secretary, a Chief Financial Officer and such other
officers as may from time to time be appointed by the Board of Directors.
Officers shall be elected by the Board of Directors, which shall consider that
subject at its first meeting after every annual meeting of stockholders. Each
officer shall hold office until his successor is elected and qualified or until
his earlier resignation or removal. The Chairman of the Board, the Chief
Executive Officer and the President shall each be members of the Board of
Directors. Any number of offices may be held by the same person.
* Section 2. Chairman of the Board. The Chairman of the Board, if
such an officer be elected, shall, if present, preside at meetings of the Board
of Directors and exercise and perform such other powers and duties as may from
time to time be assigned to him by the Board of Directors or as may be
prescribed by these By-Laws. If there is no Chief Executive Officer, then the
Chairman of the Board shall also be the Chief Executive Officer of the
Corporation and shall have the powers and duties prescribed in Article IV,
Section 3 of these By-Laws.
__________________________________
* As amended April 30, 1997.
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<PAGE> 16
* Section 3. Chief Executive Officer. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the Chairman of
the Board, if there be such an officer, the Chief Executive Officer of the
Corporation shall, subject to the control of the Board of Directors, have
general supervision, direction, and control of the business and the officers of
the Corporation. He shall preside at all meetings of the stockholders and, in
the absence or nonexistence of a Chairman of the Board, at all meetings of the
Board of Directors. He shall have the general powers and duties of management
usually vested in the Chief Executive Officer of a Corporation and shall have
such other powers and duties as may be prescribed by the Board of Directors or
these By-Laws.
* Section 4. President. The President shall be the chief
operating officer of the Corporation with such duties and powers as may be
prescribed by the Chief Executive Officer or the Board of Directors.
* Section 5. Vice President. Each Vice President shall have such
powers and duties as may be delegated to him by the Board of Directors.
Section 6. Chief Financial Officer. The Chief Financial Officer
shall have the responsibility for maintaining the financial records of the
Corporation and shall have custody of all monies and securities of the
Corporation. He shall make or cause to be made such disbursements of the funds
of the Corporation as are authorized and shall render from time to time an
account of all such transactions and of the financial condition of the
Corporation. The Chief Financial Officer shall also perform such other duties
as the Board of Directors may from time to time prescribe.
Section 7. Secretary. The Secretary shall issue all authorized
notices for, and shall keep, or cause to be kept, minutes of all meetings of
the stockholders, the Board of Directors, and all committees of the Board of
Directors. The Secretary shall keep, or cause to be kept at the principal
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<PAGE> 17
executive office or at the office of the Corporation's transfer agent or
registrar, a record of the Corporation's stockholders, giving the names and
addresses of all stockholders and the number and class of shares held by each.
The Secretary shall have charge of the seal and the corporate books of the
Corporation and shall perform such other duties as the Board of Directors may
from time to time prescribe.
Section 8. Delegation of Authority. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officers or agents, notwithstanding any provision hereof.
Section 9. Removal. Any officer of the Corporation may be
removed at any time, with or without cause, by the Board of Directors.
* Section 10. Action With Respect to Securities of Other
Corporations. Unless otherwise directed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or any officer of the
Corporation authorized by the Chairman of the Board or the Chief Executive
Officer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any and all rights
and powers which this Corporation may possess by reason of its ownership of
securities in such other corporation.
__________________________________
* As amended April 30, 1997.
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<PAGE> 18
ARTICLE V
STOCK
* Section 1. Certificates of Stock. Each stockholder shall be
entitled to a certificate signed by, or in the name of the Corporation by, the
Chairman of the Board, the Chief Executive Officer, the President or a Vice
President, and by the Secretary or an Assistant Secretary, or the Chief
Financial Officer or Treasurer (if there be such an officer), certifying the
number of shares owned by him or her. Any of or all the signatures on the
certificate may be facsimile.
Section 2. Transfers of Stock. Transfers of stock shall be made
only upon the transfer books of the Corporation kept at an office of the
Corporation or by transfer agents designated to transfer shares of the stock of
the Corporation. Except where a certificate is issued in accordance with
Section 4 of Article V of these By-Laws, an outstanding certificate for the
number of shares involved shall be surrendered for cancellation before a new
certificate is issued therefor.
Section 3. Record Date. The Board of Directors may fix a record
date, which shall not be more than sixty (60) days nor fewer than ten (10) days
before the date of any meeting of stockholders, no more than sixty (60) days
prior to the time for other action hereinafter described, as of which there
shall be determined the stockholders who are entitled: to notice of or to vote
at any meeting of stockholders or any adjournment thereof; to express consent
to corporate action in writing without a meeting (if the Corporation's charter
allows such action without a meeting); to receive payment of any dividend or
other distribution or allotment of any rights; or to exercise any rights with
respect to any change, conversion or exchange of stock or with respect to any
other lawful action.
__________________________________
* As amended April 30, 1997.
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<PAGE> 19
Section 4. Lost, Stolen or Destroyed Certificates. In the event
of the loss, theft or destruction of any certificate of stock, another may be
issued in its place pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE VI
NOTICES
Section 1. Notices. Except as otherwise specifically provided
herein or required by law, all notices required to be given to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, or by sending such notice by
prepaid telegram, mailgram or commercial courier service. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his or her last known address as the same appears on the books of the
Corporation. The time when such notice shall be deemed to given shall be the
time such notice is received by such stockholder, director, officer, employee
or agent, or by any person accepting such notice on behalf of such person, if
hand delivered, or the time such notice is dispatched, if delivered through the
mails or by telegram, mailgram or courier.
Section 2. Waivers. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent
to the notice required to be given to such stockholder, director,
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<PAGE> 20
officer, employee or agent. Neither the business nor the purpose of any
meeting need be specified in such a waiver. Attendance of a person at a
meeting shall constitute a waiver of notice for such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE VII
MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions
for use of facsimile signatures elsewhere specifically authorized in these
By-Laws, facsimile signatures of any officer or officers of the Corporation may
be used whenever and as authorized by the Board of Directors or a committee
thereof.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Chief Financial Officer or by an Assistant Secretary.
Section 3. Reliance Upon Books, Reports and Records. Each
director, each member of any committee designated by the Board of Directors,
and each officer of the Corporation shall, in the performance of his duties, be
fully protected in relying in good faith upon the books of account or other
records of the Corporation, including reports made to the Corporation by any of
its officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
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<PAGE> 21
Section 4. Fiscal Year. The fiscal year of the Corporation
shall be as fixed by the Board of Directors.
Section 5. Time Periods. In applying any provision of these
By-Laws which require that an act be done or not done a specified number of
days prior to an event or that an act be done during a period of a specified
number of days prior to an event, calendar days shall be used, the day of the
doing of the act shall be excluded, and the day of the event shall be included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("proceeding"), by reason of the fact that he or a person of whom
he is the legal representative, is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer or employee or in any other
capacity while serving as a director, officer or employee, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by
Delaware Law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said Law permitted
the Corporation to provide prior to such amendment) against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
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<PAGE> 22
taxes or penalties, amounts paid or to be paid in settlement and amounts
expended in seeking indemnification granted to such person under applicable
law, this by-law or any agreement with the Corporation) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer or employee
and shall inure to the benefit of his or her heirs, executors and
administrators; provided however, that, except as provided in Section 2 of this
Article VIII, the Corporation shall indemnify any such person seeking indemnity
in connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such right shall be a
contract right and shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
then so requires, the payment of such expenses incurred by a director or
officer of the Corporation in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of such proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not entitled
to be indemnified under this Section 1 or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim under
Section 1 of this Article VIII is not paid in full by the Corporation within
twenty (20) days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if such suit is not frivolous or
brought in bad faith, the
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<PAGE> 23
claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking, if any, has been
tendered to this Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights. The rights conferred on
any person in Sections 1 and 2 of this Article VIII shall not be exclusive of
any other right which such persons may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise.
Section 4. Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for
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<PAGE> 24
indemnification rights equivalent to or, if the Board of Directors so
determines, greater than, those provided for in this Article VIII.
Section 5. Insurance. The Corporation shall maintain insurance
to the extent reasonably available, at its expense, to protect itself and any
such director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
Section 6. Effect of Amendment. Any amendment, repeal or
modification of any provision of this Article VIII by the stockholders and the
Directors of the Corporation shall not adversely affect any right or protection
of a director or officer of the Corporation existing at the time of such
amendment, repeal or modification.
Section 7. Savings Clause. If this Article VIII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director,
officer, employee and agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the full extent permitted by an applicable portion
of this Article VIII that shall not have been invalidated and to the full
extent permitted by applicable law.
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<PAGE> 25
ARTICLE IX
AMENDMENTS
The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws or the Corporation. Any adoption, amendment or repeal of
By-Laws of the Corporation by the Board of Directors shall require the approval
of a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is presented to the
Board). The stockholders shall also have power to adopt, amend or repeal the
By-Laws of the Corporation. In the event of any such adoption, amendment or
repeal of these By-Laws by Stockholders, in addition to any vote of the holders
or any class or series of stock of this Corporation required by law or by these
By-Laws, the affirmative vote of the holders of at least a majority of the
voting power of all of the then-outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required.
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<PAGE> 1
f
EXHIBIT 11.1
KLA-TENCOR CORPORATION
CALCULATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
(In thousands except per share amounts) 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary earnings per share
- --------------------------
Net income $23,704 $31,817 $69,012 $88,978
======= ======= ======= =======
Average common and common equivalent shares:
Average common shares outstanding 51,559 50,648 51,250 50,427
Dilutive options 2,271 1,522 1,764 1,894
------- ------- ------- -------
53,830 52,170 53,014 52,321
======= ======= ======= =======
Net income per share $ 0.44 $ 0.61 $ 1.30 $ 1.70
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of operations, the consolidated balance sheet and the
accompanying notes to the consolidated financial statements, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 149,573
<SECURITIES> 268,798
<RECEIVABLES> 125,082
<ALLOWANCES> 3,055
<INVENTORY> 118,289
<CURRENT-ASSETS> 443,557
<PP&E> 137,284
<DEPRECIATION> 63,856
<TOTAL-ASSETS> 788,292
<CURRENT-LIABILITIES> 170,334
<BONDS> 0
0
0
<COMMON> 52
<OTHER-SE> 611,590
<TOTAL-LIABILITY-AND-EQUITY> 788,292
<SALES> 473,586
<TOTAL-REVENUES> 473,586
<CGS> 224,508
<TOTAL-COSTS> 224,508
<OTHER-EXPENSES> 156,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,125
<INCOME-PRETAX> 104,563
<INCOME-TAX> 35,551
<INCOME-CONTINUING> 69,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,012
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
</TABLE>
