<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1995
REGISTRATION NO. 33-62125
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
LTX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2594045
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
LTX PARK AT UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
(617) 461-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN J. ARCARI
LTX CORPORATION
LTX PARK AT UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
(617) 461-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
PAMELA A. KEATING, ESQ. EDWIN L. MILLER, JR., ESQ.
LTX CORPORATION TESTA, HURWITZ & THIBEAULT
LTX PARK AT UNIVERSITY AVENUE 125 HIGH STREET
WESTWOOD, MASSACHUSETTS 02090 BOSTON, MASSACHUSETTS 02110
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.05 par value)..... 5,750,000 shares(2) $11.75 $67,562,500 $22,704(3)
===========================================================================================================
<FN>
(1) Pursuant to Rule 457(c) of the Securities Act of 1933, and solely for the
purpose of calculating the amount of the registration fee, the proposed
maximum offering price per share and the proposed maximum aggregate offering
price are based on (a) as to 4,600,000 shares previously registered pursuant
to this Registration Statement, the average of the high and low sale prices
of $11.75 and $11 on August 22, 1995 on the Nasdaq National Market of LTX
Corporation Common Stock and (b) as to 1,150,000 additional shares
registered hereby, the average of the high and low sale prices of $12.00 and
$11.50 on September 5, 1995 on the Nasdaq National Market of LTX Corporation
Common Stock.
(2) Includes 750,000 shares which the Underwriters have the option to purchase
from the Registrant to cover over-allotments.
(3) A registration fee of $18,044 was previously paid on August 25, 1995 with
the initial filing; $4,660 is paid herewith.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, dated September 11, 1995
PROSPECTUS
5,000,000 SHARES
LOGO
LTX CORPORATION
COMMON STOCK
---------------------------
Of the 5,000,000 shares of Common Stock offered hereby, 4,500,000 are being
sold by LTX Corporation ("LTX" or the "Company") and 500,000 shares are being
sold by the Selling Shareholder. See "Principal and Selling Shareholders." The
Company will not receive any proceeds from the sale of shares by the Selling
Shareholder.
On September 7, 1995, the last reported sale price on the Nasdaq National
Market for the Common Stock was $13.125 per share. See "Price Range of Common
Stock." The Common Stock is quoted on the Nasdaq National Market under the
symbol "LTXX."
---------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING AT PAGE 5.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
=================================================================================================
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Shareholder
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
------------------------------------------------------------------------------------------------
Total(3)................ $ $ $ $
=================================================================================================
<FN>
(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(2) Before deducting estimated expenses of $240,000 payable by the Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
750,000 additional shares of Common Stock to cover over-allotments, if any.
If such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ ,
$ , and $ , respectively. See "Underwriting."
</TABLE>
---------------------------
The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the shares
will be made at the offices of Lehman Brothers Inc., New York, New York, on or
about , 1995.
---------------------------
LEHMAN BROTHERS NEEDHAM & COMPANY, INC.
, 1995
<PAGE> 3
LINEAR/MIXED SIGNAL PRODUCTS
The Synchro is the latest
generation of linear/mixed signal
test systems. Synchrosystems are
[PHOTO OF SYNCHRO modular in design, which enables
TEST SYSTEM] customers to add new options to
their systems to meet their future
needs. The Synchro Series includes:
the Synchro Plus, Synchro II, and
Synchro ProductionPACs. The
Synchro Plus allows customers to
test their most advanced devices
while the Synchro ProductionPAC
meets their volume production
needs.
DIGITAL PRODUCTS
LTX offers two lines of
digital test systems: the
Delta Series and the Master
Series, which are marketed [PHOTO OF DELTA 50
under the Trillium name. The TEST SYSTEM]
Delta Series includes: the
Delta 50, Delta/ST, and Delta
100. The Master Series
includes: the Deltamaster and
Micromaster test systems.
These digital systems offer a
broad range of test
capabilities which meet the
production test requirements
of microcontrollers and the
test requirements of high
performance microprocessors.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS, IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
------------------------
LTX(R), Hiper(R) and enVision(TM) are all trademarks of the Company.
2
<PAGE> 4
--------------------------------------------------------------------------------
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) included or
incorporated by reference in this Prospectus. Unless otherwise indicated, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option.
THE COMPANY
LTX Corporation designs, manufactures and markets automatic test equipment
for the semiconductor industry that is used to test digital, linear and mixed
signal (a combination of digital and linear) integrated circuits ("ICs") and
discrete semiconductor components. The Company currently offers three lines of
test systems: digital test systems, which test digital ICs, including
microprocessors and microcontrollers; linear/mixed signal test systems, which
test a wide range of linear and mixed signal ICs; and discrete component test
systems, which test small signal and high power semiconductor components. The
Company also sells service and applications support for its test systems. The
semiconductors tested by the Company's systems are widely used in the computer,
communications, automotive and consumer electronics industries. The Company
markets its products worldwide to both manufacturers and users of digital,
linear and mixed signal ICs and discrete semiconductor components. The Company
sells its test systems to most of the major worldwide semiconductor
manufacturers. The Company's customers include ASAT, AT&T, Austria Mikro
Systeme, Hitachi, Intel, Motorola, National Semiconductor, Philips, SGS Thomson
and Sony.
All semiconductor manufacturers use semiconductor test equipment ("STE") to
design and manufacture semiconductors. Demand for STE is driven by capacity
expansion in the semiconductor industry and advances in semiconductor
technology. Advances in semiconductor technology have permitted the design and
manufacture of increasingly complex semiconductors with improved performance at
lower cost. As a result, semiconductors have become more widely used across a
broad spectrum of industries, including the computer, communications, automotive
and consumer electronics industries. The resulting business expansion in the
semiconductor industry, together with more advanced semiconductor technology,
have created a demand for STE that is faster, more versatile, more accurate,
more productive and easier to program and maintain. STE that meets this demand
also reduces the customer's total cost of testing.
The Company's strategy is to produce and supply high performance, modular
test systems using leading-edge technology and to provide complete test
solutions to its worldwide customer base through its substantial group of
engineers located throughout the world. This strategy enables the Company to
provide STE that is capable of testing advanced semiconductors in the design
phase and testing these devices at lower cost in the production phase. The
Company believes its strategy enables it to build strong long-term alliances
with its customers and to meet their demand for higher performance, more
cost-effective test systems.
The Company's test systems are also used by semiconductor manufacturers for
design verification, characterization, qualification and failure analysis of
ICs. In addition, certain large electronic equipment manufacturers use the
Company's test systems for incoming inspection and for further classification of
ICs. All of the Company's test systems are comprised of multiple
computer-controlled instruments which send signals to a device under test and
measure the responses of that device to classify the device by performance
characteristics and to ensure conformance with quality standards. The Company's
test system instrumentation is controlled by operating system software which is
developed by the Company. Current prices for the Company's test systems range
from approximately $400,000 for certain low pin count systems to approximately
$4,000,000 for a high pin count Delta Series test system.
The Company markets its products through its direct sales force in most
parts of the world. In Japan, the second largest market for STE, the Company
encounters significant competition from local STE manufacturers. In order to
better penetrate the Japanese market, the Company has entered into strategic
alliances with Sumitomo Metal Industries, Ltd., Ando Electric Co. Ltd., a
Japanese STE manufacturer and majority-owned subsidiary of Nippon Electric
Corporation, Ltd. (NEC), and Asia Electronics, Inc., a Japanese STE manufacturer
which is 50% owned by Toshiba Corporation.
LTX was incorporated in Massachusetts in August 1976. The Company's
principal executive offices are located at LTX Park at University Avenue,
Westwood, Massachusetts 02090, and its telephone number at that location is
(617) 461-1000.
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3
<PAGE> 5
<TABLE>
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THE OFFERING
<S> <C>
Common Stock offered by the Company....................... 4,500,000 shares
Common Stock offered by the Selling Shareholder........... 500,000 shares
Common Stock to be outstanding after the offering(1)...... 33,826,589 shares
Use of proceeds by the Company............................ Working capital, capital expenditures,
debt repayment and other general
corporate purposes.
Nasdaq National Market symbol............................. LTXX
<FN>
---------------
(1) Based on the number of shares of Common Stock outstanding as of August 23,
1995 and excluding 2,267,364 shares of Common Stock reserved for issuance
pursuant to outstanding stock options, 2,042,017 shares of Common Stock
reserved for issuance pursuant to outstanding warrants and 406,556 shares of
Common Stock reserved for issuance upon conversion of the Company's 7 1/4%
Convertible Subordinated Debentures Due 2011.
</TABLE>
<TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
FISCAL YEAR ENDED JULY 31
--------------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales............................... $200,361 $149,106 $172,932 $168,326 $210,319
Gross profit............................ 78,972 43,032 59,406 47,887 73,571
Restructuring charges................... -- 2,800 -- 14,376 --
Income (loss) from operations........... 11,165 (23,240) (2,886) (28,401) 14,840
Net income (loss)....................... 6,128 (24,260) (4,309) (31,304) 10,694
Net income (loss) per share............. $ 0.36 $ (1.22) $ (0.20) $ (1.23) $ 0.36
Weighted average shares................. 21,963 19,888 21,089 25,485 29,787
</TABLE>
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
---------------------------------------------------------------------------------------------------
OCTOBER 31, JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31,
1993 1994 1994 1994 1994 1995 1995 1995
----------- ----------- --------- -------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales......... $47,164 $38,119 $ 40,216 $ 42,827 $46,790 $50,017 $ 53,571 $ 59,941
Gross profit...... 14,945 7,455 11,494 13,993 15,861 17,469 18,691 21,550
Restructuring
charges......... -- 14,376 -- -- -- -- -- --
Income (loss) from
operations...... (754) (23,525) (3,653) (469) 2,037 3,135 4,070 5,598
Net income
(loss).......... (1,605) (24,005) (4,331) (1,363) 786 1,917 2,911 5,080
Net income (loss)
per share....... $ (0.06) $ (0.96) $ (0.17) $ (0.05) $ 0.03 $ 0.07 $ 0.10 $ 0.16
</TABLE>
<TABLE>
<CAPTION>
JULY 31, 1995
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital...................................................... $ 62,182 $118,051
Total assets......................................................... 145,917 201,786
Short-term debt...................................................... 8,816 8,816
Long-term debt....................................................... 28,267 28,267
Stockholders' equity................................................. 65,407 121,276
<FN>
---------------
(1) Adjusted to reflect the sale of 4,500,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $13.125 per share
(the closing price of the Common Stock on September 7, 1995) and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
</TABLE>
--------------------------------------------------------------------------------
4
<PAGE> 6
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be carefully considered in evaluating the Company and its
business before purchasing any of the shares of Common Stock offered hereby.
CYCLICALITY OF SEMICONDUCTOR INDUSTRY
The Company's business is largely dependent upon the capital expenditures
of semiconductor manufacturers. The semiconductor industry is highly cyclical
and has historically experienced recurring periods of oversupply, which often
have had a severely detrimental effect on such industry's demand for test
equipment. Over the past two to three years, the semiconductor industry has been
experiencing significant growth, although there can be no assurance that such
growth will continue or that the Company's business and results of operations
will not be adversely affected by future downturns in the semiconductor
industry. The Company attempts to mitigate the risk of cyclicality in the
semiconductor industry and changes in particular segments of the industry by
offering products to a wide geographic base of customers in the digital, linear
and mixed signal IC and discrete component markets. However, any factor
adversely affecting any particular market or segment would adversely affect the
Company's business and results of operations. No assurance can be given that the
Company's business and results of operations will not be materially adversely
affected if downturns or changes in any particular market segments of the
semiconductor industry occur in the future, especially if all of the market
segments in which the Company participates experience downturns at the same
time.
OPERATING LOSSES; FLUCTUATIONS IN SALES AND OPERATING RESULTS
The Company incurred net losses in fiscal years 1992, 1993 and 1994.
Although the Company recognized a net profit of $10,694,000 in fiscal 1995,
there can be no assurance that the Company will be profitable in the future.
The Company's sales and operating results have fluctuated and could in the
future fluctuate significantly from period to period, including from one
quarterly period to another, due to a combination of factors, including the
cyclical demand of the semiconductor industry, the large selling prices of the
Company's test systems (which typically result in a long selling process),
competitive pricing pressures and the mix between and configuration of digital
and linear/mixed signal and discrete component test systems sold in a particular
period. The Company has also experienced significant fluctuations in its gross
margin on product sales. Given the relatively large selling prices of the
Company's test systems, sales of a limited number of test systems account for a
substantial portion of sales in any particular fiscal quarter and a small number
of transactions could therefore have a significant impact on sales and gross
margins for that fiscal quarter. The impact of these and other factors on the
Company's sales and operating results in any future period cannot be forecast
with accuracy. In addition, the need for continued investment in research and
development, for capital equipment requirements and for extensive worldwide
customer support capability results in significant fixed costs which would be
difficult to reduce in the event that the Company does not meet its sales
objectives. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations."
IMPORTANCE OF NEW PRODUCT INTRODUCTIONS
The STE market is subject to rapid technological change and new product
introductions, as well as advancing industry standards. The development of
increasingly complex semiconductors and the utilization of semiconductors in a
broader spectrum of products has driven the need for more advanced test systems
to test such devices at an acceptable cost. The Company's ability to remain
competitive in the digital, linear and mixed signal IC and discrete component
markets will depend upon its ability to successfully enhance existing test
systems and develop new generations of test systems and to introduce these new
products on a timely and cost-effective basis. The Company also has to
manufacture its products in volume at a competitive price and on a timely basis
to enable customers to integrate them into their operations as they begin to
produce their next generation of semiconductors. The Company's failure to have a
competitive test system available when
5
<PAGE> 7
required by a semiconductor manufacturer would make it substantially more
difficult for the Company to sell test systems to that manufacturer for a number
of years. The Company has in the past experienced delays in introducing certain
of its products and enhancements, and there can be no assurance that it will not
encounter technical or other difficulties that could in the future delay the
introduction of new products or enhancements. If new products have reliability
or functionality problems, reduced orders, higher manufacturing costs, delays in
collecting accounts receivable and additional warranty expense may result, which
could reduce gross margins on new product sales. The Company's newly introduced
Delta Series of products is subject to the risks associated with new product
introductions, including the risk that reliability or functionality problems
could increase expenses and reduce gross margins on new product sales.
Furthermore, announcements by the Company or its competitors of new products
could cause customers to defer or forego purchases of the Company's existing
products, which would also adversely affect the Company's business and results
of operations. There can be no assurance that the Company will be successful in
the introduction and volume manufacture of its new products, that such
introduction will coincide with the development by semiconductor manufacturers
of their next generation semiconductors or that such products will satisfy
customer needs or achieve market acceptance. The failure to do so could
materially adversely affect the Company's business and results of operations.
HIGHLY COMPETITIVE INDUSTRY
The STE industry is highly competitive in all areas of the world. Most of
the Company's major competitors have substantially greater financial resources
and some have more extensive engineering, manufacturing, marketing and customer
support capabilities than the Company. The Company expects its competitors to
continue to improve the performance of their current products and to introduce
new products with improved price and performance characteristics. The Company's
major competitors in the market for digital test systems are Schlumberger
Limited, Teradyne, Inc. and Credence Systems Corporation, except in Japan where
the Company's major competitor is Advantest Corporation (an affiliate of Fujitsu
Limited). The Company's principal competitor for linear/mixed signal test
systems is Teradyne, Inc., except in Japan where the Company's major competitor
is Yokogawa Electric Works. The Company principally competes on the basis of
performance, cost of test, reliability, customer service, applications support,
price and ability to deliver its products on a timely basis. New product
introductions by the Company's competitors could cause a decline in sales or
loss of market acceptance of the Company's existing products and could prevent
the successful introduction of the Company's new products. In addition,
increased competitive pressure could lead to intensified price-based
competition, resulting in lower prices and adversely affecting the Company's
business and results of operations. In particular, at the end of a product life
cycle and as the Company and its competitors introduce more technologically
advanced products, it becomes more difficult to maintain established prices for
the earlier introduced product. From time to time, the Company's test systems
are sold by third parties as used equipment at prices substantially below the
prices of new test systems sold by the Company. Such sales of used test systems
may adversely affect the Company's sales of new test systems. Certain of the
Company's customers have also developed test equipment. The Company believes
that to remain competitive it will require significant financial resources for
investment in new product development and for the maintenance of customer
support centers worldwide. There can be no assurance that the Company will be
able to compete successfully in the future. See "Business -- Competition."
CUSTOMER CONCENTRATION
Although the composition of the Company's largest customers has changed
from year to year, sales to the Company's top ten customers accounted for 63% of
net sales in fiscal 1995 and 58% in both fiscal 1994 and fiscal 1993. The loss
of a major customer or reduction in orders by major customers, including
reductions due to market or competitive conditions in the semiconductor
industry, has had in the past and would have in the future an adverse effect on
the Company's business and results of operations. In addition, the Company's
ability to increase its sales will depend in part upon its ability to obtain
orders from new customers. Once a semiconductor manufacturer has selected a
particular semiconductor test equipment vendor's test system for a generation of
semiconductors and made a substantial investment to develop related test program
software and interfaces, the manufacturer is more likely to continue to purchase
test systems from that vendor for the entire
6
<PAGE> 8
generation of semiconductors and, possibly, subsequent generations of
semiconductors as well. The loss of one or more of its top ten customers could
have a material adverse effect on the Company's business and results of
operations. See "Business -- Customers."
INTERNATIONAL BUSINESS
Approximately 61% and 66% of the Company's sales for fiscal 1994 and fiscal
1995, respectively, were attributable to sales outside the United States. The
Company expects that international sales will continue to represent a
significant portion of its total sales. Sales to customers outside the United
States are subject to risks, including the imposition of governmental controls,
the need to comply with a wide variety of foreign and United States export laws,
political and economic instability, trade restrictions, changes in tariffs and
taxes, longer payment cycles typically associated with international sales, and
the greater difficulty of administering business overseas as well as general
economic conditions. Although substantially all of the Company's international
sales are denominated in United States dollars, a portion of all costs of the
Company's foreign operations are denominated in foreign currencies and,
accordingly, the Company's business and results of operations may be affected by
fluctuations in interest and currency exchange rates. The Company periodically
enters into foreign exchange contracts to hedge the risk that eventual net cash
flows will be adversely affected by changes in exchange rates. Furthermore,
although the Company endeavors to meet technical standards established by
foreign regulatory bodies, there can be no assurance that the Company will be
able to comply with changes in foreign standards in the future. The inability of
the Company to design products to comply with foreign standards could have a
material adverse effect on the Company. In addition, the laws of certain foreign
countries may not protect the Company's intellectual property to the same extent
as do the laws of the United States.
ACQUISITIONS
The Company from time to time may acquire technologies, product lines or
businesses that are complementary to those of the Company. Although the Company
believes that integration of acquired technologies, product lines and businesses
will result in long-term growth and profitability, there can be no assurance
that the Company will be able to successfully negotiate, finance or integrate
such acquired technologies, product lines or businesses. Furthermore, the
integration of an acquired company or business may cause a diversion of
management time and resources. There can be no assurance that a given
acquisition, if consummated, would not materially adversely affect the Company.
DEPENDENCE UPON KEY PERSONNEL
The Company's success is dependent upon certain key management and
technical personnel. There is intense competition for qualified employees among
companies in the semiconductor test equipment industry, and the loss of certain
of the Company's employees or an inability to attract and motivate highly
skilled employees could adversely affect its business.
PROPRIETARY RIGHTS
The Company's future success depends in part upon its proprietary
technology. Although the Company attempts to protect its proprietary technology
through a combination of contract provisions, trade secrets, copyrights and
patents, it believes that its future success depends more upon its engineering,
manufacturing, marketing and service skills. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of its technology or the independent development by
others of similar technology.
The use of patents to protect hardware and software has increased in the
STE industry. The Company has at times been notified of claims that it may be
infringing patents issued to others. Although there are no pending actions
against the Company regarding any patents, no assurance can be given that
infringement claims by third parties will not have a material adverse effect on
the Company's business and results of operations. As to any claims asserted
against the Company, the Company may seek or be required to obtain a
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<PAGE> 9
license under the third party's intellectual property rights. There can be no
assurance, however, that a license will be available under reasonable terms or
at all. In addition, the Company could decide to resort to litigation to
challenge such claims or a third party could resort to litigation to enforce
such claims. Such litigation could be expensive and time consuming and could
materially adversely affect the Company's business and results of operations.
See "Business -- Proprietary Rights."
DEPENDENCE ON KEY SUPPLIERS
Most of the components for the Company's products are available from a
number of different suppliers; however, certain components are purchased from a
single supplier. Although LTX believes that all single-source components are
currently available in adequate amounts, there can be no assurance that
shortages will not develop in the future. Any disruption or termination of
supply of certain single-source components could have an adverse effect on the
Company's business and results of operations. See "Business -- Manufacturing and
Supply."
VOLATILITY OF STOCK PRICE
The Company's Common Stock has experienced substantial price volatility,
particularly as a result of quarter to quarter variations in the actual or
anticipated financial results of, or announcements by, the Company, its
competitors or its customers concerning technological innovations, new products
or developments concerning patents or proprietary rights. In addition, the stock
market has experienced extreme price and volume fluctuations which have
particularly affected the market price of many technology companies and which
have often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may have an unfavorable effect on the market price of the Company's Common
Stock.
8
<PAGE> 10
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby are estimated to be $55,869,000 ($65,221,000 if
the Underwriters' over-allotment option is exercised in full), assuming a public
offering price of $13.125 per share (the closing price of the Common Stock on
September 7, 1995) and after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company. The Company will not
receive any proceeds from the sale of shares by the Selling Shareholder. See
"Principal and Selling Shareholders."
The net proceeds will be used to finance working capital, to fund capital
expenditures and for other general corporate purposes. The Company may apply a
portion of the net proceeds to redeem all or a portion of its 7 1/4% Convertible
Subordinated Debentures Due 2011. Whether the Company redeems these obligations
will depend upon a number of factors, including the market price of the
Company's Common Stock and interest rates at the time. The Company also may
apply a portion of the proceeds to acquire complementary businesses, assets or
technologies. Although there are no current negotiations, agreements or
understandings with respect to any such acquisition, the Company desires to be
able to respond to opportunities as they arise. In addition, the Company
believes that success in its industry requires substantial financial flexibility
to fund future growth. Pending such uses, the Company will invest the net
proceeds in short-term investment-grade, interest-bearing securities.
<TABLE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "LTXX." The following table sets forth for the periods indicated the
actual high and low sales prices per share of Common Stock, as reported on the
Nasdaq National Market:
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year Ended July 31, 1993:
First Quarter........................................................ $ 2 1/16 $1 3/8
Second Quarter....................................................... 4 1/2 1 3/4
Third Quarter........................................................ 5 7/8 3 1/8
Fourth Quarter....................................................... 6 1/2 4 5/8
Fiscal Year Ended July 31, 1994:
First Quarter........................................................ $ 8 1/4 $4 3/4
Second Quarter....................................................... 5 5/8 3 1/8
Third Quarter........................................................ 4 1/2 2
Fourth Quarter....................................................... 3 3/4 2
Fiscal Year Ended July 31, 1995:
First Quarter........................................................ $ 4 3/4 $3
Second Quarter....................................................... 5 11/16 3 1/2
Third Quarter........................................................ 6 7/16 4 7/8
Fourth Quarter....................................................... 11 5/8 6
Fiscal Year Ended July 31, 1996:
First Quarter (through September 7, 1995)............................ $13 1/4 $9 1/2
</TABLE>
See the cover page of this Prospectus for a recent last reported sale price
of the Common Stock.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on the shares of
Common Stock and does not anticipate paying any cash dividends on the shares of
Common Stock in the foreseeable future. The Company currently intends to retain
future earnings to fund the development and growth of its business. Moreover,
the Company's credit agreement with a bank contains certain covenants which
prohibit the payment of cash dividends by the Company.
9
<PAGE> 11
CAPITALIZATION
<TABLE>
The following table sets forth the consolidated capitalization of the
Company at July 31, 1995 and as adjusted to reflect the sale of Common Stock
offered hereby and the application of the net proceeds therefrom, assuming a
public offering price of $13.125 per share (the closing price of the Common
Stock on September 7, 1995) and after deducting the estimated underwriting
discounts and commissions and offering expenses payable by the Company.
<CAPTION>
JULY 31, 1995
--------------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS, EXCEPT SHARE
AMOUNTS)
<S> <C> <C>
(UNAUDITED)
Short-term debt:
Notes payable....................................... $ 8,457 $ 8,457
Current portion of long-term debt................... 359 359
-------- --------
Total short-term debt....................... $ 8,816 $ 8,816
======== ========
Long-term debt:
Lease purchase obligations.......................... $ 1,318 $ 1,318
Subordinated note payable........................... 20,000 20,000
7 1/4% Convertible Subordinated Debentures Due
2011............................................. 7,308 7,308
-------- --------
Total long-term debt............................. 28,626 28,626
Less current portion............................. (359) (359)
-------- --------
Total....................................... 28,267 28,267
-------- --------
Stockholders' equity:
Common stock, $0.05 par value: 100,000,000 shares
authorized; 29,268,826 shares issued and
outstanding; 33,768,826 shares issued and
outstanding, as adjusted(1)...................... 1,463 1,688
Additional paid-in capital.......................... 131,425 187,069
Accumulated deficit................................. (67,481) (67,481)
-------- --------
Total stockholders' equity....................... 65,407 121,276
-------- --------
Total capitalization........................ $ 93,674 $ 149,543
======== ========
</TABLE>
---------------
(1) Excludes 2,325,127 shares of Common Stock reserved for issuance pursuant to
stock options outstanding at July 31, 1995, 2,042,017 shares of Common Stock
reserved for issuance pursuant to outstanding warrants and 406,556 shares of
Common Stock reserved for issuance upon conversion of the Company's 7 1/4%
Convertible Subordinated Debentures Due 2011.
10
<PAGE> 12
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for and as of the end of each of the fiscal years in the five-year
period ended July 31, 1995. The selected consolidated financial data for and as
of the end of each of the four fiscal years in the period ended July 31, 1994
are derived from the consolidated financial statements of the Company, which
have been audited by Arthur Andersen LLP, independent public accountants. The
selected consolidated financial data for and as of the end of the fiscal year
ended July 31, 1995 are unaudited. These selected consolidated financial data
should be read in conjunction with the Company's Consolidated Financial
Statements and the Notes thereto included or incorporated by reference into this
Prospectus.
<CAPTION>
FISCAL YEAR ENDED JULY 31
----------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales:
Product................................... $187,887 $134,353 $154,392 $145,688 $185,180
Service................................... 12,474 14,753 18,540 22,638 25,139
-------- -------- -------- -------- --------
Total net sales................... 200,361 149,106 172,932 168,326 210,319
Cost of sales:
Product................................... 113,124 96,024 102,005 104,189 122,509
Service................................... 8,265 10,050 11,521 12,750 14,239
Provision for excess inventories.......... -- -- -- 3,500 --
-------- -------- -------- -------- --------
Total cost of sales............... 121,389 106,074 113,526 120,439 136,748
-------- -------- -------- -------- --------
Gross profit................................ 78,972 43,032 59,406 47,887 73,571
Engineering and product development
expenses.................................. 21,859 21,943 19,744 19,604 19,778
Selling, general and administrative
expenses.................................. 45,948 41,529 42,548 42,308 38,953
Restructuring charges....................... -- 2,800 -- 14,376 --
-------- -------- -------- -------- --------
Income (loss) from operations............... 11,165 (23,240) (2,886) (28,401) 14,840
Interest expense, net....................... 5,550 3,520 3,979 3,874 3,774
-------- -------- -------- -------- --------
Income (loss) before income taxes and
minority interest......................... 5,615 (26,760) (6,865) (32,275) 11,066
Provision for income taxes.................. 1,095 -- -- -- 372
-------- -------- -------- -------- --------
Income (loss) before minority interest...... 4,520 (26,760) (6,865) (32,275) 10,694
Minority interest in net loss of
subsidiary................................ 1,608 2,500 2,556 971 --
-------- -------- -------- -------- --------
Net income (loss)........................... $ 6,128 $(24,260) $ (4,309) $(31,304) $ 10,694
======== ======== ======== ======== ========
Net income (loss) per share................. $ 0.36 $ (1.22) $ (0.20) $ (1.23) $ 0.36
Weighted average shares..................... 21,963 19,888 21,089 25,485 29,787
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................. $ 73,578 $ 49,019 $ 55,624 $ 48,853 $ 62,182
Total assets................................ 144,829 118,284 138,257 130,636 145,917
Short-term debt............................. 4,044 9,430 10,047 7,307 8,816
Long-term debt.............................. 25,956 26,056 21,003 41,399 28,267
Stockholders' equity........................ 76,793 53,084 66,476 40,593 65,407
</TABLE>
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
LTX designs, manufactures and markets automatic test equipment for the
semiconductor industry. The Company sells and supports its products worldwide to
both manufacturers and users of semiconductor components. LTX has been selling
equipment to test linear/mixed signal ICs since 1977 and digital ICs since 1985.
The Company's business is largely dependent upon the capital expenditures of
semiconductor manufacturers. The semiconductor industry is highly cyclical and
has historically experienced recurring periods of oversupply, which often have
had a severely detrimental effect on such industry's demand for test equipment.
As a result of these and other factors, the Company incurred losses in fiscal
years 1992, 1993 and 1994.
The Company has recently taken certain steps to attempt to mitigate the
effect on its business of the cyclicality of the semiconductor industry. In
February 1994, the Company initiated a major restructuring program, including a
reorganization of senior management. This restructuring program lowered the
Company's break-even level of sales and aligned management responsibilities and
objectives along the Company's product lines. The Company consolidated
operations in Massachusetts and California, implemented a workforce reduction of
approximately 100 employees and eliminated several levels of management. Largely
as a result of these actions, quarterly operating expense levels were reduced
$2.1 million in the second half of fiscal 1994. In addition, product reliability
and product cost reduction programs were initiated to improve the Company's
gross margins.
In fiscal 1995, the Company began delivering its Delta Series digital test
systems and its Synchro ProductionPAC mixed signal test system. The Delta 50 and
Delta/ST systems were developed to meet the test requirements of newer high
volume, lower cost devices such as microcontrollers. The Synchro Production PAC
systems are lower cost, focused configurations aimed at the production
requirements of a variety of new mixed signal devices. In July 1994, the Company
strengthened its relationship with Ando Electric Company Ltd. ("Ando"), a
Japanese STE manufacturer and majority-owned subsidiary of Nippon Electric
Corporation, Ltd. (NEC). The Company received $20.0 million from Ando under a
term loan agreement that extends through July 2001. In fiscal 1993, the Company
entered into a development, manufacturing and marketing agreement with Ando
relating to the Delta 50.
Since the second quarter of fiscal 1994, the Company's operating results
have improved significantly. The Company returned to profitability in the first
quarter of fiscal 1995 and had net income of $10.7 million in fiscal 1995. The
Company has substantially increased its backlog position, while increasing
quarterly sales from $38.1 million in the second quarter of fiscal 1994 to $59.9
million in the fourth quarter of fiscal 1995. With the higher level of backlog,
the Company has been able to manufacture and deliver its test systems more
evenly within a quarter. Largely as a result of this, the Company generated
$19.5 million in net cash flow from operations in fiscal 1995.
12
<PAGE> 14
<TABLE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the items included
in the Consolidated Statement of Operations as percentages of total net sales.
<CAPTION>
PERCENTAGE OF NET SALES
-------------------------
YEAR ENDED JULY 31
-------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Net sales:
Product........................................................... 89.3% 86.6% 88.0%
Service........................................................... 10.7 13.4 12.0
------ ------ ------
Total net sales............................................. 100.0 100.0 100.0
Cost of sales:
Product........................................................... 59.0 61.9 58.2
Service........................................................... 6.6 7.6 6.8
Provisions for excess inventories................................. -- 2.1 --
------ ------ ------
Total cost of sales......................................... 65.6 71.6 65.0
------ ------ ------
Gross profit........................................................ 34.4 28.4 35.0
Engineering and product development expenses........................ 11.5 11.6 9.4
Selling, general and administrative expenses........................ 24.6 25.1 18.5
Restructuring charges............................................... -- 8.6 --
------ ------ ------
Income (loss) from operations....................................... (1.7) (16.9) 7.1
Interest expense, net............................................... 2.3 2.3 1.8
------ ------ ------
Income (loss) before income taxes and minority interest............. (4.0) (19.2) 5.3
Provision for income taxes.......................................... -- -- 0.2
------ ------ ------
Income (loss) before minority interest.............................. (4.0) (19.2) 5.1
Minority interest in net loss of subsidiary......................... 1.5 0.6 --
------ ------ ------
Net income (loss)................................................... (2.5)% (18.6)% 5.1%
====== ====== ======
</TABLE>
Fiscal 1995 Compared to Fiscal 1994
Strong semiconductor industry conditions during fiscal 1995 resulted in a
significant increase in demand for the Company's test systems. Orders for the
Company's products and services were $236.9 million in fiscal 1995 as compared
to $197.9 million in fiscal 1994, an increase of approximately 20%. In the
fourth quarter of fiscal 1995, the Company achieved a record order level of
$83.7 million. Orders for the Company's linear and mixed signal test systems
remained at a high level in fiscal 1995, increasing 11% over fiscal 1994, while
orders for the Company's digital products increased 41% year-to-year. As a
result, the Company's backlog of unfilled orders for products and services was
$98.4 million at July 31, 1995 as compared to $71.8 million at July 31, 1994.
Net sales were $210.3 million in fiscal 1995 as compared to $168.3 million
in fiscal 1994, an increase of approximately 25%. Sales of the Company's linear
and mixed signal test systems were about 40% higher in fiscal 1995 as compared
to fiscal 1994. Sales of the Company's digital test systems in fiscal 1995 were
slightly higher than fiscal 1994. In the fourth quarter of fiscal 1995, sales of
the Company's digital test systems were almost 50% higher than the fourth
quarter of fiscal 1994. Service revenues were $25.1 million in fiscal 1995 as
compared to $22.7 million in fiscal 1994.
The gross profit margin was 35.0% of net sales in fiscal 1995 as compared
to 28.4% in fiscal 1994. The improvement in the gross profit margin was largely
a result of proportionately lower fixed manufacturing costs on the higher level
of shipments and higher average selling prices. In fiscal 1994, the gross profit
margin was reduced by 2.1% as a result of a $3.5 million provision for excess
inventories.
Engineering and product development expenses were $19.8 million, or 9.4% of
net sales, in fiscal 1995, as compared to $19.6 million, or 11.6% of net sales,
in fiscal 1994. Engineering and product development expenses have remained
approximately equal year-to-year reflecting the Company's continuing development
efforts, particularly for its Delta Series and Synchro product lines.
13
<PAGE> 15
Selling, general and administrative expenses were $39.0 million, or 18.5%
of net sales, in fiscal 1995, as compared to $42.3 million, or 25.1% of net
sales, in fiscal 1994. The decrease in selling, general and administrative
expenses of $3.4 million was largely a result of the Company's cost reduction
and restructuring measures initiated in fiscal 1994, which included a workforce
reduction and consolidation of facilities.
Net interest expense was $3.8 million in fiscal 1995 as compared to $3.9
million in fiscal 1994. In July 1995, the Company's 13 1/2% Convertible
Subordinated Debentures Due 2011 were converted into 2,241,000 shares of Common
Stock, reducing interest expense in the fourth quarter of fiscal 1995. In
addition, lower average bank borrowings reduced interest expense in fiscal 1995
as compared to fiscal 1994. This reduction in interest expense was largely
offset by an increase in interest due to a long-term loan the Company received
in July 1994.
The tax provision of $0.4 million in fiscal 1995 reflected certain state
and foreign tax provisions. The Company is in a net operating loss carryforward
position in most tax jurisdictions. There was no tax provision in fiscal 1994
due to the net operating loss for the year.
The Company's Japanese subsidiary's results of operations were break-even
in fiscal 1995. In fiscal 1994, the minority partner's share of the Company's
Japanese subsidiary's net loss was $1.0 million.
The Company had net income of $10.7 million, or $0.36 per share, in fiscal
1995, as compared to a net loss of $31.3 million, or $1.23 per share, in fiscal
1994. The net loss in fiscal 1994 included a restructuring charge of $14.4
million and a provision for excess inventories of $3.5 million. The Company's
operating results improved sequentially during fiscal 1995, beginning with net
income of $0.8 million in the first quarter and ending with net income of $5.1
million in the fourth quarter. The quarterly improvement in the Company's
results reflected the increasing level of sales, higher gross profit margin and
reduction of operating expenses as a percentage of net sales.
Fiscal 1994 Compared to Fiscal 1993
Net sales were $168.3 million in fiscal 1994 as compared to $172.9 million
in fiscal 1993, a decrease of approximately 3%. Sales of the Company's linear
and mixed signal products increased by over 30% in fiscal 1994 as compared to
fiscal 1993, and service revenues increased by over 20% year-to-year. However,
this improvement was offset by a reduction of over 30% in sales of the Company's
digital product line in fiscal 1994 as compared to fiscal 1993. The decline in
shipments of the Company's digital product line was due to lower demand from
customers, particularly in North America, for testing microprocessors and other
personal computer-related devices.
The gross profit margin was 28.4% of net sales in fiscal 1994 as compared
to 34.4% in fiscal 1993. In the second quarter of fiscal 1994, the Company
recorded a $3.5 million provision for excess inventories primarily as a result
of lower than anticipated shipment levels in the first half of fiscal 1994. This
provision lowered the gross profit margin by 2.1% of net sales in fiscal 1994.
In fiscal 1993, the gross profit margin was increased by 2.6% as a result of a
$6.5 million payment made by Ando under the terms of a development contract that
was included in product sales. There was no similar contract revenue in fiscal
1994. The gross profit margin in fiscal 1994 was also adversely affected by
proportionately higher fixed manufacturing costs on lower digital product sales
and by lower average selling prices for the Company's digital products.
Engineering and product development expenses were $19.6 million, or 11.6%
of net sales, in fiscal 1994 as compared to $19.7 million, or 11.5% of net
sales, in fiscal 1993. Engineering expenses in both fiscal 1994 and fiscal 1993
included significant development costs for the Company's new generation of
digital products, the Delta Series, as well as enhancements to the mixed signal
product line.
In March 1994, the Company announced a major restructuring program. The
restructuring consisted of a consolidation of facilities, primarily involving
the Company's leased facilities in Westwood, Massachusetts, and a workforce
reduction of approximately 100 employees. As a result of those decisions, the
Company took a $14.4 million restructuring charge to its second quarter results
of operations. The restructuring charge largely related to the Company's plan to
eliminate excess leased facilities and included amounts for severance payments
and outplacement benefits for terminated employees. Largely as a result of the
restructuring,
14
<PAGE> 16
engineering and product development expenses and selling, general and
administrative expenses, combined, were $2.1 million lower in the fourth quarter
of fiscal 1994 as compared to the second quarter of fiscal 1994.
Selling, general and administrative expenses were $42.3 million, or 25.1%
of net sales, in fiscal 1994 as compared to $42.5 million, or 24.6% of net
sales, in fiscal 1993. The decrease of $0.2 million was due to a translation
loss of $1.5 million in fiscal 1993, which was partially offset by personnel
additions and higher costs for sales activities in the first half of fiscal
1994.
Net interest expense was $3.9 million in fiscal 1994 as compared to $4.0
million in fiscal 1993. A decrease in interest expense in fiscal 1994 as a
result of the conversion of the Company's 10 1/2% Convertible Subordinated
Debentures Due 2010 into Common Stock in July 1993 was largely offset by an
increase in interest expense on higher average bank borrowings in fiscal 1994.
The Company's Japanese subsidiary had a net loss in fiscal 1994 and fiscal
1993. The minority interest in net loss of subsidiary represents the minority
partner's share of the Company's Japanese subsidiary's loss in both years. The
net loss in fiscal 1994 was reduced substantially from the prior fiscal year
primarily as a result of an increase in sales and gross margin in fiscal 1994
over fiscal 1993.
There was no tax provision in fiscal 1994 or fiscal 1993 due to the net
loss in both years.
The Company had a net loss of $31.3 million in fiscal 1994 as compared to a
net loss of $4.3 million in fiscal 1993. The Company reported a net loss of $1.6
million in the first quarter of fiscal 1994 and a net loss of $24.0 million in
the second quarter of fiscal 1994, including the restructuring charge of $14.4
million and a provision for excess inventories of $3.5 million. The Company
reduced its net loss to $4.3 million in the third quarter of fiscal 1994 and to
$1.4 million in the fourth quarter of fiscal 1994 as a result of a combination
of lower operating expenses from the restructuring effort initiated in March
1994 and an increase in the Company's shipment level and gross profit margin.
15
<PAGE> 17
<TABLE>
QUARTERLY RESULTS OF OPERATIONS
The following tables set forth certain unaudited quarterly financial
information for each of the Company's last eight fiscal quarters, including such
amounts expressed as a percentage of total net sales. The Company believes that
this information includes all necessary adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such quarterly
information when read in conjunction with the consolidated financial statements
included or incorporated elsewhere herein. The operating results for any quarter
are not necessarily indicative of results of any future period. Generally,
orders are lower in the first quarter of the Company's fiscal year than in other
quarters of that fiscal year as a result of buying patterns in the semiconductor
industry, although the Company's net sales in a particular fiscal quarter are a
function of both orders and backlog.
<CAPTION>
FISCAL 1994 FISCAL 1995
------------------------------------------------ ------------------------------------------------
OCTOBER 31, JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31,
1993 1994 1994 1994 1994 1995 1995 1995
----------- ----------- --------- -------- ----------- ----------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales:
Products................ $42,466 $ 32,911 $34,164 $36,147 $40,828 $43,864 $47,318 $53,170
Service................. 4,698 5,208 6,052 6,680 5,962 6,153 6,253 6,771
------- -------- ------- ------- ------- ------- ------- -------
Total net sales.... 47,164 38,119 40,216 42,827 46,790 50,017 53,571 59,941
Cost of sales:
Products................ 29,275 23,982 25,485 25,447 27,409 28,883 31,451 34,766
Service................. 2,944 3,182 3,237 3,387 3,520 3,665 3,429 3,625
Provision for excess
inventories........... -- 3,500 -- -- -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Total cost of
sales............ 32,219 30,664 28,722 28,834 30,929 32,548 34,880 38,391
------- -------- ------- ------- ------- ------- ------- -------
Gross profit.............. 14,945 7,455 11,494 13,993 15,861 17,469 18,691 21,550
Engineering and products
development expenses.... 5,041 5,092 4,794 4,677 4,722 4,715 5,077 5,264
Selling, general and
administrative
expenses................ 10,658 11,512 10,353 9,785 9,102 9,619 9,544 10,688
Restructuring charges..... -- 14,376 -- -- -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations.............. (754) (23,525) (3,653) (469) 2,037 3,135 4,070 5,598
Interest expense, net..... 851 900 994 1,129 1,251 1,123 1,055 345
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) before
income taxes and
minority interest....... (1,605) (24,425) (4,647) (1,598) 786 2,012 3,015 5,253
Provision for income
taxes................... -- -- -- -- -- 95 104 173
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) before
minority interest....... (1,605) (24,425) (4,647) (1,598) 786 1,917 2,911 5,080
Minority interest in net
loss of subsidiary...... -- 420 316 235 -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Net income (loss)......... $(1,605) $(24,005) $(4,331) $(1,363) $ 786 $ 1,917 $ 2,911 $ 5,080
======= ======== ======= ======= ======= ======= ======= =======
Net income (loss) per
share................... $ (0.06) $ (0.96) $ (0.17) $ (0.05) $ 0.03 $ 0.07 $ 0.10 $ 0.16
Net sales:
Products................ 90.0% 86.3% 85.0% 84.4% 87.3% 87.7% 88.3% 88.7%
Service................. 10.0 13.7 15.0 15.6 12.7 12.3 11.7 11.3
------- -------- ------- ------- ------- ------- ------- -------
Total net sales.... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of sales:
Products................ 62.1 62.9 63.4 59.4 58.6 57.8 58.7 58.0
Service................. 6.2 8.3 8.0 7.9 7.5 7.3 6.4 6.0
Provision for excess
inventories........... -- 9.2 -- -- -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Total cost of
sales............ 68.3 80.4 71.4 67.3 66.1 65.1 65.1 64.0
------- -------- ------- ------- ------- ------- ------- -------
Gross profit.............. 31.7 19.6 28.6 32.7 33.9 34.9 34.9 36.0
Engineering and products
development expenses.... 10.7 13.4 11.9 10.9 10.1 9.4 9.5 8.8
Selling, general and
administrative
expenses................ 22.6 30.2 25.8 22.9 19.4 19.2 17.8 17.9
Restructuring charges..... -- 37.7 -- -- -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations.............. (1.6) (61.7) (9.1) (1.1) 4.4 6.3 7.6 9.3
Interest expense, net..... 1.8 2.4 2.5 2.6 2.7 2.3 2.0 0.5
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) before
income taxes and
minority interest....... (3.4) (64.1) (11.6) (3.7) 1.7 4.0 5.6 8.8
Provision for income
taxes................... -- -- -- -- -- 0.2 0.2 0.3
------- -------- ------- ------- ------- ------- ------- -------
Income (loss) before
minority interest....... (3.4) (64.1) (11.6) (3.7) 1.7 3.8 5.4 8.5
Minority interest in net
loss of subsidiary...... -- 1.1 0.8 0.5 -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Net income (loss)......... (3.4)% (63.0)% (10.8)% (3.2)% 1.7% 3.8% 5.4% 8.5%
======= ======== ======= ======= ======= ======= ======= =======
</TABLE>
16
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents were $29.2 million at July 31, 1995 as compared to
$17.2 million at July 31, 1994. The increase in cash and equivalents of $12.0
million was a result of $19.5 million of net cash provided by operating
activities, $10.2 million of net cash used for property and equipment
expenditures, $2.3 million of net cash provided by financing activities and $0.4
million of net cash provided by the effect of exchange rate changes.
The positive net cash flow from operating activities was primarily a result
of the net income for the fiscal year, before non-cash depreciation charges.
Although sales in the fourth quarter of fiscal 1995 were approximately 40%
higher than the fourth quarter of the prior year, accounts receivable were $0.5
million lower year-to-year. The decrease in accounts receivable reflected the
Company's ability to ship more evenly within a fiscal quarter and achieve a
higher level of collections on those shipments within the fiscal quarter.
Inventories increased $4.4 million during fiscal 1995 to meet the higher sales
levels and to allow for more even shipments during the year. The increase in
accounts payable of $6.0 million during fiscal 1995 relates to the higher level
of inventory purchases during the period. At July 31, 1995, the Company had
received $3.3 million in advance payments from customers for systems to be
delivered in fiscal 1996. At July 31, 1995, the Company had a restructuring
reserve of $6.1 million remaining to cover the estimated future cash flows
relating primarily to excess leased facilities. Cash outflows during fiscal 1995
were $4.8 million for excess leased facilities and $0.8 million for severance
payments. At July 31, 1995, the Company had working capital of $62.2 million and
a ratio of current assets to current liabilities of 2.2 to 1.0.
Additions to property and equipment were $10.2 million during fiscal 1995
and were slightly higher than depreciation charges of $9.7 million. Equipment
additions during fiscal 1995 were primarily for use in product development and
customer support activities. The Company anticipates that expenditures for
property and equipment in fiscal 1996 will be approximately $14.0 million.
The Company's Japanese subsidiary had bank borrowings of $8.5 million at
July 31, 1995 as compared to $6.9 million at July 31, 1994. The Company had no
borrowings outstanding under its domestic bank line at July 31, 1995 or July 31,
1994.
In July 1995, the Company's 13 1/2% Convertible Subordinated Debentures Due
2011 were converted into 2,241,000 shares of Common Stock. The outstanding
principal amount of $15.7 million of Debentures was converted at the conversion
price of $7.00 per share. As a result, long-term debt was reduced by $13.1
million for the book value of the Debentures and stockholders' equity was
increased by $12.1 million.
Management believes that the Company has sufficient cash resources to meet
at least its fiscal 1996 needs. These resources include existing cash balances,
borrowing availability under domestic and Japanese bank lines and future cash
flows from operations, together with the proceeds from the sale of Common Stock
offered by the Company hereby.
17
<PAGE> 19
BUSINESS
LTX designs, manufactures and markets automatic test equipment for the
semiconductor industry that is used to test digital, linear and mixed signal (a
combination of digital and linear) ICs and discrete semiconductor components.
The Company currently offers three lines of test systems: digital test systems,
which test digital ICs, including microprocessors and microcontrollers;
linear/mixed signal test systems, which test a wide range of linear and mixed
signal ICs; and discrete component test systems, which test small signal and
high power semiconductor components. The Company also sells service and
applications support for its test systems. The semiconductors tested by the
Company's systems are widely used in the computer, communications, automotive
and consumer electronics industries. The Company markets its products worldwide
to both manufacturers and users of digital, linear and mixed signal ICs and
discrete semiconductor components.
INDUSTRY BACKGROUND
All semiconductor manufacturers use STE in the design and manufacture of
ICs. During design, STE is used for design verification, characterization,
qualification and failure analysis of ICs. During manufacture, STE is used
during wafer probing to select usable ICs and after packaging to classify ICs by
performance characteristics and to assure conformance with quality standards.
Typically, all ICs are tested two or more times during the manufacturing
process. In addition, certain large electronic equipment manufacturers employ
STE for incoming inspection and for further classification of ICs.
Demand for STE is driven by overall business expansion in the semiconductor
industry and advances in semiconductor technology. When demand for
semiconductors increases, semiconductor manufacturers will often purchase STE to
meet their growing capacity requirements. Advances in semiconductor technology
have allowed for increasingly complex semiconductor devices with improved
performance, lower cost and greater reliability than earlier generations of
devices. As a result, the use of semiconductors has proliferated across many
industries, particularly in applications for the computer, communications,
automotive and consumer electronics industries. In turn, semiconductor
manufacturers are demanding STE that is faster, more versatile, more accurate,
more productive and easier to program and maintain.
According to industry sources, worldwide sales of STE totaled approximately
$2.3 billion in 1994. Sales of STE for testing of digital, linear and mixed
signal ICs and discrete components, which are the markets in which the Company
participates, accounted for approximately $1.5 billion of this total. STE for
testing of memory ICs accounted for the balance. Worldwide semiconductor
shipments increased by approximately 29% and 32% in 1993 and 1994, respectively,
and by approximately 45% in the first six months of 1995 over the comparable
1994 period. Worldwide shipments of STE increased by approximately 37% in 1994.
Prices of STE systems generally increase as their capabilities increase.
The acquisition of STE represents a significant investment on the part of the
Company's customers, who typically consider both the capital and long term
operating costs of the test system in the acquisition process. Factors that can
vary from one test system to another, and thereby affect the total cost of
testing, include:
Speed. A test system that offers faster test times or that is able to test
more than one device at a time is able to test a greater number of devices over
its product life, thus increasing the system's efficiency and reducing the
customer's cost of testing.
Accuracy. Superior accuracy improves the yield of the semiconductor
production process because it reduces the number of good devices that are
improperly rejected and permits the selection of a higher number of premium
devices.
Efficiency. Greater efficiency in test program preparation, loading and
debugging leads to faster time to market for newly-designed semiconductors.
Software. Test system operating software which is easier to use and more
powerful reduces the amount of engineering resources needed to develop test
programs and operate test systems.
18
<PAGE> 20
Reliability. A test system that operates with minimal downtime allows the
customer's production and engineering work to proceed without frequent
intervention and provides more cost-effective operation.
System Architecture. Test system architecture that is modular extends the
product life of a test system because the system can be adapted to meet the
customer's new requirements while largely retaining compatibility with existing
test programs.
Customer Support. Customer specific applications programs, worldwide
service and customer training contribute to the efficient use of STE and
minimize the customer's cost of testing.
COMPANY STRATEGY
LTX's objective is to be the leading supplier of STE in the markets in
which it participates. The key elements of the Company's strategy are as
follows:
Focus on Leading-Edge Devices
The Company's test systems are designed to meet the design and production
test requirements of leading-edge digital, linear and mixed signal ICs and
discrete components. Testing of these devices requires high performance test
systems. The Company believes that only STE manufacturers with sophisticated
technological ability are able to compete effectively in this sector of the STE
market. Moreover, the Company believes that by focusing on testing advanced
devices, it is able to gain valuable insight into future market opportunities.
Develop Adaptable Test Systems
The Company designs its test systems so that they may be adapted and
improved to meet its customers' future needs. This philosophy is reflected in
the modular architecture of many of the Company's products, which permits both
capacity additions and upgrading of performance as the Company develops new
modular options and associated software. When possible, the Company also seeks
to enable its customers to bridge different generations of the Company's
products. For example, the Company's enVision software has been designed to
operate on its new Delta Series products, as well as on its Master Series
products.
Provide Application Specific Solutions
The Company is committed to providing complete test solutions to its
customers by having a substantial group of engineers strategically located at
customer support centers throughout the world. By actively participating in the
application of its test systems, the Company is able to learn more about
requirements for new devices and to improve the design of future test systems.
LTX also believes that its participation in the application of its test systems
enables its customers to get devices to market more rapidly and builds stronger
ties with these customers.
Leverage Worldwide Presence
The semiconductor business is a worldwide industry, with well-established
manufacturers in the United States, Europe and the Far East. The Company has
nine offices in the United States, and in Europe maintains sales and support
offices in the United Kingdom, France, Italy and Germany. In recent years, an
increasing portion of semiconductor test and assembly operations has been
conducted in the Pacific Rim by manufacturers based in the United States and
Europe, as well as by local manufacturers. LTX has established sales and support
offices in Korea, Taiwan and Singapore to focus on the specific needs of the
markets within the Pacific Rim. In addition, through a majority-owned
subsidiary, the Company provides sales and support services at three locations
in Japan. The Company believes that this network of sales and support centers
improves its ability to sell and support its products to the world's major
semiconductor manufacturers.
19
<PAGE> 21
Execute Strategic Alliances in Japan
The Japanese semiconductor industry represents the second largest market in
the world for STE. In Japan, the Company encounters significant competition from
local STE manufacturers. In fiscal 1990, the Company strengthened its resources
and presence in Japan by forming a joint venture with Sumitomo Metal Industries,
Ltd. ("SMI") through which the Company currently sells and services its products
in Japan. In addition, in fiscal 1993, the Company entered into a development,
manufacturing and marketing agreement with Ando, a Japanese STE manufacturer and
majority owned subsidiary of NEC, relating to the Delta 50, a new digital test
system that the Company introduced in fiscal 1994. The Company believes that its
alliance with Ando will better enable it to penetrate the Japanese digital
production STE market. Moreover, since the Delta 50 is compatible with other
Delta Series machines, the Company believes that sales of Delta 50 test systems
to key Japanese semiconductor manufacturers will increase the Company's
opportunities to sell other Delta Series test systems to these same
manufacturers. In fiscal 1995, the Company entered into a development,
manufacturing and marketing agreement with Asia Electronics, Inc. ("Asia"), a
Japanese STE manufacturer which is 50% owned by Toshiba Corporation ("Toshiba"),
relating to a new discrete component test system for testing integrated power
modules that the Company plans to introduce in 1996. The Company believes that
its alliance with Asia will increase LTX's penetration of the market for
discrete component test systems in Japan.
Emphasize Quality and Reliability
The Company's People Driven Quality (PDQ) Program is designed to
continually improve all of its processes and increase the satisfaction of its
customers. The Company believes that this program will lead to: more efficient
and timely performance in engineering projects; improvement in manufacturing
costs through the reduction of defective products and manufacturing cycle time;
better on-time delivery performance; and greater reliability of its test
systems.
PRODUCTS AND MARKETS
Product Overview
The Company offers products in three broad product categories:
- Systems that are used to test linear and mixed signal devices, which
include the Synchro Series and Ninety;
- Systems that are used to test digital devices, which include the Delta
Series and Master Series, and enVision test development software; and
- Discrete component test systems, marketed as the iPTest product line.
Since its inception, the Company has shipped over $1.8 billion of products,
including approximately $1.2 billion of linear/mixed signal test systems and
approximately $600 million of digital test systems. In fiscal 1995, sales of
linear/mixed signal test systems, digital test systems and discrete component
test systems represented approximately 57%, 28% and 3%, respectively, of total
net sales of the Company with service revenues representing 12%.
The Company's test systems are used by semiconductor manufacturers for
design verification, characterization, qualification and failure analysis of
ICs. In addition, certain large electronic equipment manufacturers use the
Company's test systems for incoming inspection and for further classification of
ICs. All of the Company's test systems are comprised of multiple
computer-controlled instruments which send signals to a device under test and
measure the responses of that device to classify the device by performance
characteristics and to ensure conformance with quality standards. The Company's
test system instrumentation is controlled by operating system software which is
developed by the Company. The Company also develops and sells test programs for
specific devices and offers software packages for use by semiconductor
manufacturers for test simulation in engineering design and test program
generation, data collection and statistical analysis in manufacturing.
20
<PAGE> 22
Linear and Mixed Signal ICs
Linear ICs are used in almost every electronic application. Physical
occurrences, such as sound, images, temperature, pressure, speed, acceleration,
position and rotation, consist of continuously varying information. Linear ICs
are used to amplify, filter and shape this information. Mixed signal ICs convert
the signals from linear ICs into digital signals that can be processed by a
computer. Mixed signal devices also convert processed digital information into a
linear form to control physical phenomena or to improve sound and images.
Linear and mixed signal ICs are widely used in automobiles, appliances,
personal computers, telephones, personal communication products and home
entertainment products such as video cassette recorders, cameras, compact disc
players and video games. The complexity and density of these ICs have increased
rapidly over the past several years, as the demand for portable,
battery-operated products has required IC manufacturers to integrate more
functions on each chip and reduce size and power consumption. These
technological advances have resulted in increased demand for higher performance
linear/mixed signal test systems.
<TABLE>
Listed in the following table are certain customers for the Company's
linear/mixed signal test systems by market segment.
--------------------------------------------------------------------------------
<CAPTION>
DEVICE APPLICATIONS CUSTOMERS
<S> <C>
--------------------------------------------------------------------------------------------
Automotive General Motors, Motorola,
National Semiconductor
--------------------------------------------------------------------------------------------
Consumer Motorola, National Semiconductor, Siemens,
Sony, SGS Thomson
--------------------------------------------------------------------------------------------
Datacommunications Austria Mikro Systeme ("AMS"),
Newbridge Networks, Rockwell
--------------------------------------------------------------------------------------------
Disk drives National Semiconductor, Philips, Silicon
Systems, SGS Thomson
--------------------------------------------------------------------------------------------
Industrial Cardiac Pacemakers, Maxim,
National Semiconductor, Sony
--------------------------------------------------------------------------------------------
Telecommunications AMS, AT&T, Philips, SGS Thomson
--------------------------------------------------------------------------------------------
Wireless communications AMS, AT&T, Motorola, National Semiconductor
--------------------------------------------------------------------------------------------
</TABLE>
Digital ICs
Digital ICs include microprocessors, microcontrollers, programmable DSPs
(digital signal processing), microperipherals and logic/ASIC (application
specific IC) devices. These ICs are used for computing, controlling and
calculating functions, and are at the heart of most electronic products. The
most well known of these devices is the microprocessor, which is the enabler of
personal computer technology. Microcontrollers, however, are much more broadly
used in automobiles, appliances, home entertainment products and many other
electronic products which utilize electronic control functions. According to
industry statistics, fewer than 200 million microprocessors were manufactured
worldwide during 1994, while more than 2.5 billion microcontrollers were
manufactured that year. The unit growth alone from 1993 to 1994 in
microcontrollers shipped was approximately double the total production for
microprocessors in 1994. Microprocessors can cost hundreds or even thousands of
dollars, while microcontrollers typically cost tens of dollars. However, testing
of microcontrollers can be as complex as microprocessors and requires high
performance test systems.
21
<PAGE> 23
<TABLE>
The following table sets forth types of devices tested by certain customers
of the Company's digital test systems.
--------------------------------------------------------------------------------
<CAPTION>
DEVICE APPLICATIONS CUSTOMERS
--------------------------------------------------------------------------------------------
<S> <C>
ASICs National Semiconductor, Silicon Systems,
Symbios Logic, Western Digital
--------------------------------------------------------------------------------------------
Logic ASAT, Gould/AMI, Harris, Lucky Goldstar,
Silicon Systems
--------------------------------------------------------------------------------------------
Microcontrollers Microchip Technology, National Semiconductor
--------------------------------------------------------------------------------------------
Microprocessors Motorola, NEC, Symbios Logic
--------------------------------------------------------------------------------------------
PC chip sets ACER, ASE Test, Samsung,
Taiwan Semiconductor (TSMC)
--------------------------------------------------------------------------------------------
</TABLE>
LINEAR/MIXED SIGNAL PRODUCTS
LTX offers two product lines for testing linear/mixed signal ICs, the
Syncho Series and Ninety, introduced in 1990 and 1986, respectively.
Synchro Series
The Synchro is the latest generation of the Company's linear/mixed signal
test systems. Synchro test systems are designed for high throughput testing of
linear devices and for testing mixed signal devices that require high digital
pattern rates and high digital pin counts along with analog signal generation
and measurement requirements. The Synchro features DSP(digital signal
processor) - per-pin architecture which allows for concurrent control of both
linear and digital resources at each pin of the IC under test. This design
permits the generation of test signals and measurements on many device pins at
the same time, producing faster test times on high pin count ICs. The Synchro
systems are modular in design which enables customers to add new options to
their systems in the future. This allows customers to increase the capability of
their Synchro system to meet their new test requirements. Since its
introduction, the Company has significantly upgraded the performance and
capabilities of the Synchro through the introduction of new hardware and
software.
The Synchro Series includes the Synchro II, Synchro Plus and Synchro
ProductionPAC test systems:
Synchro II. The configuration of the Synchro II test system is flexible.
This permits LTX customers to choose from a wide array of options to meet the
test requirements of a broad range of linear/mixed signal devices.
Synchro Plus. The Synchro Plus test system is configured with SuperSpeed
Data Pins which can test mixed signal devices at data rates of up to 400 MHz.
The Synchro Plus system addresses the test requirements of new, high speed
devices used in applications such as disk drives for personal computers and
advanced ATM(Asynchronous Transfer Mode) interface boards used to support the
development of the information superhighway.
Synchro ProductionPAC. The Synchro ProductionPAC test systems are lower
cost, smaller footprint, specifically focused configurations that address the
production requirements of high volume, low cost mixed signal devices. The RFPAC
system is configured to test devices used in the rapidly expanding wireless
communications market. The PowerPAC addresses "smart" power devices that are
being increasingly used in automobiles and consumer electronics. The TelePAC
addresses commodity ICs used in telecommunications. The ConverterPAC is focused
on devices used in multimedia applications.
All Synchro Series test systems are fully compatible in hardware, software
and specification. Current prices range from approximately $400,000 for a
Synchro ProductionPAC system to approximately $2,000,000 for a high pin count
Synchro Plus system.
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<PAGE> 24
Ninety
The Ninety system is an improved version of the LTX77, the Company's first
linear/mixed signal test system introduced in 1977. Although the Synchro has
largely superseded the Ninety, the Company continues to manufacture the Ninety,
primarily for customers who are already using the Ninety or LTX77 systems and
desire to expand capacity. Many of the Ninety or LTX77 systems the Company has
previously sold are currently still in use. In the past, the Company has
upgraded the performance and capabilities of the Ninety system through the
introduction of new hardware and software. As with the Synchro, a wide array of
options are available. The current prices for a Ninety system range from
approximately $200,000 to approximately $700,000, depending on the system
configuration.
Software Tools
The Company offers software for test program generation and debugging in
manufacturing, called Device Tool, with its Synchro test systems. The Company
also offers data collection and statistical analysis software, called
dataVision. This software is test system independent and provides customers with
solutions for integrated yield management in manufacturing and engineering
device characterization. Device Tool typically sells for approximately $25,000
and dataVision typically sells for approximately $100,000.
DIGITAL PRODUCTS
LTX offers two product lines for testing digital ICs, the Delta Series and
Master Series, which are marketed under the Trillium name. The Delta Series and
Master Series product lines are based on a resource-per-pin architecture which
allows for a complete set of the test system's key features (timing generators,
waveform formatting and pattern memory) for each pin channel of the test system.
The Company believes that this architecture provides for faster, simpler
characterization and engineering debugging of new ICs, better system timing
accuracy, and simplified interfacing with computer-aided design systems. The
Company's enVision test development software is sold with both the Delta Series
and Master Series product lines.
Delta Series
The Company's new line of digital test systems, the Delta Series, includes
the Delta 50, Delta/ST and the Delta 100. Introduced in 1994, the Delta 50 was
designed to meet the production test requirements of newer high volume, lower
cost devices such as microcontrollers. The Delta 50 has a compact design and is
capable of testing 512 pins at data rates of up to 50 MHz or 256 pins at data
rates of up to 100 MHz. The Delta/ST, introduced in 1995, incorporates Synchro
mixed signal technology with Delta Series digital technology to address the test
requirements of a new generation of devices with high performance analog signal
interfaces to complex digital functions. These new devices are enabling the
development of powerful, yet low cost consumer electronic products in areas such
as multimedia and portable communications. The Delta 100, also introduced in
1994, was designed to test high performance microprocessors and the ICs that
make up the chip sets that are used with them. The Delta 100 can test up to 512
pins at data rates of up to 100 MHz with timing accuracy of 150 pico seconds.
The Delta 50, Delta/ST, and Delta 100 operate with the Company's enVision
software providing customers with compatibility among these systems. The current
prices for the Delta Series test systems range from approximately $500,000 for a
low pin count Delta 50 to approximately $4,000,000 for a high pin count Delta
100.
In fiscal 1993, the Company entered into a development, manufacturing and
marketing agreement with Ando, a Japanese STE manufacturer and majority owned
subsidiary of NEC, relating to the Delta 50. The Company has developed the Delta
50 in conjunction with Ando and has granted Ando exclusive rights to manufacture
the Delta 50 in Japan. The Company has retained exclusive rights to manufacture
the Delta 50 outside of Japan. Ando has the exclusive right to sell the Delta 50
in Japan and the Company has exclusive marketing rights for the rest of the
world, with certain exceptions in each case. In connection with this agreement,
the Company has received a payment of $6.5 million from Ando and will receive
royalty payments on sales of the Delta 50 by Ando. In July 1994, the Company
amended its development agreement with Ando to allow for further development
enhancements to the Delta 50.
23
<PAGE> 25
Master Series
The Master Series product line includes the Deltamaster and Micromaster
test systems, which are enhanced versions of the Company's original digital test
system. The Deltamaster, introduced in 1990, is a high-performance system with
the capability of testing up to 256 pins at data rates of up to 80 MHz. The
Micromaster, introduced in 1987, is a lower-priced system that can test up to
256 pins at data rates of up to 40 MHz. The Micromaster is device interface and
software compatible with the Deltamaster. Although the Delta Series product line
is expected to eventually replace the Master Series, the Company will continue
to sell the Master Series test systems, primarily to customers who are already
using these systems and desire to expand capacity. The current prices for the
Master Series range from approximately $400,000 for a low pin count Micromaster
to approximately $2,000,000 for a high pin count Deltamaster.
enVision
In fiscal 1993, the Company completed the development of its new
object-oriented enVision programming software for use on all its digital test
systems. In earlier generation software languages, programming commands made
direct reference to the hardware of the test system, which required the user to
have a detailed knowledge of the system's hardware. In contrast, this detailed
knowledge is not required when using enVision, thereby allowing the programmer
to focus attention on refining the test program for the specific IC under test.
Thus, the Company has designed enVision to be more device oriented than tester
oriented. enVision permits a user to test multiple devices at the same time,
significantly improving the throughput of the Company's digital test systems.
enVision is an integral feature of the Delta Series product line and can be
purchased by customers of the Master Series product line. The current price for
enVision is approximately $15,000 per workstation.
DISCRETE PRODUCTS
The Company's iPTest systems are used to test discrete semiconductor
components, such as diodes, small signal transistors and power transistors, as
well as arrays of these components. These discrete components are used in every
area of electronics. For example, diodes are used in consumer, industrial and
automotive applications; small signal transistors are used in consumer
electronics, such as hearing aids and portable radios; and power transistors are
used in audio amplifiers, radios and televisions. iPTest systems are also
capable of accurately measuring the characteristics of transient voltage
suppression components, which are widely used to protect personal computers and
telecommunications products from harmful voltage spikes or surges.
The Company expects that arrays of discrete components, such as
multi-device modules, will replace transistors in electric motor control and
will permit a wider use of semiconductors in extremely high power applications,
such as air conditioners, domestic appliances, electric locomotives and
automobiles. These arrays of discrete components are mostly constructed from
high power transistors of IGBT (insulated gate bipolar transistor) technology.
In 1995, the Company introduced new options to its iPTest systems for high
volume production testing of these discrete power components. The Company
believes that these newer components may become the most significant market for
discrete component test systems. In 1995, the Company entered into a
development, manufacturing and marketing agreement with Asia, a Japanese STE
manufacturer which is 50% owned by Toshiba, relating to a new discrete component
test system.
Prices of iPTest systems currently range from approximately $100,000 to
approximately $700,000, depending on the system configuration and testing
specifications.
SERVICE
The Company considers service to be an important aspect of its business.
The Company's worldwide service organization is capable of performing
installations and all necessary maintenance of test systems sold by the Company,
including routine servicing of components manufactured by third parties. The
Company includes a one-year parts and three-month labor warranty on test systems
or options designed and manufactured by the Company, and a three-month labor
warranty on components that have been purchased
24
<PAGE> 26
from other manufacturers and incorporated into the Company's test systems. The
Company also provides training on the maintenance and operation of test systems
sold to its customers.
The Company offers a wide range of service contracts which gives its
customers flexibility to select the maintenance program best suited to their
needs. Customers may purchase service contracts which extend maintenance beyond
the initial warranty provided by the Company with the sale of its test systems.
Many customers enter into annual or multiple-year service contracts over the
life of the equipment. The pricing of contracts is based upon the level of
service provided to the customer and the time period of the service contract. As
the installed base of LTX test systems has grown, service revenues have been
increasing on an annual basis. The Company believes that service revenues should
be less affected by the cyclicality of the semiconductor industry than sales of
test equipment. The Company maintains 22 service centers around the world.
SALES AND DISTRIBUTION
The Company sells its products primarily through its worldwide sales
organization. In Japan, the Company sells, services and supports its products
through its joint venture with SMI, except that Ando has the right to
manufacture and sell the Delta 50 to certain customers in Japan and to sell the
Delta 100 to these customers. The Company will share with its SMI joint venture
specified portions of the royalties to be paid by Ando on any sales by it of the
Delta 50 and of the revenues received on the Delta 100. In the future, Asia will
be selling the Company's iPTest systems to certain customers in Japan. The
Company uses a small number of independent sales representatives in certain
other regions of the world.
<TABLE>
CUSTOMERS
The Company's customers include many of the world's leading semiconductor
manufacturers. The Company's major customers in fiscal 1995 included:
<S> <C>
ASAT Motorola
AT&T National Semiconductor
Austria Mikro Systeme Philips
Hitachi SGS Thomson
Intel Sony
</TABLE>
Sales to these major customers accounted for approximately 63% of net sales
in fiscal 1995. Sales to Philips accounted for approximately 17% of net sales in
fiscal 1995. No single customer accounted for 10% or more of net sales in fiscal
1994. Sales to Intel accounted for approximately 16% of net sales in fiscal
1993. See "Risk Factors -- Customer Concentration."
<TABLE>
GEOGRAPHIC SALES
The following table sets forth the Company's net sales by geographic area
as a percentage of total net sales for each of the Company's last three fiscal
years:
<CAPTION>
% OF TOTAL NET SALES
----------------------------
FISCAL FISCAL FISCAL
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
North America...................................................... 52.7% 38.8% 33.7%
Europe............................................................. 12.0 14.5 15.8
Japan.............................................................. 5.5 12.5 10.2
Rest of world (principally Pacific Rim)............................ 29.8 34.2 40.3
----- ----- -----
Total.................................................... 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
Sales to customers outside the United States are subject to risks,
including the imposition of governmental controls, the need to comply with a
wide variety of foreign and United States export laws, political and economic
instability, trade restrictions, changes in tariffs and taxes, longer payment
cycles typically associated with international sales, and the greater difficulty
of administering business overseas as well as general economic conditions. For
information about the Company's foreign operations and export sales, see "Risk
25
<PAGE> 27
Factors -- International Business" and Note 10 of Notes to the Company's
Consolidated Financial Statements.
ENGINEERING AND PRODUCT DEVELOPMENT
The STE market is characterized by rapid technological change and new
product introductions, as well as advancing industry standards. The Company's
ability to remain competitive in the digital, linear and mixed signal IC and
discrete component markets will depend upon its ability to successfully enhance
existing test systems and develop new generations of test systems and to
introduce these new products on a timely and cost-effective basis. Accordingly,
the Company devotes a significant portion of its personnel and financial
resources to engineering and product development programs and seeks to maintain
close relationships with its customers in order to be responsive to their
product needs. The Company's expenditures for engineering and product
development were $19.7 million, $19.6 million and $19.8 million during fiscal
1993, 1994 and 1995, respectively. See "Risk Factors -- Importance of New
Product Introductions."
The Company's engineering strategy is to develop its test systems in an
evolutionary manner so that they may be progressively upgraded. This approach
preserves its customers' substantial investments in test programs, and, in
general, maintains market acceptance for the Company's test systems. In order to
implement this strategy, the Company works closely with its customers to define
new product features and to identify emerging applications for its products.
MANUFACTURING AND SUPPLY
LTX's principal manufacturing operations consist of component parts
assembly, final assembly and testing at its manufacturing facilities in
Westwood, Massachusetts and San Jose, California. Over the past year, the
Company has significantly increased its outsourcing of certain subassemblies to
contract manufacturers. The Company uses standard components and prefabricated
parts manufactured to the Company's specifications. Most of the components for
the Company's products are available from a number of different suppliers;
however, certain components are purchased from a single supplier. Although LTX
believes that all single-source components currently are available in adequate
amounts, there can be no assurance that shortages will not develop in the
future. Any disruption or termination of supply of certain single-source
components could have an adverse effect on the Company's business and results of
operations. See "Risk Factors -- Dependence on Key Suppliers."
COMPETITION
The STE industry is highly competitive, with many other domestic and
foreign companies participating in the markets for each of the Company's
products. The Company's major competitors in the market for digital test systems
are Schlumberger Limited, Teradyne, Inc. and Credence Systems Corporation,
except in Japan where the Company's major competitor is Advantest Corporation
(an affiliate of Fujitsu Limited). The Company's principal competitor for
linear/mixed signal test systems is Teradyne, Inc., except in Japan where the
Company's major competitor is Yokogawa Electric Works. The Company's principal
competitor for discrete component test systems is Tesec, Ltd. Most of the
Company's major competitors are also suppliers of other types of automatic test
equipment and have significantly greater financial and other resources than the
Company.
The Company principally competes on the basis of performance, cost of test,
reliability, customer service, applications support, price and ability to
deliver its products on a timely basis. Although the Company believes that it
competes favorably with respect to each of these factors, new product
introductions by the Company's competitors could cause a decline in sales or
loss of market acceptance of the Company's existing products. In addition,
increased competitive pressure could lead to intensified price-based
competition, resulting in lower prices and adversely affecting the Company's
business and results of operations. See "Risk Factors -- Highly Competitive
Industry."
26
<PAGE> 28
BACKLOG
At July 31, 1995, the Company's backlog of unfilled orders for all products
and services was approximately $98.4 million, compared with approximately $71.8
million at July 31, 1994. While backlog is calculated on the basis of firm
orders, no assurance can be given that customers will purchase the equipment
subject to such orders. As a result, the Company's backlog at a particular date
is not necessarily indicative of actual sales for any succeeding period.
PROPRIETARY RIGHTS
The development of the Company's products is largely based on proprietary
information. The Company relies upon a combination of contract provisions,
copyright, trademark and trade secret laws to protect its proprietary rights in
products. It also has a policy of seeking patents on technology considered of
particular strategic importance. Although the Company believes that the
copyrights, trademarks and patents it owns are of value, the Company believes
that they will not determine the Company's success, which depends principally
upon its engineering, manufacturing, marketing and service skills. However, the
Company intends to protect its rights when, in its view, these rights are
infringed upon.
The Company licenses some software programs from third party developers and
incorporates them in the Company's products. Generally, such agreements grant to
the Company non-exclusive licenses with respect to the subject program and
terminate only upon a material breach by the Company. The Company believes that
such licenses are generally available on commercial terms from a number of
licensors.
The use of patents to protect hardware and software has increased in the
STE industry. The Company has at times been notified of claims that it may be
infringing patents issued to others. Although there are no pending actions
against the Company regarding any patents, no assurance can be given that
infringement claims by third parties will not have a material adverse effect on
the Company's business and results of operations. As to any claims asserted
against the Company, the Company may seek or be required to obtain a license
under the third party's intellectual property rights. There can be no assurance,
however, that a license will be available under reasonable terms or at all. In
addition, the Company could decide to resort to litigation to challenge such
claims or a third party could resort to litigation to enforce such claims. Such
litigation could be expensive and time consuming and could materially adversely
affect the Company's business and results of operations. See "Risk
Factors -- Proprietary Rights".
EMPLOYEES
At July 31, 1995, the Company had a total of 922 employees, including 238
in engineering and product development, 174 in service and customer support, 323
in manufacturing and 187 in sales, marketing and administration. Many of the
Company's employees are highly skilled, and the Company believes its future
success will depend in large part on its ability to attract and retain such
employees. None of the Company's employees are represented by a labor union, and
the Company has experienced no work stoppages. The Company believes that its
employee relations are excellent.
FACILITIES
All of the Company's facilities are leased. The Company maintains its
headquarters in Westwood, Massachusetts, where corporate administration, sales
and customer support and manufacturing and engineering for its linear/mixed
signal products are located. In May 1995, the Company subleased a 208,000 square
foot facility at this location for a ten year term. The Company's lease of this
facility expires in 2010. The Company is currently consolidating its operations
into an adjacent 167,000 square foot facility. The lease of that facility
expires in 2007. Manufacturing and engineering for the Company's digital
products are located in a 70,000 square foot facility in San Jose, California.
The lease of this facility expires in 1999. The Company also leases seven sales
and customer support offices at various locations in the United States totaling
approximately 40,000 square feet.
27
<PAGE> 29
The Company's European headquarters is located in Woking, United Kingdom.
The Company also maintains sales and support offices in facilities at four other
locations in Europe. The manufacturing and engineering facilities for the
Company's iPTest systems are located in Guildford, United Kingdom. The Company
also maintains sales and support offices in six locations in the Far East.
Office space leased in Europe and the Far East totals approximately 100,000
square feet.
The headquarters of LTX Co., Ltd., the Company's joint venture with SMI, is
located in Kawasaki, Japan. The joint venture also leases additional offices in
four other locations in Japan. Office space leased in Japan totals approximately
15,000 square feet.
The Company believes that its existing facilities are adequate to meet its
current and foreseeable future requirements.
28
<PAGE> 30
<TABLE>
MANAGEMENT
The executive officers and Directors of the Company are as follows:
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger W. Blethen................................... 44 President and Director
Martin S. Francis.................................. 49 President and Director
John J. Arcari..................................... 49 Chief Financial Officer and Treasurer
Kenneth E. Daub.................................... 59 Senior Vice President
Graham C.C. Miller................................. 64 Chairman of the Board
Jacques Bouyer..................................... 67 Director
Fred J. Butler..................................... 66 Director
Roger J. Maggs..................................... 49 Director
Robert E. Moore.................................... 57 Director
Samuel Rubinovitz.................................. 65 Director
</TABLE>
Executive officers are chosen by and serve at the discretion of the Board
of Directors of the Company. Directors of the Company are elected at the annual
stockholders' meeting for staggered three-year terms and serve until their
successors are duly elected and qualified.
Roger W. Blethen was elected a President of the Company in February 1994.
Mr. Blethen has been a Director since 1980 and had been a Senior Vice President
of the Company from 1985 until February 1994. Mr. Blethen was a founder of LTX
and has served in a number of senior management positions with the Company since
its formation in 1976.
Martin S. Francis was elected a President of the Company in February 1994.
Mr. Francis has been a Director since 1991 and had been a Senior Vice President
of the Company from 1991 until 1994. Prior to 1991, Mr. Francis had held senior
management positions in the Company's European and Japanese operations from the
time that he joined LTX in 1982.
John J. Arcari has been Chief Financial Officer and Treasurer of the
Company since 1987. He had been Controller of LTX since joining the Company in
1981. Prior to joining LTX, Mr. Arcari spent ten years with the public
accounting firm of Price Waterhouse as a certified public accountant.
Kenneth E. Daub was appointed a Senior Vice President of the Company in
1991 and is responsible for North American and Pacific Rim sales. From the time
he joined the Company in 1987 until 1991, Mr. Daub served as Vice President
responsible for North American Sales. Prior to joining the Company in 1987, Mr.
Daub held various senior positions with Schlumberger Limited.
Graham C. C. Miller has been the Chairman of the Board of the Company since
its formation in 1976. Mr. Miller was a founder of the Company and was President
of the Company from 1976 until February 1994. Mr. Miller is also a director of
Newbridge Networks Corporation.
Jacques Bouyer was elected a Director of the Company in 1991. Mr. Bouyer
has been a management consultant since 1990. Mr. Bouyer was Chairman of the
Board and Chief Executive Officer of Philips Composants S.A., an electronics
company which is a wholly-owned subsidiary of Philips Electronics N.V. from 1986
until his retirement from that company in 1990. He is also a director of
Richardson Electronics, Ltd.
Fred J. Butler was elected a Director of the Company in 1993. Mr. Butler
was Vice President Finance of Thinking Machines Corporation, a manufacturer of
supercomputers, from 1988 until his retirement in 1994. From 1980 until 1988 Mr.
Butler was Senior Vice President Finance and Treasurer of Compugraphic
Corporation, a supplier of phototypesetting equipment.
Roger J. Maggs was elected a Director of the Company in 1994. Mr. Maggs is
currently President of Celtic House Investment Partners, a private investment
firm. Mr. Maggs was a Vice President of Alcan Aluminium Limited from 1986 until
June 1994.
29
<PAGE> 31
Robert E. Moore has been a Director of the Company since 1989. Mr. Moore is
currently President and Chairman of the Board of Reliable Power Meters, Inc., a
company founded by him in 1992 which manufacturers and sells power measurement
instruments. He also was a founder of Basic Measuring Instruments, Inc., which
manufactures and sells power measurement instruments, and served as a director
of that company from 1982 until 1990 and as a Senior Vice President responsible
for marketing and sales from 1985 until 1990.
Samuel Rubinovitz was elected a Director of the Company in September 1994.
He was Executive Vice President of EG&G, Inc., responsible for the aerospace,
optoelectronics and instrument product groups from 1989 until his retirement in
1994. He is a director of EG&G, Inc., Richardson Electronics, Ltd., KLA
Instruments Inc. and Kronos Inc.
<TABLE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth as of July 31, 1995 and as adjusted to
reflect the sale of shares offered hereby, certain information regarding
beneficial ownership of the Company's Common Stock by: (i) each person known by
the Company to own beneficially 5% or more of the Company's outstanding shares
of Common Stock; (ii) each Director of the Company; (iii) all Directors and
executive officers of the Company as a group; and (iv) the Selling Shareholder
listed below.
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1)(2) OFFERING(1)(2)(3)
------------------- NUMBER OF -------------------
DIRECTORS AND FIVE PERCENT STOCKHOLDERS NUMBER PERCENT SHARES OFFERED NUMBER PERCENT
-------------------------------------------------- --------- ------- -------------- --------- -------
<S> <C> <C> <C> <C> <C>
State of Wisconsin Investment Board(4)............ 2,575,000 8.8% -- 2,575,000 7.6%
Gruber & McBaine Capital Mgmt.(5)................. 2,278,800 7.9 -- 2,278,800 6.7
Ando Electric Co., Ltd.(6)........................ 2,000,000 6.8 -- 2,000,000 5.9
Graham C.C. Miller................................ 809,180 2.8 -- 809,180 2.4
Roger W. Blethen.................................. 132,150 * -- 132,150 *
Martin S. Francis................................. 110,932 * -- 110,932 *
Jacques Bouyer.................................... 15,000 * -- 15,000 *
Fred J. Butler.................................... 10,334 * -- 10,334 *
Roger J. Maggs.................................... 4,000 * -- 4,000 *
Robert E. Moore................................... 3,000 * -- 3,000 *
Samuel Rubinovitz................................. 6,668 * -- 6,668 *
All Directors and executive officers as a group
(10) persons.................................... 1,203,132 4.1 -- 1,203,132 3.6
</TABLE>
<TABLE>
<CAPTION>
SELLING SHAREHOLDER
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
2985314 Canada Inc.(7)............................ 727,273 2.5 500,000 227,273 *
</TABLE>
---------------
* Represents beneficial ownership of less than one percent of the outstanding
Common Stock.
(1) Except as otherwise indicated in the footnotes to this table, the listed
beneficial owner has sole voting and investment power with respect to such
shares.
(2) Includes shares purchasable within 60 days after July 31, 1995 pursuant to
the exercise of options covering 200,600 shares for Mr. Miller, 55,305
shares for Mr. Blethen, 86,400 shares for Mr. Francis, 9,000 shares for Mr.
Bouyer, 1,000 shares for Mr. Moore, 4,000 shares for Mr. Maggs, 6,668 shares
for Mr. Rubinovitz, and 467,623 shares for all Directors and executive
officers as a group.
(3) Assumes the Underwriters do not exercise their option to purchase up to
750,000 additional shares of Common Stock from the Company to cover
over-allotments.
(4) Based on a Schedule 13G filed in February 1995 by the State of Wisconsin
Investment Board.
(5) Based on a Schedule 13D filed in April 1995 by Gruber & McBaine Capital
Management, Inc. and various related parties as a group; these shares
represent the aggregate holdings of members of this group.
(6) All shares purchasable within 60 days after July 31, 1995 pursuant to the
exercise of a warrant.
(7) The Selling Shareholder is a corporation controlled by Terence H. Matthews,
Chairman of the Board of Directors and Chief Executive Officer of Newbridge
Networks Corporation, a manufacturer of digital networking products. Mr.
Miller is also a director of Newbridge Networks Corporation.
30
<PAGE> 32
DESCRIPTION OF COMMON STOCK
The Company's By-laws provide that holders of the Common Stock are entitled
to one vote per share on all matters to be voted upon by the stockholders.
Stockholders are not entitled to cumulative voting in the election of directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. See "Dividend Policy". In the event of liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities.
The Common Stock has no preemptive or conversion rights and is not subject to
further calls or assessments by the Company. There are no redemption or sinking
fund provisions applicable to the Common Stock. The Common Stock currently
outstanding is, and the Common Stock offered by this Prospectus will be, validly
issued, fully paid and non-assessable. Under the Company's By-laws, a special
meeting of stockholders may be called by stockholders only if called by one or
more stockholders who hold at least 40% in interest of the Company's capital
stock entitled to vote at such meeting.
The transfer agent and registrar for the Common Stock is The First National
Bank of Boston.
The Company furnishes to its stockholders annual reports containing
financial statements that have been examined and reported upon, with an opinion
expressed, by its independent public accountants and quarterly reports
containing unaudited financial information for the first three quarters of each
fiscal year.
RIGHTS AGREEMENT
The Board of Directors of the Company adopted a Rights Agreement, dated as
of May 11, 1989, between the Company and The First National Bank of Boston, as
rights agent (the "Rights Agreement") and in connection therewith issued one
common share purchase right for each share of Common Stock then or thereafter
outstanding. The rights will become exercisable (the "Stock Acquisition Date")
only if a person or group acquires 20% or more of the Company's Common Stock or
announces a tender offer that would result in ownership of 30% or more of the
Common Stock. Initially, each right will entitle a stockholder to buy one share
of Common Stock of the Company at a purchase price of $30.00 per share, subject
to adjustment depending upon the occurrence thereafter of certain events.
Generally, in the event that a person or group becomes the beneficial owner of
20% or more of the Company's outstanding Common Stock (a "Flip-In Event"), each
right, other than rights owned by the acquirer, will thereafter entitle the
holder to receive, upon exercise of the right, Common Stock having a value equal
to two times the exercise price of the right. In the event that, at any time
after the Stock Acquisition Date, the Company is acquired in a merger or other
business combination transaction or more than 50% of the Company's assets or
earning power is sold or transferred (a "Flip-Over Event"), each right, other
than rights owned by the acquirer, will thereafter entitle the holder to
receive, upon the exercise of the right, common stock of the acquirer having a
value equal to two times the exercise price of the right.
Before any person or group has acquired 20% or more of the Common Stock of
the Company, the rights are redeemable by the Company at $0.01 per right. The
rights will expire on May 11, 1999, unless redeemed by the Company prior to that
date.
CLASSIFIED BOARD
The Company's Board of Directors is divided into three classes, with two
classes consisting of three directors and one class consisting of two directors.
Each class serves three years, with the terms of office of the respective
classes expiring in successive years.
MASSACHUSETTS LAW
Under Chapter 110F of the Massachusetts General Laws, a Massachusetts
corporation with more than 200 stockholders may not engage in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person becomes an interested
stockholder, unless (i) the interested stockholder obtains the approval of the
Board of Directors prior to becoming an interested
31
<PAGE> 33
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder or (iii) the
business combination is approved by both the Board of Directors and the holders
of two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time within
the prior three years did own) 5% (or, for persons eligible to use SEC Schedule
13G, 15%) or more of the outstanding voting stock of the corporation. A
"business combination" includes a merger, stock or asset sale, and certain other
specified transactions resulting in a financial benefit to the interested
stockholder.
CERTAIN EFFECTS
The above described provisions of the Company's By-laws, the Rights
Agreement, the classified board and Massachusetts law may discourage potential
takeover attempts. The Company's Rights Agreement, in particular, may discourage
a future acquisition of the Company not approved by the Board of Directors in
which stockholders might otherwise receive a higher value for their shares or
which a substantial number and perhaps even a majority of the Company's
stockholders believes to be in the best interests of all stockholders. As a
result, stockholders who might desire to participate in such a transaction may
not have the opportunity to do so. These provisions could have an adverse effect
on the market price of the Common Stock.
32
<PAGE> 34
<TABLE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, each of
the Underwriters named below, for whom Lehman Brothers Inc. and Needham &
Company, Inc. are acting as Representatives (the "Representatives"), has
severally agreed to purchase from the Company and the Selling Shareholder, and
the Company and the Selling Shareholder have agreed to sell to each Underwriter,
the aggregate number of shares of Common Stock set forth opposite their
respective names in the table below:
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Lehman Brothers Inc. .....................................................
Needham & Company, Inc. ..................................................
---------
Total........................................................... 5,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to certain conditions precedent, and that the Underwriters are committed
to purchase and pay for all shares if any shares are purchased.
The Company and the Selling Shareholder have been advised that the
Underwriters propose initially to offer the shares of Common Stock to the public
at the offering price set forth on the cover page of this Prospectus and to
certain dealers (who may include the Underwriters) at such price less a
concession not in excess of $ per share. The Underwriters may allow,
and such dealers may reallow, a concession to certain other dealers (who may
include the Underwriters) not in excess of $ per share. After the
initial offering to the public, the offering price and other selling terms may
be changed by the Representatives.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 750,000 shares of Common Stock at the public offering price per share, less
the underwriting discounts and commissions, set forth on the cover page of this
Prospectus. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. To the extent the Underwriters exercise such option, each of the
Underwriters will be committed, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares of Common Stock to be purchased by such Underwriter as shown in the above
table bears to the total shown.
In the Underwriting Agreement, the Company and the Selling Shareholder have
agreed to indemnify the Underwriters against certain liabilities that may be
incurred in connection with this offering, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
The Company, the Selling Shareholder, the Directors and executive officers
of the Company, and Ando have agreed that, without the prior consent of Lehman
Brothers Inc., they will not directly or indirectly offer to sell, sell, or
otherwise dispose of shares of Common Stock or any securities convertible or
exchangeable therefor, for a period of 90 days following the date of this
Prospectus, subject to certain limited exceptions. Consent to earlier sale of
such shares may be granted by Lehman Brothers Inc. at its discretion.
In connection with this offering, certain Underwriters and selling group
members (if any) who are qualifying registered market makers on the Nasdaq
National Market may engage in passive market making transactions in the Common
Stock of the Company on the Nasdaq National Market in accordance with Rule
10b-6A under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") during the two business day period before commencement of offers or sales
of the Common Stock. The passive market making transactions must comply with
applicable volume and price limits and be identified as such. In general, a
passive market maker may display its bid at a price not in excess of the highest
independent bid for
33
<PAGE> 35
the security; if all independent bids are lowered below the passive market
maker's bid, however, such bid must then be lowered when certain purchase limits
are exceeded.
LEGAL MATTERS
The validity of the Common Stock will be passed upon for the Company by
Pamela A. Keating, General Counsel of the Company. Ms. Keating owns or has the
right to acquire pursuant to stock options 13,625 shares of the Company's Common
Stock. Certain legal matters will be passed upon for the Underwriters by Testa,
Hurwitz & Thibeault, Boston, Massachusetts.
EXPERTS
The financial statements of the Company as of July 31, 1994 and 1993 and
for each of the years in the three-year period ended July 31, 1994 included or
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included or incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048; and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.,
at prescribed rates. The Common Stock is traded on the Nasdaq National Market.
Reports and other information concerning the Company may be inspected at the
office of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
A Registration Statement on Form S-3 relating to the Common Stock offered
hereby has been filed by the Company with the Commission. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits thereto.
For further information with respect to the Company and the securities offered
hereby, reference is made to such Registration Statement and exhibits.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission,
each such statement being qualified in all respects by such reference. A copy of
the Registration Statement may be inspected without charge at the Commission's
principal offices in Washington, D.C., and copies of all or any part thereof may
be obtained from the Commission upon the payment of certain fees prescribed by
the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1994, the Company's Quarterly Reports on Form 10-Q for the quarters ended
October 31, 1994, January 31, 1995 and April 30, 1995, the description of the
Company's Common Stock contained in the Company's Registration Statement on Form
8-A filed on November 24, 1982, as amended by the Company's Form 8-A/A filed
with the Commission on September 30, 1993, and the description of the Company's
Common Stock Purchase Rights (the "Rights") contained in the Company's
Registration Statement on Form 8-A filed with the Commission on May 17, 1989, as
amended by the Company's Form 8-A/A filed with the Commission on September 30,
34
<PAGE> 36
1993, are incorporated herein by reference. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering of the
Common Stock offered hereby shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the respective dates of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request from such person, a copy of any and all of the documents that have been
incorporated by reference in this Prospectus, other than exhibits to such
documents not specifically incorporated by reference. Written or telephone
requests for such documents should be directed to LTX Corporation, LTX Park at
University Avenue, Westwood, Massachusetts 02090 (Telephone (617) 461-1000),
Attention: John J. Arcari, Chief Financial Officer.
35
<PAGE> 37
<TABLE>
LTX CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Consolidated Statement of Operations.................................................. F-3
Consolidated Balance Sheet............................................................ F-4
Consolidated Statement of Stockholders' Equity........................................ F-5
Consolidated Statement of Cash Flows.................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
The following financial statements consist of the audited consolidated
financial statements for the fiscal years ended July 31, 1992, 1993 and 1994 and
the unaudited consolidated financial statements for the fiscal year ended July
31, 1995. The Notes to the Consolidated Financial Statements relate solely to
the audited financial statements for the fiscal years ended July 31, 1992, 1993
and 1994.
F-1
<PAGE> 38
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of LTX Corporation:
We have audited the accompanying consolidated balance sheets of LTX
Corporation and subsidiaries as of July 31, 1993 and 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended July 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of LTX Corporation and
subsidiaries as of July 31, 1993 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 13, 1994
(Except with respect
to the matter discussed
in Note 4, as to which the
date is October 6, 1994)
F-2
<PAGE> 39
<TABLE>
LTX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
YEAR ENDED JULY 31
--------------------------------------------------
1995
1992 1993 1994 -----------
-------- -------- -------- (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales:
Product................................. $134,353 $154,392 $145,688 $185,180
Service................................. 14,753 18,540 22,638 25,139
-------- -------- -------- --------
Total net sales.................... 149,106 172,932 168,326 210,319
Cost of sales:
Product................................. 96,024 102,005 104,189 122,509
Service................................. 10,050 11,521 12,750 14,239
Provision for excess inventories........ -- -- 3,500 --
-------- -------- -------- --------
Total cost of sales................ 106,074 113,526 120,439 136,748
-------- -------- -------- --------
Gross profit....................... 43,032 59,406 47,887 73,571
Engineering and product development
expenses................................... 21,943 19,744 19,604 19,778
Selling, general and administrative
expenses................................... 41,529 41,080 42,308 38,953
Restructuring charges........................ 2,800 -- 14,376 --
Translation losses........................... -- 1,468 -- --
-------- -------- -------- --------
Income (loss) from operations...... (23,240) (2,886) (28,401) 14,840
Other income (expense):
Interest expense........................ (3,968) (4,277) (4,286) (4,254)
Interest income......................... 448 298 412 480
-------- -------- -------- --------
Income (loss) before income taxes
and minority interest............ (26,760) (6,865) (32,275) 11,066
Provision for income taxes................... -- -- -- 372
-------- -------- -------- --------
Income (loss) before minority
interest......................... (26,760) (6,865) (32,275) 10,694
Minority interest in net loss of
subsidiary................................. 2,500 2,556 971 --
-------- -------- -------- --------
Net income (loss).................. $(24,260) $ (4,309) $(31,304) $ 10,694
======== ======== ======== ========
Net income (loss) per share:
Primary................................. $ (1.22) $ (0.20) $ (1.23) $ 0.37
Fully diluted........................... $ (1.22) $ (0.20) $ (1.23) $ 0.36
Weighted average shares:
Primary................................. 19,888 21,089 25,485 28,805
Fully diluted........................... 19,888 21,089 25,485 29,787
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 40
<TABLE>
LTX CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
JULY 31
-------------------------------------
1993 1994 1995
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents................................ $ 21,725 $ 17,226 $ 29,183
Accounts receivable, less allowances of $700, $700
and $700.......................................... 34,953 33,323 32,785
Inventories......................................... 45,180 42,672 47,101
Other current assets................................ 4,116 3,848 4,929
-------- -------- --------
Total current assets...................... 105,974 97,069 113,998
-------- -------- --------
Property and equipment, net......................... 28,258 28,946 28,407
Other assets........................................ 4,025 4,621 3,512
-------- -------- --------
$138,257 $130,636 $145,917
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable....................................... $ 9,933 $ 6,870 $ 8,457
Current portion of long-term liabilities............ 114 437 359
Accounts payable.................................... 26,924 15,545 21,744
Accrued compensation................................ 2,579 2,512 3,155
Unearned service revenues and customer advances..... 4,671 3,867 7,157
Restructuring charges............................... -- 11,710 6,087
Other accrued expenses.............................. 6,129 7,275 4,857
-------- -------- --------
Total current liabilities................. 50,350 48,216 51,816
-------- -------- --------
Long-term liabilities, less current portion.............. 1,060 21,204 20,959
Convertible subordinated debentures...................... 19,943 20,195 7,308
Deferred compensation.................................... 428 428 427
Stockholders' equity:
Common stock, $0.05 par value:
100,000,000 shares authorized; 24,716,370
shares,
26,223,942 shares and 29,268,826 issued and
outstanding.................................... 1,236 1,311 1,463
Additional paid-in capital.......................... 112,111 117,457 131,425
Accumulated deficit................................. (46,871) (78,175) (67,481)
-------- -------- --------
Total stockholders' equity................ 66,476 40,593 65,407
-------- -------- --------
$138,257 $130,636 $145,917
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 41
<TABLE>
LTX CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ------ -------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 31, 1991............... 19,790,671 $ 989 $ 94,106 $(18,302) $ 76,793
Exercise of stock options............ 54,274 3 83 86
Issuance of shares under employees'
stock purchase plan................ 249,828 13 452 465
Net loss............................. (24,260) (24,260)
---------- ------ -------- -------- --------
BALANCE, JULY 31, 1992............... 20,094,773 1,005 94,641 (42,562) 53,084
Sale of common stock................. 2,458,000 123 9,709 9,832
Exercise of stock options............ 408,695 20 845 865
Issuance of shares under employees'
stock purchase plan................ 254,902 13 616 629
Conversion of 10 1/2% Convertible
Subordinated Debenture Due 2010.... 1,500,000 75 6,300 6,375
Net loss............................. (4,309) (4,309)
---------- ------ -------- -------- --------
BALANCE, JULY 31, 1993............... 24,716,370 1,236 112,111 (46,871) 66,476
Sale of common stock................. 971,515 48 3,959 4,007
Exercise of stock options............ 255,285 13 538 551
Issuance of shares under employees'
stock purchase plan................ 280,772 14 849 863
Net loss............................. (31,304) (31,304)
---------- ------ -------- -------- --------
BALANCE, JULY 31, 1994............... 26,223,942 1,311 117,457 (78,175) 40,593
(unaudited)
Conversion of 13 1/2% Convertible
Subordinated Debentures Due 2011... 2,240,581 112 11,943 12,055
Exercise of stock options............ 504,595 25 965 990
Issuance of shares under employees'
stock purchase plan................ 299,708 15 1,060 1,075
Net income........................... 10,694 10,694
---------- ------ -------- -------- --------
BALANCE, JULY 31, 1995............... 29,268,826 $1,463 $131,425 $(67,481) $ 65,407
========== ====== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 42
<TABLE>
LTX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
YEAR ENDED JULY 31
-------------------------------------------
1992 1993 1994 1995
-------- ------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss)................................... $(24,260) $(4,309) $(31,304) $ 10,694
Add (deduct) non-cash items:
Minority interest in subsidiary................ (2,500) (2,556) (971) --
Depreciation and amortization.................. 9,422 9,159 9,158 9,701
Original issue discount amortization........... 262 262 252 263
Translation loss............................... -- -- -- 178
(Increase) decrease in:
Accounts receivable............................ 8,863 (4,946) 1,630 990
Inventories.................................... 2,526 (5,027) 2,508 (4,429)
Other current assets........................... (663) 538 268 (980)
Other assets................................... (250) (540) 375 382
Increase (decrease) in:
Accounts payable............................... (7,760) 14,655 (11,379) 6,033
Accrued expenses, compensation and
restructuring charges....................... (1,666) 366 12,789 (6,626)
Unearned service revenues and customer
advances.................................... 3,604 (2,797) (804) 3,290
-------- ------- -------- --------
Net cash provided by (used in) operating
activities..................................... (12,422) 4,805 (17,478) 19,496
-------- ------- -------- --------
CASH USED IN INVESTING ACTIVITIES:
Expenditures for property and equipment.......... (7,622) (7,797) (12,687) (10,222)
-------- ------- -------- --------
Net cash used in investing activities............ (7,622) (7,797) (12,687) (10,222)
-------- ------- -------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from stock plans:
Employees' stock purchase plan................... 465 629 863 1,075
Exercise of stock options........................ 86 865 551 990
Sale of common stock................................ -- 9,832 4,007 --
Increase (decrease) in notes payable................ 5,096 1,240 (3,063) 1,187
Proceeds from sale and leaseback of equipment....... 575 1,142 3,483 --
Payments of long-term debt.......................... (447) (705) (175) (627)
Costs of debenture conversion....................... -- -- -- (367)
Proceeds from long-term debt........................ -- -- 20,000 --
-------- ------- -------- --------
Net cash provided by financing activities........... 5,775 13,003 25,666 2,258
-------- ------- -------- --------
Effect of exchange rate changes on cash............... -- -- -- 425
Net increase (decrease) in cash and equivalents....... (14,269) 10,011 (4,499) 11,957
Cash and equivalents at beginning of year............. 25,983 11,714 21,725 17,226
-------- ------- -------- --------
Cash and equivalents at end of year................... $ 11,714 $21,725 $ 17,226 $ 29,183
======== ======= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest......................................... $ 3,979 $ 4,390 $ 4,237 $ 4,872
Income taxes..................................... 162 -- -- 364
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
ACTIVITIES:
Conversion of convertible subordinated debentures to
common stock (See Note 6)........................ -- $ 6,375 -- $ 12,415
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 43
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned domestic subsidiaries and wholly-owned and majority-owned
foreign subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation.
Minority interest in net loss of subsidiary represents the minority
shareholder's proportionate share of the results of operations of the Company's
majority-owned Japanese subsidiary (see Note 12).
Foreign Currency Translation
The financial statements of the Company's foreign subsidiaries are
translated in accordance with Statement of Financial Accounting Standards No.
52. The Company's functional currency is the U.S. dollar. Accordingly, the
Company's foreign subsidiaries translate monetary assets and liabilities at
year-end exchange rates while nonmonetary items are translated at historical
rates. Income and expense accounts are translated at the average rates in effect
during the year, except for sales, cost of sales and depreciation which are
primarily translated at historical rates. Net realized and unrealized gains and
losses resulting from foreign currency remeasurement and transaction gains and
losses are included in the results of operations.
Cash Equivalents
Cash equivalents consist of short-term investments with maturity dates of
one month or less and which are readily convertible into cash.
Inventories
Inventories are stated at the lower of cost or market, cost being
determined on the first-in, first-out method, and include material, labor and
manufacturing overhead.
Property and Equipment
Property and equipment is recorded at cost. The Company provides for
depreciation and amortization on the straight-line method. Charges are made to
operating expenses in amounts which are sufficient to amortize the cost of the
assets over their estimated useful lives.
Revenue Recognition
Revenue from product sales is recognized at the time of shipment. Service
revenues are recognized over the applicable contractual periods or as services
are performed. Revenues from engineering contracts are recognized over the
contract period on a percentage of completion basis.
Warranty Costs
Warranty costs incurred by the Company during the three years ended July
31, 1994 were not significant. Future warranty costs are not expected to be
significant, and therefore, the Company has not provided any warranty reserves.
Engineering and Product Development Costs
The Company expenses all engineering, research and development costs as
incurred. Expenses subject to capitalization in accordance with the Statement of
Financial Accounting Standards No. 86, relating to certain software development
costs, were insignificant.
F-7
<PAGE> 44
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in fiscal 1994. The change in accounting
principles was not material to the results of operations for the years ended
July 31, 1994, 1993 or 1992.
Deferred income taxes are recorded for temporary differences between the
financial reporting and tax basis of assets and liabilities. Research and
development tax credits are recognized for financial reporting purposes to the
extent they can be used to reduce the tax provision. The Company has not
provided for federal income taxes on the cumulative undistributed earnings of
its foreign subsidiaries in the past since it reinvested those earnings. At July
31, 1994, the Company's foreign subsidiaries had accumulated deficits.
Net Loss per Share
Net loss per share is based on the weighted average number of shares of
common stock outstanding only, as the inclusion of common stock equivalents
would be anti-dilutive. Common stock equivalents include shares issuable under
stock option plans and warrants to purchase shares. None of the Company's
Convertible Subordinated Debentures are common stock equivalents.
<TABLE>
2. INVENTORIES
Inventories consist of the following:
<CAPTION>
JULY 31
-------------------------
1993 1994
---------- ----------
<S> <C> <C>
Raw materials................................. $11,694,000 $12,075,000
Work-in-process............................... 23,859,000 18,810,000
Finished goods................................ 9,627,000 11,787,000
----------- -----------
$45,180,000 $42,672,000
=========== ===========
</TABLE>
<TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<CAPTION>
JULY 31 DEPRECIABLE
------------------------- LIFE IN
1993 1994 YEARS
---------- ---------- ------------
<S> <C> <C> <C>
Machinery and equipment................... $ 67,060,000 $ 68,365,000 5
Office furniture and equipment............ 7,910,000 3,917,000 3-7
Leasehold improvements.................... 7,486,000 7,297,000 10 or term
of lease
------------ ------------
82,456,000 79,579,000
Less: accumulated depreciation and
amortization............................ (54,198,000) (50,633,000)
------------ ------------
$ 28,258,000 $ 28,946,000
============ ============
</TABLE>
4. NOTES PAYABLE
The Company's Japanese subsidiary had borrowings outstanding of $6,870,000
at July 31, 1994 under demand bank lines of credit of $7,000,000, which are
guaranteed by the Company's minority partner in Japan. The Company's Japanese
subsidiary also had an unused demand bank line of $2,000,000 at July 31, 1994,
which is guaranteed by the Company. At July 31, 1993, the Company's Japanese
subsidiary had borrowings outstanding of $9,933,000 under demand bank lines of
credit.
The Company had no borrowings outstanding under a $5,000,000 domestic bank
line at July 31, 1994 and July 31, 1993. This line was available to finance
certain designated foreign receivables and designated export
F-8
<PAGE> 45
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
inventories of the Company and was guaranteed by the Export-Import Bank of the
United States. This line was amended in June 1994 and the financial covenants
under this line were restructured. On October 6, 1994, this line was replaced
with a new $5,000,000 line of credit which matures in December 1995 and which
requires no guarantees. The new line bears interest at the bank's prime rate
plus 1%. Borrowing availability under the line is on a formula basis and
borrowings are secured by accounts receivable and inventories. The line of
credit has financial covenants which largely relate to results of operations and
a minimum level of liquidity.
<TABLE>
5. LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
<CAPTION>
JULY 31
-----------------------------
1993 1994
--------- ----------
<S> <C> <C>
Subordinated note payable
with interest at 8%................... $ -- $20,000,000
Lease purchase obligations at various
interest rates, net of deferred
interest.............................. 1,174,000 1,641,000
---------- -----------
1,174,000 21,641,000
Less -- current portion................. (114,000) (437,000)
---------- -----------
$1,060,000 $21,204,000
========== ===========
</TABLE>
In July 1994, the Company received $20,000,000 from Ando Electric Co., Ltd.
of Japan ("Ando") under a long-term loan agreement which extends through July
2001. The loan bears interest at 8%, which is payable semi-annually beginning in
January 1995 and has semi-annual principal payments of $2,000,000 beginning in
January 1997. The loan is secured by the Company's inventories and capital
equipment and is subordinated in right of payment to senior indebtedness of the
Company. In connection with this loan agreement, the Company issued to Ando a
warrant to purchase up to 2,000,000 shares of common stock during the term of
the loan agreement. (See Note 8). The Company also expanded its existing license
and development agreement with Ando to allow for further joint development of
the Company's Delta 50 technology. Proceeds from the loan were used to repay
domestic bank borrowings and to finance working capital requirements.
<TABLE>
6. CONVERTIBLE SUBORDINATED DEBENTURES
Convertible subordinated debentures consist of:
<CAPTION>
JULY 31
-----------------------------
1993 1994
---------- ----------
<S> <C> <C>
13 1/2% Debentures Due 2011................ $12,625,000 $12,887,000
7 1/4% Debentures Due 2011................ 7,318,000 7,308,000
----------- -----------
$19,943,000 $20,195,000
=========== ===========
</TABLE>
On July 31, 1990, the Company exchanged $27,532,000 of its original issue
of $35,000,000 of 7 1/4% Convertible Subordinated Debentures Due 2011 for
$15,693,000 at par value of a new issue of 13 1/2% Convertible Subordinated
Debentures Due 2011. The debentures were issued at a value of $11,839,000, the
market value of the securities on the date of the exchange. The resulting
original issue discount of $3,854,000 is being charged to operations through
2011. The debentures are subordinated in right of payment to senior indebtedness
and are convertible by the holders into common stock at $7.00 per share at any
time prior to redemption. The debentures are redeemable at the Company's option,
in whole or in part, at 100% of the principal amount. Holders of the debentures
have the right to require the Company to redeem the debentures if, prior to
April 15, 2000, a change in control of the Company occurs. Annual sinking fund
payments of $785,000 are required beginning April 15, 1996. Interest is payable
semi-annually on April 15 and October 15.
F-9
<PAGE> 46
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In April 25, 1986, the Company issued and sold at par $35,000,000 of 7 1/4%
Convertible Subordinated Debentures Due 2011. A total of $7,308,000 of the
original issue of $35,000,000 of 7 1/4% Convertible Subordinated Debentures
remain outstanding on July 31, 1994. The debentures are subordinated in right of
payment to senior indebtedness and are convertible by the holders into common
stock at $18 per share at any time prior to redemption or maturity. The
debentures are redeemable at the Company's option at any time, in whole or in
part, at 100% of the principal amount. Annual sinking fund payments of $366,000
are required beginning April 15, 1996. Interest is payable semi-annually on
April 15 and October 15.
On July 30, 1993, Sumitomo Metal Industries, Ltd. of Japan converted its
$6,375,000 10 1/2% Convertible Subordinated Debenture Due 2010 into 1,500,000
shares of common stock of the Company. The Company had issued the debenture to
Sumitomo Metal Industries, Ltd. in May 1990 (see Note 12).
<TABLE>
7. INCOME TAXES
At July 31, 1994, the Company had $4,575,000 of federal tax credits
available for carryforward, which expire in fiscal years 1998 through 2004. In
addition, the Company had a federal net operating loss carryforward available of
$29,600,000 which expires in fiscal years 2007 through 2009.
Reconciliations of the U.S. federal statutory rate to the Company's
effective tax rate are as follows:
<CAPTION>
YEAR ENDED JULY 31
-----------------------------
1992 1993 1994
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory rate............................ (34.0)% (34.0)% (34.0)%
Losses without current tax benefit..................... 34.0 34.0 34.0
----- ----- -----
Effective tax rate..................................... 0.0% 0.0% 0.0%
===== ===== =====
</TABLE>
<TABLE>
The temporary differences and carryforwards which created the deferred tax
assets and liabilities as of July 31, 1994 and July 31, 1993 are as follows:
<CAPTION>
JULY 31
-----------------------------
1993 1994
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating losses.................................... $ 2,625,000 $ 10,360,000
Tax credits............................................. 4,309,000 4,575,000
Inventory valuation reserves............................ 3,418,000 4,426,000
Restructuring charges................................... 0 4,099,000
Spares amortization..................................... 2,413,000 2,761,000
Unearned service revenues............................... 1,332,000 949,000
Other................................................... 862,000 720,000
------------ ------------
Total deferred tax assets............................. 14,959,000 27,890,000
Valuation allowance..................................... (13,302,000) (26,375,000)
------------ ------------
Net deferred tax assets............................... $ 1,657,000 $ 1,515,000
============ ============
Deferred tax liabilities:
Depreciation............................................ $ (266,000) $ (243,000)
Basis difference -- debenture exchange.................. (899,000) (807,000)
Other................................................... (492,000) (465,000)
------------ ------------
Total deferred tax liabilities........................ $ (1,657,000) $ (1,515,000)
============ ============
Net deferred taxes recorded........................... $ -- $ --
============ ============
</TABLE>
The valuation allowance relates to uncertainty surrounding the realization
of the deferred tax assets as a result of the Company's operating losses.
F-10
<PAGE> 47
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY
Authorized Shares
At the Company's Annual Meeting of Stockholders in December 1993, the
stockholders approved an increase in the Company's authorized common stock from
50,000,000 shares to 100,000,000 shares.
Stock Option Plans
The Company has three stock option plans: the 1990 Incentive Stock Option
Plan ("1990 I.S.O. Plan"), the 1984 Stock Option Plan for LTX (Europe) Ltd.
("U.K. Plan") and the 1983 Non-Qualified Stock Option Plan ("Non-Qualified
Plan").
The 1990 I.S.O. Plan and the U.K. Plan provide for the granting of options
to employees to purchase shares of common stock at not less than 100% of the
fair market value on the date of grant. Options under both plans are exercisable
over a three-year vesting period beginning one year from the date of grant. In
December 1993, the stockholders of the Company approved an increase to the
number of shares of common stock that may be granted under the 1990 I.S.O. Plan,
through October 2000, from 1,000,000 shares to 1,500,000 shares. At July 31,
1994, options to purchase 1,119,818 shares had been granted, and 380,182 shares
were subject to future grant under the 1990 I.S.O. Plan. At July 31, 1994,
options to purchase 108,800 shares had been granted, and 41,200 shares were
subject to future grant under the U.K. Plan.
The Non-Qualified Plan provides for the granting of options to key
employees, directors and advisors of the Company to purchase shares of common
stock at prices to be determined by the Board of Directors. Compensation expense
relating to shares granted under this plan at less than fair market value has
been charged to operations over the applicable vesting period. At July 31, 1994,
options to purchase 731,820 shares had been granted, and 118,180 shares were
subject to future grant under this plan.
<TABLE>
The following table summarizes stock option activity for the three years
ended July 31, 1994:
<CAPTION>
RANGE OF
OPTION
SHARES PRICES
-------- ------------
<S> <C> <C>
Outstanding at July 31, 1991.................................... 1,732,525 $0.50 - $6.88
Granted.................................................... 546,000 0.05 - 2.38
Exercised.................................................. (54,274) 0.50 - 2.50
Terminated................................................. (128,223) 1.88 - 3.75
---------
Outstanding at July 31, 1992.................................... 2,096,028 0.05 - 6.88
Granted.................................................... 569,000 0.05 - 1.88
Exercised.................................................. (408,695) 0.50 - 3.75
Terminated................................................. (143,895) 1.88 - 3.75
---------
Outstanding at July 31, 1993.................................... 2,112,438 0.05 - 6.88
Granted.................................................... 398,000 0.05 - 3.94
Exercised.................................................. (255,285) 0.05 - 3.75
Terminated................................................. (71,814) 1.75 - 3.75
---------
Outstanding at July 31, 1994.................................... 2,183,339 0.05 - 6.88
=========
</TABLE>
Of the total options outstanding at July 31, 1994, 1,451,473 shares were
exercisable and 32,500 shares were at the option price of $0.05 per share.
Warrants
In July 1994, in connection with a term loan agreement, the Company issued
to Ando Electric Co., Ltd. a warrant to purchase up to 2,000,000 shares of
common stock, at the fair market value of $2.31 per share, during the term of
the loan agreement (see Note 5). At July 31, 1994, the total warrant was
outstanding.
F-11
<PAGE> 48
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Employees' Stock Purchase Plan
In December 1993, the stockholders of the Company approved the adoption of
the 1993 Employees' Stock Purchase Plan, which replaced the 1983 Employees'
Stock Purchase Plan which expired in December 1993. Under this plan, eligible
employees may contribute up to 15% of their annual compensation for the purchase
of common stock of the Company up to $25,000 of fair market value of the stock
per calendar year. The plan limits the number of shares which can be issued for
any semi-annual plan period to 150,000 shares and, over the term of the plan,
the Company may issue up to 600,000 shares. Under the plan, 280,772 shares were
issued in fiscal 1994 and 319,228 shares were available for future issuance
under this plan at July 31, 1994.
Rights Agreement
The Board of Directors of the Company adopted a Rights Agreement, dated as
of May 11, 1989, between the Company and The First National Bank of Boston, as
rights agent (the "Rights Agreement") and in connection therewith, distributed
one common share purchase right for each outstanding share of common stock. The
rights will become exercisable only if a person or group acquires 20% or more of
the Company's common stock or announces a tender offer that would result in
ownership of 30% or more of the common stock. Initially, each right will entitle
a stockholder to buy one share of common stock of the Company at a purchase
price of $30.00 per share, subject to significant adjustment depending upon the
occurrence thereafter of certain events. Before any person or group has acquired
20% or more of the common stock of the Company, the rights are redeemable by the
Board of Directors at $0.01 per right. The rights will expire on May 11, 1999,
unless redeemed by the Company prior to that date.
9. RETIREMENT PLAN
The Company's retirement plan provides for an annual discretionary
contribution by the Company from current or accumulated profits of an amount not
to exceed 5% of the eligible compensation of the participants in the plan.
Amounts are allocated to the accounts of the participants based on their
compensation and years of service and are subject to certain vesting provisions.
No contribution was made in fiscal 1994, 1993 or 1992. Eligible employees may
also make voluntary contributions to the plan through a salary reduction
contract up to the statutory limit or 15% of their annual compensation.
<TABLE>
10. GEOGRAPHIC AREA INFORMATION
The Company's operations by geographic segment for the three years ended
July 31, 1994 are summarized as follows:
<CAPTION>
YEAR ENDED JULY 31
-----------------------------------------
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
Sales to unaffiliated customers
North America................................. $ 85,030,000 $ 91,248,000 $ 65,240,000
Europe........................................ 20,704,000 20,744,000 24,423,000
Japan......................................... 14,984,000 9,447,000 21,106,000
Rest of world (principally Pacific Rim)....... 28,388,000 51,493,000 57,557,000
------------ ------------ ------------
Total sales to unaffiliated customers.... $149,106,000 $172,932,000 $168,326,000
============ ============ ============
Transfers between geographic areas
United States................................. $ 27,211,000 $ 51,003,000 $ 67,225,000
Europe........................................ 5,391,000 5,857,000 7,751,000
Japan......................................... 865,000 142,000 364,000
------------ ------------ ------------
Total transfers between geographic
areas.................................. $ 33,467,000 $ 57,002,000 $ 75,340,000
============ ============ ============
</TABLE>
F-12
<PAGE> 49
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
-----------------------------------------
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income (loss) from operations
United States................................. $(17,728,000) $ 2,288,000 $(25,991,000)
Europe........................................ (1,030,000) (212,000) (613,000)
Japan......................................... (4,678,000) (5,717,000) (1,892,000)
Eliminations.................................. 196,000 755,000 95,000
------------ ------------ ------------
Total income (loss) from operations...... $(23,240,000) $ (2,886,000) $(28,401,000)
============ ============ ============
Identifiable assets
United States................................. $112,765,000 $135,962,000 $124,029,000
Europe........................................ 13,302,000 9,382,000 20,730,000
Japan......................................... 14,369,000 12,428,000 13,180,000
Eliminations.................................. (22,152,000) (19,515,000) (27,303,000)
------------ ------------ ------------
Total identifiable assets................ $118,284,000 $138,257,000 $130,636,000
============ ============ ============
</TABLE>
Transfer prices on products sold to foreign subsidiaries are intended to
produce profit margins that correspond to the subsidiary's sale and support
efforts.
The Company incurred translation losses, from foreign currency
remeasurement, of $1,468,000, primarily in Japan, in fiscal 1993. Transaction
gains or losses were not significant in fiscal 1993. Translation and transaction
gains or losses were not significant in fiscal 1994 or fiscal 1992.
<TABLE>
11. COMMITMENTS
The Company has operating lease commitments for certain facilities and
equipment and capital lease commitments for certain equipment. Minimum lease
payments under non-cancelable leases at July 31, 1994 are as follows:
<CAPTION>
TOTAL TOTAL
REAL OPERATING CAPITAL
ESTATE EQUIPMENT LEASES LEASES
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended July 31,
1995................................ $ 6,813,000 $2,146,000 $ 8,959,000 $ 581,000
1996................................ 5,876,000 1,826,000 7,702,000 461,000
1997................................ 5,741,000 659,000 6,400,000 220,000
1998................................ 5,817,000 243,000 6,060,000 220,000
1999................................ 5,290,000 14,000 5,304,000 220,000
2000 and thereafter................. 38,334,000 -- 38,334,000 149,000
----------- ---------- ----------- ----------
Total minimum lease payments............. $67,871,000 $4,888,000 $72,759,000 $1,851,000
=========== ========== ==========
Less: amount representing interest....... (210,000)
----------
Present value of total capital leases.... $1,641,000
==========
</TABLE>
Total rental expense for fiscal 1994, 1993 and 1992 was $9,849,000,
$10,822,000 and $11,295,000, respectively.
As a result of the Company's restructuring in fiscal 1994, certain leased
facilities have been considered excess. At July 31, 1994, the Company had
accrued $8,200,000, which is included in restructuring charges on the
accompanying balance sheet, relating to the lease commitments on these
facilities.
F-13
<PAGE> 50
LTX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. JOINT VENTURE AGREEMENT
In May 1990, the Company completed a joint venture agreement with Sumitomo
Metal Industries, Ltd. ("SMI") of Japan to manufacture, sell and support the
Company's semiconductor test equipment products in Japan. Under this joint
agreement, SMI acquired 235,000 newly issued shares of the Company's Japanese
subsidiary for $12,000,000 and the Company invested an additional $4,000,000 in
the subsidiary. As a result, 50.5% of the shares of the Japanese company are
owned by LTX and 49.5% are owned by SMI. As part of the joint venture agreement,
the Company has licensed certain of its test technology to the joint venture,
and will receive royalties should its products be manufactured by the joint
venture. SMI also purchased 1,500,000 shares of the Company's common stock for
$5,625,000 and purchased a $6,375,000 convertible debenture that was converted
into common stock in July 1993 (see Note 6).
At July 31, 1994, other assets include a minority interest receivable from
SMI of $2,320,000 which arose as a result of cumulative losses of the Company's
Japanese subsidiary allocable to SMI, exceeding SMI's investment in the
Company's subsidiary. The Company believes this asset is fully realizable from
SMI due to SMI's guarantee of a portion of the Company's Japanese subsidiary's
bank lines of credit.
F-14
<PAGE> 51
DISCRETE PRODUCTS
The iPTest system is used to test
discrete semiconductor components:
diodes, small signal transistors and
power transistors. These discrete
components are used in every area of [PHOTO OF iPTEST
electronics. LTX expects that arrays TEST SYSTEM]
of discrete components, such as
multi-device modules, will replace
transistors in electric motor control
and will permit a wider use of
semiconductors in extremely high
power applications, such as air
conditioners, domestic appliances,
electric locomotives and automobiles.
iPTest systems are capable of indexed
parallel test for high volume,
cost-effective testing.
DEVICE TOOL
Device Tool is the first in a
[PHOTO OF COMPUTER SCREEN series of layered software
WITH DEVICE TOOL SOFTWARE options for the Synchro test
DISPLAYED] development environment.
Device Tool is the first test
development tool in the
industry which addresses
multiple phases of the IC
development process, including
test design, program creation,
loadboard design, test program
debug and documentation.
ENVISION(TM)
enVision is the LTX
object-oriented
programming software used
on its digital test [PHOTO OF COMPUTER SCREEN
systems. LTX has designed WITH ENVISION SOFTWARE
enVision to be device DISPLAYED]
oriented rather than
tester oriented. In
earlier generation
software language,
programming commands made
direct reference to the
hardware of the test
system, which required the
user to have a detailed
knowledge of the system's
hardware. In contrast,
this detailed knowledge is
not required when using
enVision, thereby allowing
the programmer to focus
attention on refining the
test program for the
specific IC under test.
<PAGE> 52
===============================================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE HEREIN
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN
OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
<TABLE>
--------------------------
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 9
Price Range of Common Stock........... 9
Dividend Policy....................... 9
Capitalization........................ 10
Selected Consolidated Financial
Data................................ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 18
Management............................ 29
Principal and Selling Shareholders.... 30
Description of Common Stock........... 31
Underwriting.......................... 33
Legal Matters......................... 34
Experts............................... 34
Available Information................. 34
Incorporation of Certain Documents by
Reference........................... 34
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
===============================================================================
===============================================================================
5,000,000 SHARES
[LOGO]
LTX CORPORATION
COMMON STOCK
---------------------------
PROSPECTUS
, 1995
---------------------------
LEHMAN BROTHERS
NEEDHAM & COMPANY, INC.
===============================================================================
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth a reasonably itemized statement of all
expenses in connection with the issuance and distribution of the shares of
Common Stock being registered hereby, other than underwriting discounts and
commissions. All amounts shown are estimates except the Securities and Exchange
Commission registration fee and the National Association of Securities Dealers,
Inc. fees.
<S> <C>
SEC registration fee...................................................... $ 22,704
NASD filing fee........................................................... 5,733
Nasdaq National Market fee................................................ 17,500
Blue sky fees and expenses................................................ 7,500
Transfer agent and registrar fees......................................... 3,500
Legal fees and expenses................................................... 40,000
Accounting fees and expenses.............................................. 35,000
Printing and engraving expenses........................................... 95,000
Miscellaneous............................................................. 13,063
--------
Total........................................................... $240,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Chapter 156B of the Massachusetts General Laws, under which the Company is
organized, permits a Massachusetts corporation to adopt a provision in its
Articles of Organization eliminating or limiting the liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such liability does not arise from certain
proscribed conduct (including intentional misconduct and breach of duty of
loyalty).
On December 8, 1987, the stockholders approved an amendment to the
Company's Articles of Organization. The amendment to the Articles of
Organization, which became effective on April 8, 1988, is as follows:
"No director shall be personally liable to the corporation or any of
its stockholders for monetary damages for any breach of fiduciary duty as a
director not withstanding any provision of law imposing such liability;
provided, however, that this provision shall not eliminate or limit the
liability of a director for (i) any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) authorizing distributions to stockholders in
violation of the corporation's Articles of Organization or which render the
corporation insolvent or bankrupt, and approving loans to officers or
directors of the corporation which are not repaid and which were not
approved or ratified by a majority of disinterested directors or
stockholders, or (iv) any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this provision
shall apply to or have any effect on the liability or alleged liability of
any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to the effective date of such
amendment."
The By-laws of the registrant provide for indemnification of officers
and directors as follows:
SECTION 6.5 INDEMNIFICATION.
(a) The Corporation shall indemnify each director and officer against
all judgments, fines, settlement payments and expenses, including
reasonable attorneys' fees, paid or incurred in connection with any claim,
action, suit or proceeding, civil or criminal, to which he may be made a
party or with which he may be threatened by reason of his being or having
been a director or officer of the corporation,
II-1
<PAGE> 54
or, at its request, a director, officer, stockholder or member of any other
corporation, firm, association or other organization or by reason of his
serving or having served, at its request, in any capacity with respect to
any employee benefit plan, or by reason of any action or omission by him in
such capacity, whether or not he continues to be a director or officer at
the time of incurring such expenses or at the time the indemnification is
made. No indemnification shall be made hereunder (i) with respect to
payments and expenses incurred in relation to matters as to which he shall
be finally adjudged in such action, suit or proceeding not to have acted in
good faith and in the reasonable belief that his action was in the best
interests of the corporation (or, to the extent that such matter relates to
service with respect to an employee benefit plan, in the best interest of
the participants or beneficiaries of such employee benefit plan), or (ii)
otherwise prohibited by law. The foregoing right of indemnification shall
not be exclusive of other rights to which any director or officer may
otherwise be entitled and shall inure to the benefit of the executor or
administrator of such director or officer. The Corporation may pay the
expenses incurred by any such person in defending a civil or criminal
action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding, upon receipt of an undertaking by such person
to repay such payment if it is determined that such person is not entitled
to indemnification hereunder.
(b) The Board of Directors may, without stockholder approval,
authorize the Corporation to enter into agreements, including any
amendments or modification thereto, with any of its directors, officers or
other persons described in paragraph (a) above providing for
indemnification of such persons to the maximum extent permitted under
applicable law and the Corporation's Articles of Organization and By-laws.
(c) No amendment to or repeal of this section shall have any adverse
effect on (i) the right of any director or officer under any agreement
entered into prior thereto, or (ii) the rights of any director or officer
hereunder relating to his service, for which he would otherwise be entitled
to indemnity hereunder, during any period prior to such amendment or
repeal.
The Company has a directors and officers liability policy that insures the
Company's directors and officers against certain liabilities.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification and contribution by the Underwriters with
respect to certain liabilities of directors, officers and other controlling
persons of the Company.
<TABLE>
ITEM 16. EXHIBITS
<C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Articles of Organization, as amended, of the Registrant.
3.3 -- By-laws, as amended, of the Registrant.
**4.1 -- Rights Agreement, as amended, of the Registrant is incorporated herein by
reference to Exhibit 1 of the Registrant's Form 8-A/A filed with the Commission
on September 30, 1993 amending the Registrant's Registration Statement on
Form 8-A filed with the Commission on May 17, 1989.
*5.1 -- Opinion of Pamela A. Keating, Esq.
23.1 -- Consent of Arthur Andersen LLP.
*23.2 -- Consent of Pamela A. Keating, Esq. (included in Exhibit 5.1).
***24.1 -- Power of Attorney.
<FN>
---------------
* To be filed by amendment.
** Incorporated herein by reference.
*** Previously filed.
</TABLE>
II-2
<PAGE> 55
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 56
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement (Reg. No. 33-62125) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Westwood and Commonwealth
of Massachusetts on the 11th day of September, 1995.
LTX Corporation
By: /s/ ROGER W. BLETHEN
------------------------------------
Roger W. Blethen
Director and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement (Reg. No. 33-62125) has been signed below by the
following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board September 11, 1995
------------------------------------------
(Graham C. C. Miller)
* President and Director September 11, 1995
------------------------------------------ (Principal Executive
(Roger W. Blethen) Officer)
* President and Director September 11, 1995
------------------------------------------ (Principal Executive
(Martin S. Francis) Officer)
* Chief Financial Officer and September 11, 1995
------------------------------------------ Treasurer (Principal
(John J. Arcari) Financial Officer)
/S/ GLENN W. MELONI Controller (Principal September 11, 1995
------------------------------------------ Accounting Officer)
(Glenn W. Meloni)
* Director September 11, 1995
------------------------------------------
(Jacques Bouyer)
* Director September 11, 1995
------------------------------------------
(Fred J. Butler)
* Director September 11, 1995
------------------------------------------
(Roger J. Maggs)
* Director September 11, 1995
------------------------------------------
(Robert E. Moore)
* Director September 11, 1995
------------------------------------------
(Samuel Rubinovitz)
*By: /S/ GLENN MELONI September 11, 1995
------------------------------------------
Glenn Meloni
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 1
EXHIBIT 1.1
5,000,000 Shares
LTX CORPORATION
Common Stock
UNDERWRITING AGREEMENT
----------------------
_____ __, 1995
LEHMAN BROTHERS INC.
NEEDHAM & COMPANY, INC.,
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
LTX Corporation, a Massachusetts corporation (the "Company"), and
2985314 Canada Inc. (the "Selling Stockholder"), propose to sell an aggregate
of 5,000,000 shares (the "Firm Stock") of the Company's Common Stock, par value
$.05 per share (the "Common Stock"). Of the 5,000,000 shares of the Firm
Stock, 4,500,000 shares are being sold by the Company and 500,000 shares are
being sold by the Selling Stockholder. In addition, the Company proposes to
grant to the Underwriters named in Schedule 1 hereto (the "Underwriters") an
option to purchase up to an additional 750,000 shares of the Common Stock on
the terms and for the purposes set forth in Section 3 (the "Option Stock"). The
Firm Stock and the Option Stock, if purchased, are hereinafter collectively
called the "Stock." This is to confirm the agreement concerning the purchase of
the Stock from the Company and the Selling Stockholder by the Underwriters
named in Schedule 1 hereto (the "Underwriters").
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 with
respect to the Stock has (i) been prepared by the
Company in conformity with the requirements of the
<PAGE> 2
- 2 -
United States Securities Act of 1933 (the "Securities
Act") and the rules and regulations (the "Rule and
Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act
and (iii) become effective under the Securities Act.
Copies of such registration statement and any
amendments thereto have been delivered by the Company
to you as the representatives (the "Representatives")
of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of
which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the
date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration
statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus
filed with the Commission by the Company pursuant to
Rule 424(a) of the Rules and Regulations; "Registration
Statement" means such registration statement, as
amended at the Effective Time, including any documents
incorporated by reference therein at such time and all
information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the
Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations together with any registration statement
filed by the Company pursuant to Rule 462(b) of the
Rules and Regulations; and "Prospectus" means (i) such
final prospectus, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations or (ii) the term sheet or
abbreviated term sheet described in Rule 434(b) of the
Rules and Regulations, as first filed pursuant to
paragraph (7) of Rule 424(b) of the Rules and
Regulations together with the last preliminary
prospectus included in the Registration Statement filed
prior to the Effective Time or filed pursuant to Rule
424(a) of the Rules and Regulations that is delivered
by the Company to the Underwriters for delivery to
purchasers of the Stock. Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12
of Form S-3 under the Securities Act, as of the date of
such Preliminary Prospectus or the Prospectus, as the
case may be, and any reference to any amendment or
supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any
document filed under the United States Securities
Exchange Act of 1934 (the "Exchange Act") after the
date of such Preliminary Prospectus or the Prospectus,
as the case may be, and incorporated by reference in
such Preliminary Prospectus or the Prospectus, as the
case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any
annual report of the Company filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated
<PAGE> 3
- 3 -
by reference in the Registration Statement. The
Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to
the Registration Statement or the Prospectus will, when
they become effective or are filed with the Commission,
as the case may be, conform in all material respects to
the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the
applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided that no representation or warranty is made
as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance
upon and in conformity with written information
furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically
for inclusion therein
(c) The documents incorporated by reference in
the Prospectus, when they were filed with the
Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and
regulations of the Commission thereunder; and any
further documents so filed and incorporated by
reference in the Prospectus, when such documents are
filed with the Commission will conform in all material
respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading.
(d) The Company and each of its subsidiaries (as
defined in Section 17) have been duly incorporated and
are validly existing as corporations in good standing
under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or
lease of property or the conduct of their respective
businesses requires such qualification, and have all
power and authority necessary to own or hold their
respective properties and to conduct the businesses in
which they are engaged, except for any non-
qualification or the like that would not have a
material adverse effect on the consolidated financial
position, stockholders' equity, results of operations,
business or prospects of the Company and its
subsidiaries taken as a whole ("Material Adverse
Effect"); and none of the subsidiaries of the Company
is a "significant subsidiary", as such term is defined
in Rule 405 of the Rules and Regulations, except for
LTX (Foreign Sales Corporation) B.V.
<PAGE> 4
- 4 -
(e) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued
shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and
non-assessable and conform, in all material respects,
to the description thereof contained in the Prospectus;
and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and non-
assessable and (except for directors' qualifying shares
and except as set forth in the Prospectus) are owned
directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims.
(f) The unissued shares of the Stock to be issued
and sold by the Company to the Underwriters hereunder
have been duly and validly authorized and, when issued
and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the
description thereof contained in the Prospectus.
(g) This Agreement has been duly authorized,
executed and delivered by the Company.
(h) The execution, delivery and performance of
this Agreement by the Company and the consummation of
the transactions contemplated hereby will not conflict
with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of
its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the
charter or by-laws of the Company or any of its
subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets; and
except for the registration of the Stock under the
Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing
or registration with, any such court or governmental
agency or body is required for the execution, delivery
and performance of this Agreement by the Company and
the consummation of the transactions contemplated
hereby.
(i) There are no contracts, agreements or
understandings between the Company and any person
granting such person the right (other than rights
<PAGE> 5
- 5 -
which have been waived or satisfied) to require the
Company to file a registration statement under the
Securities Act with respect to any securities of the
Company owned or to be owned by such person or to require
the Company to include such securities in the securities
registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other
registration statement filed by the Company under the
Securities Act.
(j) Except as described in the Prospectus, the
Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule
144A under, or Regulations D or S of, the Securities
Act, other than shares issued pursuant to employee
benefit plans, stock option plans or other employee
compensation plans or pursuant to outstanding options,
rights or warrants.
(k) Neither the Company nor any of its
subsidiaries has sustained, since the date of the
latest audited financial statements included or
incorporated by reference in the Prospectus, any
material loss or interference with its business from
fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or
court or governmental action, order or decree,
otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been
any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any material
adverse change, or any development involving a
prospective material adverse change, in or affecting
the general affairs, management, financial position,
stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus.
(l) The financial statements (including the
related notes and supporting schedules) filed as part
of the Registration Statement or included or
incorporated by reference in the Prospectus present
fairly the financial condition and results of
operations of the entities purported to be shown
thereby, at the dates and for the periods indicated,
and have been prepared in conformity with generally
accepted accounting principles applied on a consistent
basis throughout the periods involved.
(m) Arthur Andersen LLP, who have certified
certain financial statements of the Company, whose
report appears in the Prospectus or is incorporated by
reference therein and who have delivered the initial
letter referred to in Section 9(g) hereof, are
independent public accountants as required by the
Securities Act and the Rules and Regulations.
(n) The Company and each of its subsidiaries own
or possess adequate rights to use all material patents,
patent applications, trademarks, service marks,
<PAGE> 6
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trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for
the conduct of their respective businesses and have no
reason to believe that the conduct of their respective
businesses will conflict with, and have not received
any notice of any claim of conflict with, any such
rights of others.
(o) There are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company
or any of its subsidiaries, would have a Material
Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened
by others.
(p) The conditions for use of Form S-3, as set
forth in the General Instructions thereto, have been
satisfied.
(q) There are no contracts or other documents
which are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which
have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated
therein by reference as permitted by the Rules and
Regulations.
(r) No relationship, direct or indirect, exists
between or among the Company on the one hand, and the
directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is
required to be described in the Prospectus which is not
so described.
(s) No labor disturbance by the employees of the
Company exists or, to the knowledge of the Company, is
imminent which might be expected to have a Material
Adverse Effect.
(t) The Company has filed all federal, state and
local income and franchise tax returns required to be
filed through the date hereof and has paid all taxes
due thereon, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries
which has had nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to
the Company or any of its subsidiaries, would have a
Material Adverse Effect.
(u) Since the date as of which information is
given in the Prospectus through the date hereof, and
except as may otherwise be disclosed in the Prospectus,
the Company has not (i) issued or granted any
securities, other than pursuant to options, rights or
warrants or employee benefit plans, stock option
<PAGE> 7
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plans or other employee compensation plans outstanding as
of the date of the Prospectus, (ii) incurred any material
liability or obligation, direct or contingent, other
than liabilities and obligations which were incurred in
the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or
(iv) declared or paid any dividend on its capital
stock.
(v) The Company (i) makes and keeps accurate
books and records and (ii) maintains internal
accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with
management's authorization, (B) transactions are
recorded as necessary to permit preparation of its
financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D)
the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(w) Neither the Company nor any of its
subsidiaries (i) is in violation of its charter or
by-laws, (ii) is in default in any material respect,
and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in
the due performance or observance of any term, covenant
or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or
assets is subject or (iii) is in violation in any
material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its
property or assets may be subject or has failed to
obtain any material license, permit, certificate,
franchise or other governmental authorization or permit
necessary to the ownership of its property or to the
conduct of its business.
(x) Neither the Company nor any of its
subsidiaries, nor any director, officer, agent,
employee or other person or acting on behalf of the
Company or any of its subsidiaries, has used any
corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to
political activity; made any direct or indirect
unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful
payment.
(y) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term
under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.
<PAGE> 8
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(z) The Company confirms as of the date hereof that
it is in compliance with all provisions of Section 1 of Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, and the Company further agrees that if it
commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance
(the "Department"), whichever date is later, or if the
information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
2. Representations, Warranties and Agreements of the
Selling Stockholder. The Selling Stockholder represents,
warrants and agrees that:
(a) The Selling Stockholder has, and immediately
prior to the First Delivery Date (as defined in Section
5 hereof) the Selling Stockholder will have, good and
valid title to the shares of Stock to be sold by the
Selling Stockholder hereunder on such date, free and
clear of all liens, encumbrances, equities or claims;
and upon delivery of such shares and payment therefor
pursuant hereto, good and valid title to such shares,
free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.
(b) The Selling Stockholder has placed in
custody under a custody agreement and power of attorney
(the "Custody Agreement") with John J. Arcari and
Glenn W. Meloni, as agents (the "Agents"), and
Pamela A. Keating, Esq., as custodian (the
"Custodian"), for delivery under this Agreement,
certificates in negotiable form (with signature
guaranteed by a commercial bank or trust company having
an office or correspondent in the United States or a
member firm of the New York or American Stock
Exchanges) representing the shares of Stock to be sold
by the Selling Stockholder hereunder. Pursuant to the
Custody Agreement, the Selling Stockholder has also
duly and irrevocably granted to the Agents a power of
attorney appointing the Agents and one or more other
persons, as attorneys-in-fact, with full power of
substitution, and with full authority (exercisable by
any one or more of them) to execute and deliver this
Agreement and to take such other action as may be
necessary or desirable to carry out the provisions
hereof on behalf of the Selling Stockholder.
(c) The Selling Stockholder has full right, power
and authority to enter into this Agreement and the
Custody Agreement; the execution, delivery and
performance of this Agreement and the Custody Agreement
by the Selling Stockholder and the consummation by the
Selling Stockholder of the transactions contemplated
hereby and thereby will not conflict with or result in
<PAGE> 9
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a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling
Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the property or
assets of the Selling Stockholder is subject, nor will
such actions result in any violation of the provisions
of the charter or by-laws of the Selling Stockholder or
any statute or any order, rule or regulation of any
court or governmental agency or body having
jurisdiction over the Selling Stockholder or the
property or assets of the Selling Stockholder; and,
except for the registration of the Stock under the
Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing
or registration with, any such court or governmental
agency or body is required for the execution, delivery
and performance of this Agreement or the Custody
Agreement by the Selling Stockholder and the
consummation by the Selling Stockholder of the
transactions contemplated hereby and thereby.
(d) The Registration Statement and the Prospectus
and any further amendments or supplements to the
Registration Statement or the Prospectus will, when
they become effective or are filed with the Commission,
as the case may be, do not and will not, as of the
applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading; provided that the foregoing representation
or warranty is limited to information contained in or
omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on
behalf of the Selling Stockholder specifically for
inclusion therein.
(e) Without having undertaken to determine
independently the accuracy or completeness of either
the representations and warranties of the Company
contained in Section 1 hereof or the information
contained in the Registration Statement and the
Prospectus (as amended or supplemented), the Selling
Stockholder has no reason to believe that the
representations and warranties of the Company
contained in Section 1 hereof are not true and correct
in all material respects, and is not prompted to sell
shares of Common Stock by any materially adverse
information concerning the Company which is not set
forth in the Registration Statement or the Prospectus
(as amended or supplemented).
<PAGE> 10
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(f) The Selling Stockholder has not taken and
will not take, directly or indirectly, any action which
is designed to or which has constituted or which might
reasonably be expected to cause or result in the
stabilization or manipulation of the price of any
security of the Company to facilitate the sale or
resale of the shares of the Stock.
3. Purchase of the Stock by the Underwriters. On the
basis of the representations and warranties contained in, and
subject to the terms and conditions of, this Agreement, the
Company agrees to sell 4,500,000 shares of the Firm Stock, and
the Selling Stockholder hereby agrees to sell 500,000 shares of
the Firm Stock, severally and not jointly, to the several
Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto.
Each Underwriter shall be obligated to purchase from the Company,
and from the Selling Stockholder, that number of shares of the
Firm Stock which represents the same proportion of the number of
shares of the Firm Stock to be sold by the Company and by the
Selling Stockholder as the number of shares of the Firm Stock set
forth opposite the name of such Underwriter in Schedule 1
represents of the total number of shares of the Firm Stock to be
purchased by all of the Underwriters pursuant to this Agreement.
The respective purchase obligations of the Underwriters with
respect to the Firm Stock shall be rounded among the Underwriters
to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an
option to purchase up to 750,000 shares of Option Stock. Such
option is granted solely for the purpose of covering over-
allotments in the sale of Firm Stock and is exercisable as
provided in Section 5 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in
proportion to the number of shares of Firm Stock set opposite the
name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the
Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other
than in 100 share amounts. The price of both the Firm Stock and
any Option Stock shall be $_____ per share.
The Company and the Selling Stockholder shall not be
obligated to deliver any of the Stock to be delivered on the
First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the
Stock to be purchased on such Delivery Date as provided herein.
4. Offering of Stock by the Underwriters. Upon
authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock
for sale upon the terms and conditions set forth in the
Prospectus.
5. Delivery of and Payment for the Stock. Delivery of
and payment for the Firm Stock shall be made at the office of
Bingham, Dana & Gould, Boston, Massachusetts, at 10:00 A.M.,
Eastern time, on ___________, 1995, or at such other date or
place as shall be
<PAGE> 11
- 11 -
determined by agreement between the Representatives and the Company.
This date and time are sometimes referred to as the First Delivery
Date." On the First Delivery Date, the Company and the Selling
Stockholder shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account
of each Underwriter against payment to or upon the order of the Company
and the Selling Stockholder of the purchase price by certified or
official bank check or checks payable in next-day funds. Time
shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not
less than two full business days prior to the First Delivery
Date. For the purpose of expediting the checking and packaging
of the certificates for the Firm Stock, the Company and the
Selling Stockholder shall make the certificates representing the
Firm Stock available for inspection by the Representatives in New
York, New York, not later than 2:00 P.M., Eastern time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the
date of this Agreement, the option granted in Section 3 may be
exercised by written notice being given to the Company by the
Representatives. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option
Stock are to be issued and the date and time, as determined by
the Representatives, when the shares of Option Stock are to be
delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have
been exercised nor later than the fifth business day after the
date on which the option shall have been exercised. The date and
time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery
Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date".
Delivery of and payment for the Option Stock shall be
made at the place specified in the first sentence of the first
paragraph of this Section 5 (or at such other place as shall be
determined by agreement between the Representatives and the
Company) at 10:00 A.M., Eastern time, on the Second Delivery
Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option
Stock to the Representatives for the account of each Underwriter
against payment to or upon the order of the Company of the
purchase price by certified or official bank check or checks
payable in next-day funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be
registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice.
For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for
<PAGE> 12
- 12 -
inspection by the Representatives in New York, New York, not
later than 2:00 P.M., Eastern time, on the business day prior to
the Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved
by the Representatives and to file such Prospectus
pursuant to Rule 424(b) under the Securities Act not
later than Commission's close of business on the second
business day following the execution and delivery of
this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities
Act; to make no further amendment or any supplement to
the Registration Statement or to the Prospectus prior
to the last Delivery Date except as permitted herein;
to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to file promptly
all reports and any definitive proxy or information
statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering
or sale of the Stock; to advise the Representatives,
promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any
order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or
supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) To furnish promptly to each of the
Representatives and to counsel for the Underwriters a
signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and
exhibits filed therewith;
(c) To deliver promptly to the Representatives
such number of the following documents as the
Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as
originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than
this Agreement), (ii) each Preliminary Prospectus, the
Prospectus
<PAGE> 13
- 13 -
and any amended or supplemented Prospectus and
(iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto); and, if the
delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or
sale of the Stock or any other securities relating
thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue
statement of a material fact or omit to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to
file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with
the Securities Act or the Exchange Act, to notify the
Representatives and, upon their request, to file such
document and to prepare and furnish without charge to
each Underwriter and to any dealer in securities as
many copies as the Representatives may from time to
time reasonably request of an amended or supplemented
Prospectus which will correct such statement or
omission or effect such compliance.
(d) To file promptly with the Commission any
amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus that
may, in the reasonable judgment of the Company or the
Representatives, be required by the Securities Act;
(e) A reasonable period of time prior to filing
with the Commission any amendment to the Registration
Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and
not to make such filing if the Representatives shall
have objected thereto in good faith;
(f) As soon as practicable after the Effective
Date, to make generally available to the Company's
security holders and to deliver to the Representatives
an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company,
Rule 158);
(g) For a period of five years following the
Effective Date, to furnish to the Representatives
copies of all materials furnished by the Company to its
shareholders and all public reports and all reports and
financial statements furnished by the Company to the
principal national securities exchange upon which the
Common Stock may be listed pursuant to requirements of or
<PAGE> 14
- 14 -
agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation
of the Commission thereunder;
(h) Promptly from time to time to take such
action as the Representatives may reasonably request to
qualify the Stock for offering and sale under the
securities laws of such jurisdictions as the
Representatives may request and to comply with such
laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the
Stock; provided that in connection therewith the
Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of
process in any jurisdiction;
(i) For a period of 90 days from the date of the
Prospectus, not to offer for sale, sell or otherwise
dispose of (or enter into any transaction which is
designed to, or could be expected to, result in the
disposition by any person of), directly or indirectly,
any shares of Common Stock (other than the Stock and
shares issued pursuant to employee benefit plans, stock
option plans or other employee compensation plans
existing on the date hereof, as any such plan may be
amended after the date hereof, or pursuant to currently
outstanding options, warrants or rights), or sell or
grant options, rights or warrants with respect to any
shares of Common Stock (other than the grant of options
pursuant to option plans existing on the date hereof,
as any such plan may be amended after the date hereof),
without the prior written consent of Lehman Brothers
Inc.; and to cause each executive officer and director
of the Company to furnish to the Representatives, prior
to the First Delivery Date, a letter or letters, in
form and substance satisfactory to counsel for the
Underwriters, pursuant to which each such person shall
agree not to offer for sale, sell or otherwise dispose
of (or enter into any transaction which is designed to,
or could be expected to, result in the disposition by
any person of), directly or indirectly, any shares of
Common Stock for a period of 90 days from the date of
the Prospectus, without the prior written consent of
Lehman Brothers Inc., other than pursuant to gifts, or
transfers as settlors of trust, in each case to persons
who agree in writing to be bound by the provisions of
this clause;
(j) To apply for the inclusion of the Stock on
the National Market System and to use its best efforts
to complete that inclusion; and
(k) To apply the net proceeds from the sale of
the Stock being sold by the Company as set forth in the
Prospectus.
7. Further Agreements of the Selling Stockholder. The
Selling Stockholder agrees:
<PAGE> 15
- 15 -
(a) For a period of 90 days from the date of the
Prospectus, not to offer for sale, sell or otherwise
dispose of (or enter into any transaction which is
designed to, or could be expected to, result in the
disposition by any person of), directly or indirectly,
any shares of Common Stock (other than the Stock),
without the prior written consent of Lehman Brothers
Inc.;
(b) That the Stock to be sold by the Selling
Stockholder hereunder, which is represented by the
certificates held in custody for the Selling
Stockholder, is subject to the interest of the
Underwriters, that the arrangements made by the Selling
Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminated by any
act of the Selling Stockholder, by operation of law or
the occurrence of any other event; and
(c) To deliver to the Representatives prior to
the First Delivery Date a properly completed and
executed United States Treasury Department Form W-8.
8. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the
Stock and any taxes payable in that connection; (b) the costs
incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and any amendments
and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus
and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this
Agreement; (d) the costs of producing and distributing this
Agreement and any other related documents in connection with the
offering, purchase, sale and delivery of the stock; (e) the costs
of delivering and distributing the Custody Agreement; (f) the
filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of
sale of the Stock; (g) any applicable listing or other fees; (h)
the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in
Section 8(h) and of preparing, printing and distributing a Blue
Sky Memorandum (including related fees and expenses of counsel to
the Underwriters); and (i) all other costs and expenses incident
to the performance of the obligations of the Company and the
Selling Stockholder under this Agreement; provided that, except
as provided in this Section 8 and in Section 10 and Section 13
the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer
taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.
9. Conditions of Underwriters' Obligations. The
respective obligations of the Underwriters hereunder are subject
to the accuracy, when made and on each Delivery Date, of the
representations and warranties of the Company and the Selling
Stockholder contained
<PAGE> 16
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herein, to the performance by the Company and the Selling
Stockholder of their respective obligations hereunder, and
to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely
filed with the Commission in accordance with Section
6(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission;
and any request of the Commission for inclusion of
additional information in the Registration Statement or
the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and
disclosed to the Company on or prior to such Delivery
Date that the Registration Statement or the Prospectus
or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of
Testa, Hurwitz & Thibeault, counsel for the
Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other
legal matters incident to the authorization, form and
validity of this Agreement, the Custody Agreement,
the Stock, the Registration Statement and the
Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby
shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the
Company and the Selling Stockholder shall have
furnished to such counsel all documents and information
that they may reasonably request to enable them to pass
upon such matters.
(d) Pamela A. Keating, Esq. shall have
furnished to the Representatives her written opinion,
as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly
incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified
to do business and is in good standing as a
foreign corporation in each jurisdiction in which
its ownership or lease of property or the conduct
of its business requires such qualification
(except where non-qualification would not have a
Material Adverse Effect) and has all corporate
power and authority necessary to own or hold its
properties and conduct the businesses in which it
is engaged;
<PAGE> 17
- 17 -
(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and
all of the issued shares of capital stock of the
Company (including the shares of Stock being
delivered on such Delivery Date) have been duly
and validly authorized and issued, are fully paid
and non-assessable and conform to the description
thereof contained in the Prospectus; and all of
the issued shares of capital stock of each
subsidiary of the Company have been duly and
validly authorized and issued and are fully paid,
non-assessable and (except for directors'
qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by
the Company, free and clear of all liens,
encumbrances, equities or claims;
(iii) There are no preemptive
or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer
of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or
other instrument known to such counsel;
(iv) To the best of such counsel's
knowledge and other than as set forth in the
Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of
its subsidiaries is a party or of which any
property or assets of the Company or any of its
subsidiaries is the subject which, if determined
adversely to the Company or any of its
subsidiaries, would have a Material Adverse
Effect; and, to the best of such counsel's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or
threatened by others;
(v) The Registration Statement was
declared effective under the Securities Act as of
the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant
to the subparagraph of Rule 424(b) of the Rules
and Regulations specified in such opinion on the
date specified therein and no stop order
suspending the effectiveness of the Registration
Statement has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is
pending or threatened by the Commission;
(vi) The Registration Statement and
the Prospectus and any further amendments or
supplements thereto made by the Company prior to
such Delivery Date (other than the financial
statements and related schedules therein, as to
which such counsel need express no opinion) comply
as to form in all material respects with the
requirements of the Securities Act and the Rules
and Regulations; and the documents incorporated by
reference in the Prospectus (other than the
financial
<PAGE> 18
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statements and related schedules therein, as to
which such counsel need express no opinion), when
they were filed with the Commission, complied as
to form in all material respects with the requirements
of the Exchange Act and the rules and regulations of
the Commission thereunder;
(vii) To the best of such counsel's
knowledge, there are no contracts or other
documents which are required to be described
in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by
the Rules and Regulations which have not been
described or filed as exhibits to the Registration
Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(viii) This Agreement has been
duly authorized, executed and delivered by the
Company;
(ix) The issue and sale of the
shares of Stock being delivered on such Delivery
Date by the Company and the compliance by the
Company with all of the provisions of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or
result in a breach or violation of any of the
terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument
known to such counsel to which the Company or any
of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will
such actions result in any violation of the
provisions of the charter or by-laws of the
Company or any of its subsidiaries or any statute
or any order, rule or regulation known to such
counsel of any court or governmental agency or
body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or
assets; and, except for the registration of the
Stock under the Securities Act and such consents,
approvals, authorizations, registrations or
qualifications as may be required under the
Exchange Act and applicable state securities laws
in connection with the purchase and distribution
of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or
registration with, any such court or governmental
agency or body is required for the execution,
delivery and performance of this Agreement by the
Company and the consummation of the transactions
contemplated hereby; and
<PAGE> 19
- 19 -
(x) To the best of such counsel's
knowledge, there are no contracts, agreements or
understandings between the Company and any person
granting such person the right (other than rights
which have been waived or satisfied) to require
the Company to file a registration statement under
the Securities Act with respect to any securities
of the Company owned or to be owned by such person
or to require the Company to include such
securities in the securities registered pursuant
to the Registration Statement or in any securities
being registered pursuant to any other
registration statement filed by the Company under
the Securities Act.
In rendering such opinion, such counsel may state
that her opinion is limited to matters governed by the
Federal laws of the United States of America and the
laws of Massachusetts. Such counsel shall also have
furnished to the Representatives a written statement,
addressed to the Underwriters and dated such Delivery
Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel is
the General Counsel of the Company and has acted as
counsel to the Company in connection with the
preparation of the Registration Statement, and (y)
based on the foregoing, no facts have come to the
attention of such counsel which lead her to believe
that (I) the Registration Statement, as of the
Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material
fact or omits to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading or (II) any
document incorporated by reference in the Prospectus,
when it was filed with the Commission, contained an
untrue statement of a material fact or omitted to state
a material fact necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or
fairness of the statements contained in the
Registration Statement or the Prospectus except for the
statements made in the Prospectus under the caption
"Description of Common Stock" insofar as such
statements relate to the Stock and concern legal
matters.
(e) Counsel for the Selling Stockholder shall
have furnished to the Representatives its written
opinion, as counsel to the Selling Stockholder,
addressed to the Underwriters and dated the First
Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect
that:
<PAGE> 20
- 20 -
(i) The Selling Stockholder has full
right, power and authority to enter into this
Agreement and the Custody Agreement; the
execution, delivery and performance of this
Agreement and the Custody Agreement by the Selling
Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated
hereby and thereby will not conflict with or
result in a breach or violation of any of the
terms or provisions of, or constitute a default
under, any statute, any indenture, mortgage, deed
of trust, loan agreement or other agreement or
instrument known to such counsel to which the
Selling Stockholder is a party or by which the
Selling Stockholder is bound or to which any of
the property or assets of the Selling Stockholder
is subject, nor will such actions result in any
violation of the provisions of the charter or by-
laws of the Selling Stockholder or any statute or
any order, rule or regulation known to such
counsel of any court or governmental agency or
body having jurisdiction over the Selling
Stockholder or the property or assets of the
Selling Stockholder; and, except for the
registration of the Stock under the Securities Act
and such consents, approvals, authorizations,
registrations or qualifications as may be required
under the Exchange Act and applicable state
securities laws in connection with the purchase
and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of,
or filing or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this
Agreement or the Custody Agreement by the Selling
Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated
hereby and thereby;
(ii) This Agreement has been duly
authorized, executed and delivered by or on behalf
of the Selling Stockholder;
(iii) The Custody Agreement has
been duly authorized, executed and delivered by
the Selling Stockholder and constitutes the valid
and binding agreement of the Selling Stockholder,
enforceable in accordance with its terms;
(iv) Immediately prior to the First
Delivery Date, the Selling Stockholder had good
and valid title to the shares of Stock to be sold
by the Selling Stockholder under this Agreement,
free and clear of all liens, encumbrances,
equities or claims, and full right, power and
authority to sell, assign, transfer and deliver
such shares to be sold by the Selling Stockholder
hereunder; and
<PAGE> 21
- 21 -
(v) Good and valid title to the
shares of Stock to be sold by the Selling
Stockholder under this Agreement, free and clear
of all liens, encumbrances, equities or claims,
has been transferred to each of the several
Underwriters.
In rendering such opinion, such counsel may (i)
state that its opinion is limited to matters governed
by the Federal laws of the United States of America (as
to which it may rely on an opinion of U.S. counsel
acceptable to the Underwriters) and applicable Canadian
law and (ii) in rendering the opinion in Section
9(e)(iv) above, rely upon a certificate of the Selling
Stockholder in respect of matters of fact as to
ownership of and liens, encumbrances, equities or
claims on the shares of Stock sold by the Selling
Stockholder, provided that such counsel shall furnish
copies thereof to the Representatives and state that it
believes that both the Underwriters and it are
justified in relying upon such certificate.
(f) The Representatives shall have received from
Testa, Hurwitz & Thibeault, counsel for the
Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of
the Stock, the Registration Statement, the Prospectus
and other related matters as the Representatives may
reasonably require, and the Company shall have
furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to
pass upon such matters.
(g) At the time of execution of this Agreement,
the Representatives shall have received from Arthur
Andersen LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming
that they are independent public accountants within the
meaning of the Securities Act and are in compliance
with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of
the date hereof (or, with respect to matters involving
changes or developments since the respective dates as
of which specified financial information is given in
the Prospectus, as of a date not more than five days
prior to the date hereof), the conclusions and findings
of such firm with respect to the financial information
and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with
registered public offerings.
(h) With respect to the letter of Arthur Andersen
LLP referred to in the preceding paragraph and delivered
to the Representatives concurrently with the execution
of this Agreement (the "initial letter"), the Company
shall have furnished to the Representatives a letter
(the "bring-down letter") of such accountants, addressed
to the Underwriters and dated such Delivery Date
<PAGE> 22
- 22 -
(i) confirming that they are independent public
accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letter (or, with
respect to matters involving changes or developments
since the respective dates as of which specified
financial information is given in the Prospectus, as of
a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of
such firm with respect to the financial information and
other matters covered by the initial letter and
(iii) confirming in all material respects the
conclusions and findings set forth in the initial
letter.
(i) The Company shall have furnished to the
Representatives a certificate, dated such Delivery
Date, of one of its Presidents and its chief financial
officer stating that:
(i) The representations, warranties
and agreements of the Company in Section 1
are true and correct in all material respects
as of such Delivery Date; the Company has
complied with all its agreements contained herein;
and the conditions set forth in Sections 9(a) and
9(k) have been fulfilled; and
(ii) They have carefully examined
the Registration Statement and the Prospectus and,
in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not
include any untrue statement of a material fact
and did not omit to state a material fact required
to be stated therein or necessary to make the
statements therein not misleading, and (B) since
the Effective Date no event has occurred which
should have been set forth in a supplement or
amendment to the Registration Statement or the
Prospectus that has not been so set forth.
(j) One of the Agents shall have furnished to
the Representatives on the First Delivery Date a
certificate, dated the First Delivery Date, signed by
an Agent on behalf of the Selling Stockholder stating
that the representations, warranties and agreements of
the Selling Stockholder contained herein are true and
correct as of the First Delivery Date and that the
Selling Stockholder has complied with all agreements
contained herein to be performed by the Selling
Stockholder at or prior to the First Delivery Date.
(k) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the
latest audited financial statements included or
incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion,
flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or
governmental action, order
<PAGE> 23
- 23 -
or decree, otherwise than as set forth or contemplated
in the Prospectus or (ii) since such date there shall
not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries
or any change, or any development involving a prospective
change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Representatives,
so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery
Date on the terms and in the manner contemplated in the
Prospectus.
(l) Subsequent to the execution and delivery of
this Agreement there shall not have occurred any of the
following: (i) trading in securities generally on the
New York Stock Exchange or the American Stock Exchange
or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or
minimum prices shall have been established on any such
exchange or such market by the Commission, by such
exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal
or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have
been an escalation in hostilities involving the United
States or there shall have been a declaration of a
national emergency or war by the United States or (iv)
there shall have occurred such a material adverse
change in general economic, political or financial
conditions (or the effect of international conditions
on the financial markets in the United States shall be
such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or
delivery of the Stock being delivered on such Delivery
Date on the terms and in the manner contemplated in the
Prospectus.
(m) The National Market System shall have
approved the Stock for inclusion, subject only to
official notice of issuance.
All opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the
Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless
each Underwriter, its officers and employees and each
person, if any, who controls any Underwriter within the
meaning of the Securities Act, from and against any
<PAGE> 24
- 24 -
loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to
which that Underwriter, officer, employee or
controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement
thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based
upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all
of the Stock under the securities laws of any state or
other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or
necessary to make the statements therein not misleading
or (iii) any act or failure to act or any alleged act
or failure to act by any Underwriter in connection
with, or relating in any manner to, the Stock or the
offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided
that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted
directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct),
and shall reimburse each Underwriter and each such
officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably
incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or
defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such
loss, claim, damage, liability or action (i) arises out
of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment
or supplement, or in any Blue Sky Application, in
reliance upon and in conformity with written
information concerning such Underwriter furnished to
the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein
or (ii) pertains to any Preliminary Prospectus, to the
extent that any such loss, claim, damage, liability or
action results from the fact that such Underwriter sold
Stock to a person to whom there was not given or sent,
at or prior to the written confirmation of such sale, a
copy of the
<PAGE> 25
- 25 -
Prospectus (or of the Prospectus as then amended
or supplemented if the Company has previously
furnished copies thereof to such Underwriter) and such
statement or omission contained in a Preliminary
Prospectus was corrected in the Prospectus. The
foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling
person of that Underwriter.
(b) The Selling Stockholder shall indemnify and
hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and
sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of,
or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be
stated therein or necessary to make the statements
therein not misleading, and shall reimburse each
Underwriter, its officers and employees and each such
controlling person for any legal or other expenses
reasonably incurred by that Underwriter, its officers
and employees or controlling person in connection with
investigating or defending or preparing to defend
against any such loss, claim, damage, liability or
action as such expenses are incurred; provided,
however, that the Selling Stockholder shall not be
liable in any such case to the extent that any such
loss, claim, damage, liability or action (i) arises out
of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any such amendment or
supplement in reliance upon and in conformity with
written information concerning such Underwriter
furnished to the Company through the Representatives by
or on behalf of any Underwriter specifically for
inclusion therein or (ii) pertains to any Preliminary
Prospectus, to the extent that any such loss, claim,
damage, liability or action results from the fact that
such Underwriter sold Stock to a person to whom there
was not given or sent, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or
of the Prospectus as then amended or supplemented if
the Company has previously furnished copies thereof to
such Underwriter) and such statement or omission
contained in a Preliminary Prospectus was corrected in
the Prospectus. In no event, however, shall the
liability of the Selling Stockholder for
indemnification under this Section 10(b) exceed the
lesser of (i) that
<PAGE> 26
- 26 -
percentage of the total amount of such losses, claims,
damages or liabilities indemnified against which equals
the percentage obtained by dividing the total number of
shares of Stock sold by the Selling Stockholder hereunder
by the total number of shares of Stock sold hereunder, or
(ii) the proceeds received by the Selling Stockholder from
the Underwriters pursuant to this Agreement. The foregoing
indemnity agreement is in addition to any liability which
the Selling Stockholder may otherwise have to any Underwriter
or any officer, employee or controlling person of that
Underwriter, and the foregoing indemnity agreement shall not
impair the provisions of any separate agreement the Company
and the Selling Stockholder may have made or may make with
respect to indemnification.
(c) Each Underwriter, severally and not jointly,
shall indemnify and hold harmless the Company, its
officers and employees, each of its directors, and each
person, if any, who controls the Company within the
meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company or
any such director, officer or controlling person may
become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon
and in conformity with written information concerning
such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse
the Company and any such director, officer or
controlling person for any legal or other expenses
reasonably incurred by the Company or any such
director, officer or controlling person in connection
with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company
or any such director, officer, employee or controlling
person.
(d) Promptly after receipt by an indemnified
party under this Section 10 of notice of any claim or
the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 10,
notify the indemnifying party in writing of the
<PAGE> 27
- 27 -
claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have
under this Section 10 except to the extent it has been
materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under
this Section 10. If any such claim or action shall be
brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the
indemnifying party to the indemnified party of its
election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the
indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the
indemnified party in connection with the defense
thereof other than reasonable costs of investigation;
provided, however, that the Representatives shall have
the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their
respective officers, employees and controlling persons
who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by
the Underwriters against the Company or the Selling
Stockholder under this Section 10 if, in the reasonable
judgment of the Representatives, it is advisable for
the Representatives and those Underwriters, officers,
employees and controlling persons to be jointly
represented by separate counsel on account of the
availability of different or additional legal defenses
to any such person or the existence of a conflict or
potential conflict between any such person and the
indemnifying party, and in that event the fees and
expenses of such separate counsel shall be paid by the
Company. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties
to such claim or action) unless such settlement,
compromise or consent includes an unconditional release
of each indemnified party from all liability arising
out of such claim, action, suit or proceeding, or (ii)
be liable for any settlement of any such action
effected without its written consent (which consent
shall not be unreasonably withheld), but if settled
with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or
judgment.
<PAGE> 28
- 28 -
(e) If the indemnification provided for in
this Section 10 shall for any reason be unavailable to
or insufficient to hold harmless an indemnified party
under Section 10(a), 10(b) or 10(c) in respect of any
loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and
the Underwriters on the other from the offering of the
Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling
Stockholder on the one hand and the Underwriters on the
other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other
relevant equitable considerations. The relative
benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this
Agreement (before deducting expenses) received by the
Company and the Selling Stockholder, on the one hand,
and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares
of the Stock purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the
offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact
relates to information supplied by the Company, the
Selling Stockholder or the Underwriters, the intent of
the parties and their relative knowledge, access to
information and opportunity to correct or prevent such
statement or omission. The Company, the Selling
Stockholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to
this Section 10(e) were to be determined by pro rata
allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of
allocation which does not take into account the
equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this
Section 10(e) shall be deemed to include, for purposes
of this Section 10(e), any legal or other expenses
reasonably incurred by such indemnified party in
connection with investigating or defending any such
action or claim. Notwithstanding the provisions of
this Section 10(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which
the total
<PAGE> 29
- 29 -
price at which the Stock underwritten by it and
distributed to the public was offered to the public
exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section
10(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm that
the statements with respect to the public offering of
the Stock by the Underwriters set forth on the cover
page of, the legend concerning over-allotments on the
inside front cover page and the concession and
reallowance figures appearing under the caption
"Underwriting" in, the Prospectus are correct and
constitute the only information concerning such
Underwriters furnished in writing to the Company by or
on behalf of the Underwriters specifically for
inclusion in the Registration Statement and the
Prospectus.
11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults
in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to
purchase the Stock which the defaulting Underwriter agreed but
failed to purchase on such Delivery Date in the respective
proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm
Stock set opposite the names of all the remaining non-defaulting
Underwriters in Schedule 1 hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased
on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 3. If the
foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not
be obligated, to purchase, in such proportion as may be agreed
upon among them, all the Stock to be purchased on such Delivery
Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the
shares which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such Delivery Date, this Agreement (or,
with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option
Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the
<PAGE> 30
- 30 -
Company or the Selling Stockholder, except that the Company will
continue to be liable for the payment of expenses to the extent
set forth in Sections 8 and 13. As used in this Agreement, the
term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases
Firm Stock which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company and the
Selling Stockholder for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing Underwriter, either the Representatives
or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice
given to and received by the Company and the Selling Stockholder
prior to delivery of and payment for the Firm Stock if, prior to
that time, any of the events described in Sections 9(k) or 9(l)
shall have occurred or if the Underwriters shall decline to
purchase the Stock for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If the
Company or the Selling Stockholder shall fail to tender the
Stock for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company or the Selling
Stockholder to perform any agreement on its part to be performed,
or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling
Stockholder is not fulfilled (which shall not, however, include
the occurrence of any event described in Section 9(l)), the
Company and the Selling Stockholder will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including
fees and disbursements of counsel) incurred by the Underwriters
in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company and the Selling
Stockholder shall pay the full amount thereof to the
Representative(s). If this Agreement is terminated pursuant to
Section 11 by reason of the default of one or more Underwriters,
neither the Company nor the Selling Stockholder shall be
obligated to reimburse any defaulting Underwriter on account of
those expenses.
14. Notices, etc. All statements, requests, notices
and agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Lehman
Brothers Inc., Three World Financial Center, New York,
New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice
pursuant to Section 10(d), to the
<PAGE> 31
- 31 -
Director of Litigation, Office of the General Counsel,
Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent
by mail, telex or facsimile transmission to the address
of the Company set forth in the Registration Statement,
Attention: General Counsel (Fax: 617-329-8836);
(c) if to the Selling Stockholder, shall be
delivered or sent by mail, telex or facsimile
transmission to 2985314 Canada Inc., 600 March Road,
Kanata, Ontario, Canada K2K 2E6, Attention: President
(Fax: (613) 591-0018);
provided, however, that any notice to an Underwriter pursuant to
Section 10(d) shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set
forth in its acceptance telex to the Representatives, which
address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt
thereof. The Company and the Selling Stockholder shall be
entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by Lehman
Brothers Inc. on behalf of the Representatives, and the Company
and the Underwriters shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of
the Selling Stockholder by an Agent.
15. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, the Selling Stockholder and their
respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and
agreements of the Company and the Selling Stockholder contained
in this Agreement shall also be deemed to be for the benefit of
the person or persons, if any, who control any Underwriter within
the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in
Section 10(c) of this Agreement shall be deemed to be for the
benefit of directors of the Company, officers of the Company who
have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed
to give any person, other than the persons referred to in this
Section 15, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision contained
herein.
16. Survival. The respective indemnities,
representations, warranties and agreements of the Company, the
Selling Stockholder and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant
to this Agreement, shall survive the delivery of and payment for
the Stock and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any
person controlling any of them.
<PAGE> 32
- 32 -
17. Definition of the Terms "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day"
means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) "subsidiary" and "Significant Subsidiary"
have the respective meanings set forth in the Rules and
Regulations.
18. Governing Law, Consent to Service of Process,
Etc.. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
By the execution and delivery of this Agreement, the
Selling Stockholder (i) acknowledges that it has, pursuant to the
Custody Agreement, irrevocably designated and appointed each
Agent (or any successor) as its authorized agent (each an
"Authorized Agent") upon which process may be served in any suit
or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby that may be instituted in any
state or federal court sitting in Massachusetts or New York, and
acknowledges that the Authorized Agent has accepted such
designation, (ii) submits to the jurisdiction of any such court
in any such suit or proceeding, (iii) waives any objection it may
have that the venue of any such court is improper or that the
forum is inconvenient, and (iv) agrees that service of process
upon any Authorized Agent shall be deemed in every respect
effective service of process upon the Selling Stockholder in any
such suit or proceeding. The Selling Stockholder further agree
to take any and all action, including the execution and filing of
any and all such documents and instruments, as may be necessary
to continue such designation and appointment of each Authorized
Agent in full force and effect. Nothing contained herein shall
limit the right of any person to serve process in any other
manner permitted by law or bring an action based on this
Agreement in any court sitting in Ontario.
To the extent that the Selling Stockholder has or
hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property,
it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement to the extent permitted by law.
This waiver is intended to be effective upon the execution of
this Agreement without any further action by the Selling
Stockholder, and the introduction of a true copy of this
Agreement into evidence shall, to the fullest extent permitted by
applicable law, be conclusive and final evidence of such waiver.
19. Counterparts. This Agreement may be executed in
one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall each be deemed to be
an original but all such counterparts shall together constitute
one and the same instrument.
20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
<PAGE> 33
- 33 -
If the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholder and the Underwriters,
please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
LTX CORPORATION
By: ___________________________________
Title:
2985314 CANADA INC.
By: ___________________________________
______________________, Agent
Accepted:
LEHMAN BROTHERS INC.
NEEDHAM & COMPANY, INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By Lehman Brothers Inc.
By __________________________
Authorized Representative
<PAGE> 34
<TABLE>
SCHEDULE 1
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Lehman Brothers Inc. ....................................
Needham & Company, Inc. .................................
Total ............................................... =======
</TABLE>
<PAGE> 1
EXHIBIT 3.1
THE COMMONWEALTH OF MASSACHUSETTS
JOHN F. X. DAVOREN
Secretary of the Commonwealth
STATE HOUSE
BOSTON, MASS. 02133
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
Incorporators
NAME POST OFFICE ADDRESS
----
Include given name in full in case of natural persons; in case of a corporation,
give state of incorporation.
Lee E. Anderson 100 Federal Street, 35th Floor
Boston, Massachusetts 02110
The above-named incorporator(s) do hereby associate (themselves) with the
intention of forming a corporation under the provisions of General Laws, Chapter
156B and hereby state(s):
1. The name by which the corporation shall be known is:
LTX Corporation
2. The purposes for which the corporation is formed are as follows:
To engage in the business of manufacturing and selling electronic test
equipment and other electronic equipment, and in general to carry on any
business permitted to corporations under Chapter 156B of the General Laws as
now in effect or as hereafter amended, or any successor provision to such
Chapter.
NOTE: If provisions for which the space provided under Articles 2, 4, 5 and 6
is not sufficient, additions should be set out on continuation sheets to be
numbered 2A, 2B, etc. Indicate under each Article where the provision is set
out. Continuation sheets shall be on 8 1/2" x 11" paper and must have a
left-hand margin 1 inch wide for binding. Only one side should be used.
<PAGE> 2
3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK ----------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES PAR AMOUNT
VALUE
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred $
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Common -- 250,000 $1 250,000
--------------------------------------------------------------------------------
</TABLE>
*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
None.
*5. The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are as follows:
None.
*6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or
for limiting, defining, or regulating the powers of the corporation, or of
its directors or stockholders, or of any class of stockholders:
Meetings of the Stockholders may be held anywhere within the United
States. The Directors may amend, add to or repeal the By-laws, in
whole or in part, except with respect to any provision thereof which
by law or the By-laws requires action by the Stockholders. The
corporation may be a partner in any business enterprise which the
corporation would have the power to conduct by itself.
<PAGE> 3
7. By-laws of the corporation have been duly adopted and the initial directors,
president, treasurer and clerk, whose names are set out below, have been
duly elected.
8. The effective date of organization of the corporation shall be the date of
filing with the Secretary of the Commonwealth or if later date is desired,
specify date (not more than 30 days after date of filing).
9. The following information shall not for any purpose be treated as a
permanent part of the Articles of Organization of the corporation.
a. The post office address of the initial principal office of the
corporation in Massachusetts is:
160 Charlemont St., Newton Highlands, Massachusetts 02161
b. The name, residence, and post office address of each of the initial
directors and following officers of the corporation are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
President: Graham C. C. Miller 29 Pleasant St. 160 Charlemont St.
Sinatick, MA 01760 Newton Highlands, MA 02161
---------- ------------------- -------------------- ---------------------------
Treasurer: Graham C. C. Miller 29 Pleasant St. 160 Charlemont St.
Sinatick, MA 01760 Newton Highlands, MA 02161
---------- ------------------- -------------------- ---------------------------
Clerk: Philip E. Perkins 76 Powers St. 160 Charlemont St.
Needham, MA 02192 Newton Highlands, MA 02161
---------- ------------------- -------------------- ---------------------------
Directors: Graham C. C. Miller 29 Pleasant St. 160 Charlemont St.
Sinatick, MA 01760 Newton Highlands, MA 02161
Philip E. Perkins 76 Powers St. 160 Charlemont St.
Needham, MA 02192 Newton Highlands, MA 02161
Meira Max 95 Welland Rd. 160 Charlemont St.
Brookline, MA 02146 Newton Highlands, MA 02161
</TABLE>
c. The date initially adopted on which the corporation's fiscal year ends
is:
July 31.
d. The date initially fixed in the by-laws for the annual meeting of
stockholders of the corporation is:
Third Tuesday in October.
e. The name and business address of the resident agent, if any, of the
corporation is:
Not applicable.
IN WITNESS WHEREOF and under the penalties of perjury the above-named
INCORPORATOR(S) sign(s) these Articles of Organization this 2nd day of
August 1976.
/s/ Lee E. Anderson
-------------------------------------------------
Lee E. Anderson, Sole Incorporator
-------------------------------------------------
-------------------------------------------------
The signature of each incorporator which is not a natural person must be
by an individual who shall show the capacity in which he acts and by
signing shall represent under the penalties of perjury that he is duly
authorized on its behalf to sign these Articles of Organization.
<PAGE> 4
RECEIVED
AUG 3, 1976
CORPORATION DIVISION
SECRETARY'S OFFICE
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B, SECTION 12
================================================================================
I hereby certify that, upon an examination of the within-written
articles of organization, duly submitted to me, it appears that the
provisions of the General Laws relative to the organization of
corporations have been complied with, and I hereby approve said articles;
and the filing fee in the amount of $25.00 having been paid, said
articles are deemed to have been filed with me this 3rd day of August 1976.
Effective date
PAUL GUZZI
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT
TO: Lee E. Anderson
Bingham, Dana & Gould
-------------------------------------------------
100 Federal Street
-------------------------------------------------
Boston, MA 02110
-------------------------------------------------
Telephone 357-9300
----------------------------------------
FILING FEE: 1/20 of 1% of the total amount of the authorized capital stock
with par value, and one cent a share for all authorized shares without
par value, but not less than $125. General Laws, Chapter 156B. Shares
of stock with a par value of less than one dollar shall be deemed to
have par value of one dollar per share.
Copy Mailed AUG 12, 1976
<PAGE> 5
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------------
We, Graham C. C. Miller , President and
Philip E. Perkins , Clerk of
LTX Corporation
--------------------------------------------------------------------------------
(Name of Corporation)
located at 160 Charlemont Street, Newton Highlands, Newton
---------------------------------------------------------------------
do hereby certify that the following amendment to the articles of organization
of the corporation was duly adopted at a meeting held on July 27, 1979, by vote
of
17,078 shares of Common out of 23,779 shares outstanding,
------------- ---------------- ------------
(Class of Stock)
being at least a majority of each class outstanding and
entitled to vote thereon:
The following vote was adopted:
That the authorized capital stock of the corporation is hereby changed from
250,000 shares of common stock, par value $1.00 per share, to 1,000,000 shares
of common stock, par value $.05 per share, and that each outstanding share of
common stock, par value $1.00 per share, is hereby split into 20 shares of
common stock, par value $.05 per share, and that the officers of this
corporation are authorized to take such actions as they or any of them, acting
singly, may consider appropriate for the purpose of implementing the increase in
capital and the stock split contemplated by this vote.
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
NOTE: Amendments for which the space provided above is not sufficient should be
set out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets
shall be on 8 1/2" wide x 11" high paper and must have a left-hand margin 1 inch
wide for binding. Only one side should be used.
<PAGE> 6
FOR INCREASE IN CAPITAL FILL IN THE FOLLOWING:
<TABLE>
<S> <C> <C>
( shares preferred )
( ------------- ) with par value
( 250,000 shares common )
The total amount of capital stock already authorized is ( -------------
( shares preferred )
( ------------- ) without par value
( shares common )
( ------------- )
( shares preferred )
( ------------- ) with par value
( 750,000 shares common )
The amount of additional capital stock authorized is ( -------------
( shares preferred )
( ------------- ) without par value
( shares common )
( ------------- )
</TABLE>
<PAGE> 7
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of the the
General Laws unless these articles specify, in accordance with the vote adopting
the amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 31st day of July, in the year 1979.
/s/ Graham C. C. Miller President
--------------------------------------------------------
Graham C. C. Miller
/s/ Philip E. Perkins Clerk
--------------------------------------------------------
Philip E. Perkins
<PAGE> 8
RECEIVED
AUG 8 1979
CORPORATION DIVISION
SECRETARY'S OFFICE
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in
the amount of $375.00 having been paid, said articles are deemed to have been
filed with me this 8th day of August, 1979.
/s/ MICHAEL JOSEPH CONNOLLY
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
State House, Boston, Mass.
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Richard M. Harter, Esq.
Bingham, Dana & Gould
-------------------------------------------------
100 Federal Street
-------------------------------------------------
Boston, MA 02110
-------------------------------------------------
Telephone 357-9300
----------------------------------------
Copy Mailed AUG 21 1979
<PAGE> 9
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------------
We, Graham C. C. Miller, President and
Richard G. Tennant, Assistant Clerk of
LTX CORPORATION
--------------------------------------------------------------------------------
(Name of Corporation)
located at 160 Charlemont Street, Newton Highlands, Newton
---------------------------------------------------------------------
--------- do hereby certify that the following amendment to the articles of
Name organization of the corporation was duly adopted at a meeting held on
Approved May 29, 1981, by vote of
317,100 shares of Common out of 443,100 shares outstanding,
------- -------
(Class of Stock)
being at least a majority of each class outstanding and entitled
to vote thereon:
The following vote was adopted:
C / / VOTED: That the present total number of the authorized shares at a
P / / par value $.05 per share be increasedfrom 1,000,000 to
M / / 5,000,000 shares at a par value of $.05 per share.
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
------- sheets of paper leaving a left hand margin of at least 1 inch for
P.C. binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 10
FOR INCREASE IN CAPITAL FILL IN THE FOLLOWING:
<TABLE>
<S> <C> <C>
( shares preferred )
( ------------- ) with par value
( 1,000,000 shares common )
( -------------
The total amount of capital stock already authorized is ( shares preferred )
( ------------- ) without par value
( shares common )
( -------------
( shares preferred )
( ------------- ) with par value
( 4,000,000 shares common )
( -------------
The amount of additional capital stock authorized is ( shares preferred )
( ------------- ) without par value
( shares common )
( -------------
</TABLE>
<PAGE> 11
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote adopting
the amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 23rd day of June, in the year 1981.
/s/ GRAHAM C. C. MILLER President
-----------------------
Graham C. C. Miller
/s/ RICHARD G. TENNANT Assistant Clerk
-----------------------
Richard G. Tennant
<PAGE> 12
RECEIVED
JUN 25 1981
SECRETARY OF STATE
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in
the amount of $2,000.00 having been paid, said articles are deemed to have been
filed with me this 25th day of June, 1981.
/S/ MICHAEL JOSEPH CONNOLLY
---------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Roger Joseph, Esq.
Bingham, Dana & Gould
-------------------------------------------------
100 Federal Street
-------------------------------------------------
Boston, MA 02110
-------------------------------------------------
Telephone 357-9300
----------------------------------------
Copy Mailed JUL 14, 1981
<PAGE> 13
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------------
We, Graham C. C. Miller, President and
Richard G. Tennant, Assistant Clerk of
LTX CORPORATION
--------------------------------------------------------------------------------
(Name of Corporation)
located at 145 University Avenue, Westwood, MA 02090
---------------------------------------------------------------------
--------- do hereby certify that the following amendment to the articles of
Name organization of the corporation was duly adopted at a meeting held on
Approved November 24th, 1981, by vote of
2,166,740 shares of Common Stock out of 2,720,620 shares outstanding,
------------- ---------------- ------------
(Class of Stock)
being at least a majority of each class outstanding and entitled
to vote thereon:
C / / VOTED: That the increasing of the authorized capital stock of
P / / the Corporation from 5,000,000 shares of common stock,
M / / par value $.05 per share, to 15,000,000 shares of
common stock, par value $.05 per share, be and hereby
is ratified, confirmed and approved.
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
------- sheets of paper leaving a left hand margin of at least 1 inch for
P.C. binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 14
FOR INCREASE IN CAPITAL FILL IN THE FOLLOWING:
<TABLE>
<S> <C> <C>
( shares preferred )
( ------------- ) with par value
( 5,000,000 shares common )
( -------------
The total amount of capital stock already authorized is ( shares preferred )
( ------------- ) without par value
( shares common )
( -------------
( shares preferred )
( ------------- ) with par value
( 10,000,000 shares common )
( -------------
The amount of additional capital stock authorized is ( shares preferred )
( ------------- ) without par value
( shares common )
( -------------
</TABLE>
<PAGE> 15
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote adopting
the amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this seventeenth day of December, in the year 1981.
/s/ GRAHAM C. C. MILLER President
-----------------------
Graham C. C. Miller
/s/ RICHARD G. TENNANT Assistant Clerk
-----------------------
Richard G. Tennant
<PAGE> 16
RECEIVED
DEC. 1, 1981
SECRETARY OF STATE
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in
the amount of $5,000.00 having been paid, said articles are deemed to have been
filed with me this 21st day of December, 1981.
/s/ MICHAEL JOSEPH CONNOLLY
---------------------------
Michael Joseph Connolly
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Carol P. Lynch
BINGHAM, DANA & GOULD
-------------------------------------------------
100 Federal Street
-------------------------------------------------
Boston, MA 02110
-------------------------------------------------
Telephone (617) 357-9300
----------------------------------------
Copy Mailed
<PAGE> 17
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
FEDERAL IDENTIFICATION
NO. 04-2594045
------------------
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------------
We, Graham C.C. Miller, President and Richard M. Harter, Clerk of
LTX Corporation
--------------------------------------------------------------------------------
(Name of Corporation)
located at LTX Park at University Avenue, Westwood, MA 02090
---------------------------------------------------------------------
do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted at a meeting held
on December 11, 1984, by vote of
6,175,198 shares of Common Stock out of 7,759,222 shares outstanding,
------------- ---------------- ------------
(Class of Stock)
being at least a majority of each class outstanding and entitled to vote
thereon:(1)
VOTED: That Section 3 of the Corporation's Articles of Organization be hereby
amended to read in its entirety as follows:
3. The total number of shares and the par value, if any, of each
class of stock which the Corporation is authorized is as
follows:
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 18
TO CHANGE the number of shares and the par value, if any, of each class of stock
within the corporation fill in the following:
The total presently authorized is:
<TABLE>
<CAPTION>
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
------------- ---------------- ---------------- -----
<S> <C> <C> <C>
COMMON NONE 15,000,000 $.05
PREFERRED NONE NONE -
</TABLE>
CHANGE the total to:
<TABLE>
<CAPTION>
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
------------- ---------------- ---------------- -----
<S> <C> <C> <C>
COMMON NONE 25,000,000 $.05
PREFERRED NONE NONE -
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
Without Par Value With Par Value
----------------- --------------
Class of Stock No. of Shares No. of Shares Par Value Amount
-------------- ------------- ------------- --------- ------
<S> <C> <C> <C> <C>
Preferred None None
Common None 25,000,000 $.05 $1,250,000
</TABLE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote adopting
the amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this day of August, in the year 1985
/s/ GRAHAM C. C. MILLER President
-----------------------
Graham C. C. Miller
Clerk
-----------------------
Richard M. Harter
<PAGE> 20
LTX CORPORATION
The undersigned certifies that he is the Secretary of LTX Corporation, a
corporation organized and existing under the laws of the Commonwealth of
Massachusetts; that the December 11, 1984 vote by holders of at least a
majority of the Common Stock of the Corporation to increase its total number of
shares to 25,000,000 is hereby certified and set forth in Articles of Amendment
as attached hereto for filing with the Office of the Secretary of the
Commonwealth of Massachusetts.
IN WITNESS HEREOF, I hereto set my hand and affix the seal of said
corporation this 8th day of November, 1985.
/s/ Richard M. Harter
---------------------
Richard M. Harter
Secretary
<PAGE> 21
SECRETARY OF THE
COMMONWEALTH
1985 NOV 12 PM 3:31
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in
the amount of $5,000.00 having been paid, said articles are deemed to have been
filed with me this 12th day of November, 1985.
/s/ MICHAEL JOSEPH CONNOLLY
-----------------------------
Michael Joseph Connolly
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Janice M. Duffy, Esq.
-------------------------------------------------
Bingham, Dana & Gould
-------------------------------------------------
100 Federal Street, Boston, MA 02110
-------------------------------------------------
Telephone (617) 357-9300
----------------------------------------
Copy Mailed
<PAGE> 22
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
FEDERAL IDENTIFICATION
NO. 04-2594045
-----------------
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------------
We, Graham C.C. Miller , President and
Richard M. Harter , Clerk of
LTX Corporation
--------------------------------------------------------------------------------
(Name of Corporation)
located at LTX Park at University Avenue, Westwood, Massachusetts 02090
---------------------------------------------------------------------
do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted at a meeting held on
December 8, 1987, by vote of
7,891,255 shares of Common Stock out of 9,509,053 shares outstanding,
------------- ---------------- ------------
(Class of Stock)
being at least a majority of each class outstanding and entitled
to vote thereon:(1)
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 23
To amend Article 6 of the Articles of Organization by adding the following
provision:
"No director shall be personally liable to the corporation or any of its
stockholders for monetary damages for any breach of fiduciary duty as a
director not withstanding any provision of law imposing such liability;
provided, however, that this provision shall not eliminate or limit the
liability of a director for (i) any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
authorizing distributions to stockholders in violation of the corporation's
Articles of Organization or which render the corporation insolvent or bankrupt,
and approving loans to officers or directors of the corporation which are not
repaid and which were not approved or ratified by a majority of disinterested
directors or stockholders, or (iv) any transaction from which the director
derived an improper personal benefit. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to the effective date of such
amendment."
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote adopting
the amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 31st day of March, in the year 1988.
/s/ Graham C.C. Miller President
-----------------------
Graham C.C. Miller
/s/ Richard M. Harter Clerk
-----------------------
Richard M. Harter
<PAGE> 24
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment
and, the filing fee in the amount of $75.00
having been paid, said articles are deemed to have been
filed with me this 8th day of April, 1988.
/s/ MICHAEL J. CONNOLLY
-----------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Richard M. Harter, Esquire
Bingham, Dana & Gould
-------------------------------------------------
100 Federal Street
-------------------------------------------------
Boston, Massachusetts 02110
-------------------------------------------------
Telephone (617) 348-8000
----------------------------------------
<PAGE> 25
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
-------------------
CERTIFICATE OF CHANGE OF PRINCIPAL OFFICE
General Laws, Chapter 156B, Section 14
I, John J. Arcari, Assistant Clerk, of
--------------
LTX Corporation
--------------------------------------------------------------------------------
(Name of Corporation)
previously having its principal office at
---------------------------------------
(Post Office Address)
145 University Avenue, Westwood, Massachusetts 02090
--------------------------------------------------------------------------------
(Number and Street, City or Town)
do hereby certify that pursuant to General Laws, Chapter 156B, Section 14, the
directors of said corporation have changed the principal office of the
corporation to
--------------------------------------------------------------------------------
(Post Office Address)
LTX Park at University Avenue, Westwood, Massachusetts 02090
--------------------------------------------------------------------------------
(Number and Street, City or Town)
SUBSCRIBED THIS 10th day of August 1990, UNDER PENALTIES OF PERJURY.
SIGNATURE /s/ JOHN J. ARCARI,
--------------------
Assistant Clerk
Form CD 14,
<PAGE> 26
THE COMMONWEALTH OF MASSACHUSETTS
FEDERAL IDENTIFICATION
NO. 04-2594045
-------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE
BOSTON, MASS. 02108
ARTICLES OF
MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 82
The fee for filing this certificate is prescribed by General Laws, Chapter 156B,
Section 114. Make check payable to the Commonwealth of Massachusetts.
* * * *
We, Graham C.C. Miller and Richard M. Harter, President* and Clerk* of
----------------------------------------
LTX Corporation
--------------------------------------------------------------------------------
name of corporation
organized under the laws of Massachusetts and herein called the parent
corporation, do hereby certify as follows:
1. That the subsidiary corporation(s) to be merged into the parent
corporations are is as follows:
<TABLE>
<CAPTION>
State of Date of
Name Organization Organization
<S> <C> <C>
Trillium Corporation Delaware October 17, 19$$
</TABLE>
2. That the parent corporation owns at least ninety per cent of the
outstanding shares of each class of the stock of each subsidiary corporation to
be merged into the parent corporation.
3. That in the case of each of the above-named corporations the laws of
the state of its organization, if other than Massachusetts, permit the merger
herein provided for and that all action required under the laws of each such
state in connection with this merger has been duly taken. (If all the
corporations are organized under the laws of Massachusetts and if General Laws,
Chapter 156B is applicable to them, then Paragraph 3 may be deleted.)
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 27
4. That at a meeting of the directors of the parent corporation the
following vote, pursuant to Subsection (a) of General Laws, Chapter 156B,
Section 82, was duly adopted:
VOTED: That this Corporation hereby merges into itself Trillium
Corporation, a Delaware corporation, and assumes all of the
obligations of Trillium Corporation.
VOTED: That the officers of this corporation hereby are directed to make
and execute a Certificate of Ownership and Merger setting forth a
copy of the resolutions to merge into itself Trillium
Corporation, and the date of the adoption thereof, and to cause
the same to be filed with the Secretaries of State of Delaware
and Massachusetts and a certified copy recorded in the office of
the Recorder of Deeds of New Castle County, Delaware, and do all
acts and things whatsoever, whether within or without the State
of Delaware and the Commonwealth of Massachusetts, which may be
necessary or proper to affect the merger.
Votes for which the space provided above is not sufficient should be set out on
continuation sheets to be numbered 2A, 2B, etc. Continuation sheets must have a
left-hand margin 1 inch wide for binding. Only one side should be used.
<PAGE> 28
5. The effective date of the merger as specified in the vote set out
under Paragraph 4 is upon filing with the Secretary of State of Massachusetts.
IN WITNESS WHEREOF and under the penalties of perjury we have hereto signed
our names this 26th day of July, 1988.
/s/ GRAHAM C.C. MILLER President*
----------------------
Graham C.C. Miller
/s/ RICHARD M. HARTER Clerk*
---------------------
Richard M. Harter
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 29
COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
I hereby approve the within articles of merger of parent and subsidiary
corporations and, the filing fee in the amount of $200.00 having been paid, said
articles are deemed to have been filed with me this 26th day of July, 1988.
/s/ MICHAEL J. CONNOLLY
-----------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
Photo Copy of Merger To Be Sent
TO:
Karl W. Saur, Esq.
Bingham, Dana & Gould
--------------------------------------------
150 Federal Street
--------------------------------------------
Boston, MA 02110
--------------------------------------------
Telephone (617) 951-8000
-----------------------------------
Copy Mailed
<PAGE> 30
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
-----------------
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
We, Graham C.C. Miller and John J. Arcari, President and Assistant Clerk of
LTX Corporation
--------------------------------------------------------------------------------
(EXACT Name of Corporation)
located at: LTX Park at University Avenue, Westwood, MA 02090
---------------------------------------------------------------------
(MASSACHUSETTS Address of Corporation)
do hereby certify that these ARTICLES OF AMENDMENT affecting Articles
NUMBERED:
3
--------------------------------------------------------------------------------
(Number those articles 1,2,3,4,5 and/or 6 being amended hereby)
of the Articles of Organization were duly adopted at a meeting held
on December 11, 1990, by vote of:
9,040,039 shares of Common Stock out of 11,865,805 shares outstanding,
------------- ---------------- ------------
type, class & series (if any)
being at least a majority of each type, class or series outstanding and
entitled to vote thereon: (1)
VOTED: That Section 3 of the Corporation's Articles of Organization be
hereby amended to read in its entirety as follows:
3. The total number of shares and the par value, if any, of each
class of stock which the Corporation is authorized is as follows:
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left-hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 31
To CHANGE the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS
TYPE NUMBER OF SHARES
--------- ----------------
<S> <C>
COMMON:
PREFERRED:
</TABLE>
<TABLE>
<CAPTION>
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
--------- ---------------- ---------
<S> <C> <C>
COMMON: 25,000,000 $0.05
PREFERRED: -
</TABLE>
CHANGE the total authorized to:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS
TYPE NUMBER OF SHARES
--------- ----------------
<S> <C>
COMMON:
PREFERRED:
</TABLE>
<TABLE>
<CAPTION>
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
--------- ---------------- ---------
<S> <C> <C>
COMMON: 50,000,000 $0.05
PREFERRED: NONE -
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
Without Par Value With Par Value
----------------- --------------
Class of Stock No. of Shares No. of Shares Par Value Amount
-------------- ------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Preferred None None
Common None 50,000,000 $0.05 $2,500,000
</TABLE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote
adopting the amendment, a later effective date not more than thirty days after
such filing, in which event the amendment will become effective on such later
date. EFFECTIVE DATE: Date of Filing
--------------
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 28th day of January, in the year 1991.
/s/ GRAHAM C.C. MILLER President
-----------------------
Graham C.C. Miller
/s/ JOHN J. ARCARI Assistant Clerk
-----------------------
John J. Arcari
<PAGE> 33
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
I hereby approve the within articles of amendment and, the filing fee in
the amount of $25,000.00 having been paid, said articles are deemed to have been
filed with me this 29th day of January, 1991.
/s/ MICHAEL JOSEPH CONNOLLY
MICHAEL J. CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO:
Pamela A. Keating, Esq.
LTX Corporation
---------------------------------------
LTX Park at University Avenue
---------------------------------------
Westwood, MA 02090
---------------------------------------
Telephone: 617-461-1000, extension 5417
-----------------------------
<PAGE> 34
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL J. CONNOLLY, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
FEDERAL IDENTIFICATION
NO. 04-2594045
-----------------
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
We Graham C. C. Miller and Pamela A. Keating, President and Clerk of
LTX Corporation
--------------------------------------------------------------------------------
(EXACT Name of Corporation)
located at: LTX Park at University Avenue, Westwood, MA 02090
--------------------------------------------------------------------
(MASSACHUSETTS Address of Corporation)
do hereby certify that these ARTICLES OF AMENDMENT affecting Articles
NUMBERED: 3
---
--------------------------------------------------------------------------------
(Number those articles 1,2,3,4,5 and/or 6 being amended hereby)
of the Articles of Organization were duly adopted at a meeting held on December
14, 1993, by vote of:
20,734,064 shares of Common Stock out of 24,893,312 shares outstanding,
----------- ----------
type, class & series, (if any)
being at least a majority of each type, class or series outstanding
and entitled to vote thereon:
VOTED: That Section 3 of the Corporation's Articles of Organization be hereby
amended to read in its entirety as follows:
3. The total number of shares and the par value, if any, of each class
of stock which the Corporation is authorized is as follows:
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left-hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
<PAGE> 35
To CHANGE the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
--------------------------------- ---------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
--------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C>
COMMON: None COMMON: 50,000,000 $0.05
PREFERRED: None PREFERRED: None -
</TABLE>
CHANGE the total authorized to:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
--------------------------------- ---------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
--------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C>
COMMON: None COMMON: 100,000,000 $0.05
PREFERRED: None PREFERRED: None -
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
Without Par Value With Par Value
----------------- --------------
Class of Stock No. of Shares No. of Shares Par Value Amount
-------------- ------------- ------------- --------- ------
<S> <C> <C> <C> <C>
Preferred None None
Common None 100,000,000 $0.05 $5,000,000
</TABLE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The General
Laws unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date. LATER
EFFECTIVE DATE: Date of Filing
--------------
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 7th day of January, in the year 1994.
/s/ GRAHAM C. C. MILLER President
-----------------------
Graham C. C. Miller
/s/ PAMELA A. KEATING Clerk
-----------------------
Pamela A. Keating
<PAGE> 37
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
======================================
I hereby approve the within articles of amendment and, the
filing fee in the amount of $50,000 having been paid, said
articles are deemed to have been filed with me this 27th
day of January, 1994.
/s/ MICHAEL JOSEPH CONNOLLY
--------------------------
MICHAEL J. CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO: Joseph A. Hedal, Esq.
LTX Corporation
------------------------------------------
LTX Park at University Avenue
------------------------------------------
Westwood, MA 02090
------------------------------------------
Telephone: (617) 461-1000, extension 5478
------------------------------
<PAGE> 1
EXHIBIT 3.3
LTX CORPORATION
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
Article I - General ................................................ 1
Section 1.1. Offices ......................................... 1
Section 1.2. Seal ............................................ 1
Section 1.3. Fiscal Year ..................................... 1
Article II - Stockholders .......................................... 1
Section 2.1. Place of Meeting ................................ 1
Section 2.2. Annual Meetings ................................. 1
Section 2.3. Special Meetings ................................ 2
Section 2.4. Notice of Meetings .............................. 2
Section 2.5. Quorum .......................................... 2
Section 2.6. Voting .......................................... 3
Section 2.7. Inspectors of Election .......................... 3
Section 2.8. Action Without Meeting .......................... 4
Article III - Directors ............................................ 4
Section 3.1. Powers .......................................... 4
Section 3.2. Number, Election and Term of Office ............. 4
Section 3.3. Place of Meetings ............................... 4
Section 3.4. Annual Meetings ................................. 5
Section 3.5. Regular Meetings ................................ 5
Section 3.6. Special Meetings ................................ 5
Section 3.7. Notice of Meetings .............................. 5
Section 3.8. Quorum .......................................... 6
Section 3.9. Voting .......................................... 6
Section 3.10. Action Without Meeting .......................... 6
Section 3.11. Meetings by Telephone Conference Calls .......... 6
Section 3.12. Resignations .................................... 6
Section 3.13. Removal ......................................... 6
Section 3.14. Vacancies ....................................... 7
Section 3.15. Compensation of Directors ....................... 7
Section 3.16. Committees ...................................... 7
Section 3.17. Issuance of Stock ............................... 7
Article IV - Officers .............................................. 7
Section 4.1. Officers ........................................ 7
Section 4.2. Election and Term of Office ..................... 8
Section 4.3. President ....................................... 8
Section 4.4. Vice Presidents ................................. 8
</TABLE>
<PAGE> 2
(ii)
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Title Page
<S> <C>
Section 4.5. Treasurer and Assistant Treasurer .............. 8
Section 4.6. Clerk and Assistant Clerk ...................... 9
Section 4.7. Secretary and Assistant Secretary .............. 9
Section 4.8. Resignation .................................... 9
Section 4.9. Removal ........................................ 9
Section 4.10. Vacancies ...................................... 10
Section 4.11. Subordinate Officers ........................... 10
Section 4.12. Compensation ................................... 10
Article V - Stock ................................................ 10
Section 5.1. Stock Certificates ............................. 10
Section 5.2. Transfer of Stock .............................. 11
Section 5.3. Fixing Date for Determination of Stockholders'
Rights ......................................... 11
Section 5.4. Lost, Mutilated or Destroyed Certificates ...... 12
Article VI - Miscellaneous Management Provisions.................. 12
Section 6.1. Execution of Instruments ....................... 12
Section 6.2. Corporate Records .............................. 12
Section 6.3. Voting of Securities ........................... 13
Section 6.4. Conflict of Interest ........................... 13
Section 6.5. Indemnification ................................ 14
Article VII - Amendments ......................................... 15
Section 7.1. General ........................................ 15
Section 7.2. Date of Annual Meeting of Stockholders ......... 15
Section 7.3. Requirements for Certain Amendments............. 16
Article VIII
Section 8.1. Control Share Acquisitions ..................... 17
</TABLE>
<PAGE> 3
LTX CORPORATION
BY-LAWS
Article I - General
Section 1.1. Offices. The principal office of the corporation shall be in
Newton Highlands, Massachusetts. The corporation may also have offices at such
other place or places within or without Massachusetts as the Board of Directors
may from time to time determine or the business of the corporation may require.
Section 1.2. Seal. The seal of the corporation shall be in the form of a
circle inscribed with the name of the corporation, the year of its incorporation
and the word "Massachusetts". When authorized by the Board of Directors and to
the extent not prohibited by law, a facsimile of the corporate seal may be
affixed or reproduced.
Section 1.3. Fiscal Year. The fiscal year of the corporation shall be the
twelve months ending July 31 of each year.
Article II - Stockholders
Section 2.1. Place of Meeting. Meetings of stockholders shall be held at
the principal office of the corporation or, to the extent permitted by the
Articles of Organization, at such other place within the United States as the
Board of Directors may from time to time designate.
Replaced Dec. 14, '82
Section 2.2. Annual Meetings. The annual meetings of stockholders shall be
held at such hour as may from time to time be designated by the Board of
Directors, on the third Tuesday in October of each year, beginning in 1977, or,
if a legal holiday, on the next succeeding full business day, for the purpose of
electing a Board of Directors and transacting such other business as may
properly be brought before such meeting. At the annual meeting any business may
be transacted whether or not the notice of such meeting shall have contained a
reference thereto, except where such a reference is required by law, the
Articles of Organization or these By-laws. If
<PAGE> 4
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the annual meeting is not held on the date determined in accordance with this
Section, a special meeting in lieu of the annual meeting may be held with all
the force and effect of an annual meeting.
Replaced Dec.12, '89
Section 2.3. Special Meetings. Special meetings of stockholders may be
called by the President or by the Board of Directors, and shall be called by the
Clerk or, in case of death, absence, incapacity or refusal of the Clerk, by any
other officer, upon written application of one or more stockholders who hold at
least one tenth part in interest of the capital stock entitled to vote at the
meeting. At any special meeting only business to which a reference shall have
been contained in the notice of such meeting may be transacted.
Section 2.4. Notice of Meetings. Written or printed notice of each meeting
of stockholders, stating the place, date and hour and the purposes of the
meeting shall be given by the Clerk or other officer calling the meeting at
least seven days, but not more than sixty days, before the meeting to each
stockholder entitled to vote at the meeting or entitled to such notice by
leaving such notice with him at his residence or usual place of business or by
mailing it, postage prepaid, and addressed to the stockholder at his address as
it appears in the records of the corporation. No notice need be given to any
stockholder if he, or his authorized attorney, waives such notice by a writing
executed before or after the meeting and filed with the records of the meeting
or by his presence, in person or by proxy, at the meeting. Any person authorized
to give notice of any such meeting may make affidavit of such notice, which, as
to the facts therein stated, shall be conclusive. It shall be the duty of every
stockholder to furnish to the Clerk of the corporation or to the transfer agent,
if any, of the class of stock owned by him, his current post office address.
Section 2.5. Quorum. At all meetings of stockholders the holders of a
majority in interest of all capital stock entitled to vote at such meeting or,
if two or more classes of stock are issued, outstanding and entitled to vote as
separate classes, a majority in interest of each class, present in person or
represented by proxy, shall constitute a quorum. The announcement of a quorum by
the officer presiding at the meeting shall constitute a conclusive determination
that a quorum is present. The
<PAGE> 5
AMENDMENT ADOPTED BY THE STOCKHOLDERS
ON DECEMBER 12. 1982
VOTED: That Section 2.2 of the Corporation's By-Laws by replaced by the
following:
Replaced June 2, 1994.
Section 2.2. Annual Meetings. The annual meetings of Stockholders
shall be held at such hour as may from time to time be designated
by the Board of Directors, on the second Tuesday in December of
each year, or, if a legal holiday, on the next succeeding full
business day, for the purpose of electing a Board of Directors
and transacting such other business as may properly be brought
before such meeting. At the annual meeting any business may be
transacted whether or not the notice of such meeting shall have
contained a reference thereto, except where such a reference is
required by law, the Articles of Organization or these By-Laws.
If the annual meeting is not held on the date determined in
accordance with this Section, a special meeting in lieu of the
annual meeting may be held with all the force and effect of an
annual meeting.
--------------------------------------------------------------------------------
AMENDMENT ADOPTED BY THE STOCKHOLDERS
ON DECEMBER 12, 1990
VOTED: That Section 2.3 of the Corporation's By-Laws be replaced by the
following:
Section 2.3. Special Meetings. Special meetings of stockholders
may be called by the President or by the Board of Directors, and
shall be called by the Clerk or, in case of death, absence,
incapacity or refusal of the Clerk, by any other officer, upon
written application of one or more stockholders who hold at least
forty percent in interest of the capital stock entitled to vote
at the meeting. At any special meeting only business to which a
reference shall have been contained in the notice of such meeting
may be transacted.
<PAGE> 6
AMENDMENT ADOPTED BY THE
BOARD OF DIRECTORS ON JUNE 2, 1994
VOTED: That Section 2.2 of the Corporation's By-Laws is hereby amended
and restated in its entirety as follows:
Section 2.2. Annual Meeting. The annual meeting of stockholders
shall be held within six months after the end of the
corporation's fiscal year specified by these By-Laws. The date
and hour of the annual meeting shall be fixed by the Board of
Directors. The purposes for which the annual meeting is to be
held, in addition to those prescribed by law, by the Articles of
Organization or these By-Laws, may be specified by the Board of
Directors or the President. In the event that no date for the
annual meeting is established or if no annual meeting is held in
accordance with the foregoing provisions, a special meeting may
be held in lieu thereof, and any action taken at such meeting
shall have the same effect as if taken at the annual meeting.
<PAGE> 7
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absence of such an announcement shall have no significance. Shares of its own
stock held by the corporation or held for its use and benefit shall not be
counted in determining the total number of shares outstanding at any particular
time. If a quorum is not present or represented, the stockholders present or
represented and entitled to vote at such meeting, by a majority vote, may
adjourn the meeting from time to time, without notice other than announcement at
the meeting until a quorum is present or represented. At any adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted if the meeting had been held as
originally called. The stockholders present at a duly organized meeting may
continue to transact business until adjournment notwithstanding the withdrawal
of one or more stockholders so as to leave less than a quorum.
Section 2.6. Voting. Except as otherwise provided by law or the Articles
of Organization, at all meetings of stockholders each stockholder shall have one
vote for each share of stock entitled to vote and registered in his name and a
proportionate vote for a fractional share. Any stockholder may vote in person
or by proxy dated not more than six months prior to the meeting and filed with
the Clerk of the meeting. Every proxy shall be in writing, subscribed by a
stockholder or his authorized attorney-in-fact, and dated. A proxy with respect
to stock held in the name of two or more persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the corporation
receives a specific written notice to the contrary from any one of them. No
proxy shall be valid after the final adjournment of the meeting. Voting on all
matters, including the election of directors, shall be by voice vote unless
voting by ballot is requested by any stockholder. Except as otherwise provided
by law, the Articles of Organization, or these By-laws, at all meetings of
stockholders all questions shall be determined by a vote of a majority of the
shares voting, or, if two or more classes of stock are entitled to vote as
separate classes, a vote of a majority of the shares voting of each class
voting, present in person or represented by proxy. The corporation shall not,
directly or indirectly, vote shares of its own stock.
Section 2.7. Inspectors of Election. Two inspectors may be appointed by
the Board of Directors before or
<PAGE> 8
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at each meeting of stockholders, or, if no such appointment shall have been
made, the presiding officer may make such appointment at the meeting. At the
meeting for which they are appointed, such inspectors shall open and close the
polls, receive and take charge of the proxies and ballots, and decide all
questions touching on the qualifications of voters, the validity of proxies and
the acceptance and rejection of votes. If any inspector previously appointed
shall fail to attend or refuse or be unable to serve, the presiding officer
shall appoint an inspector in his place.
Section 2.8. Action Without Meeting. Any action which may be taken by
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of stockholders. Such consents shall be
treated for all purposes as a vote at a meeting.
Article III - Directors
Section 3.1. Powers. Except as otherwise provided by law, the Articles of
Organization or these By-laws, the business of the Corporation shall be managed
by a Board of Directors who may exercise all the powers of the corporation.
Amended by operation of law pursuant to enactment of Sec. 50A of a. 156B of
Mass. General Laws
Section 3.2. Number, Election and Term of Office. The Board of Directors
shall consist of not less than three nor more than seven directors. Within the
limits specified, the number of directors shall be determined (a) by a vote of
the stockholders at the annual meeting, or (b) by a vote of the stockholders at
a special meeting called for the purpose by the Board of Directors, or (c) by
vote of the Board of Directors. Except for the initial directors and except as
provided in Section 3.14, the directors shall be elected at the annual meeting
of the stockholders or at a special meeting. All directors shall hold office
until the following annual meeting or special meeting in lieu of the annual
meeting and until their successors are chosen and qualified.
Section 3.3. Place of Meetings. Meetings of the Board of Directors may be
held at any place within or without the Commonwealth of Massachusetts.
<PAGE> 9
AMENDMENTS ENACTED BY OPERATION OF LAW PURSUANT TO
MASSACHUSETTS GENERAL LAWS, CH. 156B SECTION 50A
Section 3.2 Number, Election and Term of Office. The number of directors
shall be not less than three, except that whenever there shall be only two
stockholders, the number of directors shall be not less than two and whenever
there shall be only one stockholder, the number of directors shall be not less
than one.
The Board of Directors shall be divided into three classes, such classes to be
as nearly equal in number as possible. One of such classes of directors shall be
elected annually by the stockholders. Subject to the foregoing requirements and
applicable law, the Board of Directors may, from time to time, fix the number
of directors and their respective classifications, provided that any such action
does not operate to remove a director elected by the stockholders other than in
the manner specified in the Articles of Organization or the By-laws. Except as
otherwise provided in accordance with these By-laws, the members of each class
shall be elected for a term of three years and shall serve until their
successors are elected and qualified. Any successor to a director whose seat
becomes vacant shall serve for the remainder of the term of his predecessor and
until his successor is elected and qualified. Except as otherwise provided by
law, by the Articles of Organization or by these By-laws, a director shall hold
office until the annual meeting of stockholders held in the third year following
the year of his election and thereafter until his successor is chosen and
qualified.
Section 3.13 Removal. A director whose term is classified in accordance
with these By-laws may be removed from office only for cause by vote of either
(a) the holders of a majority of the shares outstanding and entitled to vote in
the election of directors or (b) a majority of the directors then in office.
"Cause" shall mean, in the case of the removal of a director whose term is
classified in accordance with these By-laws, only (i) conviction of a felony
(ii) declaration of unsound mind by order of court, (iii) gross dereliction of
duty, (iv) commission of an action involving moral turpitude, or (v) commission
of an action that constitutes intentional misconduct or a knowing violation of
law if such action in either event results both in an improper substantial
personal benefit and a material injury to the corporation. A director may be
removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him.
Section 3.14 Enlargement of the Board of Directors; Vacancies. The number
of directors whose terms are classified in accordance with the provisions of
these By-laws may be increased by the directors by the affirmative vote of a
majority of the directors then in office. Any vacancy at any time existing in
the Board of Directors among those directors whose terms are classified in
accordance with these By-laws, whether resulting from an increase in the size of
the Board of Directors, from the death, resignation. disqualification or
removal of a director or otherwise, shall be filled solely by the affirmative
vote of a majority of the remaining directors then in office, even though less
than a quorum of the Board of Directors.
<PAGE> 10
-5-
Section 3.4. Annual Meetings. A meeting of the Board of Directors for the
election of officers and the transaction of general business shall be held each
year beginning in 1977, at the place of and immediately after the final
adjournment of the annual meeting of stockholders or the special meeting in
lieu of the annual meeting. No notice of such annual meeting need be given.
Section 3.5. Regular Meetings. Regular meetings of the Board of Directors
may be held, without notice, at such time and place as the Board of Directors
may determine. Any director not present at the time of the determination shall
be advised, in writing, of any such determination.
Section 3.6. Special Meetings. Special meetings of the Board of
Directors, including meetings in lieu of the annual or regular meetings, may be
held upon notice at any time upon the call of the President and shall be called
by the President or the Clerk or, in case of the death, absence, incapacity or
refusal of the Clerk, by any other officer, upon written application, signed by
any two directors, stating the purpose of the meeting.
Section 3.7. Notice of Meetings. Wherever notice of any meetings of the
Board of Directors is required by these By-laws or by vote of the Board of
Directors, such notice shall state the place, date and hour of the meeting and
shall be given to each director by the President, Clerk or other officer calling
the meeting at least two days prior to such meeting if given in person by
telephone or by telegram or at least four days prior to such meeting if given by
mail. Notice shall be deemed to have been duly given, if by mail, by depositing
the notice in the post office as a first class letter, postage prepaid, or, if
by telegram, by completing and filing the notice on a telegraph blank and paying
the requisite fee at any telegraph office, the letter or telegram being
addressed to the director at his last known mailing address as it appears on the
books of the corporation. No notice need be given to any director who waives
such notice by a writing executed before or after the meeting and filed with the
records of the meeting or by his attendance at the meeting without protesting at
or before the commencement of the meeting the lack of notice to him. No notice
of adjourned meetings of the Board of Directors need be given.
<PAGE> 11
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Section 3.8. Quorum. At all meetings of the Board of Directors, a
majority of the directors then in office, but in no event less than two
directors, shall constitute a quorum. If a quorum is not present, those present
may adjourn the meeting from time to time until a quorum is obtained. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted if the meeting had been held as
originally called.
Section 3.9. Voting. At any meeting of the Board of Directors the vote of
a majority of those present shall decide any matter except as otherwise provided
by law, the Articles of Organization or these By-laws.
Section 3.10. Action Without Meeting. Any action which may be taken at any
meeting of the Board of Directors may be taken without a meeting if all the
directors consent to the action in writing and the written consents are filed
with the records of the meetings of the Board of Directors. Such consents shall
be treated for all purposes as a vote at a meeting.
Section 3.11. Meetings by Telephone Conference Calls. Directors or members
of any committee designated by the Board of Directors may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
Section 3.12. Resignations. Any director may resign by giving written
notice to the President or Clerk. Such resignation shall take effect at the time
or upon the event specified therein, or, if none is specified, upon receipt.
Unless otherwise specified in the resignation, its acceptance shall not be
necessary to make it effective.
Amended by operation of law pursuant to the enactment of Sec. 50A of Ch. 156B
of the Mass. Genera1 Laws.
Section 3.13. Removal. A director may be removed from office with or
without cause by vote of the holders of a majority in interest of the stock
entitled to vote in the election of such director and may be removed from office
with cause by vote of a majority of the directors then in office. A director may
be removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him.
<PAGE> 12
AMENDMENTS ENACTED BY OPERATION OF LAW PURSUANT
TO MASSACHUSETTS GENERAL LAWS, CH. 156B SECTION 50A
Section 3.2 Number, Election and Term of Office. The number of directors
shall be not less than three, except that whenever there shall be only two
stockholders, the number of directors shall be not less than two and whenever
there shall be only one stockholder, the number of directors shall be not less
than one.
The Board of Directors shall be divided into three classes, such classes to be
as nearly equal in number as possible. One of such classes of directors shall be
elected annually by the stockholders. Subject to the foregoing requirements and
applicable law, the Board of Directors may, from time to time, fix the number
of directors and their respective classifications, provided that any such action
does not operate to remove a director elected by the stockholders other than in
the manner specified in the Articles of Organization or the By-laws. Except as
otherwise provided in accordance with these By-laws, the members of each class
shall be elected for a term of three years and shall serve until their
successors are elected and qualified. Any successor to a director whose seat
becomes vacant shall serve for the remainder of the term of his predecessor and
until his successor is elected and qualified. Except as otherwise provided by
law, by the Articles of Organization or by these By-laws, a director shall hold
office until the annual meeting of stockholders held in the third year following
the year of his election and thereafter until his successor is chosen and
qualified.
Section 3.13 Removal. A director whose term is classified in accordance
with these By-laws may be removed from office only for cause by vote of either
(a) the holders of a majority of the shares outstanding and entitled to vote in
the election of directors or (b) a majority of the directors then in office.
"Cause" shall mean, in the case of the removal of a director whose term is
classified in accordance with these By-laws, only (i) conviction of a felony
(ii) declaration of unsound mind by order of court, (iii) gross dereliction of
duty, (iv) commission of an action involving moral turpitude, or (v) commission
of an action that constitutes intentional misconduct or a knowing violation of
law if such action in either event results both in an improper substantial
personal benefit and a material injury to the corporation. A director may be
removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him.
Section 3.14 Enlargement of the Board of Directors; Vacancies. The number
of directors whose terms are classified in accordance with the provisions of
these By-laws may be increased by the directors by the affirmative vote of a
majority of the directors then in office. Any vacancy at any time existing in
the Board of Directors among those directors whose terms are classified in
accordance with these By-laws, whether resulting from an increase in the size of
the Board of Directors, from the death, resignation, disqualification or removal
of a director or otherwise, shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors.
<PAGE> 13
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Sect 3.14 Amended by operation of law pursuant to the enactment of Sect. 50A of
Ch. 156B of the Mass. General Laws
Section 3.14. Vacancies. In the event of a vacancy in the Board of
Directors, by reason of an enlargement of the Board of Directors or otherwise,
the remaining directors, by majority vote, may elect a director to fill such
vacancy and may exercise the powers of the full Board of Directors until
the vacancy is filled.
Section 3.15. Compensation of Directors. Directors may be paid such
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 3.16. Committees. The Board of Directors may, by vote of a
majority of the directors then in office, appoint from their number one or more
committees and delegate to such committees some or all of their powers to the
extent permitted by law, the Articles of Organization or these By-laws. Except
as the Board of Directors may otherwise determine, any such committee shall be
governed in the conduct of its business by the rules governing the conduct of
the business of the Board of Directors contained in these By-laws and may, by
majority vote of the entire committee, make other rules for the conduct of its
business. The Board of Directors shall have power at any time to fill vacancies
in any such committees, to change its membership or to discharge the committee.
Section 3.17. Issuance of Stock. The Board of Directors shall have power
to issue and sell or otherwise dispose of such shares of the corporation's
authorized but unissued capital stock to such persons and at such times and for
such consideration, cash, property, services, expenses, or otherwise, and upon
such terms as it shall determine from time to time.
Article IV - Officers
Section 4.1. Officers. The officers of the corporation shall consist of a
President, a Treasurer, a Clerk, and such other officers with such other titles
as the Board of Directors may determine including but not limited to a Chairman
of the Board of Directors, a Secretary, one or more Vice Presidents, Assistant
Treasurers and Assistant Clerks, and Assistant Secretaries. Any two
<PAGE> 14
offices may be held by the same person except that the Clerk shall not also
serve as President or Treasurer. Any officer may be required to give a bond for
the faithful performance of his duties in such form and with such sureties as
the Board of Directors may determine.
Section 4.2. Election and Term of Office. Except for the initial officers
and except as provided in Section 4.10, the President, Treasurer and Clerk shall
be elected by the Board of Directors at its annual meeting or at the special
meeting held in lieu of the annual meeting and shall hold office until the
following annual meeting of the Board of Directors or the special meeting in
lieu of said annual meeting and until their successors are chosen and qualified.
Other officers may be chosen by the Board of Directors at the annual meeting or
any other meeting and shall hold office for such period as the Board of
Directors may prescribe.
Sec. 4.3 Dec. 22, 81
Section 4.4. (12/22/81)
Section 4.3. President. Unless the Board of Directors otherwise
determines, the President shall be the chief executive officer of the
corporation. He shall have the general control and management of the
corporation's business and affairs. He need not be a director. Unless there is a
Chairman of the Board, the President shall preside at all meetings of the Board
of Directors and of the stockholders.
Section 4.5 (12/22/81)
Section 4.4. Vice Presidents. The Vice President, or if there be more than
one, the Vice Presidents, shall perform such of the duties of the President on
behalf of the corporation as may be respectively assigned to him or them from
time to time by the Board of Directors or the President. The Board of Directors
may designate a Vice President as the Executive Vice President, and in the
absence or inability of the President to act, such Executive Vice President
shall have and possess all of the powers and discharge all of the duties of the
President, subject to the control of the Board of Directors.
Section 4.6 (12/22/81)
Section 4.5. Treasurer and Assistant Treasurer. The Treasurer shall be the
principal financial officer of the corporation. He shall have custody and
control over all funds and securities of the corporation, maintain full and
adequate accounts of all moneys received and paid by him on account of the
corporation and, subject to the control of the Board of Directors, discharge all
duties incident to the office of Treasurer. Any Assistant
<PAGE> 15
Amendment Adopted By Board of Directors
on December 22, 1981
VOTED: To renumber Sections 4.3 through 4.12 of the Corporation's
by-laws as Sections 4.4 through 4.13 respectively, and to insert
the following new Section 4.3:
Section 4.3. Chairman of the Board. The Chairman of the Board of
Directors shall preside at all meetings of the stockholders and
Directors and shall have such other duties as may be assigned to
him from time to time by the Board of Directors.
<PAGE> 16
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Treasurer shall perform such of the duties of the Treasurer and such other
duties as the Board of Directors, the President or the Treasurer may designate.
The Treasurer shall have authority, in connection with the normal business of
the corporation, to sign contracts, bids, bonds, powers of attorney and other
documents when required.
Section 4.7. (12/22/81)
Section 4.6. Clerk and Assistant Clerk. The Clerk shall be the principal
recording officer of the corporation. He shall record all proceedings of the
stockholders and discharge all duties incident to the office of Clerk. Unless a
Secretary is appointed by the Board of Directors to perform such duties, the
Clerk shall record all proceedings of the Board of Directors and of any
committees appointed by the Board of Directors. Any Assistant Clerk shall
perform such of the duties of the Clerk and such other duties as the Board of
Directors, the President or the Clerk may designate. In the absence of the
Clerk or any Assistant Clerk from any meeting of stockholders, the Board of
Directors or any committee appointed by the Board of Directors, a Temporary
Clerk designated by the person presiding at the meeting shall perform the duties
of the Clerk. The Clerk shall be a resident of the Commonwealth of
Massachusetts unless a resident agent has been appointed by the corporation
pursuant to law to accept service of process.
Section 4.8. (12/22/81)
Section 4.7. Secretary and Assistant Secretary. If appointed by the Board
of Directors, the Secretary shall record all proceedings of the Board of
Directors and discharge all duties incident to the office of Secretary. Any
Assistant Secretary shall perform such of the duties of the Secretary and such
other duties as the Board of Directors, President or Secretary may designate.
The Board of Directors and any committee appointed by the Board of Directors may
appoint a Secretary and one or more Assistant Secretaries to perform the
functions of the Secretary and Assistant Secretary for such committee.
Section 4.9. (12/22/81)
Section 4.8. Resignation. Any officer may resign by giving written notice
to the President or Clerk. Such resignation shall take effect at the time or
upon the event specified therein, or, if none is specified, upon receipt. Unless
otherwise specified in the resignation, its acceptance shall not be necessary
to make it effective.
Section 4.10. (12/22/81)
Section 4.9. Removal. An officer may be removed
<PAGE> 17
-10-
from office with cause, after reasonable notice and opportunity to be heard, or
without cause, in either case, by vote of a majority of the directors then in
office.
Section 4.11. (12/22/81)
Section 4.10. Vacancies. The Board of Directors may fill any vacancy
occurring in any office for any reason and may, in its discretion, leave
unfilled for such period as it may determine any offices other than those of
President, Treasurer and Clerk.
Section 4.12. (12/22/81)
Section 4.11. Subordinate Officers. The Board of Directors may, from time
to time, authorize any officer to appoint and remove subordinate officers and to
prescribe their powers and duties. The term "subordinate officers" shall in no
event include the President, Treasurer and Clerk.
Section 4.13. (12/22/81)
Section 4.12. Compensation. The Board of Directors may fix the
compensation of all officers of the corporation and may authorize any officer
upon whom the power of appointing subordinate officers may have been conferred
to fix the compensation of such subordinate officers.
Article V - Stock
Section 5.1. Stock Certificates. Each stockholder shall be entitled to a
certificate or certificates of stock of the corporation in such form as the
Board of Directors may from time to time prescribe. Each certificate shall be
duly numbered and entered in the books of the corporation as it is issued, shall
state the holder's name and the number and the class and the designation of the
series, if any, of his shares, shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer and may, but need not,
be sealed with the seal of the corporation. If any stock certificate is signed
by a transfer agent, or by a registrar, other than a director, officer or
employee of the corporation, the signatures thereon of the officers may be
facsimiles. In case any officer who has signed or whose facsimile signature has
been placed on any certificate shall have ceased to be such officer before such
certificate is issued, it may nevertheless be issued by the corporation and
delivered with the same effect as if he were such officer at the time of its
issue. Every certificate of stock which is subject to any restriction on
transfer pursuant to the Articles of Organization, the By-laws or any agreement
to which the corporation is a party, shall have the restrictions noted
conspicuously on the certificate and shall
<PAGE> 18
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also set forth on the face or back of the certificate either (i) the full text
of the restriction, or (ii) a statement of the existence of such restriction and
a statement that the corporation will furnish a copy thereof to the holder of
such certificate upon written request and without charge. Every certificate
issued at a time when the corporation is authorized to issue more than one class
or series of stock shall set forth upon the face or back of the certificate
either (i) the full text of the preferences, voting powers, qualifications and
special and relative rights of the shares of each class and series, if any,
authorized to be issued, as set forth in the Articles of Organization or (ii) a
statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
Section 5.2. Transfer of Stock. Subject to any transfer restrictions then
in force, the shares of stock of the corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives. Such transfer shall be effected by delivery of the
old certificate, together with a duly executed assignment and power to transfer
endorsed thereon or attached thereto and with such proof of the authenticity of
the signature and such proof of authority to make the transfer as the
corporation or its agents may reasonably require, to the person in charge of
the stock and transfer books and ledgers or to such other person as the Board of
Directors may designate, who shall thereupon cancel the old certificate and
issue a new certificate. The corporation may treat the holder of record of any
share or shares of stock as the owner of such stock, and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have notice thereof, express or
otherwise.
Section 5.3. Fixing Date for Determination of Stockholders' Rights. The
Board of Directors may fix in advance a time, not exceeding sixty days preceding
the date of any meeting of stockholders, or the date for the payment of any
dividend or the making of any distribution to stockholders, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or the last date on which the consent or
dissent of stockholders may be
<PAGE> 19
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effectively expressed for any purpose, as the record date for determining the
stockholders entitled to notice of, and to vote at, such meeting and any
adjournment thereof, to receive such dividend or distribution, to receive such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to express such consent or
dissent. In such case only stockholders of record on the date so fixed shall
have such right, notwithstanding any transfer of stock on the books of the
corporation after the record date. In lieu of fixing such record date, the
Board of Directors may close the stock transfer books for all or any part of
such period. In any case in which the Board of Directors does not fix a record
date or provide for the closing of the transfer books, the record date shall be
the thirtieth day next preceding the date of such meeting, the dividend payment
or distribution date, the date for allotment of rights, the date for exercising
of rights in respect of any such change, conversion or exchange of capital
stock, or the date for expressing such consent or dissent, as the case may be.
Section 5.4. Lost, Mutilated or Destroyed Certificates. No certificates
for shares of stock of the corporation shall be issued in place of any
certificate alleged to have been lost, mutilated or destroyed, except upon
production of such evidence of the loss, mutilation or destruction and upon
indemnification of the corporation and its agents to such extent and in such
manner as the Board of Directors may prescribe and as required by law.
Article VI - Miscellaneous Management Provisions
Section 6.1. Execution of Instruments. Except as otherwise provided in
these By-laws or as the Board of Directors may generally or in particular cases
authorize the execution thereof in some other manner, all instruments, documents
deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the corporation shall be signed by the
President or a Vice President, or by the Treasurer or an Assistant Treasurer, or
by the Clerk. Facsimile signatures may be used in the manner and to the extent
authorized generally or in particular cases by the Board of Directors.
Section 6.2. Corporate Records. The original, or attested copies, of the
Articles of Organization, By-laws,
<PAGE> 20
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and records of all meetings of incorporators and stockholders, and the stock and
transfer records, which shall contain the names of all stockholders and the
record address and the amount of stock held by each, shall be kept in the
Commonwealth of Massachusetts at the principal office of the corporation, or at
an office of its Clerk, its resident agent or its transfer agent. The copies and
records need not all be kept in the same office. They shall be available at all
reasonable times for inspection by any stockholder for any proper purpose. They
shall not be available for inspection to secure a list of stockholders or other
information for the purpose of selling such list or information or copies
thereof or of using the same for a purpose other than in the interest of the
applicant, as a stockholder, relative to the affairs of the corporation.
Section 6.3. Voting of Securities owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by this
corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this corporation if he is present at such
meeting, or in his absence by the Treasurer of this corporation if he is present
at such meeting, and (b) whenever, in the judgment of the President, it is
desirable for this corporation to execute a proxy or written consent in respect
to any shares or other securities issued by any other corporation and owned by
this corporation, such proxy or consent shall be executed in the name of this
corporation by the President, without the necessity of any authorization by the
Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or consent.
Any person or persons designated in the manner above stated as the proxy or
proxies of this corporation shall have full right, power and authority to vote
the shares or other securities issued by such other corporation and owned by
this corporation the same as such shares or other securities might be voted by
this corporation.
Section 6.4. Conflict of Interest. No contract or other transaction of the
corporation shall, in the absence of fraud, be affected or invalidated by the
act that any
<PAGE> 21
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stockholder, director or officer of the corporation or any corporation, firm or
association of which he may be a director, officer, stockholder or member may be
a party to or may have an interest, pecuniary or otherwise, in, any such
contract or other transaction, provided that the nature and extent of his
interest was disclosed to, or known by, the entire Board of Directors before
acting on such contract or other transaction. Except in the case of any contract
or other transaction between the corporation and any other corporation
controlling, controlled by or under common control with the corporation, any
director of the corporation who is also a director, officer, stockholder or
member of any corporation, firm or association with which the corporation
proposes to contract or transact any business, or who has an interest, pecuniary
or otherwise, in any such contract or other transaction, may not be counted in
determining the existence of a quorum at any meeting of the Board of Directors
which shall authorize any such contract or such transaction, and such director
shall not participate in the vote to authorize any such contract or transaction.
Any such contract or transaction may be authorized or approved by a majority of
the directors then in office and not disqualified by this Section 6.4 to vote on
such matters, even though the disinterested directors do not constitute a
quorum.
Replaced
Dec. 8, '87
Section 6.5. Indemnification. The corporation shall indemnify each
director and officer against all judgments, fines, settlement payments and
expenses, including reasonable attorneys' fees, paid or incurred in connection
with any claim, action, suit or proceeding, civil or criminal, to which he may
be made a party or with which he may be threatened by reason of his being or
having been a director or officer of the corporation, or, at its request, a
director, officer, stockholder or member of any other corporation, firm or
association of which the corporation is a stockholder or creditor and by which
he is not so indemnified, or by reason of any action or omission by him in such
capacity, whether or not he continues to be a director or officer at the time of
incurring such expenses or at the time the indemnification is made. No
indemnification shall be made hereunder (a) with respect to payments and
expenses incurred in relation to matters as to which he shall be finally
adjudged in such action, suit or proceeding not to have acted in good faith and
in the reasonable belief that his action was in the best interests of the
corporation, or (b) otherwise prohibited by law. The
<PAGE> 22
AMENDMENT ADOPTED BY THE STOCKHOLDERS
ON DECEMBER 8, 1987
VOTED: That Section 6.5 of the Company's By-Laws be be replaced by the
following:
Section 6.5 Indemnification. (a) The Corporation shall shall
indemnify each director and officer against all judgments, fines,
settlement payments and expenses, including reasonable attorneys'
fees, paid or incurred in connection with any claim, action, suit
or proceeding, civil or criminal, to which he may be made a
party or with which he may be threatened by reason of his being
or having been a director or officer of the corporation, or, at
its request, a director, officer, stockholder or member of any
other corporation, firm, association or other organization or by
reason of his serving or having served, at its request, in any
capacity with respect to any employee benefit plan, or by reason
of any action or omission by him in such capacity, whether or not
he continues to be a director or officer at the time of incurring
such expenses or at the time the indemnification is made. No
indemnification shall be made hereunder (i) with respect to
payments and expenses incurred in relation to matters as to which
he shall be finally adjudged in such action, suit or proceeding
not to have acted in good faith and in the reasonable belief that
his action was in the best interests of the corporation (or, to
the extent that such matter relates to service with respect to an
employee benefit plan, in the best interest of the participants
or beneficiaries of such employee benefit plan), or (ii)
otherwise prohibited by law. The foregoing right of
indemnification shall not be exclusive of other rights to which
any director or officer my otherwise be entitled and shall inure
to the benefit of the executor or administrator of such director
or officer. The Corporation may pay the expenses incurred by any
such person in defending a civil or criminal action, suit or
proceeding in advance of the final disposition of such action,
suit, or proceeding, upon receipt of an undertaking by such
person to repay such payment if it is determined that such person
is not entitled to indemnification hereunder.
(b) The Board of Directors may, without stockholder
approval, authorize the Corporation to enter into agreements,
including any amendments or modification thereto, with any of its
directors, officers or other persons described in paragraph (a)
above providing for indemnification of such persons to the
maximum extent permitted under applicable law and the
Corporation's Articles of Organization and By-laws.
(c) No amendment to or repeal of this section shall have
any adverse effect on (i) the right of any director or officer
under any agreement entered into prior thereto, or (ii) the
rights of any director or officer hereunder relating to his
service, for which he would other wise be entitled to indemnity
hereunder, during any period prior to such amendment or repeal.
<PAGE> 23
AMENDMENT ADOPTED BY THE STOCKHOLDERS
ON DECEMBER 9. 1986
VOTED: That the following new Section 6.6 "Anti-Self-Dealing" amendment
be added to the Company's By-Laws:
"Section 6.6. Transactions With Related Persons. The affirmative
vote of the holders of not less than seventy-five percent of all
outstanding shares of capital stock of the corporation entitled
to vote thereon and the affirmative vote of holders of not less
than two-thirds of all such outstanding shares not held by any
Related Person (as hereinafter defined) shall be required for the
approval or authorization of any Related Person Transaction (as
hereinafter defined), whether or not any stockholder approval or
authorization of such Related Person Transaction would otherwise
be retired; provided, however, that the seventy-five percent and
two-thirds voting requirements shall not be applicable if:
"(1) The 'Continuing Directors' of the corporation (as
hereinafter defined) by a two-thirds vote of the Continuing
Directors then in office have approved the Related Person
Transaction; or
"(2) The Related Person Transaction is solely between the
corporation and another corporation, one hundred percent of the
shares of outstanding capital stock entitled to vote generally in
the election of directors of which is owned directly or
indirectly by the corporation.
"For the purposes of the proceding and succeeding paragraphs:
"(i) The term 'Continuing Director' shall mean a
director who was a member of the Board of Directors of the
corporation immediately prior to the time that any Related Person
involved in a Related Person Transaction became a Related Person.
"(ii) The term 'Related Person' shall mean and include
any individual, corporation, partnership or other person or
entity which, together with its Affiliates and Associates (as
such terms are defined in Rule 12b-2, or any successor rule,
promulgated under the Securities Exchange Act of 1934),
beneficially owns (as defined in Rule 13d-3, or any successor
rule, promulgated under the Securities Exchange Act of 1934) in
the aggregate ten percent or more of all outstanding shares of
capital stock of the corporation, entitled to vote generally for
directors and any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity. Without
limiting the foregoing, any shares of stock of the corporation
that any Related Person has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, shall be deemed beneficially owned by the
Related Person.
"(iii) The term 'Related Person Transaction' shall mean
generally any business, financial employment or other agreement
or arrangement with any Related Person, or any
<PAGE> 24
action, consent or other arrangement which affects the rights or
obligations of the corporation with respect to a Related Person,
and shall include, but shall not be limited to, the following:
"(a) any merger, consolidation or share exchange of the
corporation or any of its subsidiaries with or into (i) any
Related Person, or (ii) any other corporation (whether or not
itself a Related Person) which is, or after such merger,
consolidation or share exchange would be, an Affiliate of a
Related Person; in each case irrespective of which corporation or
company is the surviving entity;
"(b) any merger or consolidation of a Related Person with
or into the corporation or a subsidiary of the corporation;
"(c) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or any other
security device, of all or any tangible or intangible assets of
the corporation or of a subsidiary of the corporation to a
Related Person;
"(d) any sale, lease, exchange, transfer, loan or other
disposition of all or any tangible or intangible assets of a
Related Person to the corporation or a subsidiary of the
corporation;
"(e) the issuance of any securities or the loan of any
asset of the corporation or a subsidiary of the corporation to a
Related Person;
"(f) any recapitalization that would have the effect of
increasing the voting power of a Related Person with respect to
the corporation;
"(g) any loan or other extension of credit by the Company
to a Related Person or by a Related Person of the Company;
"(h) any employment or consulting agreement or arrangement
between the Company and a Related Person;
"(i) any agreement, contract or other arrangement
providing for any of the transactions described in this
definition of Related Person Transaction.
"Anything in these By-Laws to the contrary
notwithstanding, this Section 6.6 shall not be replealed,
modified or amended in any respect, unless such action is
approved by the affirmative vote of the holders of not less than
seventy-five percent of all outstanding shares of capital stock
of the corporation entitled to vote thereon and by the
affirmative vote of holders of not less than two-thirds of all
such outstanding shares held by any Related Person; provided
however, that any amendment, modification or repeal of any of
this Section 6.6 declared advisable by the affirmative vote of
two-thirds of the Continuing Directors then in office may be
approved by the affirmative vote of the holders of not less than
two-thirds of all outstanding shares of capital stock of the
corporation entitled to vote thereon."
<PAGE> 25
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foregoing right of indemnification shall not be exclusive of other rights to
which any director or officer may otherwise be entitled and shall inure to the
benefit of the executor or administrator of such director or officer.
Section 6.6. Added Dec. 9, '86
Article VII - Amendments
Section 7.1. General. These By-laws may be amended, added to or repealed,
in whole or in part, (a) by vote of the stockholders at a meeting, where the
substance of the proposed amendment is stated in the notice of the meeting, or
(b) by vote of a majority of the directors then in office, except that no
amendment may be made by the Board of Directors on matters reserved to the
stockholders by law or the Articles of Organization or which changes the
provisions of these By-laws relating to meetings of Stockholders, to the removal
of directors or to the requirements for amendment of these By-laws. Notice of
any amendment, addition or repeal of any By-law by the Board of Directors
stating the substance of such action shall be given to all stockholders not
later than the time when notice is given of the meeting of stockholders next
following such action by the Board of Directors. Any By-law adopted by the Board
of Directors may be amended or repealed by the stockholders.
Section 7.2. Date of Annual Meeting of Stockholders. No amendment of these
By-laws changing the date of the annual meeting of stockholders may be made
within sixty days before the date fixed in these By-laws for such meeting.
Notice of such change shall be given to all stockholders at least twenty days
before the new date fixed for the meeting.
Section 7.3. Added Dec. 9, '86
Section 7.3 deleted by operation of law pursuant to the enactment of Mass. Gen
Laws Chapter 156B, Section 50A.
<PAGE> 26
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AMENDMENT ADOPTED BY THE STOCKHOLDERS
ON DECEMBER 9, 1986
VOTED: The the following new Section 7.3 be added to the Company's
By-Laws:
This section 7.3 deleted by operation of law pursuant to the enactment of Mass.
General Laws, Chapter 156B, Section 50A.
"Section 7.3 Requirements for Certain Amendments. Anything in
these By-Laws to the contrary notwithstanding, Sections 3.2,
3.13, and this Section 7.3 shall not be replealed, modified or
amended in any respect, unless such action is approved by the
affirmative vote of the holders of not less than seventy-five
percent of all outstanding shares of capital stock of the
corporation entitled to vote thereon and by the affirmative vote
of holders of not less than two-thirds of all such outstanding
shares held by any Related Person (as hereinafter defined);
provided, however, that any amendment, modification or repeal of
any Sections 3.2, 3.13, or this Section 7.3 declared advisable by
the affirmative vote of two-thirds of the Continuing Directors
(as hereinafter defined) then in office may be approved by the
affirmative vote of the holders of not less than two-thirds of
all outstanding shares of capital stock of the corporation
entitled to vote thereon. The term 'Related Person' shall mean
and include any individual, corporation, partnership or other
person or entity which, together with its Affiliates and
Associates (as such terms are defined in Rule 12b-2, or any
successor rule, promulgated under the Securities Exchange Act of
1934), beneficially owns (as defined in Rule 13d-3, or any
successor rule, promulgated under the Securities Exchange Act of
1934) in the aggregate ten percent or more of all outstanding
shares of capital stock of the corporation entitled to vote
generally for directors, and any Affiliate or Associate of any
such individual, corporation, partnership or other person or
entity. Without limiting the foregoing, any shares of the
corporation that any Related Person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights,
warranty or options, or otherwise, shall be deemed beneficially
owned by the Related Person. The term 'Continuing Director' shall
mean (a) if at the time of determination there is no Related
Person of the corporation, each director, or (b) if at the time
of determination there is one or more Related Persons of the
corporation, each director who was a member of the Board of
Directors of the corporation immediately prior to the time that
one of such Related Persons first became a Related Person."
<PAGE> 27
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Article VIII
Section 8.1. Control Share Acquisitions. Massachusetts General Law ch 110D
shall not apply to Control Share acquisitions.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated September 13, 1994
(except with respect to the matter discussed in Note 4, as towhich the date is
October 6, 1994) included in LTX Corporation's Form 10-K for the year ended
July 31, 1994 and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 11, 1995
