-----------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from .................... to ...................
Commission File 0-21904
Cyrix Corporation
(Exact name of registrant as specified in its charter)
Delaware 75-2218250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2703 North Central Expressway, Richardson, TX 75080
(Address of principal executive offices)
(Zip Code)
972-968-8387
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ -------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.004 Par Value 19,631,498
(Title of Each Class) (Number of Shares Outstanding at
April 17, 1997)
-----------------------------------------------
<PAGE>
CYRIX CORPORATION
INDEX
Part I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 3-4
Consolidated Statements of Income for the
three months ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Part II. Other Information
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
CYRIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
(In thousands)
March 31, December 31,
1997 1996
<S> <C> <C>
------------------ ----------------
Current assets:
Cash and cash equivalents $96,093 $65,712
Investments 30,591 22,035
Trade accounts receivable, net of valuation allowances of $9,417 at
March 31, 1997 and $4,236 at December 31, 1996 41,224 27,791
Inventories:
Raw materials 3,517 9,576
Work in process 15,138 14,204
Finished goods 8,031 652
------------------ ----------------
Total inventories 26,686 24,432
Prepayment for product purchases (Note 5) 15,658 20,471
Income taxes receivable -- 21,033
Deferred taxes 9,474 4,783
Other assets 786 1,184
------------------ ----------------
Total current assets 220,512 187,441
Property and equipment
Land 4,964 4,964
Buildings and improvements 11,375 11,154
Machinery and equipment 137,236 132,359
------------------ ----------------
153,575 148,477
Accumulated depreciation (69,504) (62,892)
------------------ ----------------
84,071 85,585
Prepayment for product purchases, less current portion (Note 5) 17,952 22,465
Other assets 3,642 3,851
------------------ ----------------
Total assets $326,177 $299,342
------------------ ----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYRIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
March 31, December 31,
1997 1996
------------------ ------------------
Current liabilities:
<S> <C> <C>
Accounts payable $20,350 $17,504
Accrued salaries and benefits 4,198 5,454
Deferred income and distributor reserves 8,286 2,610
Income taxes payable 11,190 377
Current maturities of long-term debt and capitalized lease
obligations (Note 4) 3,054 3,075
Other accrued expenses 10,097 8,034
------------------ ------------------
Total current liabilities 57,175 37,054
Long-term debt and capitalized lease obligations, less current
maturities (Note 4) 135,423 136,156
Deferred income taxes 2,846 3,206
Commitments and contingencies (Notes 5 and 6)
Stockholders' equity:
Common stock, $.004 par value; authorized 60,000 shares, issued
20,228 at March 31, 1997 and December 31, 1996 81 81
Additional capital 50,229 49,040
Retained earnings 80,463 73,850
Less treasury stock, at cost, 599 shares at March 31, 1997 and 717
shares at December 31, 1996 (40) (45)
------------------ ------------------
Total stockholders' equity 130,733 122,926
------------------ ------------------
Total liabilities and stockholders' equity $326,177 $299,342
------------------ ------------------
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
CYRIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Fiscal Quarter Ended March 31,
1997 1996
---------------------------------------
<S> <C> <C>
Net product sales $74,857 $49,199
Royalty revenue (Note 3) 759 2,407
---------------------------------------
Net revenues 75,616 51,606
Cost of sales 42,168 26,279
---------------------------------------
33,448 25,327
---------------------------------------
Expenses:
Marketing, general and administrative 11,700 13,012
Research and development 10,114 7,701
---------------------------------------
21,814 20,713
---------------------------------------
Income from operations 11,634 4,614
Other income and expense:
Interest income 1,008 434
Interest expense (2,623) (2,084)
---------------------------------------
(1,615) (1,650)
---------------------------------------
Income before provision for income taxes 10,019 2,964
Provision for income taxes 3,406 1,008
---------------------------------------
Net income $ 6,613 $ 1,956
---------------------------------------
Net income per common and common
equivalent share - primary $ 0.33 $ 0.10
---------------------------------------
Weighted average common and common
equivalent shares outstanding 20,340 20,029
---------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
CYRIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31,
1997 1996
---------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 6,613 $ 1,956
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,939 6,923
Provision for doubtful accounts and OEM
customer returns 4,160 4,443
Deferred taxes (5,051) 4,782
Changes in operating assets and liabilities:
Receivables (17,593) (7,011)
Inventories (2,254) (9,764)
Income taxes receivable 23,781 --
Other current assets 398 107
Accounts payable 2,846 5,499
Income taxes payable 8,065 (166)
Accrued expenses 807 1,698
Deferred income and distributor reserves 5,676 (7,948)
Other assets 209 30
---------------------------------------
Net cash provided by operating activities 34,596 549
Investing Activities
Prepayments for product purchases -- (10,000)
Reduction in prepayments for product purchases 9,326 4,957
Purchases of property and equipment, net (5,425) (3,891)
Purchases of investments (17,646) --
Proceeds from redemption of investments 9,090 --
---------------------------------------
Net cash used in investing activities (4,655) (8,934)
Financing activities
Repayments of long-term debt and capitalized
lease obligations (754) (5,422)
Tax benefit from stock option exercises 319 8
Net proceeds from issuance of common stock 875 769
---------------------------------------
Net cash provided by financing activities 440 (4,645)
---------------------------------------
Increase (decrease) in cash and cash equivalents 30,381 (13,030)
Cash and cash equivalents at beginning of period 65,712 44,334
---------------------------------------
Cash and cash equivalents at end of period $ 96,093 $31,304
---------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
CYRIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997
1. Basis of Presentation
The unaudited consolidated financial statements of Cyrix Corporation and
subsidiaries ("the Company" or "Cyrix") have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, considered necessary for a fair presentation have been
included. Results of operations for the periods presented are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1997. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements for the fiscal
year ended December 31, 1996, and notes thereto included in the Company's Form
10-K filed with the Securities and Exchange Commission ("SEC") on March 10,
1997.
The Company uses a 52/53 week fiscal year that ends on or about December 31
and 13/14 week fiscal quarters that end on or about March 31, June 30 and
September 30. The accompanying financial statements have been labeled as though
the Company's accounting periods ended on the respective calendar year ended
December 31 and the fiscal quarter ended March 31. Fiscal year 1996 ended
December 29, 1996, the first fiscal quarter of 1997 ended March 30, 1997, and
the first fiscal quarter of 1996 ended March 31, 1996. The first fiscal quarters
of 1997 and 1996 were each 13-week fiscal quarters.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" which
becomes effective for the Company's 1997 consolidated financial statements
beginning in the fourth quarter of 1997. SFAS No. 128 will eliminate the
disclosure of primary earnings per share which includes the dilutive effect of
stock options, warrants and other convertible securities ("Common Stock
Equivalents") and instead requires reporting of "basic" earnings per share,
which will exclude Common Stock Equivalents. Additionally, SFAS No. 128 changes
the methodology for fully diluted earnings per share. In the opinion of the
Company's management, it is not anticipated that the adoption of this new
accounting standard will have a material effect on the reported earnings per
share of the Company.
2. Earnings per Common and Common Equivalent Share
Earnings per common and common equivalent share are computed by dividing
net income by the weighted average number of shares of common stock and dilutive
common stock equivalents outstanding during each period. During each period
presented, common stock options were the only common stock equivalents
outstanding. The dilutive effects of common stock equivalents are calculated
using the treasury stock method. Common stock equivalents are not included in
the computation of earnings per share for any period in which their inclusion
would have the effect of increasing the earnings per share amount or decreasing
the loss per share amount otherwise computed. Fully diluted earnings per share
is substantially the same as primary earnings per share for all periods
presented.
3. Royalty Revenue
During the first fiscal quarters ended March 31, 1997 and 1996, the Company
received royalty revenue in the amount of $759 thousand and $2.4 million,
respectively, from Texas Instruments Incorporated ("TI") and SGS Thomson
Microelectronics, Inc. ("SGS") based on sales of licensed products.
4. Long-term Obligations
In May 1996, the Company issued $126.5 million of 5.5% convertible
subordinated notes ("notes") due June 1, 2001. The notes are convertible into
shares of the Company's common stock at the conversion rate of 25.1572 shares
per $1,000 principal amount of notes (equivalent to a conversion price of $39.75
per share). The notes are subordinated to present and future senior indebtedness
of the Company, and the notes are redeemable at the option of the Company, in
whole or in part, on or after June 1, 1999. Interest payments of approximately
$3.5 million are due each June 1 and December 1 until maturity.
The Company has financed certain land, buildings and equipment under
financing agreements which contain restrictive covenants including restriction
on dividends, additional debt and certain other transactions and which include
the maintenance of certain net worth, net income per quarter, working capital
and other financial ratios.
5. Commitments
The Company currently has two manufacturing agreements with IBM. The
Company entered into the first of such agreements (the "original" agreement) on
April 8, 1994. The original agreement provides for IBM's Microelectronics
division to manufacture specified quantities of wafers of Cyrix-designed
products for sale to Cyrix through December 1999 at defined prices. Cyrix is
responsible for the total production costs (including equipment costs) of such
specified quantities of products irrespective of the number of products actually
ordered by the Company. Cyrix made a capital equipment investment of
approximately $88 million in an IBM manufacturing facility pursuant to the
original agreement. The depreciation expense associated with such capital
equipment, which Cyrix owns, is reimbursed to the Company by IBM on a monthly
basis. In the event of expiration or termination of the original agreement by
either party, IBM has the option to purchase this capital equipment from Cyrix
at its then net book value, if any. Also, Cyrix made prepayments for product
purchases of approximately $30 million during fiscal 1994, $30 million during
fiscal 1995, $10 million on January 1, 1996 and $10 million on April 1, 1997.
One additional prepayment of $10 million is due on January 1, 1998. Such
prepayments will be credited to Cyrix as it purchases wafers from IBM at defined
prices during the period from July 1, 1995 through December 31, 1999. In
addition to supplying microprocessors to Cyrix, IBM has the right to manufacture
an equivalent amount of wafers of Cyrix-designed products for use internally or
to sell on an OEM basis.
The Company entered into a second agreement (the "foundry" agreement) with
IBM on May 17, 1996. The foundry agreement specifies that IBM's Microelectronics
division manufacture additional quantities of wafers of Cyrix-designed products
for sale to Cyrix through December 1997 at defined prices. The foundry agreement
originally provided that the Company purchase wafers totaling approximately $45
million during the second half of 1996. Although the foundry agreement specified
significant penalties if the Company did not purchase the entire commitment
under the foundry agreement, the Company negotiated a reduction in the
commitment due to the lower than expected sales volume in 1996 without incurring
significant penalties. The Company has submitted purchase orders to IBM for
further purchases of wafers during the second fiscal quarter of 1997 and expects
to continue to purchase wafers under the foundry agreement during the second
half of 1997.
6. Contingencies
Microprocessor Litigation
Since March 1992, the Company and Intel Corporation ("Intel") have been
engaged in litigation related to certain of the Company's microprocessor
products. On January 21, 1994, the United States District Court for the Eastern
District of Texas, Sherman Division ruled in favor of the Company with respect
to microprocessor products which were made and sold to the Company by certain
Intel licensees, SGS-Thomson Microelectronics, Inc. ("SGS") and TI. Intel
appealed the ruling on April 8, 1994. On December 8, 1994, the Court of Appeals
for the Federal Circuit affirmed the district court's January 21, 1994 ruling.
On December 23, 1994, Intel filed a petition for reconsideration of that
decision and a motion for rehearing en banc with the Court of Appeals. In
February 1995, the Court of Appeals for the Federal Circuit denied Intel's
motion for a rehearing en banc.
On January 24, 1994, the United States District Court for the Eastern
District of Texas, Sherman Division began to try the Company's allegations that
Intel violated certain antitrust statutes and misused its patents and Intel's
allegations that the Company infringed certain Intel patents. Effective January
31, 1994, the Company and Intel entered into a settlement agreement which
provides for the dismissal of the claims which were to be litigated in the
January 24, 1994 trial. Pursuant to the settlement agreement, Intel granted the
Company a fully paid-up, irrevocable license under claims 2 and 6 of Intel's
United States patent 4,972,338 ("the Crawford patent") and certain other system
patents for products sold after January 31, 1994. Intel also acknowledged that
products purchased by the Company from certain licensees exhaust Intel device
claims including claim 1 of the Crawford patent. Further, Intel paid $5 million
to the Company. The Company and Intel agreed that if the January 21, 1994
ruling, insofar as it relates to SGS, was reversed after final adjudication or
was remanded for additional findings and subsequently reversed so that Cyrix did
not have a right to use claims 2 and 6 of the Crawford patent based on the SGS
license, Cyrix would return the $5 million plus interest to Intel. Cyrix
deferred recognition as income of the $5 million settlement payment received in
February 1994 until final resolution of this issue. Intel agreed to pay the
Company an additional $5 million if the January 21, 1994 SGS ruling was upheld
after final adjudication. As noted previously, in December 1994, the Court of
Appeals for the Federal Circuit upheld the district court's January 21, 1994
ruling and later denied Intel's motion for a rehearing en banc. The time period
during which Intel had the right to appeal the case to the United States Supreme
Court expired without such appeal, and the Company received the additional $5
million settlement payment in the second quarter of 1995. Therefore, the Company
recognized settlement income of $10 million in the second quarter of 1995.
As part of the settlement agreement, the Company and Intel agreed to
litigate in the United States District Court for the Eastern District of Texas,
Sherman Division, whether products manufactured by SGS affiliates under the
"have-made" provision in the SGS-Intel license, sold to SGS, and then sold to
the Company fall within the scope of the SGS license. On December 30, 1994, the
district court ruled that SGS was licensed by Intel to exercise have-made rights
by having third parties (including SGS affiliates) manufacture and sell
microprocessors to Cyrix free of claims of patent infringement by Intel. Intel
appealed the ruling on March 7, 1995. On March 5, 1996, the Court of Appeals for
the Federal Circuit affirmed the district court's December 1994 ruling. On March
18, 1996 Intel filed a petition for a rehearing of that decision with the Court
of Appeals. In April 1996, the Court of Appeals denied Intel's petition for a
rehearing. The time period during which Intel had the right to appeal the case
to the United States Supreme Court expired without such appeal, and the Company
received a $1 million settlement payment on July 30, 1996. Therefore, the
Company recognized settlement income of $1 million in the third quarter of 1996.
Similarly, the Company and Intel agreed to litigate in the United States
District Court for the Eastern District of Texas, Sherman Division, whether IBM
is licensed under claim 1 of the Crawford patent when manufacturing products
that are primarily designed by the Company. On April 5, 1994, the district court
granted IBM's motion to intervene, and on December 8, 1994, the district court
ruled that IBM was licensed by Intel to act as a semiconductor foundry for Cyrix
free of claims of patent infringement by Intel. Intel appealed the ruling on
March 7, 1995. On March 5, 1996, the Court of Appeals for the Federal Circuit
affirmed the district court's December 1994 ruling. The time period during which
Intel had the right to appeal the case to the United States Supreme Court
expired without such appeal, and the Company received a $1 million settlement
payment on July 30, 1996. Therefore, the Company recognized settlement income of
$1 million in the third quarter of 1996.
Stockholders Class Action
In December 1994, eleven class actions were filed in the United States
District Court for the Northern District of Texas, purportedly on behalf of
purchasers of the Company's common stock, alleging that the Company and various
of its officers and directors violated sections of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder, by issuing false and misleading
statements concerning the introduction and production of the Company's Cx486DX2
40/80 MHz microprocessors. The complaints also allege that the conduct of the
Company and certain of its officers and directors constituted fraud and
negligent misrepresentation and that certain of such officers and directors sold
shares of the Company's common stock while in possession of material undisclosed
information.
In June 1995, all of the actions were consolidated into one complaint in
the federal district court in Dallas, Texas. The Company moved to dismiss the
consolidated amended class action complaint in July 1995. On August 20, 1996,
the United States District Court for the Northern District of Texas, Dallas
Division, entered an order dismissing plaintiffs' complaint for failure to
properly plead a cause of action. The court, however, dismissed plaintiffs'
complaint "without prejudice," and permitted plaintiffs leave to amend their
complaint by September 10, 1996 to cure its deficiencies. No such amendment was
filed and on September 26, 1996, the U.S. District Court in Dallas entered a
judgment dismissing the securities class action lawsuit against the Company and
various of its officers.
Gateway Trademark Litigation
By letter dated May 17, 1996, Gateway 2000, Inc. ("Gateway") alleged that
Cyrix "is infringing valuable trademark and trade dress rights of Gateway 2000"
in advertisements promoting Cyrix's 6x86(TM) personal computer systems. Gateway
asserts that Cyrix's "reproduction, copy and colorable imitation of Gateway's
registered trademark and trade dress in connection with advertising Cyrix's
goods is likely to cause confusion, mistake or deceive the public within the
meaning of the Lanham Act." The letter threatens Cyrix with actions for
trademark infringement, false advertising and trade disparagement, and unfair
competition. Finally, the letter suggests that Gateway might assert its rights
in other nations if the advertisements have been distributed on the
international market.
On May 24, 1996, Cyrix filed in the United States District Court for the
Northern District of Texas, Dallas Division, Cyrix Corporation v. Gateway 2000,
Inc., seeking a declaratory judgment: (i) that none of Cyrix's actions or
omissions relating to its advertisements of the Cyrix 6x86 computers has
violated any provisions of the Lanham Act; (ii) that none of Cyrix's actions or
omissions relating to its advertisements of the Cyrix 6x86 computers has
violated the common law of the State of Texas or any provisions of the Texas
Trademark Act, Texas Business & Commerce Code Sections 16.01 et seq., including
but not limited to those provisions relating to trademark infringement, trade
dress infringement and dilution; (iii) that Cyrix has not engaged in any false
or unlawful advertising; (iv) that Cyrix has not engaged in any unfair
competition or trade disparagement; (v) that Cyrix's conduct relating to its
advertisements of the Cyrix 6x86 computers is speech protected by the U.S.
Constitution and the Texas Constitution of 1876; (vi) that none of Cyrix's
actions or omissions relating to its advertisements of the Cyrix 6x86 computers
has violated any state or federal laws; (vii) that Cyrix's acts are privileged
and/or excused by: (a) the defense of fair use; (b) the defense of opinion and
parody; and (c) the defense of truth; and (viii) that Cyrix is free to use
images of Holstein cows to signify Gateway (even in an unflattering fashion) in
advertising of personal computers that is not factually false, deceptive or
misleading.
Subsequently, in late June and early July Gateway filed actions in state
court in New York, New Jersey, Connecticut, Massachusetts and California. The
state court cases are essentially the same and allege that Cyrix violated
anti-dilution laws, deceptive trade practices laws, trademark infringement laws,
and unfair competition laws. Cyrix believes that Gateway also made claims under
the Federal Trademark Act and certain state law claims preempted by the Federal
Copyright law. Gateway requested, among other relief, preliminary and permanent
injunctions, as well as actual and punitive damages. In each of the five cases,
Gateway sought actual damages (typically asserting such amount is at least one
million dollars) and punitive damages.
On December 20, 1996, the Company and Gateway agreed to a settlement of all
of the claims in the state and federal court actions and the dismissal with
prejudice of those actions. The settlement, the terms of which are confidential
by agreement between the parties, had no material impact upon the Company's
results of operations in the current or future years.
MMX Litigation
On March 14, 1997, Intel filed in the US District Court for the District of
Delaware a complaint alleging that both Cyrix and Advanced Microdevices Inc.
("AMD") were infringing Intel's trademark rights by promoting products which
Cyrix and AMD claimed were MMX(TM) compatible products. Although Cyrix had
distributed preliminary marketing materials that indicated its M2 processor is
expected to be MMX compatible, Cyrix had not yet sold any such parts. The
complaint sought temporary and permanent relief from additional marketing of
products that used the term MMX without recognizing it as an Intel trademark.
However, on March 31, 1997, Cyrix and Intel reached agreement that enables Cyrix
to market its products that implement MMX technology while providing appropriate
attribution to Intel for the MMX trademark and to describe Cyrix's M2 processor
as compatible with MMX technology in all future advertising.
Creative Labs Litigation
On March 17, 1997, Creative Labs, Inc. ("Creative") filed an action against
Cyrix Corporation, Compaq Corporation, and Tiger Direct, Inc. ("Tiger") in the
US District Court for the Northern District of California, Oakland Division,
alleging that each had sold and/or marketed products incorporating the Company's
MediaGX processor and that such processor, when operated with Microsoft's
Windows 95 software, caused the computers in which the products were installed
to indicate that a Sound Blaster card was installed in the system when in fact
no such card was installed. Additionally, Creative claimed that certain of
Creative's proprietary applet software were inappropriately available on Cyrix's
internet web page. Creative sought a temporary restraining order to prevent
Cyrix and the other companies named in the suit from shipping products which
caused systems to identify its sound device as a Sound Blaster sound card and to
prevent further use of Creative's applet software in the Company's internet web
page. The temporary restraining order was granted on March 28, 1997.
While admitting no wrong-doing, the Company has taken actions that it
believes satisfy the requirements of the temporary restraining order including
removal of all of Creative's applet and driver software from its internet web
page. The Company has also agreed to indemnify Tiger with regard to this action
and Tiger has tendered its defense to the Company. A hearing has been scheduled
for May 2, 1997 to determine whether a preliminary injunction against future
shipments of MediaGX processors should be granted. The ultimate outcome of this
litigation cannot presently be determined; however, the Company intends to
defend the actions vigorously. Any decision adverse to the Company in this
matter could have a material adverse effect on the Company, its financial
condition, or its results of operations.
Other Matters
The Company is a defendant in various other actions which arose in the
normal course of business. In the opinion of management, the ultimate
disposition of these other matters will not have a material adverse effect on
the financial condition or overall trends in the results of operations of the
Company.
<PAGE>
<TABLE>
<CAPTION>
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following table sets forth items from Cyrix's Consolidated
Statements of Income as percentages of net revenues:
Fiscal Quarter Ended March 31,
1997 1996
------------------------------
<S> <C> <C>
Net product sales 99.0 % 95.3 %
Royalty revenue 1.0 4.7
------------ -------------
Net revenues 100.0 100.0
Cost of sales 55.8 50.9
Marketing, general and administrative 15.5 25.2
Research and development 13.4 14.9
------------ -------------
Income from operations 15.3 9.0
Net interest expense 2.1 3.2
------------ -------------
Income before provision for income taxes 13.2 5.8
Provision for income taxes 4.5 2.0
============ =============
Net income 8.7 % 3.8 %
============ =============
</TABLE>
Results of Operations
Net Revenues. Net product sales of $74.9 million for the first quarter of
fiscal 1997 increased 52% compared with net product sales of $49.2 million for
the first quarter of fiscal 1996. Processor unit shipments for the first fiscal
quarter of 1997 declined by 3% compared with unit shipments of the same period
of fiscal 1996. During the first fiscal quarter of 1997, the Company's MediaGX
and 6x86 processors accounted for 99% of net product sales; sales of 6x86(TM)
and 5x86(TM) microprocessors represented over 90% of the Company's net product
sales the first fiscal quarter of 1996. Net revenues for the first fiscal
quarters of 1997 and 1996 included $759 thousand and $2.4 million of royalty
payments, respectively, received from TI and SGS based upon sales of products
licensed to them by the Company.
Sales of processors to international customers constituted 55% and 50% of
processor product sales in the first quarters of fiscal 1997 and 1996,
respectively. Sales of processors to international customers are made primarily
to customers in Europe, Taiwan, Hong Kong, Korea and Japan.
The outlook for the Company's revenue growth is dependent upon the
Company's MediaGX and M2 products. The MediaGX product was introduced in the
first quarter of fiscal 1997 and the M2 product is expected to be introduced in
the second quarter of fiscal 1997. If these products do not offer performance,
features and pricing attractive to the personal computer industry, the Company
may build excess inventory or experience net losses similar to those incurred in
fiscal 1996.
During the fourth quarter of 1996 and to a greater extent during the first
quarter of 1997, Intel spent considerable resources advertising its processors
that incorporate MMX technology. Additionally, AMD has introduced its K6
processor that it claims is compatible with MMX. Until Cyrix is able to
manufacture its M2 product in commercial quantities it will not have a product
offering that is compatible with MMX technology. Therefore, it is likely that
the average sales prices of Cyrix's 6x86 processors will decline significantly
during the remainder of fiscal 1997. Additionally, the Company's ability to
compete with AMD and Intel in the second half of fiscal 1997 will be dependent
upon manufacturing its M2 product in sufficient quantities and with acceptable
yields and processor speeds to offer products similar to those of its
competitors.
During the first fiscal quarter of 1997, Cyrix introduced its MediaGX
processor, which incorporates many of the functions performed by peripheral
components of traditional PCs into the processor and allows computer
manufacturers to sell complete personal computers at retail prices under one
thousand dollars. Although the product has been introduced and Cyrix has been
able to produce and sell commercial quantities of such processors, the Company's
success in the second half of 1997 is, in part, dependent upon continued success
of this product. Since the MediaGX processor requires a motherboard that differs
from the industry standard motherboard, the product's success is also dependent
upon personal computer manufacturers who have the ability and desire to market a
personal computer that uses such non-standard components. Although the Company
has been able to sell significant quantities of its MediaGX product, continued
revenue and margin growth will be dependent upon obtaining additional customers
for the product and minimizing the declines in average sales prices over the
remaining quarters of fiscal 1997.
Gross Margins. The Company's gross margin increased to $33.4 million for
the first fiscal quarter of 1997 from $25.3 million for the same period of 1996.
The Company's margins increased when compared to the first fiscal quarter of
1996 due to improvements in manufacturing processes which reduced the
processor's die size, better die yields and higher unit volumes of 6x86
products.
Quarterly growth, if any, in the Company's gross margin in the remainder of
fiscal 1997 is dependent upon the market acceptance of its MediaGX and M2
processors. Risks associated with enhancing the designs of, ramping production
of, and obtaining sales orders for such microprocessors are discussed in Net
Revenues (above), Reliance on Third-Party Manufacturers (below) and Product
Transitions (below).
Marketing, General and Administrative Expenses. Marketing, general and
administrative expenses for the first quarters of fiscal 1997 and 1996 were
$11.7 million and $13.0 million, respectively. Marketing, general and
administrative expenses for the first fiscal quarter of 1997 decreased compared
with the same period of fiscal 1996 primarily due to a decline in sales and
marketing expenses associated with the personal computer systems business.
Research and Development Expenses. The Company's research and development
expenses for the first fiscal quarters of 1997 and 1996 were $10.1 million and
$7.7 million, respectively. The increase of research and development expenses in
the first fiscal quarter of 1997 compared with the same period of 1996 was
attributable to the expansion of the Company's engineering staff, design
equipment and prototype expenses to support the development of microprocessor
products. The Company intends to continue to increase its research and
development expenses in an effort to enhance existing products and develop
technologically advanced products.
Net Interest Expense. Interest expense for the fiscal quarter ended March
31, 1997 increased to $2.6 million compared to $2.1 million for the same period
of fiscal 1996 primarily due to higher loan balances partially offset by lower
interest rates. Such increase was offset by increased interest income due to
higher cash and investment balances in the first fiscal quarter of 1997 compared
to the first fiscal quarter of 1996.
Provision (Benefit) for Income Taxes. The Company's effective tax rate was
34% in the first fiscal quarters of 1997 and 1996.
Other Factors Affecting Results of Operations.
Reliance on Third-Party Manufacturers. All of the Company's processors
produced in 1996 and the first fiscal quarter of 1997 were manufactured and sold
to the Company by IBM. The Company's 6x86 microprocessors are more complex than
its earlier generation microprocessors and such microprocessors require more
advanced manufacturing processes than those required for the Company's previous
products. Further, there can be no assurance that Cyrix will be able to
successfully ramp and sustain production of its MediaGX and M2 products at IBM
without experiencing yield problems or performance issues in the remainder of
fiscal 1997 and beyond.
The Company's reliance on third party manufacturers creates risks that the
Company will not be able to obtain capacity to meet its manufacturing
requirements, will not be able to obtain products with acceptable performance
and cost, will not have access to necessary process technologies and the
possible breakdown in the relationship with the third-party manufacturers.
Further, the Company has licensed some of its intellectual property to SGS and
IBM to obtain access to specified levels of manufacturing capacity, and the
Company could be required to license more of its intellectual property and
product rights and proprietary technology to obtain additional manufacturing
capacity. Thus, the Company currently faces competition from IBM and may also
face competition from SGS in the future. The Company's reliance on third party
manufacturers could have a material adverse affect on the Company's revenues and
operating results.
Product Transitions. Once current microprocessor products have been in the
market place for a period of time and begin to be replaced by higher performance
microprocessors (whether of the Company's or a competitor's design), the Company
expects the price of such earlier generation microprocessors to decline and net
sales and gross margins of such microprocessors to decrease. In order to
continue to maintain its then current gross margin and levels of revenue growth,
if any, the Company will therefore be required to design, develop and
successfully commercialize next generation microprocessors in a timely manner.
Although the Company is committed to its product development efforts, there can
be no assurance that the Company will be able to introduce new products quickly
enough to avoid adverse revenue transition patterns during future product
transitions.
During the first fiscal quarter of 1997, Cyrix introduced its MediaGX
processor and Cyrix plans to introduce its M2 processor in the second fiscal
quarter of 1997. Cyrix expects that these introductions will cause prices and
margins for its 6x86 processors to decline. Consequently, if the MediaGX and M2
products do not offer performance, features and pricing attractive to the
personal computer industry, the Company may build excess inventory or experience
net losses similar to those incurred in fiscal 1996. Additionally, Intel and
several of the Company's other competitors have substantially greater financial,
technical, manufacturing and marketing resources than the Company and they may
introduce new microprocessor designs with features or performance that exceed
those contained in the Company's new products. If the Company experiences a
delay in transitioning to its MediaGX and M2 processors, the period of time and
the impact on profit margins during this product transition will be dependent
upon several factors including, but not limited to, the following: Cyrix may
experience performance difficulties with the new product designs; Cyrix may not
be able to successfully ramp production of new products at IBM or other
qualified foundries without yield problems or other performance issues; and
personal computer manufacturers may not design the Company's new products into
their notebook and desktop computers in a timely manner or purchase the
Company's products in the volumes and at the prices necessary to offset the
declining market, average selling prices and profit margins of the Company's
6x86 processors.
Purchase commitments. The Company currently has two manufacturing
agreements with IBM. The Company entered into the first of such agreements (the
"original" agreement) on April 8, 1994. The original agreement provides for
IBM's Microelectronics division to manufacture specified quantities of wafers of
Cyrix-designed products for sale to Cyrix through December 1999 at defined
prices. Cyrix is responsible for the total production costs (including equipment
costs) of such specified quantities of products irrespective of the number of
products|ztually ordered by the Company. Cyrix made a capital equipment
investment of approximately $88 million in an IBM manufacturing facility
pursuant to the original agreement. The depreciation expense associated wit such
capital equipment, which Cyrix owns, is reimbursed to the Company by IBM on a
monthly basis. In the event of expiration or termination of the original
agreement by either party, IBM has the option to purchase this capital equipment
from Cyrix at its then net book value, if any. Also, Cyrix made prepayments for
product purchases of approximately $30 million during fiscal 1994, $30 million
during fiscal 1995, $10 million on January 1, 1996 and $10 million on April 1,
1997. One additional prepayment of $10 million is due on January 1, 1998. Such
prepayments will be credited to Cyrix as it purchases wafers from IBM at defined
prices during the period from July 1, 1995 through December 31, 1999. In
addition to supplying microprocessors to Cyrix, IBM has the right to manufacture
an equivalent amount of wafers of Cyrix-designed products for use internally or
to sell on an OEM basis.
The Company entered into a second agreement (the "foundry" agreement) with
IBM on May 17, 1996. The foundry agreement specifies that IBM Microelectronics
division manufacture additional quantities of wafers of Cyrix-designed products
for sale to Cyrix through December 1997 at defined prices. The foundry agreement
originally provided that the Company purchase wafers totaling approximately $45
million during the second half of 1996. Although the foundry agreement specified
significant penalties if the Company did not purchase the entire commitment, the
Company negotiated a reduction inorpe commitment due to the lower than expected
sales volume in 1996 without incurring significant penalties. The Company has
submitted purchase orders to IBM for further purchases of wafers during the
second fiscal quarter of 1997 and expects tolopntinue to purchase wafers under
the foundry agreement during the second half of 1997.
General. The markets for the Company's products are characterized by a
highly competitive and rapidly changing environment in which operating results
are subject to the effects of frequent product introductions, manufacturing
technology innovations and rapid fluctuations in product demand. While the
Company attempts to identify and respond to these changes as soon as possible,
prediction of and reaction to such events is difficult.
Liquidity and Capital Resources
Cash and cash equivalents totaled $96.1 million at March 31, 1997 compared
with $65.7 million at December 31, 1996. The Company's primary source of cash in
the three months ended March 31, 1997 was an income tax refund received totaling
$23.8 million and cash generated by an increase in taxes payable. Excluding the
income tax refund, the Company generated cash from operating activities of $10.8
million. The primary uses of cash in the three months ended March 31, 1997
consisted of purchases of investments, purchases of property, plant, and
equipment and cash consumed by increases in receivables, inventories and
deferred taxes. The Company's primary uses of cash in the first quarter of 1996
consisted of capital equipment purchases, product prepayments pursuant to the
Company's agreement with IBM and principal payments on long-term debt and
capitalized lease obligations.
Cyrix's long-term debt and capitalized lease obligations totaled $138.5
million and $139.2 million at March 31, 1997 and March 31, 1996, respectively.
Approximately $3.1 million of such debt is scheduled for payment during the next
twelve months. Additionally, the Company is obligated to make an interest
payment on the convertible subordinated bonds on June 1, 1997 totaling
approximately $3.5 million dollars. Since the end of the first fiscal quarter of
1997, the Company made a $10 million prepayment to IBM pursuant to the original
agreemsnt which will be credited against future product purchases (See "Purchase
Commitments above). Cyrix expects that its current cash, cash equivalents and
investments will be sufficient to fund operations for the remainder of fiscal
1997; however, if future cash requirements exceed available cash resources, the
Company may pursue additional financing. Due to the factors noted above
andoswsewhere in Management's Discussion and Analysis of Financial Condition and
Results of Operations, the Company's future earnings, if any, and stock price
may be subject to significant volatility, particularly on a quarterly basis.
Past financial performance should not be considered a reliable indicator of
future performance and investors should not use historical trends to anticipate
results or trends in future periods. Any shortfall in revenue or earnings from
the levels anticipated by securities analysts could have an immediate and
significant effect on the trading price of the Company's common stock in any
given period. Also, the Company participates in a highly dynamic industry which
often results in volatility of the Company's common stock price.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995
This report contains forward looking statements. The forward looking
statements with respect to the introduction, availability, cost, features,
performance, customer acceptance and revenue contribution of future products,
including the MediaGX and the M2, are subject to engineering, manufacturing and
market acceptance risks. Engineering difficulties such as the failure to
properly and timely design or debug such products could delay the introduction
of such products or adversely impact their performance or customer acceptance.
Manufacturing difficulties such as the failure to obtain required capacity,
technical problems with the manufacture of these complex products or the
inability to provide products at competitive cost to the Company could also
delay the introduction of these products or adversely affect their availability,
cost, features, performance or customer acceptance. Finally, the inability to
achieve sufficient customer design wins for the products could adversely affect
the Company's ability to market them in quantities sufficient to achieve its
revenue goals.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Current Litigation
See Note 6 to the Consolidated Financial Statements included in Part I,
Item 1 for a description of material pending litigation and certain related
settlements.
The final outcome of one or more of the issues subject to litigation as
described in Note 6 to the Consolidated Financial Statements could have a
material adverse effect on the Company's results of operations during the
remainder of fiscal 1997 or a subsequent period.
Potential Future Litigation
The Company believes that Intel has a strategy of protecting its market
share by filing intellectual property lawsuits against its competitors, and that
Intel may assert additional patent infringement claims against the Company.
Potential additional Intel litigation would likely involve different patents
with new combination or system claims. In addition, new patent applications are
continuawtr being filed by Intel and by others. Since pending United States
patent applications are confidential until patents are issued, it is impossible
to ascertain all potential patent infringement claims. If the Company is alleged
to infringe one or more patents, it may seek a license to the patent. However,
there can be no assurance that a license will be available on reasonable terms.
In such event, the Company may be forced to litigate the matter. The damages and
legal and other expenses of any resulting litigation could have a material
adverse effect on future operations.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 3(ii). Amended and Restated Bylaws of the Company as adopted by
the Board of Directors as of April 17, 1997
b. Exhibit 10. Severance agreement between Gerald D. Rogers and the
Company
c. Exhibit 11. Earnings per Common and Common Equivalent Share.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to bvvuigned on its behalf by the
undersigned, thereunto duly authorized.
Cyrix Corporation
Date: May 1, 1997 By: James W. Swent III
-------------------------
James W. Swent III
Senior Vice President of Finance
and Administration
(Principal Financial Officer)
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
3(ii) Amended and Restated Bylaws of the Company as adopted by the Board of Directors
as of April 17, 1997
10 Severance agreement between Gerald D. Rogers and the Company
11 Earnings per Common and Common Equivalent Share
</TABLE>
<PAGE>
Exhibit 3(ii)
<PAGE>
<TABLE>
<CAPTION>
RESTATED BYLAWS
OF
CYRIX CORPORATION
a Delaware corporation
(As amended through April 17, 1997)
<PAGE>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE I - CORPORATE OFFICES ............................................................................1
1.1 REGISTERED OFFICE.......................................................................1
1.2 OTHER OFFICES...........................................................................1
ARTICLE II - MEETINGS OF STOCKHOLDERS.....................................................................1
2.1 PLACE OF MEETINGS.......................................................................1
2.2 ANNUAL MEETING..........................................................................1
2.3 SPECIAL MEETING.........................................................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS........................................................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE............................................2
2.6 QUORUM..................................................................................2
2.7 ADJOURNED MEETING; NOTICE...............................................................3
2.8 VOTING..................................................................................3
2.9 WAIVER OF NOTICE........................................................................3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING.......................................................................3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING;
GIVING CONSENTS.........................................................................4
2.12 PROXIES.................................................................................4
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE...................................................5
ARTICLE III - DIRECTORS ..................................................................................5
3.1 POWERS..................................................................................5
3.2 NUMBER OF DIRECTORS.....................................................................5
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.................................5
3.4 RESIGNATION AND VACANCIES...............................................................6
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE................................................7
3.6 FIRST MEETINGS .........................................................................7
3.7 REGULAR MEETINGS........................................................................7
3.8 SPECIAL MEETINGS; NOTICE................................................................7
3.9 QUORUM .................................................................................8
3.10 WAIVER OF NOTICE........................................................................8
3.11 ADJOURNED MEETING; NOTICE...............................................................8
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.......................................8
3.13 FEES AND COMPENSATION OF DIRECTORS......................................................8
3.14 APPROVAL OF LOANS TO OFFICERS...........................................................9
3.15 REMOVAL OF DIRECTORS....................................................................9
-i-|par
<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE IV - COMMITTEES....................................................................................9
4.1 COMMITTEES OF DIRECTORS..................................................................9
4.2 COMMITTEE MINUTES.......................................................................10
4.3 MEETINGS AND ACTION OF COMMITTEES.......................................................10
ARTICLE V - OFFICERS......................................................................................10
5.1 OFFICERS................................................................................10
5.2 ELECTION OF OFFICERS....................................................................11
5.3 SUBORDINATE OFFICERS....................................................................11
5.4 REMOVAL AND RESIGNATION OF OFFICERS.....................................................11
5.5 VACANCIES IN OFFICES....................................................................11
5.6 CHAIRMAN OF THE BOARD...................................................................11
5.7 PRESIDENT...............................................................................12
5.8 VICE PRESIDENT..........................................................................12
5.9 SECRETARY...............................................................................12
5.10 TREASURER...............................................................................13
5.11 ASSISTANT SECRETARY.....................................................................13
5.12 ASSISTANT TREASURER.....................................................................13
5.13 AUTHORITY AND DUTIES OF OFFICERS........................................................13
ARTICLE VI - INDEMNITY....................................................................................14
6.1 THIRD PARTY ACTIONS.....................................................................14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION...........................................14
6.3 SUCCESSFUL DEFENSE......................................................................15
6.4 DETERMINATION OF CONDUCT................................................................15
6.5 PAYMENT OF EXPENSES IN ADVANCE..........................................................15
6.6 INDEMNITY NOT EXCLUSIVE.................................................................15
6.7 INSURANCE INDEMNIFICATION...............................................................16
6.8 THE CORPORATION.........................................................................16
6.9 EMPLOYEE BENEFIT PLANS..................................................................16
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.............................16
ARTICLE VII - RECORDS AND REPORTS.........................................................................17
7.1 MAINTENANCE AND INSPECTION OF RECORDS...................................................17
7.2 INSPECTION BY DIRECTORS
7.3 ANNUAL STATEMENT TO STOCKHOLDERS .......................................................18
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS .........................................18
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE VIII - GENERAL MATTERS............................................................................18
8.1 CHECKS..................................................................................18
8.2 EXECUTION OF CORPORATE CONTRACTS AND
INSTRUMENTS.............................................................................18
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES..................................................18
8.4 SPECIAL DESIGNATION ON CERTIFICATES.....................................................19
8.5 LOST CERTIFICATES.......................................................................19
8.6 CONSTRUCTION; DEFINITIONS...............................................................20
8.7 DIVIDENDS...............................................................................20
8.8 FISCAL YEAR.............................................................................20
8.9 SEAL....................................................................................20
8.10 TRANSFER OF STOCK.......................................................................20
8.11 STOCK TRANSFER AGREEMENTS...............................................................21
8.12 REGISTERED STOCKHOLDERS.................................................................21
ARTICLE IX - AMENDMENTS...................................................................................21
ARTICLE X - DISSOLUTION.................................................................................21
ARTICLE XI - CUSTODIAN....................................................................................22
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES......................................................22
11.2 DUTIES OF CUSTODIAN..............................................................................22
-iii-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------
1
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
BYLAWS
OF
CYRIX CORPORATION
I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. At the meeting, directors shall be
elected and any other proper business may be transacted.
plain 2.3 SPECIAL MEETING
A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting wbTL
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.5 of these bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notice shall specify the
place, date, and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is present
or represented, any business may be transacted that might have been transacted
at the meeting as originally noticed.
<PAGE>
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements). Except as may be
otherwise provided in the certificate of incorporation, each stockholder shall
be entitled to one vote for each share of capital stock held by such
stockholder.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any action
required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed.
(iii) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the Corporation shall be not less than three (3)
nor more than ten (10). The exact number of directors, within the limit
specified above, shall be determined from time to time by resolution of the
board of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the corporation.
When one or more directors so resigns and the resignation is effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
<PAGE>
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be held at
such time and place as shall be fixed by the vote of the stockholders at the
annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings and the purpose or
purposes for which the meeting is called shall be delivered personally or by
telephone to each director or sent by first-class mail or telegram, charges
prepaid, addressed to each director at that director's address as it is shown on
the records of the corporation. If the notice is mailed, it shall be deposited
in the United States mail at least four (4) days before the time of the holding
of the meeting. If the notice is delivered personally or by telephone or by
telegram, it shall be delivered personally or by telephone or to the telegraph
company at least forty-eight (48) hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the place of the meeting, if the
meeting is to be held at the principal executive office of the corporation.
3.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.15 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution, or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.7 (regular meetings),
Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10
(waiver of notice), Section 3.11 (adjournment and notice of adjournment), and
Section 3.12 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
<PAGE>
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall
be chosen by the board of directors, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled by
the board of directors.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
<PAGE>
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and shareholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at shareholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
<PAGE>
5.10 TREASURER
The treasurer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all money and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
<PAGE>
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
and amounts paid in settlement (if such settlement is approved in advance by the
corporation, which approval shall not be unreasonably withheld) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, if he acted in good faith and in manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper. Notwithstanding any other provision of this Article VI, no person shall
be indemnified hereunder for any expenses or amounts paid in settlement with
respect to any action to recover short-swing profits under Section 16(b) of the
Securities Exchange Act of 1934, as amended.
<PAGE>
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court)
shall be made by the corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made
(1) by the Board of Directors or the Executive Committee by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding or (2) or if such quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders. Notwithstanding the foregoing, a
director, officer, employee or agent of the Corporation shall be entitled to
contest any determination that the director, officer, employee or agent has not
met the applicable standard of conduct set forth in Sections 6.1 and 6.2 by
petitioning a court of competent jurisdiction.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses (including attorneys' fees) incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding by an
individual who may be entitled to indemnification pursuant to Section 6.1 or
6.2, shall be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
<PAGE>
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
shareholders listing their names and addresses and the number and class of
shares held by each shareholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
<PAGE>
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES: PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate,
<PAGE>
or his legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained in
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation shall have power to have a corporate seal, which shall be
adopted and which may be altered by the board of directors, and the corporation
may use the same by causing it or a facsimile thereof to be impressed or affixed
or in any other manner reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.
<PAGE>
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of shareholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors upon such terms as are contained in
the certificate. The fact that such power has been so conferred upon the
directors shall not divest the stockholders of the power, nor limit their power
to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of directors
of the corporation that the corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent in
writing, either in person or by duly authorized attorney, to a dissolution, no
meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has
failed within a reasonable time to take steps to dissolve, liquidate or
distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
<PAGE>
<PAGE>
Exhibit 10
<PAGE>
March 3, 1997
Mr. Gerald D. Rogers
3827 Beverly Drive
Dallas, TX 75205
Dear Jerry:
This letter, upon its execution and return by you, will evidence our
agreement with respect to (i) your continued receipt of certain benefits
following your resignation as President and Chief Executive Officer of Cyrix
Corporation (the "Corporation") effective December 9, 1996 and (ii) the other
matters addressed herein.
1. Cash Compensation.
a) The Corporation shall continue to make cash payments to you of
$11,540 on a bi-weekly basis through June 9, 1998. You agree to consult with the
Corporation on mutually agreed upon terms.
b) The Corporation shall pay to you an amount equal to the sum of (i)
$33,934, which represents your accrued vacation pay (totaling 235 hours) through
December 8, 1996, plus (ii) $50,000 bonus, which represents 25% of the 1996
bonus of $200,000 set by the Board of Directors of the Corporation at the end of
1995. Such total amount will be paid to you in a lump sum in cash eight (8) days
after your execution and delivery to the corporation of this agreement.
2. Stock Options. The vesting of 300,000 outstanding stock options
granted to you on January 26, 1995, and January 17, 1996, shall accelerate in
full immediately. A total of 465,399 option shares are available for immediate
exercise. The 40,399 option shares granted on January 15, 1991, shall be
exercisable within the terms and conditions of such grant. Not withstanding
termination of your employment with the Corporation or termination of your
services as a Director, all other options shall be exercisable for ten years
from the date of each option grant relevant to the Corporation's 1988 Incentive
Stock Plan. The Corporation agrees that all the Options shall be exercisable
without regard to any condition that you and/or your spouse execute either a
Restricted Stock Purchase Agreement in the form attached as Attachment 1 to the
Nonstatutory Stock Option Agreement between you and the Corporation, or any
ov,,r agreement of any kind imposing restrictions on you or the stock acquired
pursuant to the exercise of an Option (including any stock so acquired
previously).
3. Medical and/or Dental Benefit Continuation. You have previously been
furnished with a letter from the Corporation advising you, in connection with
your termination of employment, with regard to your right to continue certain
medical and/or dental insurance coverage. If you should elect to continue the
medical and/or dental insurance coverage in accordance with the terms of the
Corporation's prior letter, the Corporation agrees to pay the premiums for the
continuation of such coverage through June 9, 1998. In addition, the Corporation
shall pay the costs of your annual physical examinations at the Cooper Clinic
through June 9, 1998.
4. Resignation from Other Positions. This letter agreement will
evidence your resignation, effective December 9, 1996, not only from your
position as President and Chief Executive Officer of the Corporation but also
from all positions as an officer and/or director of any subsidiary of the
Corporation. You shall continue to serve as a director of the Corporation in
accordance with the Corporation's Bylaws until the Corporation1997 annual
meeting of stockholders (and thereafter, if nominated and elected in accordance
with the Corporation's Bylaws).
5. Corporate Property. The Corporation hereby assigns and transfers to you
all rights, title and interest in any computers and related peripheral equipment
and accessories and the cellular phone that you have in your possession.
6. Confidential Information. You agree not to publish or disclose to any
person or entity, or to use for your personal benefit, any data or information
concerning the Corporation or its products, business or affairs, including
information concerning the Corporation's relationships with its manufacturers
and customers (except such information as is publicly availab|~from other
sources). These confidentiality obligations will expire (3) three years from the
date of your cessation of your service as a director of the Corporation. Any
violation by you of this paragraph 6 shall result in termination of the
Corporation's payment established pursuant to paragraph 1 above and termination
of the Corporation's obligation, to pay insurance premiums set forth in
paragraph 3 above.
7. No Solicitation. You agree that prior to the first
anniversary of the cessation of your service as a director of the Corporation,
you shall not encourage or solicit any person who is either now or then an
employee of the Corporation or any of its subsidiaries to terminate such
employment. Any violation by you of this paragraph 7 shall result in termination
of the Corporation's established payment pursuant to paragraph 1 above and
termination of the Corporation's obligation to pay insurance premiums set forth
in paragraph 3 above.
8. Mutual Release.
a) You hereby release and discharge the Corporation, its subsidiaries
and affiliates, and their officers, directors, stockholders, employees, employee
benefit plans and agents, from any and all actions, liabilities and/or claims
for relief and remuneration whatsoever, with respect to any act, omission or
transaction occurring up to and including the date of your execution of this
letter agreement, arising out of, or in any way connected with, your employment
or former employment by the Corporation or your separation from such employment,
including but not limited to all matters in law, in equity, in contract, in tort
or pursuant to any statute. This release includes, but is not limited to, any
complaints or charges of wrongful termination or discrimination (based on your
age or any other factor) under the Age Discrimination in Employment Act, as
amended, Title VII of the Civil Rights Act of 1964, as amended, the Texas
Commission on Human Rights Act, as amended, the Americans with Disabilities Act,
as amended, and any other statute or law. Notwithstanding, the foregoing,
neither this release nor any other provis|s of this letter agreement shall be
deemed a waiver or release by you of (i) any of your rights under this letter
agreement, or (ii) any of your rights under the Indemnification Agreement
described in paragraph agreement below.
<PAGE>
b) The Corporation on its own behalf and on behalf of its
subsidiaries and other affiliated companies, hereby releases and discharges you
and your heirs, executors, administrators, legal representatives, successors and
assigns, of and from any and all claims, actions, suits, debts, liabilities,
contracts, obligations and demands, direct and indirect, liquidated or
unliquidated, contingent or matured, known or unknown, which the Corporation or
any of its subsidiaries or other affiliated companies may now or hereafter have
or claim to have against you and your heirs, executors, administrators, legal
representatives, successors and assigns, regardless of the nature thereof or the
manner in which such matters arose or accrued, and specifically including any
matter that may be based on your sole or contributory negligence (whether
active, passive or gross), pr^however, that the Corporation does not hereby
release claims or causes of action it may hereafter have against you arising out
of any breach by you of the provisions of this letter agreement.
9. Timing. As stated in your original agreement, dated January 8, 1997,
you had 21 days to consider and execute the agreement. This revised agreement
should be considered and executed immediately. You further agree that the
Corporation may require you to verify in writing that youxid not revoke this
agreement during the seven-day revocation period as a condition to the
Corporation making the payments set forth in paragraph 1 of this agreement.
10. Consultation with Attorney. You are advised to consult with an attorney
prior to executing this agreement.
11. Indemnification. The Corporation acknowledges and confirms the
continuing obligation of the Corporation to indemnify and advance expenses to
you pursuant to the Indemnification Agreement dated March 25, 1988 betweenwxxe
Corporation and you.
12. Good and Sufficient Consideration. You acknowledge that the promises of
the Corporation contained herein constitute good and sufficient consideration
for the release and other promises made by you.
13. Entire Agreement. This letter agreement constitutes the entire
agreement of the parties and supersedes any and all prior agreements or
understanding concerning the subject hereof. qrsi 14. Disclosure. The parties
hereto agree that they will keep the terms and fact of this agreement
confidential, except as may be required by law or judicial process and they will
not make any disparaging statements about the other to any third person or
party.
<PAGE>
15. Change in Control. In the event of a Change in Control of the
Corporation after the date of this letter agreement, the Corporation shall pay
you a lump sum in cash, on or before the fifth day following such Change of
Control, the total amount of any severance payments remaining pursuant to
paragraph 1(a) hereof. For the purposes of this paragraph 15, a Change in
Control" will be deemed to have occurred if any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 shall become
the beneficial owner (within the meaning of Rule 13(d)(3) under the Securities
and Exchange Act of 1934) of a majority or more of the Corporation's outstanding
common stock.
Please indicate your agreement to the foregoing by executing and returning
a copy of this letter agreement.
Very truly yours,
CYRIX CORPORATION
By:/s/ James W. Swent, III
---------------------
James W. Swent, III
Sr. V.P. Finance & CFO
Agreed to this 10th day of March, 1997.
/s/ Gerald D. Rogers
- -----------------------------------
Gerald D. Rogers
<PAGE>
Exhibit 11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
CYRIX CORPORATION AND SUBSIDIARIES
PRIMARY AND FULLY DILUTED EARNINGS PER
COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except per share data)
Quarters Ended March 31,
1997 1996
----------------------------
<S> <C> <C>
Weighted average common shares outstanding 19,598 19,295
Incremental shares related to assumed exercise of 742 734
stock options ------------- -------------
Weighted average common and common equivalent shares 20,340 20,029
============= =============
Net income $6,613 $1,956
============= =============
Earnings per common and common equivalent share -
primary $0.33 $0.10
============= =============
Ea|ngs per common and common equivalent share assuming full dilution:
Weighted average common shares outstanding 19,598 19,295
Incremental shares related to:
Assumed conversion of subordinated notes 3,182 --
Assumed exercise of stock options 742 734
------------- -------------
Weighted average common and common equivalent shares 23,522 20,029
============= =============
Net income available to common stockholders $6,613 $1,956
Interest, net of tax, on assumed conversion of
subordinated notes 1,148 --
------------- -------------
Adjusted net income $7,761 $1,956
============= =============
Earnings per common and common equivalent share -
fully diluted $0.33 $0.10
============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-28-1997
<PERIOD-START> Dec-30-1996
<PERIOD-END> Mar-30-1997
<CASH> 96,093
<SECURITIES> 30,591
<RECEIVABLES> 41,224
<ALLOWANCES> 9,417
<INVENTORY> 26,686
<CURRENT-ASSETS> 220,512
<PP&E> 153,575
<DEPRECIATION> 69,504
<TOTAL-ASSETS> 326,177
<CURRENT-LIABILITIES> 57,175
<BONDS> 138,477
0
0
<COMMON> 81
<OTHER-SE> 130,652
<TOTAL-LIABILITY-AND-EQUITY> 326,177
<SALES> 74,857
<TOTAL-REVENUES> 75,616
<CGS> 42,168
<TOTAL-COSTS> 21,814
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,160
<INTEREST-EXPENSE> 2,623
<INCOME-PRETAX> 10,019
<INCOME-TAX> 3,406
<INCOME-CONTINUING> 6,613
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,613
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
