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SCHEDULE 14A INFORMATION STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Ross Systems, Inc.
- ------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- ---------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ---------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- ---------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ---------------------------------------------
(5) Total fee paid:
- ---------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
011(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- ---------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ---------------------------------------------
(3) Filing Party:
- ---------------------------------------------
(4) Date Filed:
- ---------------------------------------------
(Amended by Sec Act Rel No. 7331, Exch Act Rel No. 37692, eff. 10/7/96.)
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ROSS SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 19, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Ross
Systems, Inc. (the "Company") will be held on Wednesday, November 19, 1997 at
9:00 a.m., local time, at the Company's executive offices in Atlanta, Georgia
located at Two Concourse Parkway, Suite 800, Conference Room, Atlanta, Georgia,
30328, for the following purposes:
1. To elect directors. The Board of Directors intends to nominate for
re-election the five directors identified in the accompanying Proxy
Statement.
2. To approve the reincorporation of Ross Systems, Inc. from California
to Delaware.
3. To approve the 1998 Incentive Stock Option Plan.
4. To ratify the appointment of Coopers & Lybrand LLP as independent
auditors of the Company for the fiscal year ending June 30, 1998.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on October 1, 1997 are
entitled to vote at the meeting.
FOR THE BOARD OF DIRECTORS
Dennis V. Vohs, CHAIRMAN OF THE BOARD
Atlanta, Georgia
October 8, 1997
IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-
PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY
VOTE IN PERSON EVEN IF YOU RETURN A PROXY.
<PAGE>
ROSS SYSTEMS, INC.
TWO CONCOURSE PARKWAY
SUITE 800
ATLANTA, GEORGIA 30328
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Ross
Systems, Inc. (the "Company") for use at the Annual Meeting of Shareholders to
be held Wednesday, November 19, 1997 at 9:00 a.m., local time, or at any and all
continuation(s) and adjournment(s) thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders (the "Annual
Meeting"). The Annual Meeting will be held at the Company's executive offices in
Atlanta, Georgia located at Two Concourse Parkway, Suite 800, Conference Room,
Atlanta, Georgia 30328. The telephone number at that location is (707) 351-9600.
These proxy solicitation materials were mailed on or about October 8, 1997
to all shareholders entitled to vote at the Annual Meeting.
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to: (1) elect five directors to serve
for the ensuing year and until their successors are duly qualified and elected;
(2) approve the reincorporation of the Company from California to Delaware; (3)
approve the 1998 Incentive Stock Option Plan; (4) ratify the appointment of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the 1998
fiscal year; and (5) transact such other business as may properly come before
the meeting and any and all continuations and adjournments thereof.
RECORD DATE AND SHARE OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Only shareholders of record at the close of business on October 1, 1997 (the
"Record Date") are entitled to receive notice and vote at the Annual Meeting. At
the Record Date, shares of the Company's Common Stock were issued and
outstanding. The closing price of the Company's Common Stock on the Record Date,
as reported by the Nasdaq National Market, was $ per share.
The following table sets forth the beneficial ownership of Common Stock of
the Company as of September 12, 1997 by (a) each director, (b) each of the
executive officers identified in the Summary Compensation Table, (c) all
directors and executive officers as a group, and (d) each person known to the
Company to be a beneficial owner of 5% or more of the shares outstanding on
September 12, 1997. Under the rules of the United States Securities and Exchange
Commission (the "SEC"), beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and
<PAGE>
also any shares which the individual has the right to acquire within 60 days of
September 12, 1997 through the exercise of any stock option.
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNERS (1) OWNED (1) OWNED
- --------------------------------------------------------------------------------------- ----------- -----------------
<S> <C> <C>
Dennis V. Vohs (2)..................................................................... 646,465 3.3%
Donald F. Campbell (3)................................................................. 31,200 *%
Mario M. Rosati (4).................................................................... 23,500 *%
Bruce J. Ryan (5)...................................................................... 23,500 *%
Joseph L. Southworth (6)............................................................... 91,073 *%
J. Patrick Tinley (7).................................................................. 178,046 *%
A. David Tory (8)...................................................................... 26,000 *%
Peter D. Van Houten (9)................................................................ 25,838 *%
All officers and directors as a group (10 persons) (10)................................ 1,225,075 6.3%
</TABLE>
- ------------------------
* Less than 1%.
(1) The table is based upon information supplied by executive officers,
directors and principal shareholders. Unless otherwise indicated, each of
the shareholders named in the table has sole voting investment and/or
dispositive power with respect to all shares of Common Stock shown as
beneficially owned, subject to community property laws where applicable and
to the information contained in the footnotes to this table.
(2) Includes options to purchase 242,294 shares of Common Stock.
(3) Includes options to purchase 27,500 shares of Common Stock.
(4) Consists of options to purchase 23,500 shares of Common Stock.
(5) Consists of options to purchase 23,500 shares of Common Stock.
(6) Includes options to purchase 84,023 shares of Common Stock.
(7) Includes options to purchase 127,546 shares of Common Stock.
(8) Consists of options to purchase 26,000 shares of Common Stock.
(9) Includes options to purchase 19,500 shares of Common Stock.
(10) Includes options to purchase 573,863 shares of Common Stock.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the corporate Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date, or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder voting for the election of directors may cumulate his or
her votes, giving one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of shares which the shareholder
is entitled to vote or distributing the shareholder's votes under the same
principle among as many candidates as the shareholder chooses, provided that
votes may not be cast for more than five candidates. However, no shareholder
shall be entitled to cumulate votes for any candidate unless the candidate's
name has been placed in nomination prior to the voting and the shareholder, or
any other shareholder, has given notice at the meeting prior to the voting of
the intention to cumulate the shareholder's votes. See "Election of
Directors--Nominees". On all other matters, each share has one vote.
The cost of soliciting proxies will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding
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solicitation material to such beneficial owners. In addition, the Company's
directors, officers and employees, without additional compensation, may solicit
proxies personally or by telephone, telegraph or facsimile copy. The Company has
retained a professional proxy solicitor to assist in the solicitation of proxies
at a cost estimated not to exceed $13,000.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are votes "For" or "Against" a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares "represented and voting" at the Annual Meeting (the "Votes
Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions or broker non-votes, the Company
believes that both abstentions and broker non-votes should be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. The Company further believes that neither abstentions nor broker
non-votes should be counted as shares "represented and voting" with respect to a
particular matter for purposes of determining the total number of Votes Cast
with respect to such matters. In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions and broker non-votes in this
manner. Accordingly, they will not affect the determination as to whether the
requisite majority of Votes Cast has been obtained with respect to a particular
matter.
3
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
A board of five directors has been nominated for election at the meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for management's five nominees named below, all of whom are presently
directors of the Company. In the event that any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. It is not expected that any nominee will
be unable or will decline to serve as a director. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner in accordance with cumulative
voting as will assure the election of as many of the nominees listed below as
possible. In such event, the specific nominees to be voted for will be
determined by the proxy holders. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until
his successor has been qualified and appointed.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
<S> <C> <C> <C>
Dennis V. Vohs.................................. 53 Chairman of the Board and Chief Executive 1988
Officer of the Company
Mario M. Rosati................................. 51 Attorney, Wilson Sonsini Goodrich & Rosati, P.C. 1993
Bruce J. Ryan................................... 54 Senior Vice President and Chief Financial 1992
Officer of Amdahl Corporation
J. Patrick Tinley............................... 49 President and Chief Operating Officer of the 1993
Company
</TABLE>
------------------------
There are no family relationships among any directors or executive officers
of the Company.
Mr. Vohs has served as Chairman of the Board and Chief Executive Officer of
the Company since November 1988.
Mr. Rosati has been a member of the law firm Wilson Sonsini Goodrich &
Rosati, Professional Corporation since 1971. Mr. Rosati is a director of Genus,
Inc., a publicly held semiconductor equipment manufacturer and C-ATS Software,
Inc., a publicly held financial database software company.
Mr. Ryan joined Amdahl Corporation as Executive Vice President and Chief
Financial Officer during 1994. Prior to that time, Mr. Ryan held several
positions with Digital Equipment Corporation from 1969 to 1994, most recently as
a Vice President.
Mr. Tinley has served as President and Chief Operating Officer of the
Company since July 1995. Prior to that time, Mr. Tinley served as Executive Vice
President, Product Development and Client Services of the Company from January
1995 to July 1995, as Executive Vice President, Product Development of the
Company from June 1990 to January 1995 and as Executive Vice President for
Business Development of the Company from November 1988 to June 1990.
4
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------------------------
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended June 30, 1997. During fiscal 1997 each director attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings held by all committees of the
Board of Directors on which such person served. The Board of Directors has an
Audit Committee, a Compensation Committee and a Stock Option Committee. It does
not have a nominating committee or a committee performing the functions of a
nominating committee.
During the year ended June 30, 1997, the Audit Committee of the Board
consisted of directors Rosati, Ryan and Tory and held seven meetings during the
fiscal year ended June 30, 1997. Effective June 30, 1997, director Tory resigned
from the Board, hence, resigned from the Audit Committee. Following the Annual
Meeting, the Board plans to appoint director's Rosati, Ryan and as members
of the Audit Committee, with director Ryan as Committee Chairman. The Audit
Committee recommends engagement of the Company's independent auditors, and is
primarily responsible for approving the services performed by the Company's
independent auditors and for reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls.
During the year ended June 30, 1997, the Compensation Committee of the Board
consisted of directors Vohs, Ryan and Tory and held three meetings during the
fiscal year ended June 30, 1997. Effective June 30, 1997, director Tory resigned
from the Board, hence, resigned from the Compensation Committee. Following the
Annual Meeting, the Board intends to appoint director's Vohs, Ryan and ,
with director as Committee Chairman. The Compensation Committee makes
recommendations to the Board regarding the Company's executive compensation
policy.
During the year ended June 30, 1997, the Stock Option Committee consisted of
directors Rosati, Ryan and Tory and held seven meetings during the fiscal year
ended June 30, 1997. Effective June 30, 1997, director Tory resigned, hence,
resigned from the Stock Option Committee. Following the Annual Meeting, the
Board intends to appoint directors' Rosati, Ryan and , with director
Rosati as Committee Chairman. The Stock Option Committee grants stock options
and administers the 1988 Incentive Stock Plan (the "Stock Plan").
COMPENSATION OF DIRECTORS
For the fiscal year ended June 30, 1997, directors were compensated $2,000
for each Board of Directors meeting attended and $1,000 for participating in any
telephonic Board of Directors meetings which were not regularly scheduled. In
addition, directors are reimbursed for travel expenses incurred in connection
with attending Board of Directors meetings. The Company intends to maintain its
current compensation level for the members of the Board during the year ending
June 30, 1998.
Annually, each non-employee director is automatically granted 4,000 stock
options to purchase shares of the Company's Common Stock pursuant to the terms
of the Stock Plan. Options granted to Directors under the Stock Plan are
intended by the Company not to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Pursuant to the Stock Plan, on the Annual Meeting date, each
non-employee director who is elected or re-elected at the meeting is granted an
option to purchase 4,000 shares of Common Stock. In addition, any outside
director newly elected to the Board of Directors receives an option for 10,000
shares of Company Common Stock. The 10,000 share option vests 25% a year over
four years and the 4,000 share options are fully vested on the dates of grant.
The price of all options granted is equal to the closing price of the Company's
Common Stock, as quoted on the Nasdaq National Market, on the date of grant.
During fiscal 1997, outside directors were granted a total of 12,000 stock
options at an exercise price of $6.75.
Under the proposed 1998 Stock Plan, each non-employee director will be
granted stock options to purchase shares of the Company's Common Stock pursuant
to the terms substantially similar to those set forth in the Stock Plan as
described in the immediately preceeding paragraph.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF DENNIS V. VOHS, MARIO M. ROSATI, BRUCE J. RYAN, J. PATRICK TINLEY
AND AS DIRECTORS.
5
<PAGE>
PROPOSAL NO. 2
REINCORPORATION IN DELAWARE
INTRODUCTION
Consistent with the Company's relocation of its headquarters from California
to Georgia, the Board of Directors believes that it is in the best interests of
the Company to move its state of incorporation from California. The Board of
Directors believes that the best interests of the Company and its shareholders
will be served by changing the state of incorporation of the Company to Delaware
(the "Reincorporation Proposal" or the "Proposed Reincorporation"). As discussed
below, the principal reasons for reincorporation are the greater flexibility of
Delaware corporate law, the substantial body of case law interpreting that law
and the increased ability of the Company to attract and retain qualified
directors. The Company believes that its shareholders will benefit from the well
established principles of corporate governance that Delaware law affords.
Although Delaware law provides the opportunity for the Board of Directors to
adopt various mechanisms that may enhance the Board's ability to negotiate
favorable terms for the shareholders in the event of an unsolicited takeover
attempt, the proposed Delaware certificate of incorporation and bylaws are
substantially similar to those currently in effect in California, with the
exception that certain rights, including cumulative voting (permitted but never
to date exercised by the Company's shareholders) will be eliminated. The
Reincorporation Proposal is not being proposed in order to prevent an
unsolicited takeover attempt, nor is it in response to any present attempt known
to the Board of Directors to acquire control of the Company, obtain
representation on the Board of Directors or take significant action that affects
the Company. Shareholders are urged to read carefully the following sections of
this Proxy Statement, including the related exhibits, before voting on the
Reincorporation Proposal. Throughout the Proxy Statement, the term "Ross
California" refers to the existing California corporation and the term "Ross
Delaware" refers to the new proposed Delaware corporation, a wholly-owned
subsidiary of Ross California, which is the proposed successor to Ross
California.
The Reincorporation Proposal will be effected by merging Ross California
into Ross Delaware (the "Merger"). Upon completion of the Merger, Ross
California will cease to exist and Ross Delaware will continue to operate the
business of the Company under the name Ross Systems, Inc. Pursuant to the
Agreement and Plan of Merger between Ross California and Ross Delaware, a copy
of which is attached hereto as EXHIBIT A (the "Merger Agreement"), each
outstanding share of Ross California Common Stock, no par value, and Preferred
Stock, no par value, will automatically be converted into one share of Ross
Delaware Common Stock, $.001 par value, and Preferred Stock, $.001 par value,
respectively. IT IS NOT NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING
STOCK CERTIFICATES FOR STOCK CERTIFICATES OF ROSS DELAWARE.
Upon the date on which the Merger is effective (the "Effective Date"), Ross
Delaware will also assume and continue the outstanding stock options and all
other employee benefit plans of Ross California. Each outstanding and
unexercised option or other right to purchase shares of Ross California capital
stock will become an option or right to purchase the same number of shares of
Ross Delaware capital stock on the same terms and conditions and at the same
exercise price applicable to any such Ross California option or stock purchase
right at the Effective Date.
The Proposed Reincorporation has been unanimously approved by Ross
California's Board of Directors. If approved by the shareholders, it is
anticipated that the Effective Date of the Merger will be as soon as reasonably
practicable following the Annual Meeting. However, pursuant to the Merger
Agreement, the Merger may be abandoned or the Merger Agreement may be amended by
the Board of Directors (except that certain principal terms may not be amended
without shareholder approval) either before or after shareholder approval has
been obtained and prior to the Effective Date of the Proposed Reincorporation
if, in the opinion of the Board of Directors of either company, circumstances
arise that make it inadvisable to proceed.
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Shareholders of Ross California will have no dissenters' rights of appraisal
with respect to the Reincorporation Proposal. See "Significant Differences
Between the Corporation Laws of California and Delaware--Appraisal Rights." The
discussion set forth below is qualified in its entirety by reference to the
Merger Agreement, the Certificate of Incorporation and the Bylaws of Delaware
copies of which are attached hereto as EXHIBITS A, B AND C respectively.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
As the Company plans for the future, the Board of Directors and management
believe that it is essential to be able to draw upon well established principles
of corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based and the Company believes
that shareholders will benefit from the responsiveness of Delaware corporate law
to their needs and to those of the corporation they own.
PROMINENCE, PREDICTABILITY AND FLEXIBILITY OF DELAWARE LAW. For many years
Delaware has followed a policy of encouraging incorporation in that state and in
furtherance of that policy, has been a leader in adopting, construing and
implementing comprehensive, flexible corporate laws responsive to the legal and
business needs of corporations organized under its laws. Many corporations have
chosen Delaware initially as a state of incorporation or have subsequently
changed corporate domicile to Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
INCREASED ABILITY TO ATTRACT AND RETAIN QUALIFIED DIRECTORS. Both
California and Delaware law permit a corporation to include a provision in its
certificate of incorporation that reduces or limits the monetary liability of
directors for breaches of fiduciary duty in certain circumstances. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and money
required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce these risks to its directors
and officers and to limit situations in which monetary damages can be recovered
against directors so that the Company may continue to attract and retain
qualified directors who otherwise might be unwilling to serve because of the
risks involved. The Company believes that, in general, Delaware law provides
greater protection to directors than California law and that Delaware case law
regarding a corporation's ability to limit director liability is more developed
and provides more guidance than California law.
WELL ESTABLISHED PRINCIPLES OF CORPORATE GOVERNANCE. There is substantial
judicial precedent in the Delaware courts as to the legal principles applicable
to measures that may be taken by a corporation and as to the conduct of the
Board of Directors under the business judgment rule. The Company believes that
its shareholders will benefit from the well established principles of corporate
governance that Delaware law affords.
NO CHANGE IN THE NAME, BOARD MEMBERS, BUSINESS, MANAGEMENT, EMPLOYEE PLANS OR
LOCATION OF PRINCIPAL FACILITIES OF THE COMPANY
The Reincorporation Proposal will effect a change in the legal domicile of
the Company, but not its physical location. The Proposed Reincorporation will
not result in any change in the name, business, management, fiscal year, assets
or liabilities (except to the extent of legal and other costs of effecting the
reincorporation) or location of the principal facilities of the Company. The
five directors who are elected at the Annual Meeting will become the directors
of Ross Delaware. All employee benefit plans of Ross
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California will be assumed and continued by Ross Delaware. All stock options,
warrants or other rights to acquire Capital Stock of Ross California will
automatically be converted into an option or right to purchase the same number
of shares of Ross Delaware Capital Stock at the same price per share, upon the
same terms, and subject to the same conditions. Ross California's other employee
benefit arrangements will also be continued by Ross Delaware upon the terms and
subject to the conditions currently in effect.
ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a number of
measures through amendment of the certificate of incorporation or bylaws or
otherwise, which measures are designed to reduce a corporation's vulnerability
to unsolicited takeover attempts. The Reincorporation Proposal is not being
proposed in order to prevent an unsolicited takeover attempt, nor is it in
response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
Nevertheless, certain effects of the Reincorporation Proposal may be
considered to have antitakeover implications. Section 203 of the Delaware
General Corporation Law ("Section 203"), from which Ross Delaware does not
intend to opt out, restricts certain "business combinations" with "interested
stockholders" for three years following the date that a person or entity becomes
an interested stockholder, unless the Board of Directors approves the business
combination and/or other requirements are met. See "Significant Differences
Between the Corporation Laws of California and Delaware--Stockholder Approval of
Certain Business Combinations." Furthermore, the elimination of cumulative
voting could be viewed as having an antitakeover effect in that it can make it
more difficult for a minority shareholder to gain a seat on the Board. Other
measures permitted under Delaware law, which the Company does not intend to
implement, include the establishment of a staggered board of directors and the
elimination of the right of stockholders controlling at least ten percent (10%)
of the voting shares to call a special meeting of stockholders. The elimination
of cumulative voting and the establishment of a classified board of directors
can also be undertaken under California law in certain circumstances. For a
detailed discussion of all of the changes that will be implemented as part of
the Proposed Reincorporation, see "The Charters and Bylaws of Ross California
and Ross Delaware." For a discussion of differences between the laws of
California and Delaware, see "Significant Differences Between the Corporation
Laws of California and Delaware."
In addition, Delaware law permits a corporation to adopt such measures as
stockholder rights plans designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. There is substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive measures
and as to the conduct of a board of directors under the business judgment rule
with respect to unsolicited takeover attempts.
THE CHARTERS AND BYLAWS OF ROSS CALIFORNIA AND ROSS DELAWARE
The provisions of the Ross Delaware Certificate of Incorporation and Bylaws
are similar to those of the Ross California Articles of Incorporation and Bylaws
in many respects, including the authorization of undesignated Preferred Stock.
However, the Reincorporation Proposal includes certain provisions in the Ross
Delaware Certificate of Incorporation and Bylaws that alter the rights of
stockholders and the powers of management. In addition, Ross Delaware could
implement certain other changes by amending its Certificate of Incorporation and
Bylaws. For a discussion of such changes, see "Significant Differences Between
the Corporation Laws of California and Delaware."
AUTHORIZATION OF PREFERRED STOCK. The Articles of Incorporation of Ross
California currently authorize the Company to issue 42,000,000 shares of capital
stock, 37,000,000 of which are designated "Common Stock", no par value, of which
35,000,000 are "Voting Common Stock" and 2,000,000 are "Non-voting Common Stock"
and 5,000,000 of which are designated "Preferred Stock", no par value. Ross
California's Articles of Incorporation provide that the Board of Directors is
entitled to determine the powers,
8
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preferences and rights, and the qualifications, limitations or restrictions, of
the authorized and unissued preferred stock. The Certificate of Incorporation of
Ross Delaware provides that such company will have 35,000,000 authorized shares
of Common Stock, $.001 par value, all of which shares shall have voting rights,
and 5,000,000 shares of Preferred Stock, $.001 par value. Ross Delaware's
Certificate of Incorporation provides that the Board of Directors is entitled to
determine the powers, preferences and rights, and the qualifications,
limitations or restrictions, of the authorized and unissued preferred stock.
Therefore, no substantive change is contemplated in this provision. Thus,
although it has no present intention of doing so, the Board of Directors,
without stockholder approval, could authorize the issuance of Preferred Stock
upon terms which could have the effect of delaying or preventing a change in
control of the Company or modifying the rights of holders of the Company's
Common Stock under either California or Delaware law. The Board of Directors
could also utilize such shares for further financings, possible acquisitions and
other uses.
MONETARY LIABILITY OF DIRECTORS. The Articles of Incorporation of Ross
California and the Certificate of Incorporation of Ross Delaware both provide
for the elimination of personal monetary liability of directors to the fullest
extent permissible under law. The provisions eliminating monetary liability of
directors set forth in the Ross Delaware Certificate of Incorporation is
potentially more expansive than the corresponding provisions in the Ross
California Articles of Incorporation, in that the former incorporates future
amendments to Delaware law with respect to the elimination of such liability.
For a more detailed explanation of the foregoing, see "Significant Differences
Between the Corporation Laws of California and Delaware--Indemnification and
Limitation of Liability."
SIZE OF THE BOARD OF DIRECTORS. The Bylaws of both Ross Delaware and Ross
California provide for a Board of Directors consisting of a range of five to
seven directors currently set at five directors. Under California law, although
changes in the number of directors, in general, must be approved by a majority
of the outstanding shares, the Board of Directors may fix the exact number of
directors within a stated range set forth in the articles of incorporation or
bylaws, if the stated ranges have been approved by the shareholders. Delaware
law permits the board of directors acting alone, to change the authorized number
of directors by amendment to the bylaws, unless the directors are not authorized
to amend the bylaws or the number of directors is fixed in the certificate of
incorporation (in which case a change in the number of directors may be made
only by amendment to the certificate of incorporation following approval of such
change by the stockholders). The Ross Delaware Certificate of Incorporation
provides that the number of directors will be as specified in the Bylaws and
authorizes the Board of Directors to adopt, alter, amend or repeal the Bylaws.
Following the Proposed Reincorporation, the Board of Directors of Ross Delaware
could amend the Bylaws to change the size of the Board of Directors from five
without further stockholder approval. If the Reincorporation Proposal is
approved, the five directors of Ross California who are elected at the Annual
Meeting of Shareholders will continue as the five directors of Ross Delaware
after the Proposed Reincorporation is consummated.
ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. Under both California law and
Delaware law, unless otherwise provided in the Articles of Incorporation
(California) or Certificate of Incorporation (Delaware), any action that may be
taken by the shareholders at any annual or special meeting may be taken without
a meeting by written consent of a majority of the holders of the outstanding
shares. The Articles of Incorporation of Ross California did not eliminate the
ability its shareholders to act by written consent. The Certificate of
Incorporation of Ross Delaware provides that no action shall be taken by the
stockholders of the corporation except at an annual or special meeting of the
stockholders and that no action shall be taken by the stockholders by written
consent.
CUMULATIVE VOTING FOR DIRECTORS. Under California law, if any shareholder
has given notice of an intention to cumulate votes for the election of
directors, any other shareholder of the corporation is also entitled to cumulate
his or her votes at such election. Cumulative voting provides that each share of
stock normally having one vote is entitled to a number of votes equal to the
number of directors to be elected. A
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shareholder may then cast all such votes for a single candidate or may allocate
them among as many candidates as the shareholder may choose. In the absence of
cumulative voting, the holders of a majority of the shares present or
represented at a meeting in which directors are to be elected would have the
power to elect all the directors to be elected at such meeting, and no person
could be elected without the support of holders of a majority of the shares
present or represented at such meeting. Elimination of cumulative voting could
make it more difficult for a minority shareholder adverse to a majority of the
shareholders to obtain representation on the Company's Board of Directors.
California corporations whose stock is listed on a national stock exchange or
whose stock is held by 800 shareholders of record and included in the Nasdaq
National Market System (a "Listed Company") can also eliminate cumulative voting
with shareholder approval. The Company qualifies as a Listed Company but has not
sought shareholder approval to eliminate cumulative voting. Under Delaware law,
cumulative voting in the election of directors is not mandatory, but is a
permitted option. The Ross Delaware Certificate of Incorporation does not
provide for cumulative voting rights.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS. Under California law, a
special meeting of shareholders may be called by the board of directors, the
chairman of the board, the president, the holders of shares entitled to cast not
less than ten percent (10%) of the votes at such meeting and such additional
persons as are authorized by the articles of incorporation or the bylaws. Under
Delaware law, a special meeting of stockholders may be called by the board of
directors or by any other person authorized to do so in the certificate of
incorporation or the bylaws. The Bylaws of Ross Delaware currently authorizes
the Board of Directors, the Chairman of the Board, the President and the holders
of not less than ten percent (10%) of the shares entitled to vote to call a
special meeting of stockholders. Therefore, no substantive change is
contemplated in this provision, although the Board could in the future amend the
Company's Bylaws without stockholder approval.
FILLING VACANCIES ON THE BOARD OF DIRECTORS. Under California law, any
vacancy on the board of directors other than one created by removal of a
director may be filled by the board. If the number of directors is less than a
quorum, a vacancy may be filled by the unanimous written consent of the
directors then in office, by the affirmative vote of a majority of the directors
at a meeting held pursuant to notice or waivers of notice or by a sole remaining
director. A vacancy created by removal of a director may be filled by the board
only if so authorized by a corporation's articles of incorporation or by a bylaw
approved by the corporation's shareholders. Ross California's Articles of
Incorporation and Bylaws do not permit directors to fill vacancies created by
removal of a director. Under Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors then in office (even
though less than a quorum) or by a sole remaining director, unless otherwise
provided in the certificate of incorporation or bylaws (or unless the
certificate of incorporation directs that a particular class of stock is to
elect such directors), in which case a majority of the directors elected by such
class, or a sole remaining director so elected, shall fill such vacancy or newly
created directorship). The Bylaws of Ross Delaware provide, consistent with the
Bylaws of Ross California, that any vacancy created by the removal of a director
by the stockholders of Ross Delaware may be filled only by the stockholders.
Following the Proposed Reincorporation, the Board of Directors of Ross Delaware
could, although it has no current intention to do so, amend the Bylaws to
provide that directors may fill any vacancy created by removal of directors by
the stockholders.
LOANS TO OFFICERS AND EMPLOYEES. Under California law, any loan or guaranty
to or for the benefit of a director or officer of the corporation or its parent
requires approval of the shareholders unless such loan or guaranty is provided
under a plan approved by shareholders owning a majority of the outstanding
shares of the corporation. However, under California law, shareholders of any
corporation with 100 or more shareholders of record, such as the Company, may
approve a bylaw authorizing the Board of Directors alone to approve loans or
guarantees to or on behalf of officers (whether or not such officers are
directors) if the Board determines that any such loan or guaranty may reasonably
be expected to benefit the corporation. The Bylaws of Ross California do not
contain the foregoing provision. Pursuant to the Ross
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Delaware Bylaws and in accordance with Delaware law, Ross Delaware may make
loans to, guarantee the obligations of or otherwise assist its officers or other
employees and those of its subsidiaries (including directors who are also
officers or employees) when such action, in the judgment of the directors, may
reasonably be expected to benefit the corporation.
VOTING BY BALLOT. California law provides that the election of directors
may proceed in the manner described in a corporation's bylaws. Ross California's
Bylaws provide that the election of directors at a shareholders' meeting may be
by voice vote or ballot, unless prior to such vote a shareholder demands a vote
by ballot, in which case such vote must be by ballot. Under Delaware law, the
right to vote by written ballot may be restricted if so provided in the
Certificate of Incorporation. The Certificate of Incorporation of Ross Delaware
provides that elections shall not be held by ballot unless the Bylaws of the
corporation so provide. The Bylaws of Ross Delaware do not provide for voting by
ballot. It may be more difficult for a stockholder to contest the outcome of a
vote that has not been conducted by written ballot.
COMPLIANCE WITH DELAWARE AND CALIFORNIA LAW
Following the Annual Meeting, if the Reincorporation Proposal is approved,
the Company will submit the Merger Agreement to the office of the California
Secretary of State and to the office of the Delaware Secretary of State for
filing.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The corporation laws of California and Delaware differ in many respects.
Although all the differences are not set forth in this Proxy Statement, certain
provisions, which could materially affect the rights of shareholders, are
discussed below.
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS. In recent years, a
number of states have adopted special laws designed to make certain kinds of
"unfriendly" corporate takeovers, or other transactions involving a corporation
and one or more of its significant shareholders, more difficult. Under Section
203, certain "business combinations" with "interested stockholders" of Delaware
corporations are subject to a three-year moratorium unless specified conditions
are met.
Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for three years following the date
that such person or entity becomes an interested stockholder. With certain
exceptions, an interested stockholder is a person or entity who or which owns,
individually or with or through certain other persons or entities, fifteen
percent (15%) or more of the corporation's outstanding voting stock (including
any rights to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion or exchange
rights, and stock with respect to which the person has voting rights only), or
is an affiliate or associate of the corporation and was the owner, individually
or with or through certain other persons or entities, of fifteen percent ( 15%)
or more of such voting stock at any time within the previous three years, or is
an affiliate or associate of any of the foregoing.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder, sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation of a direct
or indirect majority-owned subsidiary equal in aggregate market value to ten
percent (10%) or more of the aggregate market value of either the corporation's
consolidated assets or all of its outstanding stock; the issuance of transfer by
the corporation or a direct or indirect majority-owned subsidiary of stock of
the corporation or such subsidiary to the interested stockholder (except for
certain transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock or of the corporation's voting stock); or receipt by the
interested stockholder (except proportionately as a
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stockholder), directly or indirectly, of any loans, advances, guarantees,
pledgees or other financial benefits provided by, or through the corporation or
a subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date on which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction that resulted in the person or entity becoming an
interested stockholder; (ii) upon consummation of the transaction that made him
or her an interested stockholder, the interested stockholder owns at least
eighty-five percent (85%) of the corporation's voting stock outstanding at the
time the transaction commenced (excluding from the eighty-five percent (85%)
calculation shares owned by directors who are also officers of the target
corporation and shares held by employee stock plans that do not give employee
participants the right to decide confidentially whether to accept a tender or
exchange offer); or (iii) on or after the date such person or entity becomes an
interested stockholder, the board approves the business combination and it is
also approved at a stockholder meeting by sixty-six and two-thirds percent
(66 2/3%) of the outstanding voting stock not owned by the interested
stockholder.
Section 203 only applies to certain publicly held corporations that have a
class of voting stock that is (i) listed on a national securities exchange, (ii)
quoted on an interdealer quotation system of a registered national securities
association or (iii) held of record by more than 2,000 stockholders. Although a
Delaware corporation to which Section 203 applies may elect not to be governed
by Section 203, Ross Delaware does not intend to so elect.
Section 203 will encourage any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also might have the effect of limiting
the ability of a potential acquiror to make a two-tiered bid for Ross Delaware
in which all stockholders would not be treated equally. Shareholders should
note, however, that the application of Section 203 to Ross Delaware will confer
upon the Board the power to reject a proposed business combination in certain
circumstances, even though a potential acquiror may be offering a substantial
premium for Ross Delaware's shares over the then-current market price. Section
203 would also discourage certain potential acquirors unwilling to comply with
its provisions. See "Shareholder Voting" herein.
REMOVAL OF DIRECTORS. Under California law, any director or the entire
board of directors may be removed, with or without cause, with the approval of a
majority of the outstanding shares entitled to vote; however, no individual
director may be removed (unless the entire board is removed) if the number of
votes cast against such removal would be sufficient to elect the director under
cumulative voting. Under Delaware law, a director of a corporation that does not
have a classified board of directors or cumulative voting may be removed with or
without cause with the approval of a majority of the outstanding shares entitled
to vote at an election of directors. In the case of a Delaware corporation
having cumulative voting, if less than the entire board is to be removed, a
director may not be removed without cause if the number of shares voted against
such removal would be sufficient to elect the director under cumulative voting.
A director of a corporation with a classified board of directors may be removed
only for cause, unless the certificate of incorporation otherwise provides. The
Certificate of Incorporation of Ross Delaware does not provide for a classified
board of directors or for cumulative voting.
CLASSIFIED BOARD OF DIRECTORS. A classified board is one on which a certain
number, but not all, of the directors are elected on a rotating basis each year.
This method of electing directors makes changes in the composition of the board
of directors more difficult and thus a potential change in control of a
corporation a lengthier and more difficult process. Pursuant to legislation that
became effective on January 1, 1990, California law now permits certain
qualifying corporations to provide for a classified board of directors by
adopting amendments to their articles of incorporation or bylaws, which
amendments must be approved by the shareholders. Although Ross California
qualifies to adopt a classified board of directors, its Board of Directors has
no present intention of doing so. Delaware law permits, but does not require, a
classified board of directors, pursuant to which the directors can be divided
into as many as three classes with
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staggered terms of office, with only one class of directors standing for
election each year. The Ross Delaware Certificate of Incorporation and Bylaws do
not provide for a classified board and Ross Delaware presently does not intend
to propose establishment of a classified board. The establishment of a
classified board following the Proposed Reincorporation would require the
approval of the stockholders of Ross Delaware.
INDEMNIFICATION AND LIMITATION OF LIABILITY ROSS. California and Delaware
have similar laws respecting indemnification by a corporation of its officers,
directors, employees and other agents. The laws of both states also permit, with
certain exceptions, a corporation to adopt a provision in its articles of
incorporation or certificate of incorporation, as the case may be, eliminating
the liability of a director to the corporation or its shareholders for monetary
damages for breach of the director's fiduciary duty. There are nonetheless
certain differences between the laws of the two states respecting
indemnification and limitation of liability.
The Articles of Incorporation of Ross California eliminate the liability of
directors to the corporation to the fullest extent permissible under California
law. California law does not permit the elimination of monetary liability where
such liability is based on: (a) intentional misconduct or knowing and culpable
violation of law; (b) acts or omissions that a director believes to be contrary
to the best interests of the corporation or its shareholders, or that involve
the absence of good faith on the part of the director; (c) receipt of an
improper personal benefit; (d) acts or omissions that show reckless disregard
for the director's duty to the corporation or its shareholders, where the
director in the ordinary course of performing a director's duties should be
aware of a risk of serious injury to the corporation or its shareholders; (e)
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the corporation and its
shareholders; (f) interested transactions between the corporation and a director
in which a director has a material financial interest; and (g) liability for
improper distributions, loans or guarantees.
The Certificate of Incorporation of Ross Delaware also eliminates the
liability of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permissible under Delaware law, as such law exists currently or as it may be
amended in the future. Under Delaware law, such provision may not eliminate or
limit director monetary liability for (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law; (c)
the payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director received an improper personal benefit.
Such limitation of liability provisions also may not limit a director's
liability for violation of or otherwise relieve Ross Delaware or its directors
from the necessity of complying with federal or state securities laws, or affect
the availability of non-monetary remedies such as injunctive relief or
rescission.
California law permits indemnification of expenses incurred in derivative or
third-party actions, except that with respect to derivative actions (a) no
indemnification may be made when a person is adjudged liable to the corporation
in the performance of that person's duty to the corporation and its shareholders
unless a court determines such person is entitled to indemnify for expenses, and
then such indemnification may be made only to the extent that such court shall
determine, and (b) no indemnification may be made without court approval in
respect of amounts paid or expenses incurred in settling or otherwise disposing
of a threatened or pending action or amounts incurred in defending a pending
action that is settled or otherwise disposed of without court approval.
California law requires indemnification when the individual has defended
successfully the action on the merits (as opposed to Delaware law, which
requires indemnification relating to a successful defense on the merits or
otherwise).
Delaware law generally permits indemnification of expenses, including
attorney's fees, actually and reasonably incurred in the defense or settlement
of a derivative or third-party action, provided there is a determination by a
majority vote of a disinterested quorum of the directors, by independent legal
counsel
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or by a majority vote of a quorum of the stockholders that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be in
or (in contrast to California law) not opposed to the best interests of the
corporation. Without court approval, however, no indemnification may be made in
respect of any derivative action in which such person is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Delaware law requires indemnification of expenses when the
individual being indemnified has successfully defended any action, claim, issue,
or matter therein, on the merits or otherwise.
Expenses incurred by an officer or director in defending an action may be
paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
agreements or bylaw provisions that make mandatory the permissive
indemnification provided by California law. Under California law, there are two
limitations on such additional rights to indemnification: (i) such
indemnification is not permitted for acts, omissions or transactions from which
a director of a California corporation may not be relieved of personal liability
as described above and (ii) such indemnification is not permitted in
circumstances where California law expressly prohibits indemnification, as
described above. Ross California's Articles of Incorporation permit
indemnification beyond that expressly mandated by the California Corporations
Code and limit director monetary liability to the extent permitted by California
law. Ross California has entered into indemnification agreements with its
officers and directors.
Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. By contrast to California law, Delaware
law does not require authorizing provisions in the certificate of incorporation
and does not contain express prohibitions on indemnification in certain
circumstances. Limitations on indemnification may be imposed by a court,
however, based on principles of public policy.
A provision of Delaware law states that the indemnification provided by
statute shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise. Under
Delaware law, therefore, the indemnification agreements entered into by Ross
California with its officers and directors may be assumed by Ross Delaware upon
completion of the Proposed Reincorporation. If the Proposed Reincorporation is
approved, the indemnification agreements will be amended to the extent necessary
to conform the agreements to Delaware law, and a vote in favor of the Proposed
Reincorporation is also approval of such amendments to the indemnification
agreements. In particular, the indemnification agreements will be amended to
include within their purview future changes in Delaware law that expand the
permissible scope of indemnification of directors and officers of Delaware
corporations.
INSPECTION OF SHAREHOLDER LIST. Both California and Delaware law allow any
shareholder to inspect the shareholder list for a purpose reasonably related to
such person's interests as a shareholder. California law provides, in addition,
for an absolute right to inspect and copy the corporation's shareholder list by
persons holding an aggregate of five percent (5%) or more of a corporation's
voting shares, or shareholders holding an aggregate of one percent (1%) or more
of such shares who have filed a Schedule 14B under the revised proxy rules.
Under California law, such absolute inspection rights also apply to a
corporation formed under the laws of any other state if its principal executive
offices are in California or if it customarily holds meetings of its board in
California. Delaware law contains no provisions comparable to the absolute right
of inspection provided by California law to certain shareholders.
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DIVIDENDS AND REPURCHASES OF SHARES. California law dispenses with the
concepts of par value of shares as well as statutory definitions of capital,
surplus and the like. The concepts of par value, capital and surplus are
retained under Delaware law.
Under California law, a corporation may not make any distribution (including
dividends, whether in cash or other property, and repurchase of its shares,
other than repurchase of its shares issued under employee stock plans
contemplated by Section 408 of the California Corporations Code) unless either
(i) the corporation's retained earnings immediately prior to the proposed
distribution equal or exceed the amount of the proposed distribution or (ii)
immediately after giving effect to such distribution, the corporation's assets
(exclusive of goodwill, capitalized research and development expenses and
deferred charges) would be at least equal to 13 times its Liabilities (not
including deferred taxes, deferred income and other deferred credits), and the
corporation's current assets would be at least equal to its current liabilities
(or 13 times its current liabilities if the average pre-tax and pre-interest
expense earnings for the preceding two fiscal years were less than the average
interest expense for such years). Such tests are applied to California
corporations on a consolidated basis.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and such redemption or repurchase would not impair
the capital of the corporation.
To date, the Company has not paid any cash dividends.
SHAREHOLDER VOTING. Both California and Delaware law generally require that
a majority of the shareholders of both acquiring and target corporations approve
statutory mergers. Delaware law does not require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the stock of the
surviving corporations outstanding immediately before the effective date of the
merger is an identical outstanding of treasury share after the merger, and (c)
either no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or
delivered under the plan of merger plus those initially issuable upon conversion
of any other shares, securities or obligations to be issued or delivered under
such plan do not exceed twenty percent (20%) of the shares of common stock of
such constituent corporation outstanding immediately prior to the effective date
of the merger. California law contains a similar exception to its voting
requirements for reorganizations where shareholders of the corporation itself,
or both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than five sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
Both California law and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the outstanding voting shares of the corporation transferring such assets.
With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets, and similar transactions be approved
by a majority vote of each class of shares outstanding. In contrast, Delaware
law generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation that adversely
affects a specific class of shares. As a result, shareholder approval, of such
transactions may be easier to obtain under Delaware law for companies, which
have more than one class of shares outstanding.
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California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than fifty percent (50%) but less than ninety percent (90%) of
such common stock or its affiliate unless all of the holders of such common
stock consent to the transaction. This provision of California law may have the
effect of making a "cash-out" merger by a majority shareholder more difficult to
accomplish. Although Delaware law does not parallel California law in this
respect, under some circumstances Section 203 does provide similar protection
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally. See "Significant Differences Between the Corporation Laws
of California and Delaware-- Stockholder Approval of Certain Business
Combinations."
California law provides that except in certain circumstances when a tender
offer or a proposal for a reorganization or for a sale of assets is made by an
interested party (generally a controlling or managing person of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least ten days prior to the date of
acceptance of the interested party proposal, the shareholders must be informed
of the later offer and be afforded a reasonable opportunity to withdraw any
vote, consent or proxy, or to withdraw any tendered shares. Delaware law has no
comparable provision.
INTERESTED DIRECTOR TRANSACTIONS. Under both California and Delaware law,
certain contracts or transactions in which one or more of a corporation's
directors has an interest are not void or voidable because of such interest
provided that certain conditions, such as obtaining the required approval and
fulfilling the requirements of good faith and full disclosure, are met. With
certain exceptions, the conditions are similar under California and Delaware
law. Under California and Delaware law, (a) either the shareholders or the board
of directors must approve any such contract or transaction after full disclosure
of the material facts, and, in the case of board approval, the contract or
transaction must also be "just and reasonable" (in California) or "fair" (in
Delaware) to the corporation, or (b) the contract or transaction must have been
just and reasonable or fair as to the corporation at the time it was approved.
In the latter case, California law explicitly places the burden of proof on the
interested director. Under California law, if shareholder approval is sought,
the interested director is not entitled to vote his shares at a shareholder
meeting with respect to any action regarding such contract or transaction. If
board approval is sought, the contract or transaction must be approved by a
majority vote of a quorum of the directors, without counting the vote of any
interested directors (except that interested directors may be counted for
purposes of establishing a quorum). Therefore, certain transactions that the
Board of Directors of Ross California might not be able to approve because of
the number of interested directors, could be approved by a majority of the
disinterested directors of Ross Delaware, although less than a majority of a
quorum. The Company is not aware of any plans to propose any transaction
involving directors of the Company that could not be so approved under
California law but could be so approved under Delaware law.
SHAREHOLDER DERIVATIVE SUITS. California law provides that a shareholder
bringing a derivative action on behalf of a corporation need not have been a
shareholder at the time of the transaction in question, provided that certain
tests are met. Under Delaware law, a stockholder may bring a derivative action
on behalf of the corporation only if the stockholder was a stockholder of the
corporation at the time of the transaction in question or if his or her stock
thereafter devolved upon him or her by operation of law. California law also
provides that the corporation or the defendant in a derivative suit may make a
motion to the court for an order requiring the plaintiff shareholder to furnish
a security bond. Delaware does not have a similar bonding requirement.
APPRAISAL RIGHTS. Under both California and Delaware law, a shareholder of
a corporation participating in certain major corporate transactions may, under
varying circumstances, be entitled to appraisal
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rights pursuant to which such shareholder may receive cash in the amount of the
fair market value of his or her shares in lieu of the consideration he or she
would otherwise receive in the transaction. Under Delaware law, such fair market
value is determined exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, and such appraisal
rights are not available (a) with respect to the sale, lease or exchange of all
or substantially all of the assets of a corporation, (b) with respect to a
merger or consolidation by a corporation the shares of which are either listed
on a national securities exchange or are held of record by more than 2,000
holders if such stockholders receive only shares of the surviving corporation or
shares of any other corporation that are either listed on a national securities
exchange or held of record by more than 2,000 holders, plus cash in lieu of
fractional shares of such corporations, or (c) to stockholders of a corporation
surviving a merger if no vote of the stockholders of the surviving corporation
is required to approve the merger under certain provisions of Delaware law.
The limitations on the availability of appraisal rights under California law
are different from those under Delaware law. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System generally do not have such appraisal rights unless the
holders of at least five percent (5%) of the class of outstanding shares claim
the right of the corporation or any law restricts the transfer of such shares.
Appraisal rights are also unavailable if the shareholders of a corporation or
the corporation itself, or both, immediately prior to the reorganization will
own immediately after the reorganization equity securities constituting more
than five-sixths of the voting power of the surviving or acquiring corporation
or its parent entity (as will be the case in the Reincorporation Proposal).
Appraisal or dissenters' rights are, therefore, not available to shareholders of
Ross California with respect to the Reincorporation Proposal. California law
generally affords appraisal rights in sale or asset reorganizations.
DISSOLUTION. Under California law, shareholders holding fifty percent (50%)
or more of the total voting power may authorize a corporation's dissolution,
with or without the approval of the corporation's board of directors, and this
right may not be modified by the articles of incorporation. Under Delaware law,
unless the board of directors approves the proposal to dissolve, the dissolution
must be approved by all the stockholders entitled to vote thereon. Only if the
dissolution is initially approved by the board of directors may it be approved
by a simple majority of the outstanding shares of the corporation's stock
entitled to vote. In the event of such a board-initiated dissolution, Delaware
law allows a Delaware corporation to include in its certificate of incorporation
a supermajority (greater than a simple majority) voting requirement in
connection with dissolution's. Ross Delaware's Certificate of Incorporation
contains no such supermajority requirement, however, and a majority of the
outstanding shares entitled to vote, voting at a meeting at which a quorum is
present, would be sufficient to approve a dissolution of Ross Delaware that had
previously been approved-by its Board of Directors.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of Ross California Common Stock who receive Ross
Delaware Common Stock in exchange for their Ross California Common Stock as a
result of the Proposed Reincorporation. The discussion does not address all of
the tax consequences of the Proposed Reincorporation that may be relevant to
particular Ross California shareholders, such as dealers in securities, or those
Ross California shareholders who acquired their shares upon the exercise of
stock options, nor does it address the tax consequences to holders of options or
warrants to acquire Ross California Common Stock. Furthermore, no foreign,
state, or local tax considerations are addressed herein. In view of the varying
nature of such tax consequences, each shareholder is urged to consult his or her
own tax advisor as to the specific tax consequences of the proposed
reincorporation, including the applicability of federal, state, local or foreign
tax laws.
17
<PAGE>
Subject to the limitations, qualifications and exceptions described herein,
and assuming the Proposed Reincorporation qualifies as a reorganization within
the meaning of Section 368 (a) of the Code, the following tax consequences
generally should result:
(a) No gain or loss should be recognized by holders of Ross California
Common Stock upon receipt of Ross Delaware Common Stock pursuant to the Proposed
Reincorporation;
(b) The aggregate tax basis of the Ross Delaware Common Stock received by
each shareholder in the Proposed Reincorporation should be equal to the
aggregate tax basis of the Ross California Common Stock surrendered in exchange
therefor; and
(c) The holding period of the Ross Delaware Common Stock received by each
shareholder of Ross California should include the period for which such
shareholder held the Ross California Common Stock surrendered in exchange
therefor, provided that such Ross California Common Stock was held by the
shareholder as a capital asset at the time of Proposed Reincorporation.
The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") with respect to the federal income tax consequences of the Proposed
Reincorporation under the Code. The Company will, however, receive an opinion
from its legal counsel, Wilson Sonsini Goodrich & Rosati, Professional
Corporation, substantially to the effect that the Proposed Reincorporation will
qualify as a reorganization within the meaning of Section 368(a) of the Code
(the "Tax Opinion"). The Tax Opinion will neither bind the IRS nor preclude it
from asserting a contrary position. In addition, the Tax Opinion will be subject
to certain assumptions and qualifications and will be based upon the truth and
accuracy of representations made by Ross Delaware and Ross California. Of
particular importance will be assumptions and representations relating to the
requirement (the "continuity of interest" requirement) that the shareholders of
Ross California retain, through ownership of Ross Delaware stock, a significant
equity interest in Ross California's business after the Proposed
Reincorporation.
A successful IRS challenge to the reorganization status of the Proposed
Reincorporation (in consequence of a failure to satisfy the "continuity of
interest" requirement or otherwise) would result in a shareholder recognizing
gain or loss with respect to each share of Ross California Capital Stock
exchanged in the Proposed Reincorporation equal to the difference between the
shareholder's basis in such share and the fair market value, as of the time of
the Proposed Reincorporation, of the Ross Delaware Capital Stock received in
exchange therefor. In such event, a shareholder's aggregate basis in the shares
of Ross Delaware Capital Stock received in the exchange would equal their fair
market value on such date, and the shareholder's holding period for such shares
would not include the period during which the shareholder held Ross California
Capital Stock. Even if the Proposed Reincorporation qualifies as a
reorganization under the Code, a shareholder would recognize gain to the extent
the shareholder received (actually or constructively) consideration other than
Ross Delaware Capital Stock in exchange for the shareholder's Ross California
Capital Stock.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the Reincorporation Proposal, which will also constitute
approval of the (i) Merger Agreement, the Certificate of Incorporation and the
Bylaws of Ross Delaware, (ii) the assumption of Ross California's employee
benefit plans and outstanding stock options by Ross Delaware, and (iii)
revisions in the Company's indemnification agreements with its officers and
directors to conform those agreements to Delaware law, will require the
affirmative vote of the holders of a majority of the Votes Cast.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST THE
REINCORPORATION PROPOSAL.
18
<PAGE>
PROPOSAL NO. 3
ADOPTION OF THE 1998 INCENTIVE STOCK PLAN
PROPOSAL
In August 1997, the Board of Directors of the Company adopted the 1998
Incentive Stock Plan (the "1998 Stock Plan") in the form of EXHIBIT D hereto and
reserved a total of 900,000 shares of Common Stock for issuance thereunder. At
the Annual Meeting, the shareholders are being asked to approve the adoption of
the 1998 Stock Plan and the reservation of 900,000 shares of Common Stock for
issuance thereunder.
SUMMARY OF PLAN
PURPOSE. The purposes of the 1998 Stock Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants, and to promote the
success of the Company's business.
ELIGIBILITY; ADMINISTRATION. The 1998 Stock Plan provides that options may
be granted to employees and service providers. Incentive stock options may only
be granted to employees. The 1998 Stock Plan may be administered by the Board of
Directors or Board Committees (the "Administrator"). To the extent that the
Administrator determines it to be desirable to qualify options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code (the "Code"), the 1998 Stock Plan shall be administered by
a committee of two or more "outside directors" within the meaning of Section
162(m) of the Code. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3 of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under Rule 16b-3.
Otherwise, the 1998 Stock Plan shall be administered by the Board or a
committee, which committee shall be constituted to satisfy applicable laws.
The Administrator of the 1998 Stock Plan shall have full power to select,
from among the employees and consultants of the Company eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
any participant and to determine the specific terms of each grant, subject to
the provisions of the 1998 Stock Plan. The interpretation and construction of
any provision of the 1998 Stock Plan by the Administrator shall be final and
conclusive.
EXERCISE PRICE. The exercise price of options granted under the 1998 Stock
Plan shall be determined on the date of grant by reference to the closing price
of the Company's Common Stock as reported on the Nasdaq Stock Market. In the
event of the grant of a nonstatutory option below the fair market value, the
difference between fair market value on the date of grant and the exercise price
shall be treated as a compensation expense for accounting purposes and will
therefore affect the Company's earnings. In the case of options granted to an
employee who at the time of grant owns more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary, the exercise price
must be at least 110% of the fair market value per share of the Common Stock at
the time of grant. The exercise price of incentive stock options must be at
least 100% of the fair market value per share at the time of grant.
PERFORMANCE-BASED COMPENSATION LIMITATIONS. No employee shall be granted in
any fiscal year of the Company options to acquire in the aggregate 500,000
shares of Common Stock. The foregoing limitation, which shall adjust
proportionately in connection with any change in the Company's capitalization,
is intended to satisfy the requirements applicable to options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code. In the event that the Administrator determines that such limitation
is not required to qualify options as performance-based compensation, the
Administrator may modify or eliminate such limitation.
19
<PAGE>
EQUITY INCENTIVES TO OUTSIDE DIRECTORS. Outside directors provide a measure
of independence on matters that come before the Board relating to management
personnel and their compensation. The Company believes that equity incentives to
outside directors are an important factor in attracting, retaining and
motivating highly qualified individuals to serve as directors. Accordingly, the
terms of the 1998 Stock Plan automatically grant options to purchase 4,000
shares of the Company's Common Stock to each non-employee director annually.
Options granted to directors under the 1998 Stock Plan are intended by the
Company not to qualify as incentive stock options within the meaning of Section
422 of the Internal Code of 1986, as amended ("the Code"). In addition, the 1998
Stock Plan terms automatically grant options to purchase 10,000 shares of the
Company's Common Stock to any newly elected outside director at the time of
their first election to the Board. Options granted to outside directors under
the 1998 Stock Option Plan are issued at the price equal to the fair market
value of Common Stock on the date of the grant. The 10,000 share options vest
25% a year over four years and the 4,000 share options are fully vested on the
dates of grant.
EXERCISABILITY. Options granted to new optionees under the 1998 Stock Plan
generally become exercisable starting one year after the date of grant with 25%
of the shares covered thereby becoming exercisable at that time and with an
additional 25% of the total number of option shares becoming exercisable at the
end of each year thereafter, with full vesting occurring on the fourth
anniversary of the date of grant. The term of an option may not exceed ten
years. No option may be transferred by the optionee other than by will or the
laws of descent or distribution. Each option may be exercised, during the
lifetime of the optionee, only by such optionee.
STOCK PURCHASE RIGHTS. The 1998 Stock Plan permits the Company to grant
rights to purchase Common Stock. After the Administrator determines that it will
offer stock purchase rights under the 1998 Stock Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of shares that the offeree shall be
entitled to purchase, and the time within which the offeree must accept such
offer. The offer shall be accepted by execution of a stock purchase agreement or
a stock bonus agreement in the form determined by the Administrator.
Unless the Administrator determines otherwise, the stock purchase agreement
or a stock bonus agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason. The purchase price for shares
repurchased pursuant to the stock purchase agreement or a stock bonus agreement
shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at such rate as the Board or Committee may determine.
AMENDMENT AND TERMINATION OF THE 1998 STOCK PLAN. The Board may amend the
1998 Stock Plan at any time or from time to time or may terminate the 1998 Stock
Plan without approval of the shareholders; provided, however, that shareholder
approval is required for any amendment to the 1998 Stock Plan for which
shareholder approval would be required under applicable law, as in effect at the
time. However, no action by the Board of Directors or shareholders may alter or
impair any option previously granted under the 1998 Stock Plan. The
Administrator may accelerate any option or waive any condition or restriction
pertaining to such option at any time. The Administrator may also substitute new
stock options for previously granted stock options, including previously granted
stock options having higher option prices, and may reduce the exercise price of
any option to the then current fair market value, if the fair market value of
the Common Stock covered by such option shall have declined since the date the
option was granted. In any event, the 1998 Stock Plan shall terminate in August
2007. Any options outstanding under the 1998 Stock Plan at the time of its
termination shall remain outstanding until they expire by their terms.
20
<PAGE>
CERTAIN FEDERAL TAX INFORMATION
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or at the time it is
exercised, although exercise of the option may subject the optionee to the
alternative minimum tax. The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an incentive stock option
regardless of the applicability of the alternative minimum tax. Upon the sale or
exchange of the shares at least two years after grant of the option and one year
after exercise of the option, any gain will be treated as long-term capital
gain. If these holding periods are not satisfied at the time of sale, the
optionee will recognize ordinary income equal to the difference between the
exercise price and the lower of (i) the fair market value of the stock at the
date of the option exercise or (ii) the sale price of the stock, and the Company
will be entitled to a deduction in the same amount. (Different rules may apply
upon a premature disposition by an optionee who is an officer, director or 10 %
shareholder of the Company.) Any additional gain or loss recognized on such a
premature disposition of the shares will be characterized as capital gain or
loss. If the Company grants an incentive stock option and as a result of the
grant the optionee has the right in any calendar year to exercise for the first
time one or more incentive stock options for shares having an aggregate fair
market value (under all plans of the Company and determined for each share as of
the date the option to purchase the share was granted) in excess of $100,000,
then the excess shares must be treated as non-statutory options.
An optionee who is granted a non-statutory stock option will also not
recognize any taxable income upon the grant of the option. However, upon
exercise of a non-statutory stock option, the optionee will recognize ordinary
income for tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized by an optionee
who is an employee of the Company will be subject to tax withholding by the
Company. Upon resale of the shares by the optionee, any difference between the
sales price and the fair market value at the time of exercise, to the extent not
recognized, as ordinary income as described above, will be treated as capital
gain or loss. The Company will be allowed a deduction for federal income tax
purposes equal to the amount of ordinary income recognized by the optionee.
The foregoing summary of the federal income tax consequences of 1998 Stock
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy Statement. This summary does not purport to be complete, and does not
discuss foreign, state or local tax consequences.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the amendment to the 1998 Stock Plan requires the affirmative
vote of the Votes Cast.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ADOPTION OF THE 1998 STOCK PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT
OF A VOTE AGAINST THIS PROPOSAL.
21
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Coopers & Lybrand L.L.P., independent auditors, to
audit the consolidated financial statements of the Company for the year ending
June 30, 1998. For the year ended June 30, 1997, Coopers & Lybrand L.L.P.
audited the Company's North American and European financial statements.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING JUNE 30, 1998.
22
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer, and each of the Company's four other most highly
compensated executive officers, based on salary and bonus earned during fiscal
1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (1) SARS (#)(2) ($) (3)
- --------------------------------------------- ----------- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis V. Vohs............................... 1997 $ 312,558 -- -- 50,000 $ 1,936
Chairman of the Board and 1996 289,400 -- -- 50,000 2,200
Chief Executive Officer] 1995 278,625 -- -- 204,794 3,200
J. Patrick Tinley............................ 1997 $ 215,998 -- -- 50,000 $ 2,121
President and Chief Operating Officer 1996 175,000 -- 21,000 50,000 44,100
1995 165,000 -- 91,300 90,046 3,200
Joseph L. Southworth......................... 1997 $ 174,999 -- -- 20,000 $ 1,936
Executive Vice President, Worldwide 1996 155,300 -- -- 10,000 2,100
Development And Support 1995 152,000 -- -- 76,523 35,300
Donald F. Campbell........................... 1997 $ 149,999 -- -- 10,000 $ 2,355
Vice President, Worldwide Marketing 1996 145,000 -- 21,600 20,000 1,500
1995 85,400 -- 68,300 30,000 1,000
Peter D. Van Houten.......................... $ 140,000 $ 69,162 $ 51,623 30,000 $ 1,886
Vice President, North American Sales(4) 1997 1996 117,500 55,731 27,030 30,000 1,900
1995 79,200 68,800 34,300 2,250 2,300
</TABLE>
- ------------------------
(1) Pursuant to SEC rules, no disclosure is made with respect to individuals
whose other annual compensation is the lesser of 10% of total annual salary
and bonus for fiscal 1997 or $50,000.
(2) The Company has not granted any stock appreciation rights (SARs).
(3) Represents amounts contributed to the Company's 401(k) plan, on behalf of
the officer by the Company and premiums paid by the Company on behalf of the
officer for term life insurance in fiscal 1997.
(4) The amount shown as fiscal 1997 Other Annual Compensation for Mr. Van Houten
includes relocation reimbursements of $41,623 and auto allowance of $10,000.
23
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information related to options granted to the
Named Executive Officers during fiscal 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1997
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OPTION TERM (4)
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#)(1)(2) FISCAL YEAR (3) ($/SH) DATE 5% 10%
- ------------------------------------- ------------- --------------------- ----------- ----------- ---------- ----------
Dennis V. Vohs....................... 50,000 8.74% $ 5.500 8/22/06 $ 172,946 $ 438,279
J. Patrick Tinley.................... 50,000 8.74% 5.500 8/22/06 172,946 438,279
Joseph L. Southworth................. 20,000 3.50% 5.500 8/22/06 69,178 175,311
Donald F. Campbell................... 10,000 1.75% 5.500 8/22/06 34,589 87,655
Peter D. Van Houten.................. 30,000 5.24% 5.500 8/22/06 103,767 262,967
</TABLE>
- ------------------------
(1) The Company has not granted any SARs
(2) Generally, options granted by the Company vest annually over four years.
(3) The Company granted options representing 584,080 shares to employees in
fiscal 1997 under the Company's Stock Plan.
(4) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
terms assuming the specified compounded rates of appreciation on the
Company's Common Stock over the terms of the options. These numbers are
calculated based on SEC rules and do not reflect the Company's estimate of
future stock price appreciation. Actual gains, if any, are dependent on the
timing of option exercises and the future performance of the Company's
Common Stock. There can be no assurances that the rates of appreciation
assumed in this table can be achieved or that amounts reflected will be
realized by the individuals.
24
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information related to options exercised by the
Named Executive Officers during fiscal 1997 and the number and value of options
held at June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT JUNE 30,
JUNE 30, 1997 (#) (1) 1997 ($) (2)
-------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------------- ----------- ----------- ------------- ----------- -------------
Dennis V. Vohs.......................... -- -- 192,294 112,500 $ 44,948 $ 6,250
J. Patrick Tinley....................... -- -- 86,296 103,750 18,449 4,062
Joseph L. Southworth.................... -- -- 62,773 43,750 17,724 12,031
Donald F. Campbell...................... -- -- 20,000 40,000 -- --
Peter D. Van Houten..................... -- -- 9,500 52,750 6,125 16,937
</TABLE>
- ------------------------
(1) The Company has not granted any SARs.
(2) Value is based on the difference between the option exercise price and the
fair market value at June 30, 1997 ($3.8750 per share) multiplied by the
number of shares underlying the option.
REPORT OF THE COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board is comprised of two non-management
directors of the Company, A. David Tory and Bruce J. Ryan, and the Chairman of
the Board and Chief Executive Officer, Dennis V. Vohs. The Stock Option
Committee is comprised of three outside directors, Mario M. Rosati, Bruce J.
Ryan and A. David Tory. Together these committees are responsible for
recommending to the Board the overall compensation plans which govern the
compensation of the key executive officers, including the Chief Executive
Officer, of the Company.
The Company's executive pay programs are designed to provide a strong and
direct link between Company performance and executive compensation. The Company
believes that, in order to attract and retain the most qualified executives in
the industry, its compensation policies must be competitive with companies in a
similar business and of similar size. Accordingly, executive compensation is
based on Company and individual performance in relation to annual goals for the
executive and the Company. The annual goals set for the executive are based on
revenue growth, profitability and cash flow, as appropriate for the executive's
responsibilities. Executives are provided with a combination of one or more of
the following types of compensation: salary, profit sharing and annual bonus,
and long-term incentives.
SALARY: All executive officers (other than the Chief Executive Officer) are
provided with a fixed annual salary that is reviewed on an annual basis by the
Compensation Committee and the Chief Executive Officer. Salary and increases in
salary are determined partially by comparison of the executive's salary to
salaries for similar positions at comparable companies, the executive's annual
performance review, the value of contributions made by the executive and the
executive's and the Company's performance in relation to goals established at
the beginning of the period.
In addition to considering the above factors when setting compensation
increases, the Compensation Committee also considers the overall financial
health of the Company. In years where corporate performance does not equal or
exceed Company expectations, executive salary increases for the coming fiscal
year may be either reduced or eliminated altogether.
25
<PAGE>
PROFIT SHARING AND ANNUAL BONUS: As an incentive to help the Company meet
annual goals and become more profitable, all executive officers have a profit
sharing component included in their compensation plans. The executive can earn
profit sharing if the Company and the executive's organization meet or exceed
annual goals for profitability, revenue growth and cash flow. Generally,
executive compensation plans are structured so those higher level executives
have a larger portion of their total compensation based on profit sharing. The
determination of profit sharing is based on a formula in the executive's
compensation plan, which is approved by the Compensation Committee. The Company
feels that tying executive compensation to Company profitability aligns the
overall interests of the shareholders with those of the executive. No profit
sharing has been paid for the last three fiscal years.
The Company also attempts to motivate its executives to make contributions
of outstanding value by providing them the opportunity to earn an annual bonus.
These bonuses, if paid, can represent a significant portion of the executive's
compensation. In fiscal 1997, individual executive bonuses were targeted to be
between 42% and 93% excluding profit sharing, of the executive's salary. Each
executive can potentially earn a percentage of their target bonus based on the
achievement of the Company's and their organization's goals. For all executives,
except Mr. Vohs, the executive's achievements in relation to established goals
are evaluated by the Chief Executive Officer. The Compensation Committee,
excluding Mr. Vohs evaluates Mr. Vohs' performance. Like other executives, the
decision to grant Mr. Vohs a bonus is based on the performance of the Company
and Mr. Vohs' contributions to the Company in the past fiscal year. The bonus
plan is designed such that the executive earns a proportionally higher award if
the Company and the executive's organization exceed their goals and a smaller or
no award if the Company and the executive's organization do not exceed their
goals.
LONG-TERM INCENTIVES: The Stock Option Committee of the Board believes that
employee equity ownership provides significant additional motivation to officers
and employees to maximize value for the Company's shareholders, and therefore
periodically grants stock options under the Company's 1988 Incentive Stock Plan.
The Committee grants stock options to executive officers at the prevailing
market price, after considering the recommendation of Mr. Vohs, the positive
effects the executive has made on the overall performance of the Company, stock
option granting policies at companies of similar size in similar industries, and
certain other factors. The stock options granted only have value to the
executive if the Company's stock price increases over the exercise price.
Therefore, the Committee believes that stock options serve to align the
interests of option holders closely with those of shareholders because of the
direct benefit executive officers receive through improved stock performance.
During fiscal 1997, the Committee considered and granted stock options to the
executive offices of the Company, including Mr. Vohs. Each of the officers
received stock options based on his performance, level of responsibility,
historical and expected contribution to the Company's success and prior grants,
including vested and unvested options.
1997 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER: Mr. Vohs' Salary, Profit
Sharing and Annual Bonus and Long-Term Incentives were determined in accordance
with the criteria described in the "Salary", "Profit Sharing and Annual Bonus,"
and "Long-Term Incentives" sections of this report. These amounts were designed
to compensate Mr. Vohs at prevailing market rates when revenue growth,
profitability and cash flow targets are met and at above market rates when
revenue growth, profitability and cash flow targets were exceeded. However, in
fiscal 1997, the Company failed to achieve its revenue growth, profitability and
cash flow targets. Accordingly, Mr. Vohs received no profit sharing or annual
bonus for fiscal 1997. Mr. Vohs did not participate in deliberations concerning
his compensation, bonus or stock option grants.
COMPENSATION LIMITATIONS: Under Section 162(m) of the Code and regulations
adopted thereunder by the Internal Revenue Service in August 1993, publicly-held
companies may be precluded from deducting certain compensation in excess of $1.0
million paid to an executive officer in a single year. The regulations exclude
from this limit performance-based compensation and stock options, provided
certain
26
<PAGE>
requirements, such as stockholder approval, are satisfied. The Company is
studying these regulations and currently intends to take the necessary actions
to cause its compensation programs and stock option plans to qualify for the
exclusions.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
<S> <C>
Bruce J. Ryan Bruce J. Ryan
A. David Tory Mario M. Rosati
Dennis V. Vohs A. David Tory
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended June 30, 1997, Dennis V. Vohs,
Chairman of the Board and Chief Executive Officer, served on the Compensation
Committee. Mr. Vohs did not participate in any discussions regarding his
compensation, bonus or stock option grants. There were no Compensation Committee
"interlocks" within the meaning of the rules of the SEC.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors to file initial reports of share ownership and report changes in
share ownership with the SEC. Such persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms, which they file.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that for the period July 1, 1996 to June 30, 1997, all Section 16(a) filings
were made on a timely basis.
CERTAIN TRANSACTIONS
During fiscal 1997, Mario M. Rosati, a director of the Company, was also an
attorney with Wilson Sonsini Goodrich & Rosati, Professional Corporation
("Counsel"). The Company retained Counsel as its legal advisers during the
fiscal year. The Company plans to retain Counsel as its legal advisers again
during fiscal 1998. The amounts paid by the Company to Counsel were less than 5%
of Counsel's total gross revenues for its last completed fiscal year.
Under the terms of indemnification agreements with each of the Company's
directors, the Company is obligated to indemnify each director against certain
claims and expenses for which the director might be held liable in connection
with past or future service on the Board of Directors. In addition, the
Company's Restated Articles of Incorporation provide that, to the extent
permitted by California law, the directors shall not be liable for monetary
damages for breach of fiduciary duty as a director.
27
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
ROSS SYSTEMS, INC., NASDAQ COMPOSITE INDEX, AND
H&Q TECHNOLOGY INDEX
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the NASDAQ Composite Index and H&Q Technology Index for the
period commencing on June 30, 1992 and ending on June 30, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ROSS SYSTEMS H&Q TECHNOLOGY NASDAQ STOCK MARKET-U.S.
<S> <C> <C> <C>
Jun-92 100 100 100
Jul-92 114.29 105.20 103.54
Aug-92 92.86 100.50 100.38
Sep-92 82.14 104.99 104.11
Oct-92 73.21 111.03 108.21
Nov-92 121.43 118.91 116.82
Dec-92 130.36 124.44 121.12
Jan-93 139.29 134.80 124.57
Feb-93 182.14 130.20 119.92
Mar-93 210.71 132.21 123.39
Apr-93 153.57 124.37 118.13
May-93 167.86 137.35 125.18
Jun-93 176.79 135.59 125.76
Jul-93 150.00 127.80 125.91
Aug-93 146.43 135.97 132.42
Sep-93 182.14 138.46 136.36
Oct-93 123.21 140.83 139.43
Nov-93 117.86 142.91 135.27
Dec-93 92.86 146.10 139.04
Jan-94 71.43 155.12 143.26
Feb-94 80.36 160.25 141.92
Mar-94 76.79 151.49 133.19
Apr-94 69.64 147.59 131.47
May-94 60.71 148.02 131.79
Jun-94 53.57 138.59 126.97
Jul-94 57.14 143.76 129.57
Aug-94 50.00 158.55 137.83
Sep-94 46.43 158.03 137.48
Oct-94 58.93 172.51 140.18
Nov-94 75.00 171.03 135.53
Dec-94 75.00 175.50 135.91
Jan-95 60.71 172.94 136.67
Feb-95 71.43 187.93 143.90
Mar-95 80.36 196.53 148.17
Apr-95 60.71 211.25 152.83
May-95 57.14 218.82 156.77
Jun-95 73.21 245.16 169.48
Jul-95 89.29 267.55 181.93
Aug-95 96.43 270.61 185.62
Sep-95 98.21 277.07 189.89
Oct-95 46.43 280.96 188.80
Nov-95 44.64 277.51 193.23
Dec-95 42.86 262.42 192.21
Jan-96 35.71 266.30 193.15
Feb-96 35.71 279.64 200.51
Mar-96 53.57 267.47 201.17
Apr-96 76.79 304.44 217.86
May-96 101.79 309.03 227.87
Jun-96 82.14 286.52 217.59
Jul-96 67.86 257.07 198.21
Aug-96 71.65 272.63 209.32
Sep-96 82.14 304.16 225.33
Oct-96 87.50 299.80 222.84
Nov-96 99.11 335.15 236.62
Dec-96 137.50 326.15 236.40
Jan-97 83.93 361.08 253.20
Feb-97 83.93 331.59 239.22
Mar-97 63.39 310.88 223.61
Apr-97 37.05 322.39 230.61
May-97 52.68 370.90 256.75
Jun-97 55.36 357.90 264.61
</TABLE>
Assumes that $100.00 was invested on June 30, 1992 in the Company's Common
Stock and each index, and that all dividends paid by companies whose shares are
components of the index were reinvested. No dividends have been declared on the
Company's Common Stock. Shareholder returns over the period indicated should not
be considered indicative of future shareholder returns.
28
<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1998 Annual Meeting of Shareholders must
be received by the Company no later than June 1, 1998 in order that they may be
included in the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Board of Directors may recommend.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST A COPY
OF THE ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES
AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO THE CORPORATE SECRETARY, ROSS
SYSTEMS, INC., TWO CONCOURSE PARKWAY, SUITE 800, ATLANTA, GEORGIA 30328.
29
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF ROSS SYSTEMS, INC.
A DELAWARE CORPORATION
AND
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of , 1997, (the
"Agreement") is between Ross Systems, Inc., a Delaware corporation
("Ross-Delaware") and Ross Systems, Inc., a California corporation
("Ross-California"). Ross-Delaware and Ross-California are sometimes referred to
herein as the "Constituent Corporations."
R E C I T A L S
A. Ross-Delaware is a corporation duly organized and existing under the laws
of the State of Delaware and has an authorized capital of 40,000,000 shares,
35,000,000 of which are designated "Common Stock," $.001 par value, and
5,000,000 of which are designated "Preferred Stock", $.001 par value. As of the
date of this Agreement of Merger, 1,000 shares of Voting Common Stock were
issued and outstanding, all of which were held by Ross-California. No shares of
Preferred Stock were outstanding.
B. Ross-California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital of 42,000,000
shares, 37,000,000 of which are designated "Common Stock", no par value, of
which 35,000,000 are "Voting Common Stock" and 2,000,000 are "Non-voting Common
Stock" and 5,000,000 of which are designated "Preferred Stock", no par value. As
of the date of this Agreement of Merger, shares of Common Stock were
issued and outstanding and 107 shares of Series E Preferred Stock were issued
and outstanding.
C. The Board of Directors of Ross-California has determined that, for the
purpose of effecting the reincorporation of Ross-California in the State of
Delaware, it is advisable and in the best interests of Ross-California that
Ross-California merge with and into Ross-Delaware upon the terms and conditions
herein provided.
D. The respective Boards of Directors of Ross-Delaware and Ross-California
have approved this Agreement and have directed that this Agreement be submitted
to a vote of their respective stockholders and executed by the undersigned
officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Ross-Delaware and Ross-California hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
I. MERGER
I.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law,
Ross-California shall be merged with and into Ross-Delaware (the "Merger"), the
separate existence of Ross-California shall cease and Ross-Delaware shall be,
and is herein sometimes referred as, the "Surviving Corporation", and the name
of the Surviving Corporation shall be Ross Systems, Inc.
I.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and Merger shall have been adopted and approved by the
stockholders of each Constituent Corporation in accordance with the requirements
of the Delaware General Corporation Law and the California General Corporation
Law;
1
<PAGE>
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof;
(c) An executed Agreement and Plan of Merger meeting the requirements of the
Delaware General Corporation Law shall have been filed with the Secretary of
State of the State of Delaware; and
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
I.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of Ross-California shall cease and Ross-Delaware, as the
Surviving Corporation, (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (ii) shall be subject to all actions previously taken by its and
Ross-California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Ross-California
in the manner more fully set forth in Section 259 of the Delaware General
Corporation Law, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of Ross-Delaware as constituted immediately prior to
the Effective Date of the Merger, and (v) shall succeed, without other transfer,
to all of the debts, liabilities and obligations of Ross-California in the same
manner as if Ross-Delaware had itself incurred them, all as more fully provided
under the applicable provisions of the Delaware General Corporation Law and the
California Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
II.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Ross-Delaware as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
II.2 CERTIFICATE OF DESIGNATIONS. The Certificate of Designations of
Ross-Delaware as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Designations of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
II.3 BYLAWS. The Bylaws of Ross-Delaware as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
II.4 DIRECTORS AND OFFICERS. The directors and officers of Ross-California
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
III.1 ROSS-CALIFORNIA COMMON SHARES. Upon the Effective Date of the Merger,
each share of Ross-California Common Stock, no par value, issued and outstanding
immediately prior thereto shall by virtue of the Merger and without any action
by the Constituent Corporations, the holder of such shares or any other person,
be converted into and exchanged for one fully paid and nonassessable share of
Common Stock, $0.001 par value, of the Surviving Corporation. No fractional
share interests of Surviving Corporation Common Stock shall be issued. In lieu
thereof, any fractional share interests to which a holder would otherwise be
entitled shall be aggregated.
III.2 PREFERRED SHARES. Upon the Effective Date of the Merger, each share of
Ross-California Series E Preferred Stock, no par value, issued and outstanding
immediately prior thereto shall by virtue of the Merger and without any action
by the Constituent Corporations, the holder of such shares or any other
2
<PAGE>
person, be converted into and exchanged for one fully paid and nonassessable
share of Series A Preferred Stock, $0.001 par value, of the Surviving
Corporation. No fractional share interests of Surviving Corporation Series A
Preferred Stock shall be issued. In lieu thereof, any fractional share interests
to which a holder would otherwise be entitled shall be aggregated.
III.3 ROSS-CALIFORNIA OPTIONS, STOCK PURCHASE RIGHTS AND CONVERTIBLE
SECURITIES.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume the obligations of Ross-California under, and continue, the option plans
(including without limitation the 1988 Incentive Stock Plan, the 1998 Incentive
Stock Plan and the 1991 Employee Stock Purchase Plan) and all other employee
benefit plans. Each outstanding and unexercised option, other right to purchase,
or security convertible into, Ross-California capital stock (a "Right") shall
become, subject to the provisions in paragraph (c) hereof, an option, right to
purchase or a security convertible into the Surviving Corporation's capital
stock on the basis of one share of the Surviving Corporation's capital stock for
each one share of Ross-California capital stock issuable pursuant to any such
Right, on the same terms and conditions and at an exercise price equal to the
exercise price applicable to any such Ross-California Right at the Effective
Date of the Merger. This paragraph 3.3(a) shall not apply to Ross-California
Common Stock or Preferred Stock. Such Common Stock and Preferred Stock subject
to paragraphs 3.1 and 3.2, respectively.
(b) A number of shares of the Surviving Corporation's capital stock shall be
reserved for issuance upon the exercise of options, stock purchase rights and
convertible securities equal to the number of shares of Ross-California capital
stock so reserved immediately prior to the Effective Date of the Merger.
(c) The assumed Rights shall not entitle any holder thereof to a fractional
share upon exercise or conversion. In addition, no "additional benefits" (within
the meaning of Section 424(a)(2) of the Internal Revenue Code of 1986, as
amended) shall be accorded to the optionees pursuant to the assumption of their
options.
III.4 ROSS-DELAWARE COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, $.001 par value, of Ross-Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by Ross-Delaware, the holder of such shares or any other person, be
cancelled and returned to the status of authorized but unissued shares.
III.5 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Ross-California
Common Stock and Preferred Stock may be asked to surrender the same for
cancellation to Boston EquiServe (the "Exchange Agent"), and each such holder
shall be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the Surviving Corporation's Common Stock or
Preferred Stock, as the case may be, into which the surrendered shares were
converted as herein provided. Until so surrendered, each outstanding certificate
theretofore representing shares of Ross-California Common Stock and Preferred
Stock shall be deemed for all purposes to represent the number of shares of the
Surviving Corporation's Common Stock and Preferred Stock, respectively, into
which such shares of Ross-California Common Stock and Preferred Stock, as the
case may be, were converted in the Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of Common Stock and Preferred
Stock of the Surviving Corporation represented by such outstanding certificate
as provided above.
Each certificate representing Common Stock and Preferred Stock of the
Surviving Corporation so issued in the Merger shall bear the same legends, if
any, with respect to the restrictions on transferability as the certificates of
Ross-California so converted and given in exchange therefore, unless otherwise
determined by the Board of Directors of the Surviving Corporation in compliance
with applicable laws.
3
<PAGE>
If any certificate for shares of the Surviving Corporation's stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance of
such new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
IV. GENERAL
IV.1 COVENANTS OF ROSS-DELAWARE. Ross-Delaware covenants and agrees that it
will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for service
of process as required under the provisions of Section 2105 of the California
General Corporation Law.
(b) File any and all documents with the California Franchise Tax Board
necessary for the assumption by Ross-Delaware of all of the franchise tax
liabilities of Ross-California.
(c) Take such other actions as may be required by the California General
Corporation Law.
IV.2 FURTHER ASSURANCES. From time to time, as and when required by
Ross-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of Ross-California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by Ross-Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Ross-California and otherwise to carry out the purposes of this
Agreement, and the officers and directors of Ross-Delaware are fully authorized
in the name and on behalf of Ross-California or otherwise to take any and all
such action and to execute and deliver any and all such deeds and other
instruments.
IV.3 ABANDONMENT. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Ross-California or of
Ross-Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of Ross-California or by the sole stockholder of Ross-Delaware, or
by both.
IV.4 AMENDMENT. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the States of
California and Delaware, provided that an amendment made subsequent to the
adoption of this Agreement by the stockholders of either Constituent Corporation
shall not: (1) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of such Constituent
Corporation, (2) alter or change any term of the Certificate of Incorporation of
the Surviving Corporation to be effected by the Merger, or (3) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class or series of capital stock of
any Constituent Corporation.
IV.5 REGISTERED OFFICE. The registered office of the Surviving Corporation
in the State of Delaware is 1209 Orange Street, Wilmington, County of New
Castle, DE 19801 and The Corporation Trust Company is the registered agent of
the Surviving Corporation at such address.
IV.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at Concourse Corporate
Center Two, Two Concourse Parkway, Atlanta, Georgia
4
<PAGE>
30328 and copies thereof will be furnished to any stockholder of either
Constituent Corporation, upon request and without cost.
IV.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
IV.8 FIRPTA NOTIFICATION. (a) On the Effective Date of the Merger,
Ross-California shall deliver to Ross-Delaware, as agent for the shareholders of
Ross-California, a properly executed statement (the "Statement") substantially
in the form attached hereto as Attachment 1. Ross-Delaware shall retain the
Statement for a period of not less than seven years and shall, upon request,
provide a copy thereof to any person that was a shareholder of Ross-California
immediately prior to the Merger. In consequence of the approval of the Merger by
the shareholders of Ross-California, (i) such shareholders shall be considered
to have requested that the Statement be delivered to Ross-Delaware as their
agent and (ii) Ross-Delaware shall be considered to have received a copy of the
Statement at the request of the Ross-California shareholders for purposes of
satisfying Ross-Delaware's obligations under Treasury Regulation Section
1.1445-2(c)(3).
(b) Ross-California shall deliver to the Internal Revenue Service a notice
regarding the Statement in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2).
IV.9 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Ross-Delaware and Ross-California is
hereby executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.
Ross Systems, Inc.
a Delaware corporation
By: __________________________________
Dennis V. Vohs, Chief Executive
Officer
ATTEST:
Mario M. Rosati, Assistant Secretary
Ross Systems, Inc.
a California corporation
By: __________________________________
Dennis V. Vohs, Chief Executive
Officer
ATTEST:
Mario M. Rosati, Assistant Secretary
5
<PAGE>
ATTACHMENT I
, 1997
TO THE SHAREHOLDERS OF ROSS SYSTEMS, INC.:
In connection with the reincorporation (the "Reincorporation") in Delaware
of Ross Systems, Inc., a California corporation (the "Company"), pursuant to the
Agreement and Plan of Merger (the "Agreement") dated as of , 1997
between the Company and Ross Systems, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company ("Ross-Delaware"), your shares of Company
stock will be replaced by shares of stock in Ross-Delaware.
In order to establish that (i) you will not be subject to tax under Section
897 of the Internal Revenue Code of 1986, as amended (the "Code"), in
consequence of the Reincorporation and (ii) Ross-Delaware will not be required
under Section 1445 of the Code to withhold taxes from the Ross-Delaware stock
that you will receive in connection therewith, the Company hereby represents to
you that, as of the date of this letter, shares of Company stock do not
constitute a "United States real property interest" within the meaning of
Section 897(c) of the Code and the regulations issued thereunder.
A copy of this letter will be delivered to Ross-Delaware pursuant to Section
4.8 of the Agreement.
Under penalties of perjury, the undersigned officer of the Company hereby
declares that, to the best knowledge and belief of the undersigned, the facts
set forth herein are true and correct.
Sincerely,
<TABLE>
<S> <C> <C>
By: /s/ DENNIS V. VOHS
-----------------------------------------
Dennis V. Vohs, Chief Executive Officer
</TABLE>
6
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
ROSS SYSTEMS, INC.
ARTICLE I
The name of the corporation is Ross Systems, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The total number of shares of stock, which the Corporation shall have the
authority to issue, is 40,000,000 shares, consisting of 35,000,000 shares of
Common Stock, $0.001 par value, and 5,000,000 shares of Preferred Stock, $0.001
par value.
The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted by
the board of directors (authority to do so being hereby expressly vested in the
board). The board of directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The board of directors, within the limits and restrictions stated in any
resolution or resolutions of the board of directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series.
The authority of the board of directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the number of
shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series shall
be declared and paid, or set aside for payment, whether dividends at the rate so
determined shall be cumulative or accruing, and whether the shares of such class
or series shall be entitled to any participating or other dividends in addition
to dividends at the rate so determined, and if so, on what terms;
(c) the right or obligation, if any, of the corporation to redeem shares of
the particular class or series of Preferred Stock and, if redeemable, the price,
terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the amount
or amounts per share, which the shares of such class or series of Preferred
Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
1
<PAGE>
(e) the terms and conditions, if any, upon which shares of such class or
series shall be convertible into, or exchangeable for, shares of capital stock
of any other class or series, including the price or prices or the rate or rates
of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem or purchase
shares of such class or series pursuant to a sinking fund or fund of a similar
nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such class
or series or any shares of any other class or series of Preferred Stock; and
(i) such other preferences, powers, qualifications, special or relative
rights and privileges thereof as the board of directors of the corporation,
acting in accordance with this Restated Certificate of Incorporation, may deem
advisable and are not inconsistent with law and the provisions of this Restated
Certificate of Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or as may hereafter
be amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII, nor the
adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article VII, shall eliminate or reduce the effect of this
Article VII, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or converted
pursuant to the terms hereof, the shares so converted or redeemed shall not
revert to the status of authorized but unissued shares, but instead shall be
canceled and shall not be re-issuable by the Corporation.
2
<PAGE>
ARTICLE IX
Holders of stock of any class or series of this Corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting is
required pursuant to Sections 2115 and/or 301.5 of the California Corporations
Code, in which event each such holder shall be entitled to as many votes as
shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be voted
for, or for any two or more of them as such holder may see fit, so long as the
name of the candidate for director shall have been placed in nomination prior to
the voting and the stockholder, or any other holder of the same class or series
of stock, has given notice at the meeting prior to the voting of the intention
to cumulate votes.
ARTICLE X
1. Number of Directors. The number of directors, which constitutes the whole
Board of Directors of the corporation, shall be designated in the Bylaws of the
Corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter, amend or repeal the
Bylaws of the Corporation.
ARTICLE XII
No action shall be taken by the stockholders of the Corporation except at an
annual or special meeting of the stockholders called in accordance with the
Bylaws of the corporation, and no action shall be taken by the stockholders by
written consent.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE XIV
The name and mailing address of the incorporator are:
Jason M. Brady, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
* * *
The undersigned incorporator hereby acknowledges that the above Certificate
of Incorporation of Ross Systems, Inc. is his act and deed and that the facts
stated therein are true.
<TABLE>
<S> <C>
Dated: ,
1997 ------------------------------------------
Jason M. Brady
</TABLE>
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EXHIBIT C
BYLAWS OF
ROSS SYSTEMS, INC.
(A DELAWARE CORPORATION)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <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...................................................................................... 2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................................... 2
2.5 NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS................................................... 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................................... 3
2.7 QUORUM............................................................................................... 3
2.8 ADJOURNED MEETING; NOTICE............................................................................ 3
2.9 VOTING............................................................................................... 4
2.10 WAIVER OF NOTICE.................................................................................... 4
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.......................................................... 4
2.12 PROXIES............................................................................................. 5
2.13 ORGANIZATION........................................................................................ 5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE............................................................... 5
ARTICLE III--DIRECTORS..................................................................................... 5
3.1 POWERS............................................................................................... 5
3.2 NUMBER OF DIRECTORS.................................................................................. 6
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS............................................................. 6
3.4 RESIGNATION AND VACANCIES............................................................................ 6
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE............................................................. 7
3.6 REGULAR MEETINGS..................................................................................... 7
3.7 SPECIAL MEETINGS; NOTICE............................................................................. 7
3.8 QUORUM............................................................................................... 7
3.9 WAIVER OF NOTICE..................................................................................... 7
3.10 ADJOURNMENT......................................................................................... 8
3.11 NOTICE OF ADJOURNMENT............................................................................... 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....................................................................... 8
ARTICLE IV--COMMITTEES..................................................................................... 8
4.1 COMMITTEES OF DIRECTORS.............................................................................. 8
4.2 MEETINGS AND ACTION OF COMMITTEES.................................................................... 9
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
4.3 COMMITTEE MINUTES.................................................................................... 9
ARTICLE V--OFFICERS........................................................................................ 10
5.1 OFFICERS............................................................................................. 10
5.2 ELECTION OF OFFICERS................................................................................. 10
5.3 SUBORDINATE OFFICERS................................................................................. 10
5.4 REMOVAL AND RESIGNATION OF OFFICERS.................................................................. 10
5.5 VACANCIES IN OFFICES................................................................................. 10
5.6 CHAIRMAN OF THE BOARD................................................................................ 10
5.7 PRESIDENT............................................................................................ 10
5.8 VICE PRESIDENTS...................................................................................... 11
5.9 SECRETARY............................................................................................ 11
5.10 CHIEF FINANCIAL OFFICER............................................................................. 11
ARTICLE VI--INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS............................ 11
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS............................................................ 11
6.2 INDEMNIFICATION OF OTHERS............................................................................ 12
6.3 INSURANCE............................................................................................ 12
ARTICLE VII--RECORDS AND REPORTS........................................................................... 13
7.1 MAINTENANCE AND INSPECTION OF RECORDS................................................................ 13
7.2 INSPECTION BY DIRECTORS.............................................................................. 13
7.3 ANNUAL STATEMENT TO STOCKHOLDERS..................................................................... 13
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS....................................................... 13
7.5 CERTIFICATION AND INSPECTION OF BYLAWS............................................................... 13
ARTICLE VIII--GENERAL MATTERS.............................................................................. 14
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING................................................ 14
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS............................................................ 14
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED.................................................... 14
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES..................................................... 14
8.5 SPECIAL DESIGNATION ON CERTIFICATES.................................................................. 15
8.6 LOST CERTIFICATES.................................................................................... 15
8.7 TRANSFER AGENTS AND REGISTRARS....................................................................... 15
8.8 CONSTRUCTION; DEFINITIONS............................................................................ 16
ARTICLE IX--AMENDMENTS..................................................................................... 16
</TABLE>
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BYLAWS
OF
ROSS SYSTEMS, INC.
(a Delaware Corporation)
ARTICLE I
CORPORATE OFFICES
I.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the Certificate
of Incorporation of the corporation.
I.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
II.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 principal
executive office of the corporation.
II.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. In the absence of such designation,
the annual meeting of stockholders shall be held on the third Tuesday of
November in each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.
II.3 SPECIAL MEETING
A special meeting of the stockholders 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 stockholders 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
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request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws,
that a meeting will 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 stockholders called by action of the board
of directors may be held.
II.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise given in
accordance with Section 2.6 of these bylaws not less than ten (10) (or, if sent
by third-class mail pursuant to Section 2.6 of these bylaws, thirty (30)) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the stockholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
II.5 NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS.
Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
(a) nominations for the election of directors, and
(b) business proposed to be brought before any stockholder meeting may be
made by the Board of Directors or proxy committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of his intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be delivered
to or mailed and received by the Secretary of the corporation not less than
thirty-five (35) days nor more than sixty (60) days prior to the meeting;
provided, however, that in the event that less than forty-five (45) days notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper form, a stockholder's notice to the Secretary shall set
forth:
(i) the name and address of the stockholder who intends to make the
nominations or propose the business and, as the case may be, of the person
or persons to be nominated or of the business to be proposed;
(ii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(iii) if applicable, a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
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(iv) such other information regarding each nominee or each matter of
business to be proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or intended to be
proposed by the Board of Directors; and
(v) if applicable, the consent of each nominee to serve as director of
the corporation if so elected.
The Chairman of the meeting shall refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.
II.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
II.7 QUORUM
The holders of a majority in voting power 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 either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
II.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and 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.
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II.9 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, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the articles of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder and stockholders shall not be entitled to
cumulate their votes in the election of directors of with respect to any matter
submitted to a vote of the stockholders.
Notwithstanding the foregoing, if the stockholders of the corporation are
entitled, pursuant to Sections 2115 and 301.5 of the California Corporations
Code, to cumulate their votes in the election of directors, each such
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes that such stockholder normally
is entitled to cast) only if the candidates' names have been properly placed in
nomination (in accordance with these bylaws) prior to commencement of the
voting, and the stockholder requesting cumulative voting has given notice prior
to commencement of the voting of the stockholder's intention to cumulate votes.
If cumulative voting is properly requested, each holder of stock, or of any
class or classes or of a series or series thereof, who elects to cumulate votes
shall be entitled to as many votes as equals the number of votes that (absent
this provision as to cumulative voting) he or she would be entitled to cast for
the election of directors with respect to his or her shares of stock multiplied
by the number of directors to be elected by him, and he or she may cast all of
such votes for a single director or may distribute them among the number to be
voted for, or for any two or more of them, as he or she may see fit.
II.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 stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
II.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, 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 business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
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
unless the board of directors fixes a new record date for the
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adjourned meeting, but the board of directors shall fix a new record date if the
meeting is adjourned for more than thirty (30) days from the date set for the
original meeting.
The record date for any other purpose shall be as provided in Section 8.1 of
these bylaws.
II.12 PROXIES
Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person 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, telefacsimile 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(e) of the General Corporation Law of
Delaware.
II.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, or, in the absence of the president and the chairman of the board, one of
the corporation's vice presidents, shall call the meeting of the stockholders to
order, and shall act as chairman of the meeting. In the absence of the
president, the chairman of the board, and all of the vice presidents, the
stockholders shall appoint a chairman for such meeting. The chairman of any
meeting of stockholders shall determine the order of business and the procedures
at the meeting, including such matters as the regulation of the manner of voting
and the conduct of business. The secretary of the corporation shall act as
secretary of all meetings of the stockholders, but in the absence of the
secretary at any meeting of the stockholders, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
II.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the 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
III.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and any
limitations in the certificate of incorporation and 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.
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III.2 NUMBER OF DIRECTORS
The board of directors shall be neither less than five (5) nor more than
seven (7) members. The exact number of directors shall be five (5) until
changed, within the limits specified above by a bylaw amending this Section 3.2
duly adopted by the board of directors or by the stockholders. The indefinite
number of directors may be changed, or a definite number may be fixed without
provision for an indefinite number, by an amendment to this bylaw, duly adopted
by the board of directors or by the stockholders, or by a duly adopted amendment
to the certificate of incorporation.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
III.3 ELECTION 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. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
III.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
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,
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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.
III.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place within
or outside the State of Delaware that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
III.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice if the
times of such meetings are fixed by the board of directors. If any regular
meeting day shall fall on a legal holiday, then the meeting shall be held next
succeeding full business day.
III.7 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 directors.
Notice of the time and place of special meetings 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 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 purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
III.8 QUORUM
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 3.10
of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and other applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
III.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a waiver
of notice or a consent to holding the meeting or an approval of the minutes
thereof, whether before or after the meeting, or (ii) who
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attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such directors. All such waivers, consents, and approvals
shall be filed with the corporate records or made part of the minutes of the
meeting. A waiver of notice need not specify the purpose of any regular or
special meeting of the board of directors.
III.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
III.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
III.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.
III.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
III.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 any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, 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 contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
ARTICLE IV
COMMITTEES
IV.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
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committee, who may replace any absent member at any meeting of the committee
may. The appointment of members or alternate members of a committee requires the
vote of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have and may exercise all
the powers and authority of the board, but no such committee shall have the
power of authority to:
(a) 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 the designations
and 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);
(b) adopt an agreement of merger or consolidation under Sections 251 or 252
of the General Corporation Law of Delaware;
(c) recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets;
(d) recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution; or
(e) 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.
IV.2 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), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without 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 be determined either by resolution of the board of directors
or by resolution of the committee, that special 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.
IV.3 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
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ARTICLE V
OFFICERS
V.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant secretaries, one or more assistant treasurers, and 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.
V.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed in
accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws,
shall be chosen by the board, subject to the rights, if any, of an officer under
any contract of employment.
V.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to appoint,
such other officers 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.
V.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 the
board of directors at any regular or special meeting of the board or, except in
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.
V.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
V.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.
V.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 stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He
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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.
V.8 VICE PRESIDENTS
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.
V.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 stockholders. 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 stockholders' 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 stockholders
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 stockholders 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.
V.10 CHIEF FINANCIAL OFFICER
The chief financial officer 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 chief financial officer 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 chief financial officer 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.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
VI.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware as the same now exists or may hereafter
be amended, indemnify any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding in
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which such person was or is a party or is threatened to be made a party by
reason of the fact that such person is or was a director or officer of the
corporation. For purposes of this Section 6.1, a "director" or "officer" of the
corporation shall mean any person (i) who is or was a director or officer of the
corporation, (ii) who is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was a director or officer of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees) incurred
by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director of officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be exclusive of
any other rights which such person may have or hereafter acquire under any
statute, provision of the corporation's Certificate of Incorporation, these
bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article shall
not adversely affect any right or protection hereunder of any person in respect
of any act or omission occurring prior to the time of such repeal or
modification.
VI.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
VI.3 INSURANCE
The corporation may 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 or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
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ARTICLE VII
RECORDS AND REPORTS
VII.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
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
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.
VII.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine (and to make copies of) the
corporation's stock ledger, a list of its stockholders and its other books and
records for a purpose reasonably related to his or her position as a director.
VII.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.
VII.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president, the
chief financial officer, the secretary or any 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 the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted 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.
VII.5 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise altered to
date, certified by the secretary, shall be kept at the corporation's principal
executive office and shall be open to inspection by the stockholders of the
corporation, at all reasonable times during office hours.
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ARTICLE VIII
GENERAL MATTERS
VIII.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any other lawful
action (other than action by stockholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
stockholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the General Corporation Law of Delaware.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution.
VIII.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
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.
VIII.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
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.
VIII.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the 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 or she were such officer,
transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance;
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the number of shares for which it is issued; a summary statement or reference to
the powers, designations, preferences or other special rights of such stock and
the qualifications, limitations or restrictions of such preferences and/or
rights, if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment 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 upon its books.
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, or 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.
VIII.5 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.
VIII.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares shall
be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
VIII.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, each of which shall be an incorporated bank
or trust company--either domestic or foreign, who shall be appointed at such
times and places as the requirements of the corporation may necessitate and the
board of directors may designate.
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VIII.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware 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.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote or by the board of directors of
the corporation. 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.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
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EXHIBIT D
ROSS SYSTEMS, INC.
1998 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Directors and Consultants,
and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the administration
of stock option plans under U. S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Options or Stock Purchase Rights are, or will be, granted
under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Ross Systems, Inc., a California corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.
i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined in Section
22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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(m) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share
of Common Stock shall be the mean between the high bid and low asked prices
for the Common Stock on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source
as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(p) "NOTICE OF GRANT" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
(q) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "OPTION" means a stock option granted pursuant to the Plan.
(s) "OPTION AGREEMENT" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding Options
are surrendered in exchange for Options with a lower exercise price.
(u) "OPTIONED STOCK" means the Common Stock subject to an Option or Stock
Purchase Right.
(v) "OPTIONEE" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.
(w) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 1998 Stock Option Plan.
(y) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant to a
grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement between
the Company and the Optionee evidencing the terms and restrictions applying to
stock purchased under a Stock Purchase Right. The Restricted Stock Purchase
Agreement is subject to the terms and conditions of the Plan and the Notice of
Grant.
(aa) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
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(bb) "SECTION 16(B)" means Section 16(b) of the Exchange Act.
(cc) "SERVICE PROVIDER" means an Employee, Director or Consultant.
(dd) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.
(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 900,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be administered by
different Committees with respect to different groups of Service Providers.
(ii) SECTION 162(M). To the extent that the Administrator determines it
to be desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan
shall be administered by a Committee of two or more "outside directors"
within the meaning of Section 162(m) of the Code.
(iii) RULE 16B-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption
under Rule 16b-3.
(iv) OTHER ADMINISTRATION. Other than as provided above, the Plan shall
be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase
Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be covered by
each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not
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limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Option or Stock Purchase
Right or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock Purchase Right
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;
(x) to modify or amend each Option or Stock Purchase Right (subject to
Section 15(c) of the Plan), including the discretionary authority to extend
the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined. All elections by
an Optionee to have Shares withheld for this purpose shall be made in such
form and under such conditions as the Administrator may deem necessary or
advisable;
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY.
(a) SERVICE PROVIDERS. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
(b) OUTSIDE DIRECTORS.
(i) For purposes of this subsection (b), "Outside Director" shall mean a
member of the Board of Directors of the Company who is not an Employee.
(ii) For purposes of this subsection (b), "Automatic Option" shall mean
a Nonstatutory Stock Option granted to an Outside Director which is
automatic and not subject to the discretion of any person.
(iii) No person shall have any discretion to select which Outside
Directors shall be granted Automatic Options or to determine the number of
shares to be covered by Automatic Options granted to Outside Directors;
provided, however, that nothing in this Plan shall be construed to prevent
an Outside Director from declining to receive an Automatic Option under this
Plan.
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(iv) Each Outside Director who is first elected to the Board of
Directors at the 1997 Annual Meeting of Shareholders of the Company or
thereafter shall be granted on the date of such election (whether by the
shareholders or by the Board of Directors) an Automatic Option to purchase
10,000 Shares (subject to adjustment as provided in Section 13). Each
Outside Director who has not previously been granted any Option under the
Plan and who is re-elected at the 1997 Annual Meeting of Shareholders shall
be granted on the date of the 1997 Annual Meeting of Shareholders an
Automatic Option to purchase 10,000 Shares (subject to adjustment as
provided in Section 13).
(v) On the date of the Annual Meeting of Shareholders in each calendar
year commencing 1997, each Outside Director who is elected or re-elected at
that meeting shall be granted an Automatic Option to purchase 4,000 Shares
(subject to adjustment as provided in Section 13).
(vi) The terms of each Automatic Option shall be as follows:
(A) the term of the Automatic Option shall be five and one-half
years;
(B) Automatic Options granted pursuant to paragraph (iv) shall become
exercisable cumulatively with respect to 25% of the 10,000 Shares subject
thereto on each anniversary of the date of grant; Automatic Options
granted pursuant to paragraph (v) shall be fully exercisable on the date
of grant;
(C) the exercise price per share of Common Stock shall be 100% of the
fair market value of the Common Stock on the date of grant of the
Automatic Option.
6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service Provider
may be granted Options to purchase up to an additional 500,000 Shares which
shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 13.
(iv) If an Option is cancelled in the same fiscal year of the Company in
which it was granted (other than in connection with a transaction described
in Section 13), the cancelled Option will be counted against the limits set
forth in subsections (i) and (ii) above. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
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7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be determined by the Administrator,
subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share exercise
price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per
Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon exercise
of an option, have been owned by the Optionee for more than six months on
the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised;
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<PAGE>
(v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the Optionee,
including any liability attributable to the Optionee's participation in any
Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or (viii)
such other consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an Optionee ceases
to be a Service Provider, other than upon the Optionee's death or Disability,
the Optionee may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on the
date of termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for three (3)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
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(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing or electronically, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of Shares
that the offeree shall be entitled to purchase, the price to be paid, and the
time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a shareholder, and shall
be a shareholder when his or her purchase is entered upon the records of the
duly authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 13 of the Plan.
12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
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(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right to
exercise his or her Option until ten (10) days prior to such transaction as to
all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully vested and exercisable for a period of fifteen
(15) days from the date of such notice, and the Option or Stock Purchase Right
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
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14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration, suspension
or termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
(d) AUTOMATIC OPTIONS. Notwithstanding the foregoing, neither the provisions
of Section 5(b), nor any other provisions pertaining to Automatic Option grants
to Outside Directors, shall be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act (if applicable) or the rules thereunder.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise of
an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an Option
or Stock Purchase Right, the Company may require the person exercising such
Option or Stock Purchase Right to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.
17. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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ROSS SYSTEMS, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Ross Systems, Inc. hereby acknowledges
receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
each dated October 6, 1997, and hereby appoints Dennis V. Vohs and J. Patrick
Tinley, or either of them, proxies, each with full power of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1997 Annual Meeting of Shareholders of Ross Systems, Inc. to be held on November
19, 1997, and at any adjournment(s) thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side.
Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF
AMENDMENT TO THE 1991 EMPLOYEE STOCK PURCHASE PLAN INCREASING THE NUMBER OF
SHARES AUTHORIZED TO BE ISSUED, FOR THE APPROVAL OF AN AMENDMENT TO REVISED
ARTICLES OF INCORPORATION INCREASING THE AUTHORIZED NUMBER OF SHARES OF COMMON
STOCK, AND FOR THE RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND LLP AS
INDEPENDENT AUDITORS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING AND ANY ADJOURNMENT THEREOF.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS:
Nominees: Dennis V. Vohs, Mario M. Rosati, Bruce J. Ryan,
J. Patrick Tinley,
For all nominees except as noted above
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CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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2. PROPOSAL TO APPROVE THE REINCORPORTATION OF ROSS SYSTEMS, INC. FROM CALIFORNIA TO DELAWARE:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE 1998 INCENTIVE STOCK OPTION PLAN:
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY:
/ / FOR / / AGAINST / / ABSTAIN
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MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT
This Proxy should be marked, dated, and signed by the shareholder(s) exactly as
the shareholder's name appears on this proxy, and returned promptly in the
enclosed envelope. Persons signing as a trustee, executor, officer, partner, or
other fiduciary should so indicate.
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Signature: Date:
Signature: Date:
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