<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NO. 0-20740
-------------------------------
PLATINUM SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0277592
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
195 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618-2402
(Address of principal executive offices, zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 453-4000
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No _
As of January 29, 1997, there were 18,685,199 shares of common stock
outstanding.
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item I -Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . 7
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 1 -Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4 -Submission of Matters to Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 6 -Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS:
PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
December 31, June 30,
1996 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,948 $ 5,402
Short-term investments 5,534 10,098
Restricted cash - 1,006
Accounts receivable, net 7,807 7,893
Notes receivable from divestitures, net 413 825
Inventories 502 460
Prepaid expenses and other 1,813 1,638
- ---------------------------------------------------------------------------------------------------------------
Total current assets 25,017 27,322
Property and equipment, net 7,873 8,896
Software development costs, net 2,520 2,250
Acquired source code, net 653 1,088
Other assets 508 446
- ---------------------------------------------------------------------------------------------------------------
$ 36,571 $ 40,002
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,297 $ 3,436
Other accrued expenses 6,714 7,522
Accrued restructuring costs 1,533 1,921
Deferred revenue 9,491 10,912
- ---------------------------------------------------------------------------------------------------------------
Total current liabilities 21,035 23,791
- ---------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 31,692 31,996
Common stock 19 18
Additional paid-in capital 113,239 111,194
Less: notes receivable from officers for issuance of restricted stock (11,563) (11,563)
Accumulated foreign currency translation adjustments 419 249
Accumulated deficit (118,270) (115,683)
- ---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 15,536 16,211
- ---------------------------------------------------------------------------------------------------------------
$ 36,571 $ 40,002
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated balance sheets.
3
<PAGE> 4
PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
License fees $ 6,524 $ 4,201 $ 11,605 $ 10,977
Consulting and professional services 2,362 2,872 4,483 6,101
Support services 3,658 2,786 7,181 5,211
Royalty income 138 297 273 505
- ---------------------------------------------------------------------------------------------------------------
12,682 10,156 23,542 22,794
Cost of revenues 4,743 5,042 8,905 10,550
- ---------------------------------------------------------------------------------------------------------------
Gross profit 7,939 5,114 14,637 12,244
- ---------------------------------------------------------------------------------------------------------------
Operating expenses:
Sales and marketing 5,413 4,513 10,473 10,694
General and administrative 1,047 1,722 2,726 3,287
Software development 2,168 3,932 4,409 8,145
Charge for restructuring - 5,600 - 5,600
- ---------------------------------------------------------------------------------------------------------------
8,628 15,767 17,608 27,726
- ---------------------------------------------------------------------------------------------------------------
Loss from operations (689) (10,653) (2,971) (15,482)
Other income (expense), net 162 (306) 384 40
- ---------------------------------------------------------------------------------------------------------------
Loss before provision for income taxes (527) (10,959) (2,587) (15,442)
Provision for income taxes - - - -
- ---------------------------------------------------------------------------------------------------------------
Net loss $(527) (10,959) $(2,587) (15,442)
===============================================================================================================
Net loss per share $ (0.03) $ (0.82) $ (0.14) $ (1.13)
===============================================================================================================
Shares used in computing
net loss per share 18,378 13,353 18,256 13,682
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated statements.
4
<PAGE> 5
PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Six Months Ended
December 31,
1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,587) $(15,442)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 2,691 2,864
Interest accretion on class action settlement - 605
Charge for restructuring - 5,600
Change in operating assets and liabilities:
Decrease in accounts receivable, net 86 170
(Increase) decrease in inventories (42) 97
Increase in prepaid expenses and other (175) (241)
(Increase) decrease in other assets (62) 47
Decrease in accounts payable (139) (684)
Decrease in accrued expenses (781) (523)
Decrease in accrued restructuring costs (355) (1,624)
Decrease in deferred revenue (1,421) (1,100)
- ---------------------------------------------------------------------------------------------------------------
Cash used in operating activities (2,785) (10,231)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Payments received on notes receivable from divestitures 412 338
Increase in notes receivable from divestitures - (411)
Capital expenditures, net (734) (1,988)
Capitalized software development costs (769) (306)
Purchase of short-term investments (4,500) -
Sale of short-term investments 9,064 -
- ---------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities 3,473 (2,367)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Exercise of common stock options 1,597 671
Issuance of common stock under the Employee Stock Purchase Plan 85 172
Decrease in restricted cash 1,006 476
- ---------------------------------------------------------------------------------------------------------------
Cash provided by financing activities 2,688 1,319
- ---------------------------------------------------------------------------------------------------------------
Effect of exchange rates on cash 170 (45)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 3,546 (11,324)
Cash and cash equivalents, beginning of period 5,402 26,276
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8,948 $ 14,952
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated statements.
5
<PAGE> 6
PLATINUM SOFTWARE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements present
the financial position of Platinum Software Corporation (the "Company") as of
December 31, 1996 and June 30, 1996, the results of its operations for the
three and six months ended December 31, 1996 and 1995 and its cash flows for
the six months ended December 31, 1996 and 1995, and have been prepared by the
Company in accordance with generally accepted accounting principles and
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "SEC"). Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading. The unaudited condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 30, 1996.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the Company's financial
position, results of operations and cash flows.
The results of operations for the three and six months ended December 31, 1996,
are not necessarily indicative of the results of operations to be expected for
the entire fiscal year ending June 30, 1997.
REVENUE RECOGNITION
Revenue is recognized from licenses of software upon contract execution,
shipment of products and when the Company has performed all of its significant
contractual obligations. When a software license agreement obligates the
Company to provide more than one software module, all license revenue under the
agreement is deferred until all modules achieve general availability and are
delivered, except when the license agreement contains a specific financial
remedy in the event the unavailable module is not delivered. In such instance,
revenue is deferred in the amount attributable to the specific financial
remedy. The Company generally does not provide any post-contract customer
service or support as part of the software license fee; however, when such
services are provided for in the license agreement, an appropriate portion of
the license fee is deferred and amortized over the service or support period.
The Company's customers may enter into maintenance agreements with the Company
and such revenue is recognized ratably over the term of the agreement. Revenue
from consulting services is recognized as services are provided.
NET LOSS PER SHARE
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. The shares of common stock issuable in connection with the
July 26, 1995 election to redeem the debenture have been treated as if they
were outstanding from July 26, 1995 to September 30, 1995. Due to the
agreement to rescind the Company's July 26, 1995 election to repay the
debenture and the subsequent reinstatement of the debenture, the treatment for
net loss per share purposes of the shares of common stock issuable in
connection with the repayment of the debenture have been changed from being
outstanding to common stock equivalents from October 1, 1995 to December 31,
1995. However, common stock equivalents were antidilutive for the three and
six months ended December 31, 1996 and 1995, and therefore, excluded from the
calculation of net loss per share for such periods.
FISCAL 1996 RESTRUCTURING
During the second quarter of fiscal 1996, the Company restructured its business
operations. The restructuring included the cessation of the marketing of the
version of the Company's Platinum SQL Enterprise product that runs on the
Sybase/UNIX server platform as well as the elimination of the Company's direct
sales force for this product line. The restructuring resulted in a charge of
$5.6 million which was recorded in the second quarter of fiscal 1996.
6
<PAGE> 7
Such amount included charges for severance and other extended benefit costs
related to the reduction in force, lease termination and buyout costs related
to the closure of facilities and asset write-downs and other costs. The
Company estimates that expense savings from the second quarter 1996
restructuring, on a quarterly basis, are $2.8 million. In February 1996, the
Company had another reduction in force of approximately 40 people. This
reduction in force resulted in an additional restructuring charge of $4.2
million which was recorded in the third quarter of fiscal 1996. Such amount
included charges for severance and other extended benefit costs related to the
reduction in force, lease termination and buyout costs related to the closure
of facilities and asset write-downs and other costs. The Company estimates
that expense savings from the third quarter 1996 restructuring, on a quarterly
basis, are $900,000. The savings from the two fiscal 1996 restructurings have
been offset in part by the costs associated with the re-establishment of the
direct sales force. See "Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations." During the six months ended
December 31, 1996, the Company paid approximately $355,000 for severance, lease
termination and other costs relating to these two restructurings and the fiscal
1994 restructuring.
CONTINGENCIES
The Company is subject to miscellaneous legal proceedings in the normal course
of business and other legal proceedings related to or arising out of the fiscal
1994 restructuring, reductions in force and the discontinuance of certain
client/server applications. The Company is currently defending these
proceedings and claims, and anticipates that it will be able to resolve these
matters in a manner that will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
RESULTS OF OPERATIONS
Net loss for the second quarter of fiscal 1997 was $527,000, or $0.03 per
share, as compared to a net loss of $11.0 million, or $0.82 per share, for the
comparable quarter of fiscal 1996. Net loss for the first six months of fiscal
1997 was $2.6 million or $0.14 per share, as compared to a net loss of $15.4
million, or $1.13 per share, for the comparable period of fiscal 1996. The
following summarizes the significant aspects related to the Company's results
of operations.
Revenues
Revenues were approximately $12.7 million and $10.2 million for the three
months ended December 31, 1996 and 1995, respectively, representing an increase
of 25%. Revenues were approximately $23.5 million and $22.8 million for the
six months ended December 31, 1996 and 1995, respectively, representing an
increase of 3%.
Total license fee revenues were approximately $6.5 million and $4.2 million for
the three months ended December 31, 1996 and 1995, respectively, representing
an increase of 55% and approximately $11.6 million and $11.0 million for the
six months ended December 31, 1996 and 1995, respectively, representing an
increase of 6%.
License fee revenues for the Company's Platinum SQL product (formerly named
Platinum SQL NT) were approximately $4.3 million and $1.7 million for the three
months ended December 31, 1996 and 1995, respectively, and $7.6 million and
$4.6 million for the six months ended December 31, 1996 and 1995, respectively.
The increases primarily resulted from the re-establishment of the Company's
direct sales force which began in the fourth quarter of fiscal 1996.
License fee revenues for the Platinum-DOS and Platinum for Windows products
were approximately $2.0 million and $1.6 million for the three months ended
December 31, 1996 and 1995, respectively, and $3.5 million and $3.1_million for
the six months ended December 31, 1996 and 1995. The increases primarily
resulted from the availability of a complete suite of Platinum for Windows core
modules during the quarter ended December 31, 1996, as well as a change in
sales strategy to have the primary sales responsibility for this product reside
at the Company's corporate headquarters instead of in the field.
7
<PAGE> 8
License fee revenues for the Company's Platinum SQL Enterprise product line
were approximately $0 and $550,000 for the three months ended December 31, 1996
and 1995, respectively, and $0 and $2.4 million for the six months ended
December 31, 1996 and 1995, respectively. In October 1995, the Company
discontinued the marketing of the version of its Platinum SQL Enterprise
product line that runs on the Sybase/UNIX server platform because of lack of
recent license revenues (see Item 1 - "Notes to Unaudited Condensed
Consolidated Financial Statements -- Fiscal 1996 Restructuring").
International license fee revenues were $2.2 million and $1.3 million for the
three months ended December 31, 1996 and 1995, respectively, and $3.9 million
and $3.1 million for the six months ended December 31, 1996 and 1995,
respectively. These increases were due to the increases in the license fee
revenues for the Platinum SQL and Platinum-DOS and Platinum for Windows
products.
Consulting and professional services revenue decreased 18% from revenues of
$2.9 million in the three months ended December 31, 1995 to $2.4 million in the
three months ended December 31, 1996 and decreased 27% from revenues of $6.1
million in the six months ended December 31, 1995 to $4.5 million in the six
months ended December 31, 1996. The decreases were primarily attributable to
the involvement of the consulting and professional services division during
fiscal 1996 in providing formal training to the Company's distributors and
dealers, and the transferring of expertise gained in Platinum SQL Enterprise
and Platinum SQL NT implementations. During fiscal 1997, the consulting and
professional services division has and will focus more of its efforts on
providing consulting and implementation services to customers, and the Company
expects the dollar amount of professional services revenues to continue to
increase when compared to the second and first quarter of fiscal 1997. See
"Certain Factors That May Affect Future Results - Forward Looking Statements."
Support services revenue increased 31% from revenues of $2.8 million in the
three months ended December 31, 1995 to $3.7 million in the three months ended
December 31, 1996 and increased 38% from revenues of $5.2_million in the six
months ended December 31, 1995 to $7.2 million in the six months ended December
31, 1996. The increase was primarily attributable to an overall rise in the
installed base of end-users of Platinum SQL and an increased effort to renew
customers on maintenance contracts which the Company commenced in early fiscal
1997.
Gross Profit
Gross profit increased as a percentage of revenues from 50% for the three
months ended December 31, 1995 to 63% for the three months ended December 31,
1996. Gross profit increased as a percentage of revenues from 54% for the six
months ended December 31, 1995 to 62% for the six months ended December 31,
1996 The increases in gross profit percentage are primarily due to higher
license fee revenues and higher support services revenues as a percentage of
total revenues, which have higher margins than consulting and professional
services revenues.
Operating Expenses
Excluding the restructuring charge of $5.6 million in the three months ended
December 31, 1995, total operating expenses decreased from $10.2 million for
the three months ended December 31, 1995 to $8.6 million for the three months
ended December 31, 1996. The decrease was primarily attributable to cost
savings achieved from the fiscal 1996 restructurings. Excluding the
restructuring charge of $5.6 million in the three months ended December 31,
1995, total operating expenses as a percentage of revenues were 68% and 100%
for the three months ended December 31, 1996 and 1995, respectively. Excluding
the restructuring charge of $5.6 million in the six months ended December 31,
1995, total operating expenses decreased from $22.1 million for the six months
ended December 31, 1995 to $17.6 million for the six months ended December 31,
1996. Excluding the restructuring charge of $5.6 million in the six months
ended December 31, 1995, total operating expenses as a percentage of revenues
were 75% and 97% for the six months ended December 31, 1996 and 1995,
respectively.
Sales and marketing expenses were approximately $5.4 million and $4.5 million
for the three months ended December 31, 1996 and 1995, respectively, or
approximately 43% and 44% of total revenues. Sales and marketing expenses were
approximately $10.5 million and $10.7 million for the six months ended December
31, 1996 and 1995, respectively, or approximately 45% and 47% of total revenues.
The slight decrease in the six months ended December 31, 1996 resulted from cost
savings achieved from the termination of the Company's direct sales force in
October 1995. In the fourth quarter of fiscal 1996, the Company re-established
a smaller direct sales force for its Platinum SQL product and this accounts for
the increase in expenses for the three months ended December 31, 1996, as
compared to the three months ended December 31, 1995.
8
<PAGE> 9
General and administrative expenses were approximately $1.0 million and $1.7
million for the three months ended December 31, 1996 and 1995, respectively, or
approximately 8% and 17% of total revenues. General and administrative
expenses were approximately $2.7 million and $3.3 million for the six months
ended December 31, 1996 and 1995, respectively, or approximately 12% and 14% of
total revenues. The decreases were primarily a result of the decreased
reserves provided for uncollectible accounts receivable and decreased reserves
provided for litigation and threatened litigation.
Software development expenditures were approximately $2.4 million and $4.2
million for the three months ended December 31, 1996 and 1995, respectively,
before capitalization of software costs of approximately $269,000 and $229,000,
respectively. Software development expenditures were approximately $5.2
million and $8.5 million for the six months ended December 31, 1996 and 1995,
respectively, before capitalization of software costs of approximately $769,000
and $306,000, respectively. The decreases in the amount of software
development expenses were due to a lesser number of development employees which
resulted from personnel cuts in the fiscal 1996 restructurings and other cost
savings in the fiscal 1996 restructurings. Upon the release for general
availability of the Company's software products, the Company amortizes
capitalized software development costs over a five year period. Such
amortization is included in cost of revenues. The percentage of capitalized
software development costs to total software development costs was 11% for the
three months ended December 31, 1996 and 6% for the three months ended December
31, 1995. The percentage of capitalized software development costs to total
software development costs was 15% for the six months ended December 31, 1996
and 4% for the six months ended December 31, 1995. During the three and six
months ended December 31, 1996, costs were capitalized for the Platinum for
Windows purchase order, inventory and order entry modules and the
multi-currency functionality for Platinum SQL. The Company expects that gross
development expenditures should remain constant for the remainder of fiscal
1997. See "Certain Factors That May Affect Future Results - Forward Looking
Statements."
Other Income (Expense)
Other income (expense) for the three months ended December 31, 1996 and 1995,
was approximately $162,000 and ($306,000), respectively. Other income for the
six months ended December 31, 1996 and 1995, was approximately $384,000 and
$40,000, respectively. For the three and six months ended December 31, 1996,
other income primarily represented interest earned on the Company's cash and
cash equivalents and short-term investments. For the three and six months
ended December 31, 1995, other income (expense) primarily represented interest
earned on the Company's cash and cash equivalents and short-term investments,
offset by interest expense on the Company's debenture.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of December 31, 1996, the Company's principal sources of liquidity included
cash and cash equivalents of approximately $8.9 million. Cash and cash
equivalents increased by approximately $3.5 million over the June 30, 1996
balance. The increase is primarily attributable to the net sale of short term
investments, proceeds received from the exercise of stock options and the
decrease in restricted cash, offset by cash used in operations. The Company
had working capital of $3.5 million at June 30, 1996 as compared to working
capital of $4.0 million at December 31, 1996.
The Company's operations used approximately $2.8 million of cash and cash
equivalents in the six months ended December 31, 1996. This was primarily due
to the net loss from operations offset by non-cash items, principally
depreciation and amortization, and to the reduction of current liabilities.
As part of the sale of certain Company product lines and divisions in the
fiscal 1994 restructuring, the Company received payments on notes receivable
from divestitures of approximately $412,000 during the six months ended
December 31, 1996. The Company also paid approximately $355,000 in severance,
lease and other costs related to the fiscal 1994 and fiscal 1996 restructurings
during the six months ended December 31, 1996. At December 31, 1996, the
Company had a $1.5 million cash obligation related to lease termination and
other costs of the fiscal 1994 and fiscal 1996 restructurings and this
obligation will be funded from existing cash reserves and working capital.
9
<PAGE> 10
The Company has taken steps to significantly reduce its operating expenses,
through several reductions in work force over the past two years, as well as
the disposition of several business units. If the Company is not successful in
achieving targeted revenues, the Company may be required to take further
actions to align its operating expenses with its reduced revenues, such as
further reductions in work force.
The Company experienced negative cash flow from operations for the first nine
months of fiscal 1996 and the first six months of fiscal 1997 and positive cash
flow from operations during the fourth quarter of fiscal 1996. The Company
expects to be cash flow positive from operations commencing the third quarter
of fiscal 1997. See "Business - Certain Factors That May Affect Future Results
- - Forward Looking Statements." Accordingly, the Company is dependent upon its
ability to generate cash flow from license fees and other operating revenues,
as well as the collection of its outstanding accounts receivable to maintain
current liquidity levels. However, the Company believes that its current cash
reserves, together with existing sources of liquidity, will satisfy the
Company's projected short-term liquidity and other cash requirements for the
next 12 months.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Liquidity. The Company's cash and cash equivalents increased from $5.4 million
at June 30, 1996 to $8.9 million at December 31, 1996, principally due to the
net sale of short term investments, proceeds received from the exercise of
stock options and the decrease in restricted cash, offset by cash used in
operations. Although, the Company's fiscal 1994 restructuring is substantially
complete, there will be additional cash outlays in connection with lease
terminations, estimated to be approximately $131,000. In addition, there will
be further cash outlays estimated at approximately $967,000 in connection with
the second quarter fiscal 1996 restructuring and approximately $395,000 in
connection with the third quarter fiscal 1996 restructuring. The Company has
taken steps to significantly reduce its operating expenses, through the
reductions in work force, as well as the disposition of several business units
that were not within the Company's core financial software application
business. The Company has experienced negative cash flow from operations for
the first nine months of fiscal 1996 and the first six months of fiscal 1997
and positive cash flow from operations during the fourth quarter of fiscal
1996. The Company expects to be cash flow positive from operations during the
third quarter of fiscal 1997. See "Forward Looking Statements." If the
Company is not successful in achieving targeted revenues or positive cash flow,
the Company may be required to take further actions to align its operating
expenses with its reduced revenues, such as further reductions in work force.
Fluctuations in Quarterly Operating Results. The Company's operating results
can vary substantially from period-to-period. The Company's quarterly
operating results fluctuate in part due to the number and timing of new product
introductions and enhancements, discontinuance of product lines, the timing of
product orders and shipments, recognition of deferred revenue upon the
Company's completion of its contractual obligations, marketing and product
development expenditures and promotional programs. A significant portion of
the Company's quarterly revenues are recorded in the final month of the
quarter, with a concentration of such revenues in the final 10 business days of
that month. Also, the timing of the closing of direct sales in the latter part
of each quarter increases the risk of quarter-to-quarter fluctuations.
Accordingly, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future performance. If revenues do not meet the
Company's expectations in any given quarter, operating results may be adversely
affected. There can be no assurance that the Company will be profitable in any
quarter or at all.
Disruption of Revenues. The negative events that have occurred at the Company
since April 1994, including the fiscal 1994 restatement of the Company's
financial statements for prior periods, an investigation by the SEC relating to
the circumstances underlying the restatement, a securities class action
lawsuit, several reductions in force, the closing of business units and poor
financial performance, have caused potential customers to curtail or delay
purchasing decisions or make purchases from other software vendors and have,
accordingly, adversely impacted the Company's ability to generate revenue.
Although, the Company has settled the securities class action, raised
additional equity financing, and the SEC investigation has concluded, the
negative effects on revenue from the negative events at the Company have
continued. There can be no assurance that the difficulty in closing sales of
software licenses will not continue in the future or that Authorized Dealers or
Authorized Consultants will continue to represent the Company's products and,
accordingly, revenues may be significantly impacted in the future.
Dependence on Distribution Channels. The Company distributes its Platinum DOS
and Platinum for Windows products exclusively through third- party dealers and
VARs, and distributes its Platinum SQL software product
10
<PAGE> 11
through a direct sales force as well as through VARs and distributors. The
Company's distribution channel includes distributors, resellers, software
consultants and systems integrators, and Authorized Consultants, which consist
primarily of professional firms. Although no one of these distribution channel
members is responsible for any material amount of the Company's license fees,
the Company's results of operations could be adversely affected if significant
numbers of its Authorized Dealers or Authorized Consultants were to cease
distributing or recommending the Company's products or were to choose to
emphasize competing products. Generally, the Company's agreements with its
Authorized Dealers and Authorized Consultants do not require them to
exclusively offer or recommend the Company's products and may be terminated by
either party with or without cause.
In the fourth quarter of fiscal 1996, the Company began reestablishing a direct
sales force for its middle market client server financial software product,
Platinum SQL. There can be no assurance that the direct sales force will be
successful in generating revenues or that it will not lead to conflicts with
the Company's dealer channel.
The Company's Platinum SQL product (formerly named Platinum SQL NT) was first
introduced on a limited basis to the network of Authorized Dealers during the
quarter ended December 31, 1994. Platinum SQL, a client/server financial
software application designed to run on Microsoft Windows NT and Microsoft SQL
server, is a more technically complex product than Platinum for Windows and
Platinum-DOS and requires additional skill and training to successfully
implement. The Company presently has over 70 authorized Platinum SQL dealers
who have completed training from which approximately 30 dealers generate
greater than 90% of the indirect sales of Platinum SQL and is actively seeking
additional skilled Authorized Dealers to sell Platinum SQL. Delays in training
Authorized Dealers or recruiting additional skilled Authorized Dealers could
adversely impact the Company's ability to generate license revenues from its
Platinum SQL product line. There can be no assurance that the Company's direct
or indirect sales efforts will be successful.
Dependence on Platinum SQL Product Line. Platinum SQL, which is a successor
product to Platinum SQL Enterprise which was first introduced in June 1992, and
to Platinum SQL NT, which was first introduced in December 1994, is a
relatively new integrated financial and management information software product
for use on client/server computing systems. It is common for complex programs
such as Platinum SQL to contain undetected errors when first released, which
are discovered only after the product has been used with many different
computer systems and in varying applications. The Company has been informed by
customers of certain errors with respect to its Platinum SQL product which the
Company is addressing. The inability of the Company to correct the errors, or
any significant delay in correcting the errors in Platinum SQL, will have a
material adverse effect on the Company's results of operations. In addition,
there can be no assurance that significant technical problems will not be
discovered, or if discovered, corrected in a timely manner. Technical problems
with the current release of the database platforms on which Platinum SQL
operates could impact sales of these Company products, and any significant
technical problems could have a material adverse effect on the Company's
results of operations.
New Product Introductions. The Company's future success will depend upon its
ability to develop and successfully introduce new products, enhance its current
products on a timely basis and increase customer acceptance of its existing
products. The Company has two principal product lines, Platinum for Windows
(including Platinum-DOS) and Platinum SQL. The Company continues to provide
maintenance and support services for its Platinum SQL Enterprise product for
existing customers. Platinum SQL was released in the quarter ended December
31, 1994 and all of the core accounting modules of Platinum for Windows were
released during the quarter ended June 30, 1995 and calendar 1996. Version 4.1
of Platinum SQL, which includes multi-currency functionality for the core
accounting modules, is scheduled for release during the fourth quarter of
fiscal 1997. In the past, the Company has occasionally experienced delays in
the introduction of new products and product enhancements. There can be no
assurance that the Company will be successful in developing and marketing these
new products or product enhancements on a timely basis or that the Company will
not experience significant delays in introducing new products in the future,
which could have a material adverse effect on the Company's results of
operations. In addition, there can be no assurance that new products or
product enhancements developed by the Company will achieve market acceptance.
Dependence on Client/Server Environment. The Company's development tools,
application products and consulting and education services are intended to help
organizations build, customize or deploy solutions that operate in a
client/server computing environment. The client/server market is relatively
new, and there can be no assurance that organizations will continue to adopt
client/server environments or that customers of the Company that have begun the
migration to a client/server environment will broadly implement this model of
computing. The
11
<PAGE> 12
Company's future financial performance will depend in large part on continued
growth in the market for client/server software applications and related
services, which in turn will depend in part on the growth in the number of
organizations implementing client/server computing environments and the number
of applications developed for use in those environments. There can be no
assurance that these markets will continue to grow or that the Company will be
able to respond effectively to the evolving requirements of these markets. If
the market for client/server application products and services does not grow in
the future, or grows more slowly than the Company anticipates, or if the
Company fails to respond effectively to evolving requirements of this market,
the Company's business, financial condition and results of operations would be
materially adversely affected.
Competition. The financial computer software industry is intensely competitive
and rapidly changing. A number of companies offer products similar to the
Company's products that target the same markets. Some of the Company's
existing competitors, as well as a number of new potential competitors, have
larger technical staffs, more established and larger marketing and sales
organizations and significantly greater financial resources than the Company.
There can be no assurance that competitors will not develop products that are
superior to the Company's products or that achieve greater market acceptance.
The Company's future success will depend significantly upon its ability to
increase its share of its target markets and to license additional products and
product enhancements to existing customers. The adverse publicity relating to
the restatement of previously issued financial results has resulted in
increased competitive challenges, which the Company expects will continue. In
addition, adverse publicity relative to the Company's restructuring efforts,
downsizing and poor financial results has resulted in further competitive
challenges. There can be no assurance that the Company will be able to compete
successfully or that competition will not have a material adverse effect on the
Company's financial condition and results of operations.
Exposure to Rapid Technological Change. The market for the Company's financial
accounting software products is characterized by rapid technological advances,
changes in end-user requirements, frequent new product introductions and
enhancements and evolving industry standards. The introduction of products
embodying new technologies and the emergence of new industry standards could
render the Company's existing products and products under development obsolete
and unmarketable. The Company's future success will depend upon its ability to
address the increasingly sophisticated needs of its customers by enhancing its
current products and by developing and introducing on a timely basis new
products that keep pace with technological developments and emerging industry
standards, respond to evolving end user requirements and achieve market
acceptance. Any failure by the Company to anticipate or adequately respond to
technological developments or end-user requirements, or any significant delays
in product development or introduction, could result in a loss of
competitiveness or reduced revenues. If the Company is unable, for
technological or any other reason, to develop, introduce and sell its products
in a timely manner, the Company's business, operating results and financial
condition would be materially adversely affected. From time to time, the
Company or its present or future competitors may announce new products,
capabilities or technologies that have the potential to replace or shorten the
life cycles of the Company's existing products. There can be no assurance that
announcements of currently planned or other new products will not cause
customers to delay or alter their purchasing decisions in anticipation of such
products, which could have a material adverse effect on the Company's business,
operating results and financial condition.
Shares Eligible for Future Sale. As of January 29, 1997, the Company had
18,685,199 shares of common stock outstanding. There are presently 2,435,000
shares of Series B Preferred Stock and 231,598 shares of Series C Preferred
Stock outstanding. Each share of Series B Preferred Stock is convertible into
one share of common stock, as adjusted for stock dividends, combinations or
splits at the option of the holder. Each share of Series C Preferred Stock is
convertible into ten shares of common stock, as adjusted for stock dividends,
combinations or splits at the option of the holder. As a result, the Series B
and Series C Preferred Stock are convertible into 2,435,000 and 2,315,980
shares of common stock, respectively. The holders of the Series B and Series C
Preferred Stock have the right to cause the Company to register the sale of the
shares of common stock issuable upon conversion of the Series B and Series C
Preferred Stock. Also, the Company has a substantial number of options or
shares issuable to employees under employee option plans. In addition, certain
third parties hold warrants to purchase an aggregate of 105,000 shares of
common stock. The holders of these warrants have the right to require the
Company to register the sale of the shares of common stock issuable upon
exercise of the warrants. As a result, a substantial number of shares of
common stock will be eligible for sale in the public market at various times in
the future. Sales of substantial amounts of such shares could adversely affect
the market price of the Company's common stock.
12
<PAGE> 13
Possible Volatility of Stock Prices. The market prices for securities of
technology companies, including the Company, have been volatile. Quarter to
quarter variations in operating results, changes in earnings estimates by
analysts, announcements of technological innovations or new products by the
Company or its competitors, announcements of major contract awards and other
events or factors may have a significant impact on the market price of the
Company's Common Stock. In addition, the securities of many technology
companies have experienced extreme price and volume fluctuations, which have
often been unrelated to the companies' operating performance. These conditions
may adversely affect the market price of the Company's Common Stock.
Forward Looking Statements. This quarterly report contains certain forward
looking statements that involve risks and uncertainties. Certain risks and
uncertainties which may impact the accuracy of the forward looking statements
with respect to revenues, expenses and operating results include, without
limitation, the impact of competitive products, pricing, the discovery of
undetected errors or software bugs in the Company's products, subsequent
changes in business strategy or plan, the ability of the Company to overcome
recent negative events such as restructurings and reductions in force, and the
ability of the Company to recruit and train dealers for the Platinum SQL
product. Certain other risks and uncertainties are described under "Certain
Factors That May Affect Future Results."
Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered an indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods.
13
<PAGE> 14
PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS:
The Company is subject to miscellaneous legal proceedings in the normal course
of business and other legal proceedings related to or arising out of the fiscal
1994 restructuring, reductions in force and the discontinuance of certain
client/server applications. The Company is currently defending these
proceedings and claims, and anticipates that it will be able to resolve these
matters in a manner that will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS:
On October 24, 1996, the Company held its annual meeting of stockholders and at
such meeting L. George Klaus, Carmelo J. Santoro, W. Douglas Hajjar, Richard J.
Goeglein, Robert Finzi and Donald R. Dixon were elected as directors of the
Company by the Common, Series B and Series C stockholders. Each share of
Series B Preferred Stock is entitled to vote with the holders of Common Stock
on an as-converted basis on all matters presented for stockholder approval and
is also entitled to designate two members of the Board of Directors at each
election of directors. Each Share of Series C Preferred Stock is convertible
into ten (10) shares of Common Stock and is entitled to vote with the holders
of Common Stock on an as-converted basis on all matters presented for
stockholder approval. The holders of Series B Preferred Stock designated, by
written consent, Arthur J. Marks and L. John Doerr as members of the Board of
Directors. Other items considered at the annual meeting of stockholders
included the ratification of the appointment of Ernst & Young, LLP as the
Company's independent auditors for the fiscal year ending June 30, 1997 and the
approval of an amendment to the Company's Certificate of Incorporation to
eliminate actions by written consent by common stockholders.
The ratification of the appointment of Ernst & Young, LLP was approved by a
majority of the stockholders present and entitled to vote at the meeting.
Specifically, the total outstanding shares available for voting at the meeting
was 18,157,286 shares of Common Stock of which 16,049,721 were present or
represented at the meeting; 2,490,000 shares of Series B Preferred Stock of
which all 2,490,000 shares were present or represented at the meeting; and
2,315,980 shares of Series C Preferred Stock (on an as-converted basis) of
which 2,315,980 were present or represented at the meeting. A total of
20,855,701 shares of Common Stock, Series B Preferred Stock and Series C
Preferred Stock (on an as- converted basis) were present or represented at the
meeting. 15,999,280 shares of Common Stock, 2,490,000 shares of Series B
Preferred Stock and 2,315,980 shares of Series C Preferred Stock voted in favor
of the ratification of Ernst & Young, LLP, 27,523 shares of Common Stock voted
against, and 22,918 shares of Common Stock abstained from voting.
The proposal to amend the Company's Certificate of Incorporation to eliminate
actions by written consent by common stockholders was approved by a majority of
the outstanding shares of Common Stock, Series B Preferred Stock and Series C
Preferred Stock voting together as one class. With respect to the amendment to
the Certificate of Incorporation, 7,450,354 shares of Common Stock, 2,490,000
shares of Series B Preferred Stock, 2,315,980 shares of Series C Preferred
Stock (on an as-converted basis) or a total of 12,256,334 shares voted in favor
of the amendment. 1,465,233 shares of Common Stock voted against the amendment
and 119,889 shares of Common Stock abstained from voting.
With respect to the election of directors, 16,049,721 shares of Common Stock
were available for voting at the meeting and 2,490,000 shares of Series B
Preferred Stock and 2,315,980 shares of Series C Preferred Stock (on an
as-converted basis) were available for voting at the meeting. All shares of
Series B and Series C Preferred Stock voted in favor of all of the nominated
directors. The following nominees received the votes by common stockholders as
noted below:
14
<PAGE> 15
<TABLE>
<CAPTION>
NAME VOTES FOR WITHHELD AUTHORITY
<S> <C> <C>
L. George Klaus 15,961,673 88,048
Carmelo J. Santoro 15,958,783 90,938
W. Douglas Hajjar 15,961,673 88,048
Richard J. Goeglein 15,961,661 88,060
Robert Finzi 15,961,529 88,192
Donald R. Dixon 15,961,517 88,204
</TABLE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
3.2 Certificate of Amendment to Second Restated Certificate of
Incorporation
3.3 Amended and Restated Bylaws of the Company as currently in
effect
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLATINUM SOFTWARE CORPORATION
-----------------------------
(Registrant)
Date: February 10, 1997 /s/ MICHAEL J. SIMMONS
-----------------------------
Michael J. Simmons
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
16
<PAGE> 1
EXHIBIT 3.2
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "PLATINUM SOFTWARE CORPORATION", FILED IN THIS OFFICE ON THE
TWENTY-SIXTH DAY OF NOVEMBER, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ EDWARD J. FREEL
[LOGO] -----------------------------------
Edward J. Freel, Secretary of State
2143290 AUTHENTICATION: 8212387
960347453 DATE: 11-26-96
<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/26/1996
960347453 - 2143290
CERTIFICATE OF AMENDMENT OF
SECOND RESTATED CERTIFICATE OF INCORPORATION
OF PLATINUM SOFTWARE CORPORATION,
A DELAWARE CORPORATION
(Pursuant to Section 242 of the Delaware General Corporation Law)
PLATINUM SOFTWARE CORPORATION, a corporation organized and existing
under and by virtue of the Delaware General Corporation Law (the
"Corporation"), does hereby certify:
FIRST: That at a duly held meeting of the Board of Directors of the
Corporation, the Board of Directors of the Corporation duly adopted resolutions
setting forth a proposed amendment to the Second Restated Certificate of
Incorporation of the Corporation, declaring said amendment to be advisable and
directing that said amendment be submitted to the stockholders of the
Corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that a new Article 10, entitled "Action by Meetings" be
added to the Corporation's Second Restated Certificate of Incorporation which
reads in full as follows:
"ARTICLE 10 - ACTION BY MEETINGS
Common Stockholders of the Corporation may not take any action by
written consent in lieu of a meeting. Any action contemplated by
common stockholders must be taken at a duly called annual or special
meeting."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, this Corporation has caused this Certificate of
Amendment to be signed by Perry Tarnofsky, a duly authorized Assistant
Secretary, this 19th day of November, 1996.
PLATINUM SOFTWARE CORPORATION,
a Delaware corporation
By:____________________________________
Perry Tarnofsky
Assistant Secretary
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS
OF
PLATINUM SOFTWARE CORPORATION
A DELAWARE CORPORATION
AS AMENDED SEPTEMBER 15, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I. OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Notification of Business to be Transacted at Meeting . . . . . . . . . . . . . 2
Section 5. Notice; Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Quorum; Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. Stockholder Action by Written Consent Without a Meeting . . . . . . . . . . . . 2
Section 9. List of Stockholders Entitled to Vote . . . . . . . . . . . . . . . . . . . . . 3
Section 10. Stock Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 11. Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 12. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 13. Order of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 14. Consents to Corporation Action; Record Date . . . . . . . . . . . . . . . . . . 3
Section 15. Procedures for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Number and Election of Directors . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 8. Quorum; Vote Required for Action; Adjournment . . . . . . . . . . . . . . . . . 6
Section 9. Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 10. Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 11. Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 12. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 13. Interested Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 14. Nomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Appointment of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Subordinate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Removal and Resignation of Officers . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Vacancies in Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 6. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Vice Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8. Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12. Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V. STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Form of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Record Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2. Right of Indemnitee to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. Indemnification of Employees or Agents of the Corporation . . . . . . . . . . . 12
Section 6. Indemnification Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7. Effect of amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6. Voting of Stock Owned by the Corporation . . . . . . . . . . . . . . . . . . . 13
Section 7. Construction and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
-ii-
<PAGE> 4
AMENDED AND RESTATED
BYLAWS
OF
PLATINUM SOFTWARE CORPORATION
A Delaware corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle.
Section 2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
Section 3. Books. The books of the Corporation may be kept
within or without the State of Delaware as the Board of Directors may from time
to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of stockholders for
the election of directors shall be held at such place either within or without
the State of Delaware as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders
shall be held at a time and date designated by the Board of Directors for the
purpose of electing directors and transacting such other business as may
properly be brought before the meeting.
Section 3. Special Meetings. A special meeting of the
stockholders may be called at any time by the Chairman of the Board, if any,
the President or the Board of Directors. A special meeting of the stockholders
shall be called by the Secretary, or in the case of the death, absence,
incapacity or refusal of the Secretary, by an Assistant Secretary or some other
officer, upon application of a majority of the Directors. Any such application
shall state the purpose or purposes of the proposed meeting. Any such call
shall state the place, date, hour and purposes of the meeting.
-1-
<PAGE> 5
Section 4. Notification of Business to be Transacted at Meeting.
To be properly brought before a meeting, business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder entitled to vote at the meeting.
Section 5. Notice; Waiver of Notice. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise required by law, such notice
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation. A written waiver of any such notice
signed by the person entitled thereto, 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 the 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.
Section 6. Quorum; Adjournment. Except as otherwise required by
law, or provided by the Certificate of Incorporation or these Bylaws, the
holders of a majority of the capital stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of the stockholders. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of enough votes to leave less than a
quorum, if any action taken is approved by at least a majority of the required
quorum to conduct that meeting. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting of the time and place of the adjourned meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed. 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 entitled to vote at the meeting.
Section 7. Voting. Except as otherwise required by law, or
provided by the Certificate of Incorporation or these Bylaws, any question
brought before any meeting of stockholders at which a quorum is present shall
be decided by the vote of the holders of a majority of the stock represented
and entitled to vote thereat. Unless otherwise provided in the Certificate of
Incorporation, each stockholder represented at a meeting of stockholders shall
be entitled to cast one vote for each share of the capital stock entitled to
vote thereat held by such stockholder. Such votes may be cast in person or by
proxy, but no proxy shall be voted on or after three (3) years from its date,
unless such proxy provides for a longer period. Elections of directors need
not be by ballot unless the Chairman of the meeting so directs or unless a
stockholder demands election by ballot at the meeting and before the voting
begins.
Section 8. Stockholder Action by Written Consent Without a
Meeting. Except as otherwise provided in the Certificate of Incorporation, any
action which may be taken at any annual or special meeting of stockholders, may
be taken without a meeting and without prior notice, if a
-2-
<PAGE> 6
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. All such consents
shall be filed with the Secretary of the Corporation and shall be maintained in
the corporate records. Prompt notice of the taking of corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 9. 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 of the Corporation who is
present.
Section 10. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 9 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the Board of Directors may appoint one or more persons (who shall
not be candidates for office) as inspectors of election to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not so
appointed, or if an appointed inspector fails to appear or fails or refuses to
act at a meeting, the Chairman of any meeting of stockholders may, and on the
request of any stockholder or his proxy shall, appoint an inspector or
inspectors of election at the meeting. The duties of such inspector(s) shall
include: determining the number of shares outstanding and the voting power of
each; the shares represented at the meeting; the existence of a quorum; the
authenticity, validity and effect of proxies; receiving votes, ballots or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all votes
or consents; determining the result; and such acts as may be proper to conduct
the election or vote with fairness to all stockholders. In the event of any
dispute between or among the inspectors, the determination of the majority of
the inspectors shall be binding.
Section 12. Organization. At each meeting of stockholders the
Chairman of the Board of Directors, if one shall have been elected, (or in his
absence or if one shall not have been elected, the President) shall act as
Chairman of the meeting. The Secretary (or in his absence or inability to act,
the person whom the Chairman of the meeting shall appoint secretary of the
meeting) shall act as secretary of the meeting and keep the minutes thereof.
Section 13. Order of Business. The order and manner of
transacting business at all meetings of stockholders shall be determined by the
Chairman of the meeting.
Section 14. Consents to Corporation Action; Record Date. The
record date for determining common stockholders entitled to express consent to
corporate action in writing without
-3-
<PAGE> 7
a meeting shall be fixed by the Board of Directors. Any common stockholder
seeking to have the common stockholders authorize or take corporate action by
written consent without a meeting shall, by written notice, request the Board
of Directors to fix a record date. The Board of Directors shall, within 10
days of receipt of such a request, fix a record date which shall be not later
than 10 days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If the record date falls on a Saturday,
Sunday or legal holiday, the record date shall be the next following date which
is not a Saturday, Sunday or legal holiday.
Section 15. Procedures for Consent. In the event of the delivery
to the Company of a written consent or consents of common stockholders
purporting to authorize or take corporate action and/or related revocations
(each such written consent and related revocation is referred to in this
Section 15 as a "Consent"), the Secretary of the Company shall provide for the
safe-keeping of such Consent and shall conduct such reasonable investigation as
he or she deems necessary or appropriate for the purpose of ascertaining the
validity of such Consent and all matters incident thereto, including, without
limitation, whether the holders of shares having the requisite voting power to
authorize or take the action specified in the Consent have given consent;
provided, however, that if corporate action to which the Consent relates is the
removal or replacement of one or more members of the Board, the Secretary of
the Company shall designate two persons, who shall not be members of the Board,
to serve as Inspectors with respect to such Consent, and such Inspectors shall
discharge the functions of the Secretary of the Company under this Section 15.
The investigation shall be conducted in a manner to provide for a reliable and
prompt ministerial review of Consents, and the Secretary or the Inspectors (as
the case may be) shall complete the review within 10 days of the Company's
receipt of written consents purportedly representing the number of shares
required to authorize the action or actions being sought. If after such
investigation the Secretary or the Inspectors (as the case may be) shall
determine that the Consent is valid, that fact shall be certified on the
records of the Company kept for the purpose of recording the proceedings of
meetings of the stockholders, and the Consent shall be filed with such records,
at which time the Consent shall become effective as stockholder action. In
conducting the investigation required by this Section 15, the Secretary or the
Inspectors (as the case may be) may, at the expense of the Company, retain
special legal counsel and any other necessary or appropriate professional
advisors, and such other personnel as they may deem necessary or appropriate,
to assist them.
ARTICLE III
DIRECTORS
Section 1. Powers. Except as otherwise required by law or
provided by the Certificate of Incorporation, the business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors.
Section 2. Number and Election of Directors. Subject to any
limitations in the Certificate of Incorporation, the authorized number of
directors of the Corporation shall be not less than four (4) nor more than
seven (7). The exact number of Directors within these limits shall be fixed
from time to time by resolution of the Board of Directors of the Corporation.
The number of Directors shall be so variable until changed by an amendment to
this Section 2 of Article III of these Bylaws adopted by the affirmative vote
of a majority of the entire Board of Directors or by the stockholders at the
annual meeting. The number of Directors presently authorized is four (4).
Directors shall be elected at each annual meeting of stockholders to replace
directors whose terms then expire, and each director elected shall hold office
until his successor is duly elected and
-4-
<PAGE> 8
qualified, or until his earlier death, resignation or removal. Any director
may resign at any time effective upon giving written notice to the Corporation,
unless the notice specifies a later time for such resignation to become
effective. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. If the resignation of
a director is effective at a future time, the Board of Directors may elect a
successor prior to such effective time to take office when such resignation
becomes effective. Directors need not be stockholders.
Section 3. Vacancies. Subject to the limitations in the
Certificate of Incorporation, vacancies in the Board of Directors resulting
from death, resignation, removal or otherwise and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. Each director so selected shall hold office for
the remainder of the full term of office of the former director which such
director replaces and until his successor is duly elected and qualified, or
until his earlier death, resignation or removal. No decrease in the authorized
number of directors constituting the Board of Directors shall shorten the term
of any incumbent directors.
Section 4. Time and Place of Meetings. The Board of Directors
shall hold its meetings at such place, either within or without the State of
Delaware, and at such time as may be determined from time to time by the Board
of Directors.
Section 5. Annual Meeting. The Board of Directors shall meet
for the purpose of organization, the election of officers and the transaction
of other business, as soon as practicable after each annual meeting of
stockholders, on the same day and at the same place where such annual meeting
shall be held. Notice of such meeting need not be given. In the event such
annual meeting is not so held, the annual meeting of the Board of Directors may
be held at such place, either within or without the State of Delaware, on such
date and at such time as shall be specified in a notice thereof given as
hereinafter provided in Section 7 of this Article III or in a waiver of notice
thereof.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware at
such date and time as the Board of Directors may from time to time determine
and, if so determined by the Board of Directors, notices thereof need not be
given.
Section 7. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, the
Secretary or by any director. Notice of the date, 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
the director's address as it is shown on the records of the Corporation. In
case 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. In case 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. The
notice need not specify the purpose of the meeting. A written waiver of any
such notice signed by the person entitled thereto, 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 the 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.
-5-
<PAGE> 9
Section 8. Quorum; Vote Required for Action; Adjournment.
Except as otherwise required by law, or provided in the Certificate of
Incorporation or these Bylaws, a majority of the directors shall constitute a
quorum for the transaction of business at all meetings of the Board of
Directors and the affirmative vote of not less than a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting, from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. 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 to
conduct that meeting. When a meeting is adjourned to another time or place
(whether or not a quorum is present), 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 Board of Directors may
transact any business which might have been transacted at the original meeting.
Section 9. Action by Written Consent. Unless otherwise
restricted by the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 10. Telephone Meetings. Unless otherwise restricted by
the Certificate of Incorporation, members of the Board of Directors of the
Corporation, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee, as the
case may be, by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 10 shall constitute
presence in person at such meeting.
Section 11. Committees. The Board of Directors may, by
resolution passed unanimously by the entire Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent or
disqualified member at any meeting of the committee. In the event of absence
or disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the committee member or members present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of the absent or disqualified member. Any
committee, to the extent allowed by law and as provided in the resolution
establishing such committee, shall have and may exercise all the power and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the Bylaws of the
Corporation; and, unless the resolution or the Certificate of Incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Each committee shall
keep regular minutes of its meetings and report to the Board of Directors when
required.
-6-
<PAGE> 10
Section 12. Compensation. The directors may be paid such
compensation for their services as the Board of Directors shall from time to
time determine.
Section 13. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association, or
other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board of Directors or the committee
thereof which authorizes the contract or transaction, or solely because his of
their votes are counted for such purpose if: (i) the material facts as to his
or their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(ii) the material facts as to his or their relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 14. Nomination. Only persons who are nominated in
accordance with the procedures set forth in this Section 14 shall be eligible
for election as directors. Nominations of persons for election to the Board of
Directors may be made by or at the direction of the Board of Directors or by
any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 14. Such nominations, other than those made by or at the
discretion of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 45 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 55 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 10th day following the date on which such notice of
the date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (A) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares
of the capital stock of the Corporation which are beneficially owned by such
person and (iv) any other information relating to such person that would be
required to be disclosed in solicitations of proxies for election of directors,
or would be otherwise required, in each case pursuant to Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (including
without limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (B) as to
the stockholder giving the notice (i) the name and address of such stockholder
and (ii) the class and number of shares of the capital stock of the Corporation
which are beneficially owned (as defined by Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) by such stockholder. If requested in writing
by the Secretary at least 15 days in advance of the annual meeting, a
stockholder whose shares are not registered in the name of such stockholder on
the Corporation's books shall provide the Secretary, within ten days of such
request, with documentary support for such claim of beneficial ownership. At
the request of the Board of Directors, any person nominated by the Board of
Directors for
-7-
<PAGE> 11
election as a director shall furnish to the Secretary that information required
to be set forth in a stockholder's notice of nomination which pertains to the
nominee.
ARTICLE IV
OFFICERS
Section 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, a
Vice Chairman of the Board, a Chief Executive Officer, one or more Vice
Presidents, one or more Assistant Financial Officers and Treasurers, one or
more Assistant Secretaries and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article IV.
Section 2. Appointment of Officers. The officers of the
Corporation, except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article IV, shall be appointed by
the Board of Directors, and each shall serve at the pleasure of the Board,
subject to the rights, if any, of an officer under any contract of employment.
Section 3. Subordinate Officers. The Board of Directors may
appoint, and may empower the Chief Executive Officer or 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 the Bylaws or as the Board of Directors may from time
to time determine.
Section 4. Removal and Resignation of Officers. Subject to the
rights of an officer under any contract, any officer may be removed at any
time, with or without cause, by the Board of Directors 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 shall be without prejudice
to the rights of the Corporation under any contract to which the officer is a
party.
Section 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.
Section 6. Chairman of the Board. The Chairman of the Board, if
such an officer is elected, shall, if present, preside at meetings of the
stockholders and of the Board of Directors. He shall, in addition, perform
such other functions (if any) as may be prescribed by the Bylaws or the Board
of Directors.
Section 7. Vice Chairman of the Board. The Vice Chairman of the
Board, if such an officer is elected, shall, in the absence or disability of
the Chairman of the Board, perform all duties of the Chairman of the Board and
when so acting shall have all the powers of and be subject to all of the
restrictions upon the Chairman of the Board. The Vice Chairman of the Board
shall have such other powers and duties as may be prescribed by the Board of
Directors or the Bylaws.
-8-
<PAGE> 12
Section 8. Chief Executive Officer. The Chief Executive Officer
of the Corporation shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and the
officers of the Corporation. He shall exercise the duties usually vested in
the chief executive officer of a corporation and perform such other powers and
duties as may be assigned to him from time to time by the Board of Directors or
prescribed by the Bylaws. In the absence of the Chairman of the Board and any
Vice Chairman of the Board, the Chief Executive Officer shall preside at all
meetings of the stockholders and of the Board of Directors.
Section 9. President. The President of the Corporation shall,
subject to the control of the Board of Directors and the Chief Executive
Officer of the Corporation, if there be such an officer, have 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 the Bylaws or the Chief Executive Officer of the
Corporation. In the absence of the Chairman of the Board, Vice Chairman of the
Board and Chief Executive Officer, the President shall preside at all meetings
of the Board of Directors and stockholders.
Section 10. Vice President. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and 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 or the Bylaws, and the President, or the Chairman of the
Board.
Section 11. Secretary. The Secretary shall keep or cause to be
kept, at the principal executive office 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, with the time and place
of holding, whether regular or special, and, if special, how authorized, 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 a summary of the proceedings.
The Secretary shall keep, or cause to be kept, at the principal
executive office 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 issued for the same, 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 by the Bylaws or by
law to be given, and he shall keep or cause to be kept the seal of the
Corporation if one be adopted, in safe custody, and shall have such powers and
perform such other duties as may be prescribed by the Board of Directors or by
the Bylaws.
Section 12. 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. The Chief Financial Officer shall deposit all
moneys and other valuables in the name and to the credit of the Corporation
with such depositories as may be designated by the Board of Directors. He
shall make such disbursements of the funds of the Corporation as are authorized
and shall render from time to time an account of all of
-9-
<PAGE> 13
his transactions as Chief Financial Officer and of the financial condition of
the Corporation. The Chief Financial Officer shall also have such other powers
and perform such other duties as may be prescribed by the Board of Directors or
the Bylaws.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name
of the Corporation (i) by the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President and (ii) by the Chief Financial
Officer or the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned
by such stockholder in the Corporation.
Section 2. Signatures. 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 shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. The Corporation may issue a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. The Corporation may, in the discretion of the Board of
Directors and as a condition precedent to the issuance of such new certificate,
require the owner of such lost, stolen, or destroyed certificate, or his legal
representative, to give the Corporation a bond (or other security) sufficient
to indemnify it against any claim that may be made against the Corporation
(including any expense or liability) on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws or in any
agreement with the stockholder making the transfer. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Holders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the record
holder of shares to receive dividends, and to vote as such record holder, and
to hold liable for calls and assessments a person registered on its books as
the record holder of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise required by law.
-10-
<PAGE> 14
ARTICLE VI
INDEMNIFICATION
Section 1. Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or officer of the Corporation or is or was serving at
the request of the Corporation as a director or officer of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an official capacity
as a director or officer or in any other capacity while serving as a director
or officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as
to an indemnitee who has ceased to be a director or officer and shall inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 2 of this Article VI with respect
to proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses
under this Article VI or otherwise (hereinafter an "undertaking").
Section 2. Right of Indemnitee to Bring Suit. If a claim under
Section 1 of this Article VI is not paid in full by the Corporation within
forty-five (45) days after a written claim has been received by the
Corporation, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or part in any such suit or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) any suit by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking the Corporation shall be entitled to recover
such expenses upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in the Delaware General Corporation
Law. Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its
-11-
<PAGE> 15
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right hereunder, or by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified or to such advancement of
expenses under this Article VI or otherwise shall be on the Corporation.
Section 3. Non-Exclusivity of Rights. The rights of
indemnification and to the advancement of expenses conferred in this Article VI
shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
Section 4. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Section 5. Indemnification of Employees or Agents of the
Corporation. The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification and to the
advancement of expenses, to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article VI with respect to the
indemnification and advancement of expenses of directors or officers of the
Corporation.
Section 6. Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determinates, greater than, those provided for in this
Article VI.
Section 7. Effect of amendment. Any amendment, repeal or
modification of any provision of this Article VI by the stockholders or the
directors of the Corporation shall not adversely affect any right or protection
of a director or officer of the Corporation existing at the time of such
amendment, repeal or modification.
-12-
<PAGE> 16
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Subject to limitations contained in the
General Corporation Law of the State of Delaware and the Certificate of
Incorporation, the Board of Directors may declare and pay dividends upon the
shares of capital stock of the Corporation, which dividends may be paid either
in cash, securities of the Corporation or other property.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The Corporation shall have a
corporate seal in such form as shall be prescribed by the Board of Directors.
Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty (60) days nor
less than ten (10) days before the date of such meeting, nor more than sixty
(60) days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting. Stockholders on the
record date are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case may
be, notwithstanding any transfer of any shares on the books of the Corporation
after the record date, except as otherwise provided by agreement or by
applicable law.
Section 6. Voting of Stock Owned by the Corporation. The
Chairman of the Board, the Chief Executive Officer, the President and any other
officer of the Corporation authorized by the Board of Directors shall have
power, on behalf of the Corporation, to attend, vote and grant proxies to be
used at any meeting of stockholders of any corporation (except this
Corporation) in which the Corporation may hold stock.
Section 7. Construction and Definitions. Unless the context
requires otherwise, the general provisions, rules of construction and
definitions in the General Corporation Law of the State of Delaware shall
govern the construction of these Bylaws.
Section 8. Amendments. Subject to the General Corporation Law
of the State of Delaware, the Certificate of Incorporation and these Bylaws,
the Board of Directors may by the affirmative vote of a majority of the entire
Board of Directors amend or repeal these Bylaws, or adopt other Bylaws as in
their judgment may be advisable for the regulation of the conduct of the
affairs of the Corporation. Unless otherwise restricted by the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed, and new Bylaws
may be adopted, at any annual
-13-
<PAGE> 17
meeting of the stockholders (or at any special meeting thereof duly called for
that purpose) by a majority of the combined voting power of the then
outstanding shares of capital stock of all classes and series of the
Corporation entitled to vote generally in the election of directors, voting as
a single class, provided that, in the notice of any such special meeting,
notice of such purpose shall be given.
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,948
<SECURITIES> 5,534
<RECEIVABLES> 16,007
<ALLOWANCES> 8,200
<INVENTORY> 502
<CURRENT-ASSETS> 25,017
<PP&E> 21,657
<DEPRECIATION> 13,784
<TOTAL-ASSETS> 36,571
<CURRENT-LIABILITIES> 21,035
<BONDS> 0
0
31,692
<COMMON> 19
<OTHER-SE> (16,175)
<TOTAL-LIABILITY-AND-EQUITY> 36,571
<SALES> 11,605
<TOTAL-REVENUES> 23,542
<CGS> 1,797
<TOTAL-COSTS> 7,108
<OTHER-EXPENSES> 17,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,587)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,587)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,587)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
