<PAGE> 1
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 period ended July 1, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-27016
ROSS TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 74-2507960
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5316 Highway 290 West, Suite 500
Austin, Texas 78735-8930
(512) 436-2000
(Address and Telephone Number of Principal Executive Offices)
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.
[X] Yes [ ] No
Number of shares outstanding of each of the issuer's classes of common stock,
as of July 1, 1996: Common Stock, no par value, 23,386,604 shares.
<PAGE> 2
ROSS TECHNOLOGY, INC. AND SUBSIDIARIES
FORM 10-Q
JULY 1, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Title Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - April 1, 1996 and July 1, 1996 . . . . . 3
Consolidated Statements of Operations for the Three Months
ended July 3, 1995 and July 1, 1996 . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Three Months ended
July 3, 1995 and July 1, 1996 . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . 14
ITEM 4. Submission of Matters to a Vote of Security-Holders . . . . . . . . . 14
ITEM 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROSS TECHNOLOGY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 1, APRIL 1,
1996 1996
---- ----
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,666 $ 17,941
Trade accounts receivable, net . . . . . . . . . . . . . . . . . . . . . 21,947 16,207
Receivable from Fujitsu . . . . . . . . . . . . . . . . . . . . . . . . . 4,764 6,780
Inventory (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,208 32,321
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,681 2,706
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 83,266 75,955
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . 17,171 16,119
Deferred tax asset 2,182 2,182
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . 3,364 3,637
--------- ---------
$ 105,983 $ 97,893
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,183 $ 9,587
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,367 3,103
Payable to Fujitsu . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,114 18,929
--------- ---------
Total current liabilities 35,664 31,619
Stockholders' equity:
Common stock, $.001 par value, 100,000 shares authorized,
23,708 shares issued and 23,387 shares outstanding at
July 1, 1996 and 23,421 shares issued and 23,100 shares
outstanding at April 1, 1996 . . . . . . . . . . . . . . . . . . . . . 24 23
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 82,419 82,358
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,873) (14,856)
--------- ---------
71,570 67,525
Less: treasury stock, at cost (1,251) (1,251)
--------- ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . 70,319 66,274
--------- ---------
$ 105,983 $ 97,893
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE> 4
ROSS TECHNOLOGY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JULY 1, 1996 JULY 3, 1995
------------ ------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . $ 30,912 $ 21,802
Cost of sales . . . . . . . . . . . . . 16,730 11,965
--------- ---------
Gross profit . . . . . . . . . . . . 14,182 9,837
--------- ---------
Operating expenses:
Research and development . . . . . . 4,399 3,773
Selling, general and administrative . 3,490 1,889
Amortization of goodwill . . . . . . 272 298
--------- ---------
Total operating expenses . . . . 8,161 5,960
--------- ---------
Income from operations . . . . . 6,021 3,877
Other income (expense):
Interest income . . . . . . . . . . . 107 -
Interest expense . . . . . . . . . . - (665)
--------- ---------
Income before income taxes . . . 6,128 3,212
Income tax expense . . . . . . . . . . 2,145 64
--------- ---------
Net income . . . . . . . . . . . $ 3,983 3,148
========= =========
Net income per share (Note 3) . . . . . $ 0.17 $ 0.17
========= =========
Weighted average common and common
equivalent shares outstanding . . 23,656 18,886
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE> 5
ROSS TECHNOLOGY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JULY 1, 1996 JULY 3, 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,983 3,148
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 1,212 781
Amortization of goodwill . . . . . . . . . . . . . . . . . . . 272 298
Change in assets and liabilities:
Decrease (increase) in trade accounts receivable . . . . . . (5,740) 1,214
Decrease (increase) in receivable from Fujitsu . . . . . . . 2,016 (1,042)
Increase in inventory . . . . . . . . . . . . . . . . . . . . (15,887) (3,775)
Increase in prepaid expenses . . . . . . . . . . . . . . . . (1,974) (368)
Increase (decrease) in trade accounts payable . . . . . . . . 5,596 (366)
Decrease in payable to Fujitsu . . . . . . . . . . . . . . . (1,815) (298)
Increase in accrued liabilities . . . . . . . . . . . . . . . 264 405
--------- ---------
Net cash used in operating activities . . . . . . . . . . . (12,073) (3)
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (2,264) (968)
--------- ---------
Net cash used in investing activities . . . . . . . . . . . (2,264) (968)
Cash flows from financing activities:
Proceeds from employee stock plans . . . . . . . . . . . . . . . 62 39
Payments on notes payable . . . . . . . . . . . . . . . . . . . . - (424)
--------- ---------
Net cash provided by (used in) financing activities . . . . . 62 (385)
--------- ---------
Net decrease in cash and cash equivalents . . . . . . . . . . (14,275) (1,356)
Cash and cash equivalents at beginning of period . . . . . . . . . 17,941 1,936
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . 3,666 580
========= =========
Supplemental disclosure of cash flow information:
Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750 $ 88
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 825
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE> 6
ROSS TECHNOLOGY, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) FINANCIAL STATEMENT PRESENTATION
The financial statements of ROSS Technology, Inc. and subsidiaries
(the "Company") included herein have been prepared without audit pursuant to
the rules and regulations of the Securities and Exchange Commission (the "SEC")
and, in the opinion of management, reflect all adjustments necessary, such
adjustments being of a normal recurring nature, to present fairly the financial
condition and the results of operations for such interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however,
management believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the audited financial statements and notes thereto for
the year ended April 1, 1996 included in the Company's filing with the SEC on
Form 10-K on July 1, 1996. The results for interim periods are not necessarily
indicative of the results for the respective fiscal years.
(2) INVENTORIES
<TABLE>
<CAPTION>
July 1, April 1,
1996 1996
---- ----
<S> <C> <C>
Die bank $ 4,219 $ 6,757
Work-in-process 41,144 19,697
Finished goods 2,845 5,867
------- -------
$48,208 $32,321
======= =======
</TABLE>
Die bank inventory, consisting of silicon wafers and cut and tested
die, is comparable to raw material inventory in other manufacturing industries.
(3) NET INCOME PER COMMON SHARE
Net income per common share is computed using the weighted average
number of outstanding common stock and common stock equivalent shares, when
dilutive. Common equivalent shares include shares issuable pursuant to
outstanding options under the Company's stock option plan as determined by the
treasury stock method.
(4) COMMITMENTS AND CONTINGENCIES
The Company is party to a lawsuit generally incidental to its business.
In the opinion of management, the disposition of this item will not have a
material effect on the Company's business, financial condition or results of
operations. See Part II, Item 1 of this Quarterly Report.
-6-
<PAGE> 7
(5) NEW PRONOUNCEMENTS
Effective with the first quarter of 1997, the Company has adopted
Statement of Financial Standards No. 121 "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed Of." Statement 121
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this new pronouncement had no effect on the financial
statements for the period.
During October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounts Standards No. 123 "Accounting for Stock Based
Compensation" effective for fiscal years beginning after December 15, 1995.
The new statement allows companies to continue accounting for stock based
compensation under the provisions of APB Opinion 25 "Accounting for Stock
Issued to Employees." However, companies are encouraged to adopt a new
accounting method based on the estimated fair value of employee stock options.
Companies that do not follow the new fair value based method will be
required to provide expanded disclosures in footnotes to the financial
statements. The Company has elected to continue to account for its employee
stock compensation plans as prescribed under Opinion 25 and will make the pro-
forma disclosures of net income and earnings per share required by Statement 123
beginning with its financial statements for the year ended March 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report contains forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, with respect to
the financial condition, results of operations and business of the Company. Such
statements involve risks and uncertainties that could cause actual results to
differ materially from those set forth in the forward-looking statements,
including without limitation the Company's dependence on the timely development,
introduction and customer acceptance of new products, the ability of the Company
to successfully implement its strategy of diversifying into the system products
business, the various effects on revenue, margins and operating expenses of
transitions in the Company's product lines and overall business, the impact on
revenue and margins of rapidly changing technology, competition, downward
pricing pressures and allocations of product among different sales channels as
well as supply and manufacturing constraints and costs, changes in plans,
programs or expenses for research, development or marketing, general economic
conditions, and the other risks and uncertainties detailed from time to time in
the Company's public announcements and SEC filings, including without limitation
the Form S-1 and Final Prospectus filed in November 1995 and the Company's
Quarterly and Annual Reports on Forms 10-Q and 10-K, respectively.
The information contained in this Quarterly Report is not a complete
description of the Company's business or the risks associated with an
investment in the Company. More complete discussions can be found in the
Annual Report on Form 10-K filed July 1, 1996 and in the Final Prospectus, as
supplemented by the information contained in this Quarterly Report.
-7-
<PAGE> 8
RESULTS OF OPERATIONS
Net sales in the first quarter of the fiscal year ending March 31, 1997
("fiscal 1997") increased 42% to $30.9 million from $21.8 million in the same
period of the fiscal year ended April 1, 1996 ("fiscal 1996"). This was
primarily due to increased volume sales of the core microprocessor products and
the Company's introduction of its hyperSTATION(TM) line of system and board
products.
Gross profit as a percentage of net sales for the quarter ended July
1, 1996 increased to 46% from 45% for the comparable period in fiscal 1996.
This improvement was primarily attributable to increases in sales volume which
resulted in increased efficiency and utilization of fixed manufacturing
overhead. Improvement in gross profit in the first three months of fiscal 1997
was also attributable to sales of the Company's newly-introduced 166 MHz
hyperSPARC(TM) microprocessor product. In the early stages of their product
life cycles, high performance products such as the 166 MHz product typically
carry a higher average selling price and, consequently, higher gross profit.
Research and development ("R&D") expenses in the first quarter of
fiscal 1997 decreased to 14% of net sales from 17% in the same quarter of fiscal
1996. However, absolute expenses increased $0.6 million in the first quarter of
fiscal 1997 from the comparable quarter in the prior fiscal year. This increase
in R&D expense was primarily attributable to the addition of new personnel and
related overhead in the areas of new product design and new product development.
Additionally, R&D expenses increased as a result of pre-production costs
associated with qualifying newer generations of hyperSPARC microprocessors, as
well as the initial hyperSTATION and SPARCplug(TM) products, for production.
The Company expects that absolute levels of R&D expenses will continue to
increase in the future.
Selling, general and administrative ("SG&A") expenses, as a percentage
of net sales, for the quarter ended July 1, 1996 increased to 11% versus 9% in
the comparable period for fiscal 1996. In addition, absolute expenses in SG&A
increased $1.6 million from the comparable quarter in the prior year. The
increase in SG&A as a percentage of net sales and in absolute expenses is
primarily attributable to the Company's expansion of its sales and marketing
staff and increased advertising and promotional activity associated with the
introduction of the new hyperSTATION and SPARCplug product lines as well as
continued advertising and promotional activity related to its microprocessor
business. The Company expects that absolute levels of sales, general and
administrative expenses will continue to increase in the future.
The Company recorded income from operations of $6.0 million in the
quarter ended July 1, 1996, compared with income from operations of $3.9 million
for the same period in the prior year. This increase in operating profitability
resulted primarily from increased revenue as well as a decrease in operating
expenses as a percentage of net sales from 27% in the quarter ended July 3, 1995
to 26% during the same period in fiscal 1997.
Interest income for the quarter ended July 1, 1996 was $0.1 million
versus interest expense of $0.7 million in the comparable period for fiscal
1996, reflecting the elimination of debt in the fourth quarter of fiscal 1996
and the proceeds of the Company's initial public offering in November 1995.
During the quarter ended July 3, 1995, the Company utilized net
operating loss carryforwards to reduce its federal income tax liability.
However, the Company completely utilized its net operating loss carryforwards
during the fourth quarter of fiscal 1996 and as such paid taxes at the
statutory corporate rate during the quarter ended July 1, 1996. The Company
expects to continue to pay taxes at the statutory corporate rate for the
foreseeable future.
-8-
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of fiscal 1997 the Company used $12.1
million of cash in operating activities compared with no net use of cash for the
first three months of fiscal 1996. The increase in the use of cash is
principally attributable to the significant increase in inventory. The Company
has strategically invested in inventory to ensure the availability of its
newly-introduced system products. Both the hyperSTATION and the SPARCplug
products add additional manufacturing processes to the Company's traditional
manufacturing flow, and thus additional inventory is required to fill the
production line in order to meet the anticipated demand for both products.
The increase in accounts receivable and accounts payable from April 1,
1996 to July 1, 1996 reflects both an increase in the volume of sales of the
Company's key products and a significant increase in production activities near
the end of the quarter.
Cash used by investing activities was $2.3 million for the first three
months of fiscal 1997 compared with $1.0 million for the comparable period in
fiscal 1996. The increase in the use of cash in investing activities was due
to capital expenditures that were required as part of the Company's expansion
into the systems business as well as to increase production capacity of the
Company's existing product lines.
Cash provided by financing activities was $0.1 million for the three
month period ended July 1, 1996 compared to a use of cash of $0.4 million for
the comparable period in fiscal 1996. This change reflects the retirement of
the Company's outstanding debt during the fourth quarter of fiscal 1996.
The Company is in the process of finalizing a secured credit facility
with a major commercial bank. The credit facility is subject to negotiation of
definitive documents and terms. There can be no assurance that the Company and
the major bank will be able to negotiate a mutually acceptable credit facility
or that the Company's business and financial condition at any given time will
enable it to borrow funds pursuant to the credit facility or otherwise. A
failure to obtain the credit facility or an inability to borrow funds at any
given time could have a material, adverse effect on the Company's business,
operating results and financial condition.
The Company's principal source of liquidity as of July 1, 1996
consisted of $3.7 million of cash and cash equivalents. As of July 1, 1996, the
Company had reduced its accumulated deficit to $10.9 million and had total
stockholders' equity of $70.3 million.
-9-
<PAGE> 10
The Company's payment terms with Fujitsu for purchases of silicon
wafers and multi-die packaging are longer than those generally available from
other suppliers. Although the Company believes that such payment terms will
not change in the near future, there can be no assurance that Fujitsu will
continue to extend such favorable payment terms to the Company. Shorter
payment terms would increase the Company's cash requirements.
The Company anticipates that total payments under all operating leases
currently in place will be approximately $1.2 million, $1.4 million and $1.1
million for fiscal 1997, fiscal 1998 and fiscal 1999, respectively. These
leases primarily cover test and manufacturing equipment and the Company's
existing facilities.
The Company expects to incur additional capital expenditures of
approximately $6.0 million during the next 12 months, principally for computer
hardware and software, lab equipment and general office equipment and
furnishings.
Because the Company must order products and build inventory
substantially in advance of product shipments, there is a risk that the Company
will forecast quality and product mix incorrectly and, therefore, produce excess
or insufficient inventories. Because the markets for the Company's
microprocessor and system products are subject to rapid technological and price
changes, inventory may be subject to rapid obsolescence. If the Company
forecasts incorrectly and produces insufficient inventory of particular
products, the Company may face order cancellations from or loss of customers,
who may seek to satisfy their needs from other suppliers. In general, the
Company's customers may change delivery schedules or cancel orders without
significant penalty. This inventory risk is heightened because the Company's
customers usually place orders with short lead times. To the extent that the
Company produces excess or insufficient inventories of particular products, the
Company's operating results and financial condition could be materially
adversely affected.
Based on its current plans, the Company believes that its existing
capital, together with cash flow from operations and financing activities, will
be sufficient to meet the Company's cash requirements during the next 12 months.
There can be no assurance, however, that changes in the Company's R&D plans or
other changes affecting the company's operating expenses, capital expenditures,
products, lines of business, business strategy, supplier and customer credit
arrangements, level of product and manufacturing integration, facilities,
employment and other matters will not result in the expenditure of such
resources before such time. Beyond that time, the Company may require
additional equity or debt financing. There can be no assurance that additional
capital, including capital from bank borrowings, will be available on terms
favorable to the Company, if at all. To the extent that additional capital is
raised through the sale of additional equity or convertible debt securities, the
issuance of such securities could result in additional dilution to the Company's
stockholders. Moreover, the Company's cash requirements may vary materially
from those now planned because of changes in the Company's business or capital
expenditure plans, product plans or technology, acquisitions or dispositions
of businesses or assets, changes in the Company's level of product and
manufacturing integration, results of research and development,
-10-
<PAGE> 11
relationships with suppliers and customers, changes in the focus and direction
of the Company's research and development programs, competitive and
technological advances, the level of working capital required to sustain planned
growth, operating results (including the extent and duration of operating
losses), facilities, employment matters, and other factors.
FUTURE OPERATING RESULTS
Future operating results will depend to a considerable extent on the
Company's ability to closely manage planned product enhancements and new product
introductions to ensure that adequate supplies of new products can be delivered
to meet customer demand.
The Company is currently involved in a significant effort to diversify
its product lines and sources of revenue. In fiscal 1996 and prior years,
substantially all of the Company's revenues were derived from sales of
microprocessors and MBus modules. In the first quarter of fiscal 1997, the
Company shipped hyperSTATION motherboards and systems, which was the first time
that the Company had engaged in commercial sales of board and system products.
The Company intends to aggressively pursue and expand its board and systems
businesses, which will focus on performance- and value-enhanced products
incorporating the SPARC-industry-standard V8 architecture. In the second half
of calendar 1996, the Company expects to ship its SPARCplug product and to
expand the range of its hyperSTATION products. Other board and system products
are under development.
The Company also intends to maintain and further its microprocessor
business. In the second half of calendar 1996, the Company expects to ship its
'Colorado 4' 200 MHz hyperSPARC microprocessor in MBus modules and other
configurations. Further extensions of the hyperSPARC line of microprocessors
are under development. The Company is also conducting research and development
for new microprocessor designs based upon other advanced technologies.
The Company believes that diversification of its product lines and
revenue sources will provide additional engines for future growth of revenues
and profits. There can be no assurance, however, that this diversification
effort will be successful or profitable. The Company anticipates that the gross
profit margins of these new product lines will be consistent with other
companies participating in the workstation marketplace.
-11-
<PAGE> 12
As a result of the costs associated with deploying new product lines,
the Company expects its research and development and selling, general and
administrative expenses to be higher on a quarterly basis during the balance of
fiscal 1997 than during the first quarter. Although these expenses can be
reduced if the Company's revenues are less than anticipated, the Company
considers that it is building an infrastructure that is critical to the
Company's future success and that represents a long-term investment in the
Company's future. Therefore the Company may decide to undertake such expenses
even if the result would be an increase in such categories of expense as a
percentage of net revenues in a given fiscal quarter or for the fiscal year as a
whole.
The Company's operating results have in the past, and may in the
future, vary due to a number of factors, including market acceptance of new or
enhanced versions of the Company's products, the Company's success in entering
new markets, the various effects on revenue, margins and operating expenses of
transitions in the Company's product lines and overall business, the timing and
extent of product development costs, changes in the mix of products sold and in
the mix of sales by distribution channel, competitive pricing pressures,
anticipated and unanticipated decreases in unit average selling prices of the
Company's products, availability and cost of products (particularly silicon
wafers) from the Company's suppliers, fluctuations in manufacturing yields, the
gain or loss of significant customers, new product introductions by the Company
or the Company's competitors, the competitiveness of the SPARC architecture, and
the timing of significant orders, order cancellations or rescheduling, all as
more fully described in the Company's Annual Report on Form 10-K filed on July
1, 1996 as well as the Form S-1 and Final Prospectus filed in November 1995.
Any unfavorable change in the foregoing or other factors could have a material
adverse effect on the Company's business, operating results and financial
condition.
The Company operates in an industry characterized by increasing
competition, rapidly changing technology, and increasingly aggressive pricing.
As a result, the Company's future operating results will depend to a
considerable extent on its ability to rapidly and continuously, develop and
introduce new microprocessor and system technologies that offer its customers
enhanced performance at competitive prices. The development of new
high-performance computer products is a complex and uncertain process requiring
high levels of innovation from the Company's designers and suppliers, as well
as accurate anticipation of customers' requirements and technological trends.
The Company is also increasingly dependent on the ability of its suppliers to
design, manufacture and deliver advanced components required for the timely
introduction of new products. The failure of any of these suppliers to deliver
-12-
<PAGE> 13
components on time or in sufficient quantities, or the failure of any of the
Company's designers to develop advanced innovative products on a timely basis,
could result in a significant adverse impact on the Company's operating
results.
Once a hardware product is developed, the Company must rapidly bring
it to volume manufacturing, a process that requires accurate forecasting of
both volumes and configurations, among other things, in order to achieve
competitive yields and costs. Upon introduction of new products, the Company
must also manage the transition from older, displaced products to minimize
disruptions in customer ordering patterns, reduce levels of existing product
inventory, and ensure that adequate supplies of new products can be delivered
to meet customer demand.
Historically, average selling prices for microprocessors in general,
and for the Company's products in the time period during which they have been
commercially available, have decreased over the life of each specific product.
The Company expects that the average selling prices of its products will
continue to be subject to significant downward pressure in the future. If the
Company is unable to introduce and gain market acceptance of new products with
higher average selling prices or reduce its costs sufficiently to offset
decreases in prices of existing products, the Company's gross profits and
operating results would be adversely affected. In addition, because the
Company is continuing to increase its operating expenses for new product
development in anticipation of increasing sales levels, the Company's business
and operating results would be adversely affected if such sales levels were not
achieved.
During the recent past, the Company's sales and gross margins have
been substantially impacted by the mix of OEM and upgrade customers, as well as
the mix of high-end and low-end products sold. In addition, operating results
could be adversely affected by general economic and other conditions affecting
the timing of customer orders and capital spending or a downturn in the markets
for microprocessors or high-performance computer workstations.
Sales to the Company's largest OEM customer, Sun Microsystems, Inc.
("Sun"), have varied substantially on a year-to-year and quarter-to-quarter
basis over the periods since fiscal 1991. The Company's sales to Sun peaked, as
a percentage of net revenues, at 89% in the third quarter of fiscal 1991. The
Company's sales to Sun as a percentage of net revenues were 45% in fiscal 1996
and 32% in the first quarter of fiscal 1997, respectively. The Company
anticipates that sales to Sun will continue to fluctuate significantly in the
future and that sales to Sun will be reduced in fiscal 1997, as compared with
fiscal 1996. The Company is in ongoing discussions with Sun regarding potential
future design wins for the Company's current and future microprocessor and
system products, but there can be no assurance that the Company will achieve
future design wins with Sun.
-13-
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Rao Cherukuri et al. v. PeQuR Technology, Inc., et al., Civil No.
CV757267 (Santa Clara Superior Court). On April 11, 1996, this action was filed
against, among others, the Company in the Superior Court of California (the
"Action"). The Action was brought by three former employees of PeQuR
Technology, Inc. ("PeQuR"), a Texas corporation which on January 4, 1995 sold
substantially all of its assets to ROSS Computer Corp. ("RCC"), then a
wholly-owned subsidiary of the Company. Plaintiffs allege, among other causes
of action, fraud, deceit, and breach of fiduciary duty in connection with
certain alleged agreements by PeQuR to provide compensation to the plaintiffs in
the form of vested PeQuR stock which agreements, in turn, allegedly would have
entitled plaintiffs to receive a share of the proceeds of the asset sale to RCC,
to employment with the Company or RCC, and/or to receive shares of the Company's
Common Stock.
The Company believes that the plaintiffs' claims against it are
without merit and intends to defend this case vigorously. Based on information
presently known to management, the Company does not believe that the ultimate
resolution of this lawsuit will have a material adverse effect upon the
financial condition or results of operations of the Company.
As previously reported, the Company transferred its entire equity
interest in RCC to Fujitsu Limited, its majority stockholder, on March 26, 1996.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security-Holders
None
ITEM 5. Other Information
On June 27, 1996, the Registrant's Board of Directors (the "Board")
voted, pursuant to Section 3.2 of the Registrant's Restated Bylaws, to reduce
the size of the Board from nine to eight members effective upon the election
of directors at the Registrant's Annual Meeting of Stockholders.
On August 13, 1996 the Registrant held its Annual Meeting of
Stockholders, and all incumbent directors were re-elected to the Board except
for Mr. Satoshi Imokawa, who did not stand for re-election.
An amendment and restatement of the Registrant's 1995 Qualified
Employee Stock Purchase Plan was approved by the Board on July 17, 1996 and by
the Registrant's stockholders on August 13, 1996.
-14-
<PAGE> 15
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1 - Restated Certificate of Incorporation of Registrant*
3.2 - Restated Bylaws of the Registrant
4.1 - Specimen of Common Stock Certificate*
4.2 - Stock Purchase Warrant issued by the Registrant to Sun Microsystems, Inc.*
27 - Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None
______________________
* Incorporated by reference to identically numbered exhibits to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
January 1, 1996.
-15-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROSS TECHNOLOGY, INC.,
a Delaware corporation
Date: August 14, 1996 /S/ DAVID A. ZELENIAK
------------------ --------------------------------------
David A. Zeleniak
Chief Financial Officer and Secretary
-16-
<PAGE> 17
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C>
3.2 Restated Bylaws of the Registrant
27 Financial Data Schedule
</TABLE>
-17-
<PAGE> 1
Exhibit 3.2
BYLAWS
OF
ROSS TECHNOLOGY, INC.
AMENDED AS OF
JUNE 27, 1996
EFFECTIVE AS OF
AUGUST 13, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CORPORATE OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 REGISTERED OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 PLACE OF MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . 2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . . . . . . 2
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 ADJOURNED MEETING; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . . . 4
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS . . . . . . . . . 5
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE . . . . . . . . . . . . . . . . . . . . 6
2.14 BUSINESS CONDUCTED AT, AND STOCKHOLDER PROPOSALS FOR, MEETINGS OF THE
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 NUMBER OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS . . . . . . . . . . . 8
3.4 RESIGNATION AND VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . . . . . . . . . 9
3.6 FIRST MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 ADJOURNED MEETING; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . . . . . . 11
3.13 FEES AND COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . 11
3.14 APPROVAL OF LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 COMMITTEE MINUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 MEETINGS AND ACTION OF COMMITTEES . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 REMOVAL AND RESIGNATION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . 14
5.5 VACANCIES IN OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.8 VICE PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10 CONTROLLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 ASSISTANT SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.12 ASSISTANT CONTROLLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.13 AUTHORITY AND DUTIES OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI INDEMNITY AND DIRECTORS' LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . 17
6.2 RIGHT OF CLAIMANT TO BRING SUIT . . . . . . . . . . . . . . . . . . . . . . 17
6.3 NON-EXCLUSIVITY OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 DIRECTORS' LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 INDEMNIFICATION OF OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 INSURANCE AND TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 MAINTENANCE AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . 20
7.2 INSPECTION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3 ANNUAL STATEMENT TO STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . 21
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS . . . . . . . . . . . . . . . 21
ARTICLE VIII GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 CHECKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS . . . . . . . . . . . . . . 21
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES . . . . . . . . . . . . . . . . . . . 22
8.4 SPECIAL DESIGNATION ON CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 22
8.5 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.6 CONSTRUCTION; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.7 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.8 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.9 SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.10 TRANSFER OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.11 STOCK TRANSFER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.12 REGISTERED STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE X DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES . . . . . . . . . . . . . . . . . 26
11.2 DUTIES OF CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
-iv-
<PAGE> 6
Amended as of
June 27, 1996
Effective as of
August 13, 1996
BYLAWS
OF
ROSS TECHNOLOGY, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the
registered agent of the corporation at such location is the Corporation Trust
Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Tuesday of August in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected
and any other proper business may be transacted.
-1-
<PAGE> 7
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than a majority of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the
general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of these
bylaws, that a meeting will be held at the time requested by the person or
persons calling the meeting, so long as that time is not less than thirty-five
(35) nor more than sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after receipt of the request, then
the person or persons requesting the meeting may give the notice. Nothing
contained in this paragraph of this Section 2.3 shall be construed as limiting,
fixing or affecting the time when a meeting of stockholders called by action of
the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent
of the corporation that the notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
-2-
<PAGE> 8
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting
at which a quorum is present or represented, any business may be transacted
that might have been transacted at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business that might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these
bylaws, subject to the provisions of Sections 217 and 218 of the Delaware
General Corporation Law ("DGCL") (relating to voting rights of fiduciaries,
pledgors and joint owners of stock and to voting trusts and other voting
agreements).
Except as provided in the following paragraph or as may be otherwise
provided in the certificate of incorporation, each stockholder shall have one
vote for every share of stock entitled to vote which is registered in his name
on the record date for the meeting. Except as provided below, all elections
shall be determined by a plurality of the votes cast, and except as otherwise
required by law or the certificate of incorporation, all other matters shall be
determined by a majority of the votes cast.
All voting, including on the election of directors but
excepting where otherwise provided herein or required by law or the certificate
of incorporation, may be by a voice
-3-
<PAGE> 9
vote; provided, however, that upon demand therefor by a stockholder entitled to
vote or such stockholder's proxy, a stock vote shall be taken. Every stock
vote shall be taken by ballots, each of which shall state the name of the
stockholder or proxy voting and such other information as may be required under
the procedure established for the meeting. Every vote taken by ballots shall
be counted by an inspector or inspectors appointed by the chairman of the
meeting.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the DGCL
or of the certificate of incorporation or these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the DGCL
if such action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
notice and written consent have been given as provided in Section 228 of the
DGCL.
-4-
<PAGE> 10
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) nor less than ten (10) days before the date
of such meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held.
(ii) The record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the board of directors is necessary, shall be the day
on which the first written consent is expressed.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board
of directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed
by the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise)
-5-
<PAGE> 11
by the stockholder or the stockholder's attorney-in-fact. The revocability of
a proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(c) of the DGCL.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
2.14 BUSINESS CONDUCTED AT, AND STOCKHOLDER PROPOSALS FOR,
MEETINGS OF THE STOCKHOLDERS
(a) At any annual or special meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a stockholders'
annual or special meeting, business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the board
of directors; (ii) otherwise properly brought before the meeting by or at the
direction of the board of directors; or (iii) otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable
requirements, and subject to any limitations on business which may be proposed
or transacted at such meeting, for business to be properly brought before an
annual or special meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the secretary of the corporation. To be
timely with respect to an annual meeting, a stockholder's notice must be
received at the principal executive office of the corporation not less than
sixty (60) days nor more than one hundred twenty (120) days prior to the date
of such annual meeting; provided, however, that in event that the first public
disclosure (whether by mailing of a notice to stockholders or to an exchange on
which the stock of the corporation is listed, by press release or otherwise) of
the date of the annual meeting is made less than seventy (70) days prior to the
date of the meeting, notice by the stockholder will be timely received not
later than the close of business on the tenth (10th) day following the day on
which such public
-6-
<PAGE> 12
disclosure was first made. To be timely with respect to a special meeting, a
stockholder's notice must be received at the principal executive office of the
corporation not later than the close of business on the tenth (10th) day
following the day on which the first public disclosure (whether by mailing of a
notice to stockholders or to an exchange on which the stock of the corporation
is listed, by press release or otherwise) of the date of the special meeting is
made.
(b) A stockholder's notice to the Secretary shall set
forth, as to each matter the stockholder proposes to bring before the annual or
special meeting: (i) a reasonably detailed description of any proposal to be
made at such meeting; (ii) the name and address, as they appear on the
corporation's stock register, of the stockholder proposing such business; (iii)
the class and number of shares of capital stock of the corporation which are
beneficially owned by the stockholder; (iv) any material interest of the
stockholder in such business; and (v) such other information relating to the
stockholder or the proposal as is required to be disclosed under the rules of
the Securities and Exchange Commission governing the solicitation of proxies
whether or not such proxies are in fact solicited by the stockholder.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at an annual or special stockholders' meeting except in accordance
with the procedures set forth in this Section 2.14; provided, however, that
nothing in this Section 2.14 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual or special
meeting in accordance with said procedures. The chairman of an annual or
special meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 2.14, and if he should so determine, any
such business not properly brought before the meeting shall not be transacted.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the DGCL and any limitations in the
certificate of incorporation or these bylaws relating to action required to be
approved by the stockholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
-7-
<PAGE> 13
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than three
(3) nor more than nine (9). The exact number of directors shall be eight (8)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the stockholders.
The indefinite number of directors may be changed, or a definite number may be
fixed without provision for an indefinite number, by a duly adopted amendment
to the certificate of incorporation or by an amendment to this bylaw duly
adopted by the vote or written consent of the holders of a majority of the
stock issued and outstanding and entitled to vote.
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to
fill a vacancy, shall hold office until his successor is elected and qualified
or until his earlier resignation or removal.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws, vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. If at any time, by reason of death or resignation or other cause,
the corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian
-8-
<PAGE> 14
of a stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the certificate of incorporation or these
bylaws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as
aforesaid, which election shall be governed by the provisions of Section 211 of
the DGCL as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS
The first meeting of each newly-elected board of directors shall be held
immediately following the annual meeting of stockholders and no notice of such
meeting need be given to the newly-elected directors in order legally to
constitute the meeting, provided a quorum shall be present.
3.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
-9-
<PAGE> 15
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the corporation. If the notice is
mailed, it shall be deposited in the United States mail at least ten (10) days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone, telegram or facsimile, it shall be so delivered at
least forty-eight (48) hours before the time of the holding of the meeting.
Any oral notice given personally or by telephone may be communicated either to
the director or to a person at the office of the director who the person giving
the notice has reason to believe will promptly communicate it to the director.
The notice need not specify the purpose or the place of the meeting, if the
meeting is to be held at the principal executive office of the corporation.
3.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the DGCL
or of the certificate of incorporation or these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of
-10-
<PAGE> 16
notice unless so required by the certificate of incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto
in writing and the writing or writings are filed with the minutes of
proceedings of the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or any committee thereof
and a stated salary as director. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for serving on any such committee and for attending committee
meetings.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.
-11-
<PAGE> 17
3.15 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist
of one or more of the directors of the corporation. The board may designate
one or more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers that may
require it; but no such committee shall have the power or authority to (i)
amend the certificate of incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the issuance
of shares of stock adopted by the board of directors as provided in Section
151(a) of the DGCL, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the DGCL, (iii) recommend
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the corporation or a revocation of a
-12-
<PAGE> 18
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
DGCL.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws,
Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), and Section 3.12 (action without a meeting), with such changes in
the context of those bylaws as are necessary to substitute the committee and
its members for the board of directors and its members; provided, however, that
the time of regular meetings of committees may also be called by resolution of
the board of directors and that notice of special meetings of committees shall
also be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a controller. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant controllers, and
any such other officers as may be appointed in accordance with the provisions
of Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of
-13-
<PAGE> 19
Section 5.3 or 5.5 of these bylaws, shall be chosen by the board of directors,
subject to the rights, if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
president shall be the chief
-14-
<PAGE> 20
executive officer of the corporation and shall, subject to the control of the
board of directors, have general supervision, direction, and control of the
business and the officers of the corporation. He shall preside at all meetings
of the stockholders and, in the absence or nonexistence of a chairman of the
board, at all meetings of the board of directors. He shall have the general
powers and duties of management usually vested in the office of president of a
corporation and shall have such other powers and duties as may be prescribed by
the board of directors or these bylaws.
5.8 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform
all the duties of the president and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of directors,
these bylaws, the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates evidencing such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law
or by these bylaws. He shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such
-15-
<PAGE> 21
other duties as may be prescribed by the board of directors or by these bylaws.
5.10 CONTROLLER
The controller shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The controller shall deposit all money and other valuables in the name
and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as treasurer and of the financial condition of the corporation,
and shall have such other powers and perform such other duties as may be
prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.12 ASSISTANT CONTROLLER
The assistant controller, or, if there is more than one, the assistant
controllers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the controller or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the controller
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the
-16-
<PAGE> 22
business of the corporation as may be designated from time to time by the board
of directors or the stockholders.
ARTICLE VI
INDEMNITY AND DIRECTORS' LIABILITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Provisions regarding the indemnification of the corporation's officers,
directors and employees also are contained in the corporation's certificate of
incorporation. The corporation shall, to the maximum extent and in the manner
permitted by the DGCL, indemnify each of its directors and officers against
expenses (including attorneys' fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding,
arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Section 6.1, a "director" or "officer" of
the corporation includes any person (i) who is or was a director or officer of
the corporation, (ii) who is or was serving at the request of the corporation
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation. Such
director or officer shall have the right to be paid by the corporation for
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the DGCL (or other applicable law)
requires, the payment of such expenses in advance of the final disposition of
any such proceeding shall be made only upon receipt by the corporation of an
undertaking by or on behalf of such director or officer to repay all amounts so
advanced if it should be determined ultimately that he or she is not entitled
to be indemnified under this Section or otherwise.
6.2 RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Section 6.1 is not paid in full by the corporation
within ninety (90) days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim, together with interest
thereon, and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense of prosecuting such claim, including reasonable
attorneys' fees incurred in connection therewith. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
corporation) that the
-17-
<PAGE> 23
claimant has not met the standards of conduct which make it permissible under
the DGCL (or other applicable law) for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the corporation. Neither the failure of the corporation (or of its full
board of directors, its directors who are not parties to the proceeding with
respect to which indemnification is claimed, its stockholders, or independent
legal counsel) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
DGCL (or other applicable law), nor an actual determination by any such person
or persons that such claimant has not met such applicable standard of conduct,
shall be a defense to such action or create a presumption that the claimant has
not met the applicable standard of conduct.
6.3 NON-EXCLUSIVITY OF RIGHTS
The rights conferred by this Article shall not be exclusive of any other
right which any director, officer, representative, employee or other agent may
have or hereafter acquire under the DGCL or any other statute, or any provision
contained in the corporation's certificate of incorporation or in these bylaws,
or any agreement, or pursuant to a vote of stockholders or disinterested
directors, or otherwise.
6.4 DIRECTORS' LIABILITY
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such a director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL or (iv) for any transaction from which such director derived an
improper personal benefit. No amendment to or repeal of this Article VI shall
apply to or have any effect on the liability or alleged liability of any
director of the corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal. If the DGCL is
amended hereafter to further eliminate or limit the personal liability of
directors, the liability of a director of this corporation shall be limited or
eliminated to the fullest extent permitted by the DGCL, as amended.
-18-
<PAGE> 24
6.5 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the DGCL, to indemnify each of its employees and agents (other
than directors and officers) against expenses (including attorneys' fees),
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the fact that
such person is or was an agent of the corporation. For purposes of this
Section 6.5, an "employee" or "agent" of the corporation (other than a director
or officer) includes any person (i) who is or was an employee or agent of the
corporation, (ii) who is or was serving at the request of the corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was an employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at
the request of such predecessor corporation.
6.6 INSURANCE AND TRUST FUND
In furtherance and not in limitation of the powers conferred by statute:
(a) the corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of law; and
(b) the corporation may create a trust fund,
grant a security interest and/or use other means (including, without
limitation, letters of credit, surety bonds and/or other similar arrangements),
as well as enter into contracts providing indemnification to the fullest extent
permitted by law and including as part thereof provisions with respect to any
or all of the foregoing, to ensure the payment of such amount as may become
necessary to effect indemnification as provided therein, or elsewhere.
-19-
<PAGE> 25
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean
a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent is the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to
so act on behalf of the stockholder. The demand under oath shall be directed
to the corporation at its registered office in Delaware or at its principal
place of business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether
a director is entitled to the inspection sought. The
-20-
<PAGE> 26
Court may summarily order the corporation to permit the director to inspect any
and all books and records, the stock ledger, and the stock list and to make
copies or extracts therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such other
and further relief as the Court may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority
granted herein may be exercised either by such person directly or by any other
person authorized to do so by proxy or power of attorney duly executed by such
person having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders
for payment of money, notes or other evidences of indebtedness that are issued
in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to
-21-
<PAGE> 27
pledge its credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the
board of directors, every holder of stock represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the corporation by the chairman or
vice-chairman of the board of directors, or the president or vice-president,
and by the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation
shall declare a dividend upon partly paid shares of the same class, but only
upon the basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the DGCL, in lieu of the
-22-
<PAGE> 28
foregoing requirements there may be set forth on the face or back of the
certificate that the corporation shall issue to represent such class or series
of stock a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, the designations, the preferences, and
the relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the DGCL shall govern the construction of
these bylaws. Without limiting the generality of this provision, the singular
number includes the plural, the plural number includes the singular, and the
term "person" includes both a corporation and a natural person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the DGCL. Dividends may be paid in
cash, in property, or in shares of the corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of
the corporation, and meeting contingencies.
-23-
<PAGE> 29
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation shall have power to have a corporate seal, which may be
altered by the board of directors, and the corporation may use the same by
causing it or a facsimile thereof, to be impressed or affixed or in any other
manner reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the DGCL.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of another person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its
-24-
<PAGE> 30
certificate of incorporation, confer the power to adopt, amend or repeal bylaws
upon the directors. The fact that such power has been so conferred upon the
directors shall not divest the stockholders of the power, nor limit their power
to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation
entitled to vote thereon votes for the proposed dissolution, then a certificate
stating that the dissolution has been authorized in accordance with the
provisions of Section 275 of the DGCL and setting forth the names and
residences of the directors and officers shall be executed, acknowledged, and
filed and shall become effective in accordance with Section 103 of the DGCL.
Upon such certificate's becoming effective in accordance with Section 103 of
the DGCL, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall
be filed and shall become effective in accordance with Section 103 of the DGCL.
Upon such consent's becoming effective in accordance with Section 103 of the
DGCL, the corporation shall be dissolved. If the consent is signed by an
attorney, then the original power of attorney or a photocopy thereof will be
attached to and filed with the consent. The consent filed with the Secretary
of State shall have attached to it the affidavit of the secretary or some other
officer of the corporation stating that the consent has been signed by or on
behalf of all the stockholders entitled to vote on a dissolution; in addition,
there shall be attached to the consent a certification by the secretary or some
other officer of the corporation setting forth the names and residences of the
directors and officers of the corporation.
-25-
<PAGE> 31
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to
be receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed within a
reasonable time to take steps to dissolve, liquidate or distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the DGCL, but the authority of the custodian
shall be to continue the business of the corporation and not to liquidate its
affairs and distribute its assets, except when the Court of Chancery otherwise
orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the
DGCL.
-26-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-02-1996
<PERIOD-END> JUL-01-1996
<CASH> 3,666
<SECURITIES> 0
<RECEIVABLES> 28,768
<ALLOWANCES> 2,057
<INVENTORY> 48,208
<CURRENT-ASSETS> 83,266
<PP&E> 25,952
<DEPRECIATION> 8,781
<TOTAL-ASSETS> 105,983
<CURRENT-LIABILITIES> 35,664
<BONDS> 0
0
0
<COMMON> 24
<OTHER-SE> 70,295
<TOTAL-LIABILITY-AND-EQUITY> 105,983
<SALES> 30,912
<TOTAL-REVENUES> 30,912
<CGS> 16,730
<TOTAL-COSTS> 16,730
<OTHER-EXPENSES> 8,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,128
<INCOME-TAX> 2,145
<INCOME-CONTINUING> 3,983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,983
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
