-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNixodhY+YEQB8BR6UfQjVN0hSzyHpKXlpjmsTJyHfFfxwpcx/6+FVdfDHsLpIIF n3wNkEHw1dOJ43qJqNXh2A== 0000950135-97-002487.txt : 19970520 0000950135-97-002487.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950135-97-002487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFINIUM SOFTWARE INC CENTRAL INDEX KEY: 0001002044 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042734036 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27030 FILM NUMBER: 97608878 BUSINESS ADDRESS: STREET 1: 25 COMMUNICATIONS WAY STREET 2: DRAWER 6000 CITY: HYANNIS STATE: MA ZIP: 02601 BUSINESS PHONE: 5087782000 FORMER COMPANY: FORMER CONFORMED NAME: SOFTWARE 2000 INC /MA/ DATE OF NAME CHANGE: 19960322 FORMER COMPANY: FORMER CONFORMED NAME: SOFTWARE 2000 INC /MA/ DATE OF NAME CHANGE: 19951012 10-Q 1 INFINIUM SOFTWARE, INC. 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _______to______ Commission File Number 0-27030 INFINIUM SOFTWARE, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2734036 ------------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 25 Communications Way, Hyannis, MA 02601 (Address of principal executive offices, including Zip Code) (508) 778-2000 (Registrant's telephone number, including area code) ---------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- The number of shares outstanding of the registrant's Common Stock on March 31, 1997 was 11,943,996. ================================================================================ 2 INFINIUM SOFTWARE, INC. INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheet at September 30, 1996 and March 31, 1997...................................... 3 Condensed Consolidated Statement of Operations for the three and six months ended March 31, 1996 and 1997...... 4 Condensed Consolidated Statement of Cash Flows for the six months ended March 31, 1996 and 1997.................... 5 Notes to Condensed Consolidated Financial Statements ...... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 9 PART II - OTHER INFORMATION ITEMS 1.- 3. Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders.......... 17 ITEM 5. Not applicable ITEM 6. Exhibits and Reports on Form 8-K............................. 17 SIGNATURES.............................................................. 18 EXHIBIT INDEX........................................................... 19 EXHIBITS................................................................ 20 2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 30, MARCH 31, 1996 1997 ---- ---- (UNAUDITED) ASSETS Current assets: Cash, cash equivalents and marketable securities ............................ $43,337 $39,380 Accounts receivable, less allowance for doubtful accounts of $1,250 and $1,525 at September 30, 1996 and March 31, 1997, respectively .......... 12,354 15,369 Deferred income taxes ....................................................... 2,427 2,716 Prepaid expenses and other current assets ................................... 3,569 4,241 ------- ------- Total current assets .................................................. 61,687 61,706 Property and equipment, net ................................................. 6,047 6,109 Capitalized software development costs, net ................................. 6,171 6,419 Goodwill and other intangibles, net ......................................... -- 2,135 Other assets ................................................................ 1,799 1,899 ------- ------- Total assets .......................................................... $75,704 $78,268 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................................ $ 4,495 $ 3,769 Accrued expenses ............................................................ 7,300 7,805 Income taxes payable ........................................................ 1,368 1,668 Deferred revenue ............................................................ 24,853 26,642 ------- ------- Total current liabilities ............................................. 38,016 39,884 Deferred income taxes 2,038 568 ------- ------- Stockholders' equity: Common stock, $.01 par value; authorized 40,000 shares, issued and outstanding 11,114 and 11,944 shares at September 30, 1996 and March 31, 1997, respectively ............................................... 111 119 Additional paid-in capital .................................................. 27,394 32,351 Retained earnings ........................................................... 8,145 5,345 Cumulative translation adjustment ........................................... -- 1 ------- ------- Total stockholders' equity ............................................ 35,650 37,816 ------- ------- Total liabilities and stockholders' equity ............................ $75,704 $78,268 ======= =======
The accompanying notes are an integral part of the condensed consolidated financial statements. 3 4 INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1996 1997 1996 1997 ---- ---- ---- ---- Revenue: Software license fees ........................... $ 4,710 $ 5,659 $ 9,512 $10,993 Service revenue ................................. 11,795 14,151 23,314 27,097 ------- ------- ------- ------- Total revenue ........................... 16,505 19,810 32,826 38,090 ------- ------- ------- ------- Operating costs and expenses: Cost of software license fees ................... 890 1,013 1,825 2,039 Cost of services ................................ 4,052 5,455 8,104 10,177 Research and development ........................ 3,436 4,035 6,802 7,670 Sales and marketing ............................. 5,782 6,820 11,297 13,108 General and administrative ...................... 1,817 1,848 3,446 3,551 Write-off of in-process research and development acquired (Note 5) ................. -- 6,846 -- 6,846 ------- ------- ------- ------- Total operating costs and expenses ...... 15,977 26,017 31,474 43,391 ------- ------- ------- ------- Income (loss) from operations ..................... 528 (6,207) 1,352 (5,301) Other income, net ................................. 334 469 629 995 ------- ------- ------- ------- Income (loss) before provision (benefit) for income taxes ................................ 862 (5,738) 1,981 (4,306) Provision (benefit) for income taxes .............. 313 (2,007) 713 (1,506) ------- ------- ------- ------- Net income (loss) ................................. $ 549 $(3,731) $ 1,268 $(2,800) ======= ======= ======= ======= Per share data: Net income (loss) per share ..................... $ 0.05 $ (0.30) $ 0.12 $ (0.23) ======= ======= ======= ======= Weighted average common and common equivalent shares outstanding ..................... 11,254 12,456 10,805 12,120 ======= ======= ======= =======
The accompanying notes are an integral part of the condensed consolidated financial statements. 4 5 INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED ---------------- MARCH 31, MARCH 31, 1996 1997 ---- ---- Cash flows from operating activities: Net income (loss) .................................................. $ 1,268 $ (2,800) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization ................................... 2,280 2,832 Allowance for doubtful accounts ................................. 300 210 Deferred income taxes ........................................... 37 (1,759) Write-off of in-process research and development acquired ....... -- 6,846 Changes in operating assets and liabilities, net of effects from the acquisition of Time (Open Systems) Limited: Accounts receivable ......................................... 712 (2,679) Prepaid expenses and other current assets ................... (1,012) (640) Other assets ................................................ (136) (100) Accounts payable ............................................ (146) (999) Accrued expenses ............................................ 184 (98) Income taxes payable ........................................ (770) 299 Deferred revenue ............................................ (366) 811 -------- -------- Net cash provided by operating activities ................. 2,351 1,923 -------- -------- Cash flows from investing activities: Purchase of marketable securities .................................. (29,736) (30,954) Sale of marketable securities ...................................... 14,253 36,542 Purchase of property and equipment ................................. (1,808) (1,164) Capitalization of software development costs ....................... (1,696) (1,725) Acquisition of Time (Open Systems) Limited (Note 5) ................ -- (3,443) -------- -------- Net cash used for investing activities ..................... (18,987) (744) -------- -------- Cash flows from financing activities: Proceeds from initial public offering of common stock .............. 12,827 -- Proceeds from exercise of stock options and employee stock purchase plan .................................................... 885 451 Proceeds from repayments of notes receivable - stockholders ........ 379 -- -------- -------- Net cash provided by financing activities .................. 14,091 451 -------- -------- Effect of foreign exchange rate changes on cash ...................... -- 1 -------- -------- Net increase (decrease) in cash and cash equivalents ................. (2,545) 1,631 Cash and cash equivalents, beginning of period ....................... 8,161 7,817 -------- -------- Cash and cash equivalents, end of period ............................. $ 5,616 $ 9,448 ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. 5 6 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 1. BASIS OF PRESENTATION The information at March 31, 1996 and 1997 and for the three and six month periods then ended is unaudited, but includes all adjustments (consisting only of normal recurring entries) which the Company's management believes to be necessary for the fair presentation of the financial position, results of operations, and changes in cash flows for the periods presented. The accompanying interim financial statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1996. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations. Interim results of operations for the three and six month periods ended March 31, 1997 are not necessarily indicative of operating results for the full fiscal year. 2. FOREIGN CURRENCY TRANSLATION As a result of economic factors relating to the Company's UK subsidiaries, the functional currency of the subsidiaries has been redesignated to the British Pound effective October 1, 1996. Accordingly, the assets and liabilities of the UK subsidiaries have been translated into the U.S. dollar at the current exchange rate, equity at the historical rate and income and expense items at an average exchange rate for the period. Translation adjustments have been reported as a cumulative translation adjustment within the equity section of the balance sheet. All other foreign subsidiaries and branches have retained the U.S. dollar as their functional currency. Accordingly, monetary assets and liabilities of these subsidiaries and branches are translated into the U.S. dollar at the exchange rate in effect at period end and nonmonetary assets and liabilities are remeasured at historic exchange rates. Income and expenses are remeasured at the average exchange rate for the period. Translation gains and losses are reflected in the consolidated statement of income. 3. NET INCOME PER SHARE Net income per share is determined by dividing net income applicable to common stock by the weighted average number of common shares and common equivalent shares outstanding during the period. Common share equivalents are computed using the treasury stock method and consist of common stock which may be issuable upon exercise of outstanding common stock options and warrants to purchase common stock, when dilutive. Fully diluted per share amounts are not presented as the effect is not material. The computation of the weighted average number of shares outstanding for the three months ended March 31, 1996 and 1997 is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, --------- --------- 1996 1997 1996 1997 ---- ---- ---- ---- Weighted average common and common equivalent shares: Common stock outstanding .......... 9,763 11,901 9,344 11,508 Common stock equivalents .......... 1,491 555 1,461 612 ------ ------ ------ ------ 11,254 12,456 10,805 12,120 ====== ====== ====== ======
6 7 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) 3. NET INCOME PER SHARE, CONTINUED In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share." This Statement establishes and simplifies standards for computing and presenting earnings per share. SFAS 128 will be effective for the Company's first quarter of fiscal 1998, and requires restatement of all previously reported earnings per share data that are presented. Early adoption of this Statement is not permitted. SFAS 128 replaces primary and fully diluted earnings per share with basic and diluted earnings per share. The Company expects that basic earnings per share amounts will be accretive compared to the primary earnings per share amounts, and diluted earnings per share amounts will not be materially different from the fully diluted earnings per share amounts. 4. OTHER INCOME, NET Other income, net consists of the following:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1996 1997 1996 1997 ---- ---- ---- ---- Interest income........... $363 $ 490 $ 694 $1,038 Foreign exchange loss..... (29) (21) (65) (43) ---- ----- ----- ----- $334 $ 469 $ 629 $ 995 ==== ===== ===== =====
5. ACQUISITION On January 6, 1997, the Company acquired all of the outstanding capital stock of Time (Open Systems) Limited ("Time"), a UK-based privately held software concern which developed and marketed a suite of client/server financial applications. The transaction was consummated for $2,793 in cash, approximately 770 shares of the Company's common stock which was issued at the closing of the acquisition and is being held pursuant to an escrow agreement under which the shares will be released ratably over a three year period and $650 of related acquisition costs. The value ascribed to the shares issued was $4,514. The acquisition was accounted for as a purchase. Accordingly, the results of operations of Time and the fair market values of the acquired assets and assumed liabilities were included in the Company's financial statements as of the date of the acquisition. The purchase price was allocated to the acquired assets and assumed liabilities as follows: 7 8 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) 5. ACQUISITION, CONTINUED Accounts receivable $ 546 Other current assets 32 Property and equipment 132 In-process research and development 6,846 Acquired software 312 Assembled workforce 468 Goodwill 1,477 Current liabilities (1,856) ------- $ 7,957 =======
The amount allocated to in-process research and development was determined by an independent appraiser and represented technology which had not reached technological feasibility and had no alternative future use. Accordingly, this amount of $6,846 was charged to operations at the acquisition date. The amounts allocated to intangible assets are being amortized on a straight line basis over their expected useful lives of 2-7 years. Pro forma statements of operations are not shown as they would not differ materially from reported results. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All statements contained herein that are not historical facts, including but not limited to, statements regarding anticipated future expense levels and capital requirements, the Company's future product development and marketing plans, the Company's ability to obtain debt, equity or other financing, the Company's ability to generate cash from operations, and the Company's ability to attract and retain employees, are based on current expectations. These statements are forward looking in nature and involve a number of risks and uncertainties, as more fully described under "Factors Affecting Future Performance." Actual results may differ materially from those described in the forward-looking statements. RESULTS OF OPERATIONS Infinium Software, Inc., ("the Company"), formally known as Software 2000, Inc., was founded in 1981 and offers a broad range of financial management, human resource management and materials management business software applications that run on the IBM AS/400 hardware platform. The Company also offers a specialized manufacturing system designed to manage process manufacturing operations. The Company's revenue is derived from two sources: software license fees and service revenue. Software license fees includes revenue from noncancellable software license agreements entered into between the Company and its customers with respect to both the Company's products and third party products distributed by the Company. Software license fee revenue is recognized upon shipment of the software and when all significant contractual obligations have been satisfied. The Company's service revenue is comprised of software maintenance fees and fees for consulting services. Maintenance fees are billed separately and are recognized ratably over the period of the maintenance agreement, which is typically one year. Consulting service revenue is recognized as the services are performed. As discussed in Note 5 to the condensed consolidated financial statements, the Company acquired all of the outstanding capital stock of Time (Open Systems) Limited ("Time"), a UK-based privately held software concern which developed and marketed a suite of client/server financial application software products (the "Time Products") in January 1997. The Company expects to introduce the versions of the Time Products for the Microsoft NT Server platform in North America and other international markets in mid-1997, upon the completion of additional product development. These products, along with the Microsoft NT Server-based Human Resources Management product line now being developed by the Company, will form the basis for the Company's planned expansion into the emerging market for business applications designed for Windows NT servers. The following table sets forth for the periods indicated the Company's condensed consolidated statement of operations data expressed as a percentage of total revenue and the percentage of dollar increase period over period for the three and six months ended March 31, 1996 and 1997. 9 10
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31, ---------------------------- -------------------------- % OF TOTAL % OF $ % OF TOTAL % OF $ REVENUE INCREASE REVENUE INCREASE ------- -------- ------- -------- 1996 1997 96 TO 97 1996 1997 96 TO 97 ---- ---- -------- ---- ---- -------- Revenue: Software license fees .............. 29% 29% 20% 29% 29% 16% Service revenue .................... 71 71 20 71 71 16 --- --- ------ --- --- ---- Total revenue ................... 100 100 20 100 100 16 --- --- ------ --- --- ---- Operating costs and expenses: Cost of software license fees ...... 5 5 14 6 5 12 Cost of services ................... 25 28 35 25 27 26 Research and development ........... 21 20 17 21 20 13 Sales and marketing ................ 35 34 18 34 34 16 General and administrative ......... 11 9 2 11 9 3 Write-off of in-process research and development acquired ......... -- 35 n/a -- 18 n/a --- --- ------ --- --- ---- Total operating costs and expenses .................... 97 131 63 96 114 38 --- --- ------ --- --- ---- Income (loss) from operations ........ 3 (31) (1,276) 4 (14) (492) --- --- ------ --- --- ---- Other income, net .................... 2 2 40 2 3 58 --- --- ------ --- --- ---- Income (loss) before provision (benefit) for income taxes ......... 5 (29) (766) 6 (11) (317) Provision (benefit) for income taxes .............................. 2 (10) (741) 2 (4) (311) --- --- ------ --- --- ---- Net income (loss) ................... 3% (19)% (780)% 4% (7)% (321)% === === ====== === === ====
Included in operating costs and expenses above, and further discussed in note 5 to the condensed consolidated financial statements, is a one-time charge of $6.8 million for the three and six months ended March 31, 1997 as a result of the write-off of in-process research and development acquired in connection with the acquisition of Time. On a pro forma basis, exclusive of this one-time charge, operating costs and expenses would have reported $19.2 million and $36.5 million for the three and six months ended March 31, 1997, respectively, resulting in a 20% and 16% increase over the same periods a year previous, respectively, income from operations would have reported $0.6 million and $1.5 million for the three and six months ended March 31, 1997, respectively, resulting in a 21% and 14% increase over the same periods a year previous, respectively, and net income would have reported $0.7 million and $1.7 million for the three and six months ended March 31, 1997, respectively, resulting in an increase of 31% and 30% over the same periods a year previous, respectively. Net income per share would have reported an increase of 19% from $0.05 for the quarter ended March 31, 1996 to $0.06 for the quarter ended March 31, 1997 and a 16% increase from $0.12 for the six months ended March 31, 1996 to $0.14 for the six months ended March 31, 1997. QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1997 REVENUE. Total revenue, consisting of software license fees and service revenue, increased 20%, from $16.5 million for the quarter ended March 31, 1996 to $19.8 million for the quarter ended March 31, 1997. Software license fee revenue increased 20%, from $4.7 million for the quarter ended March 31, 1996 to $5.7 million for the quarter ended March 31, 1997. The growth was predominately generated from domestic operations which grew 28% over the same period a year ago. The Asia Pacific region also contributed with 21% growth over the same period a year ago. The Company believes that the software license fee growth reflects a continued market acceptance of the products and the efforts of target marketing into the process manufacturing and healthcare markets. Service revenue increased 20%, from $11.8 million for the quarter ended March 31, 1996 to $14.2 million for the quarter ended March 31, 1997. The Company's service revenue is comprised of software 10 11 maintenance fees and fees for consulting services. Overall, the increase was attributable to an increase in the installed base of customers and an increase in larger consulting service engagements. The following table sets forth a comparative breakout of the components of service revenue.
THREE MONTHS ENDED MARCH 31, ---------------------------- (IN THOUSANDS) % OF $ INCREASE --------------- 1996 1997 96 TO 97 ---- ---- -------- Maintenance fee revenue $ 7,442 $ 8,378 13% Consulting services revenue 4,353 5,773 33 ------- ------- -- Total service revenue $11,795 $14,151 20% ======= ======= ==
COST OF SOFTWARE LICENSE FEES. Cost of software license fees consists primarily of the cost of product media, manuals, shipping and amortization expense related to capitalized software development costs. Cost of software license fees increased 14%, from $0.9 million for the quarter ended March 31, 1996 to $1.0 million for the quarter ended March 31, 1997. Cost of software license fees as a percentage of software license fee revenue decreased slightly from 19% for the quarter ended March 31, 1996 to 18% for the quarter ended March 31, 1997. The decrease as a percentage of software license fees is attributed to continued decreases in documentation-related expenses offset by an increase of amortization of capitalized software development costs. COST OF SERVICES. Cost of services consists of costs to provide training, technical support and implementation consulting services to licensees of Infinium Software products. Cost of services increased 35%, from $4.1 million for the quarter ended March 31, 1996 to $5.5 million for the quarter ended March 31, 1997. Cost of services as a percentage of service revenue increased from 34% for the quarter ended March 31, 1996 to 39% for the quarter ended March 31, 1997. The increase in the dollar amount of such costs and as a percentage of service revenue resulted primarily from increased staffing and to an increase in the use of third party consultants for delivery of consulting services in response to continued growth in the customer base and to the continued demand for consulting services. RESEARCH AND DEVELOPMENT. Research and development expenses consist primarily of engineering personnel costs reduced by capitalized software development costs and, when applicable, research funding. Research and development expenses increased 17%, from $3.4 million for the quarter ended March 31, 1996 to $4.0 million for the quarter ended March 31, 1997. Research and development spending, defined as research and development expenses before capitalization of software development costs and, if applicable, research funding, increased 16%, from $4.3 million for the quarter ended March 31, 1996 to $5.0 million for the quarter ended March 31, 1997. Research and development spending as a percentage of total revenue was 26% for the quarter ended March 31, 1996 and 25% for the quarter ended March 31, 1997. The increase in research and development expense and spending was due primarily to increased NT platform development for the current period. The Company capitalized $0.8 million of software development costs for each of the quarters ended March 31, 1996 and 1997. The Company has numerous product development initiatives underway and anticipates that expenditures in future periods will increase. In addition to its traditional AS/400 platform efforts, major product initiatives are currently underway on the Microsoft NT Server platform as a result of the recent acquisition of Time with respect to financial management applications. The Company is also making substantial investments to develop a new Human Resources Management product line designed exclusively for the Microsoft NT Server market. SALES AND MARKETING. Sales and marketing expenses consist primarily of salaries, commissions, royalties, travel, promotional expenses, and facilities, computers and communications costs for direct sales offices. Sales and marketing expenses increased 18%, from $5.8 million for the quarter ended March 31, 1996 to $6.8 million for the quarter ended March 31, 1997. Sales and marketing expenses as a percentage 11 12 of total revenue decreased slightly from 35% for the quarter ended March 31, 1996 to 34% for the quarter ended March 31, 1997. The increase in dollar amount was attributable to increased staffing in the direct sales force and an expansion of distribution channels in preparation for the launch of the NT products. The increase was also attributed to the roll-out of the new corporate identity of Infinium Software from that of Software 2000. Sales and marketing expenses on an absolute basis and as a percentage of revenue is expected to continue to increase in the future as a result of these initiatives. GENERAL AND ADMINISTRATIVE. General and administrative expenses consist primarily of salaries of executive, administrative, financial and legal personnel, as well as provisions for doubtful accounts, insurance, investor relations and outside professional fees. General and administrative expenses was $1.8 million for the quarters ended March 31, 1996 and 1997. General and administrative expenses as a percentage of total revenue decreased from 11.0% for the quarter ended March 31, 1996 to 9% for the quarter ended March 31, 1997. The decrease as a percent of revenue is attributable to ongoing cost containment efforts throughout the general and administrative areas. WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in Note 5 to the condensed consolidated financial statements, the Company recorded a one-time charge to operations of $6.8 million for the write-off of in-process research and development acquired in connection with the acquisition of Time. PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal, state and foreign income taxes were $0.3 million and ($2.0) million for the quarter ended March 31, 1996 and for the quarter ended March 31, 1997, respectively. The effective tax rates were 36% for the quarter ended March 31, 1996 and 35.0% for the quarter ended March 31, 1997. SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997 REVENUE. Total revenue increased 16%, from $32.8 million for the six months ended March 31, 1996 to $38.1 million for the six months ended March 31, 1997. Software license fee revenue increased 16%, from $9.5 million for the six months ended March 31, 1996 to $11.0 million for the six months ended March 31, 1997. The software license fee growth reflects a continued market acceptance of the products and the efforts of target marketing into the process manufacturing and healthcare markets. Service revenue increased 16%, from $23.3 million for the six months ended March 31, 1996 to $27.1 million for the six months ended March 31, 1997. The increase was primarily attributable to an increase in the installed base of customers resulting in an increase in both maintenance revenue and consulting service revenue. The following table sets forth a comparative breakout of the components of service revenue.
SIX MONTHS ENDED MARCH 31, -------------------------- (IN THOUSANDS) % OF $ INCREASE --------------- 1996 1997 96 TO 97 ---- ---- -------- Maintenance fee revenue $14,466 $16,532 14% Consulting services revenue 8,848 10,565 19 ------- ------- -- Total service revenue $23,314 $27,097 16% ======= ======= ==
COST OF SOFTWARE LICENSE FEES. Cost of software license fees increased 12%, from $1.8 million for the six months ended March 31, 1996 to $2.0 million for the six months ended March 31, 1997. Cost of software license fees as a percentage of software license fee revenue remained consistent at 19% for the six months ended March 31, 1996 and 1997. 12 13 COST OF SERVICES. Cost of services increased 26%, from $8.1 million for the six months ended March 31, 1996 to $10.2 million for the six months ended March 31, 1997. Cost of services as a percentage of service revenue increased from 35% for the six months ended March 31, 1996 to 38% for the six months ended March 31, 1997. The increase in the dollar amount of such costs and as a percentage of service revenue resulted primarily from an increase in the use of third party consultants for delivery of consulting services into the customer base in response to continued growth in the customer base and to the continued demand for consulting services. RESEARCH AND DEVELOPMENT. Research and development expenses increased 13%, from $6.8 million for the six months ended March 31, 1996 to $7.7 million for the six months ended March 31, 1997. Research and development spending, defined as research and development expenses before capitalization of software development costs and research funding, increased 13%, from $8.5 million for the six months ended March 31, 1996 to $9.6 million for the six months ended March 31, 1997. Research and development spending as a percentage of total revenue was 26% for the six months ended March 31, 1996 and 25% for the six months ended March 31, 1997. The increase in research and development expense and spending was due primarily to increased NT platform development initiatives during the current fiscal year. The Company capitalized $1.7 million of software development costs for each of the six months ended March 31, 1996 and 1997. SALES AND MARKETING. Sales and marketing expenses increased 16%, from $11.3 million for the six months ended March 31, 1996 to $13.1 million for the six months ended March 31, 1997. Sales and marketing expenses as a percentage of total revenue remained consistent at 34% for the six months ended March 31, 1996 and 1997. The increase in dollar amount was attributable to increased staffing in the direct sales force and an expansion of distribution channels in preparation for the launch of NT products as well as to the roll-out of the new corporate identity of Infinium Software from that of Software 2000 during the second quarter of the current fiscal year. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 3%, from $3.4 million for the six months ended March 31, 1996 to $3.6 million for the six months ended March 31, 1997. General and administrative expenses as a percentage of total revenue decreased from 11.0% for the six months ended March 31, 1996 to 9% for the six months ended March 31, 1997. The increase in dollar amount of general and administrative expenses related primarily to additional investor relation costs related to operating as a public company offset somewhat by a decrease in the provision for doubtful accounts. WRITE-OFF OF RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in Note 5 to the condensed consolidated financial statements, the Company recorded a one-time charge to operations of $6.8 million for the write-off of in-process research and development acquired in connection with the acquisition of Time. PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal, state and foreign income taxes were $0.7 million and ($1.5) million for the six months ended March 31, 1996 and for the six months ended March 31, 1997, respectively. The effective tax rates were 36% for the quarter ended March 31, 1996 and 35.0% for the six months ended March 31, 1997. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, the Company had cash, cash equivalents and marketable securities of $39.4 million. During the first six months of fiscal 1997, the Company used a net $4.0 million of cash, cash equivalents and marketable securities of which $3.4 million was attributed to the acquisition of Time. Other uses were to fund software development and to purchase computers and equipment. The principal sources of cash, cash equivalents and marketable securities was provided by operating activities and proceeds from the exercise of stock options under the Company's stock option plans and employee stock purchase plan. In October, 1996, the Company's $5.0 million working capital revolving line of credit with a bank expired and the Company 13 14 does not currently plan to negotiate another line. The Company had not made any borrowings under the facility. The Company's accounts receivable balance, net of the allowance for doubtful accounts, was $15.9 million at March 31, 1997 and $12.4 million at September 30, 1996. Days sales of receivables outstanding ("DSO") was 69 days at March 31, 1997 compared to 77 days at the end of last quarter. The Company calculates DSO as accounts receivable, net of allowance for doubtful accounts divided by the current quarters revenue multiplied by 90. The decrease in DSO from the prior quarter resulted primarily from collections on accounts receivable. Deferred revenue remained consistent at $26.6 million at March 31, 1997 and December 31, 1996. This was a 7% increase from the $24.9 million at September 30, 1996. The increase in deferred revenue was primarily due to an increase in deferred license fee revenue and deferred consulting services as a result of continued growth in the customer base and to the continued demand for consulting services. The Company believes that cash, cash equivalents and marketable securities on hand and cash flows from operations will be sufficient to fund its operations at least through fiscal 1998. While operating activities may provide cash in certain periods, to the extent the Company experiences growth in the future, the Company anticipates that its operating and investing activities may use cash, and consequently such growth may require the Company to obtain additional sources of financing. In addition, although there are no current agreements or negotiations with respect to additional material acquisitions of complementary businesses, products or technologies, such transactions could, if they were to occur, require additional sources of financing. FACTORS AFFECTING FUTURE PERFORMANCE The Company's quarterly revenue and operating results have varied significantly in the past and are likely to vary substantially from quarter to quarter in the future. Such fluctuations may result in volatility in the price of the Company's Common Stock. Quarterly revenue and operating results may fluctuate as a result of a variety of factors, including the Company's lengthy sales cycle, the proportion of revenue attributable to license fees versus service revenue, changes in the level of operating expenses, demand for the Company's products, the introduction of new products and product enhancements by the Company or its competitors, the Company's ability to attract and retain employees, changes in customer budgets, competitive conditions in the industry and general economic conditions. Further, the purchase of the Company's products often involves a significant commitment of capital by its customers with the attendant delays frequently associated with large capital expenditures and authorization procedures within an organization. For these and other reasons, the sales cycles for the Company's products are typically lengthy and subject to a number of significant risks over which the Company has little or no control. The Company historically has operated with little software license backlog because its software products are generally shipped as orders are received. The Company has often recognized a substantial portion of its revenue in the last month of the quarter and often in the last week of that month. As a result, license fees in any quarter are substantially dependent on orders booked and shipped in the last month or last week of that quarter. Accordingly, a small variation in the timing of recognition of revenue for specific transactions is likely to adversely and disproportionately affect the Company's operating results for a quarter because the Company establishes its expenditure levels on the basis of its expected future revenue and only a small portion of the Company's expenses vary with its revenue. Accordingly, the Company believes that period to period comparisons of results of operations are not necessarily meaningful and should not be relied upon as indicative of future performance. The Company's business has experienced and is expected to continue to experience significant seasonality. In recent years, the Company has had greater demand for its products in its fourth fiscal quarter and has experienced lower revenues in its succeeding first and second fiscal quarters. The fluctuations are caused primarily by customer purchasing patterns and the Company's sales recognition programs which reward and recognize sales personnel on the basis of achievement of annual performance 14 15 quotas. Due to the factors set forth in this section, it is likely that in some future quarter the Company's operating results will be below the expectations of the Company and public market analysts and investors. In such event, the price of the Company's Common Stock would likely be materially adversely affected. The business applications software market is characterized by rapid technological change, frequent new product introductions, evolving industry standards and changes in customer demands. The introduction of products embodying new technologies and the emergence of new industry standards can render existing products obsolete and unmarketable. The Company's future success will depend in part on its ability to enhance existing products and services and to develop and introduce new products and services to meet changing client requirements. There can be no assurance that the Company will be successful in developing and marketing product enhancements or new products that respond to technological change or evolving industry standards, that the Company will not experience difficulties that could delay or prevent the successful development, introduction and marketing of these products and enhancements, or that any new products and product enhancements it may introduce will achieve market acceptance. In addition, there can be no assurance that the Company will not encounter product development delays in the future or that, despite testing by the Company, errors will not be found in new products or product enhancements after commencement of commercial shipments, resulting in loss of market share, delay in market acceptance, or warranty claims which could have a material adverse effect upon the Company's business, operating results and financial condition. The majority of the Company's products, maintenance and other services related thereto, are presently designed for users of IBM AS/400 mid-range computers. Future revenue from licenses of present products and sales of services and recurring maintenance revenue are therefore dependent on new sales and continued widespread use of the AS/400 and the continued support of such computers by IBM. Because the Company's primary current source of revenue comes from customers using IBM mid-range computers, a significant shift in the way the Company's customers use computers may have a material adverse effect on the Company's business. In addition, because the Company's primary product line requires the use of IBM's OS/400 operating system, the Company may be required to adapt those products to any changes made in such operating system in the future. The Company's inability to adapt to future changes in the OS/400 operating system, or delays in doing so, could have a material adverse effect on the Company's business, operating results and financial condition. The Company's development and implementation of new human resources software applications to run on the Microsoft Windows NT servers involve significant research and development expenditures and more intense competition from a larger number of competitors. There can be no assurance that the Company will be successful in developing and marketing these products or will be able to compete successfully against current or future competitors. In addition, the Company recently acquired all of the outstanding capital stock of Time, a company which had developed a suite of client server financial application software products. Although the Company expects to introduce enhanced versions of certain of the Time Products in North America and other international markets in mid-1997, there can be no assurance that it will complete the product enhancements necessary for such introductions within that period. The business applications software market is highly competitive and rapidly changing. A number of companies offer products similar to the Company's products and target the same customers as the Company. The Company believes its ability to compete depends upon many factors within and outside its control, including the timely development and introduction of new products and product enhancements, product functionality, performance, price, reliability, customer service and support, sales and marketing efforts and product distribution. The Company believes that competition in its industry is undergoing rapid change and that the barriers to competition between market segments that have previously existed are decreasing. Due to the relatively low barriers to entry in the software market, the Company expects additional competition from other established and emerging companies as the client/server business 15 16 applications software market continues to develop and expand. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which would have a material adverse effect on the Company's business, operating results and financial condition. There can be no assurance that the Company will be able to compete successfully against current or future competitors or that competitive pressures will not have a material adverse effect on the Company's business, operating results, and financial condition. Revenue from customers outside North America represented 8.7% and 10.6% of the Company's total revenue in fiscal 1995 and fiscal 1996, respectively. The Company believes that its revenue and future operating results will depend, in part, on its ability to increase sales in international markets. There can be no assurance that the Company will be able to maintain or increase its current level of international revenue. An important part of the Company's strategy is to expand its indirect marketing channels in international markets. There can be no assurance that the Company will be able to attract and retain international distributors and resellers that will be able to market the Company's products effectively and will be qualified to provide timely and cost-effective customer support and service. The inability to attract and retain important distributors and resellers could materially and adversely affect the Company's international business, operating results and financial condition. Other risks inherent to the Company's international business activities generally include unexpected changes in regulatory requirements, tariffs and other trade barriers, costs and difficulties of localizing products for foreign countries, lack of acceptance of localized products in foreign countries, longer accounts receivable payment cycles, difficulty in managing international operations, potentially adverse tax consequences including restrictions on the repatriation of earnings, the burdens of complying with a wide variety of foreign laws and economic instability. There can be no assurance that such factors would not have a material adverse affect on the Company's future international revenue, and consequently, on the Company's business, operating results and financial condition. 16 17 PART II - OTHER INFORMATION Items 1 - 3. Not applicable Item 4. Submission of Matters to a Vote of Security Holders (a) The Company's Annual Meeting of Stockholders was held on Friday, February 14, 1997. (b) Manuel Correia and Frederick J. Lizza were elected as Class I directors at the meeting. The terms of office of Robert A. Pemberton, Robert P. Schechter, Roland Pampel and R. Stephen Cheheyl as Class II and Class III directors continued after the meeting. (c) At the meeting, the stockholders elected the Company's Class I Directors as follows:
Broker ------ Name For Against Withheld Abstentions Non-votes - ---- --- ------- -------- ----------- --------- Correia 10,784,402 17,689 Lizza 10,703,127 98,964
In addition, the stockholders approved the change of the Company's corporate name to "Infinium Software, Inc."
Broker ------ For Against Withheld Abstentions Non-votes --- ------- -------- ----------- --------- 10,637,652 57,744 32,795 73,900
Finally, the stockholders ratified the selection of the firm of Price Waterhouse LLP as auditors for the Company for the fiscal year ending September 30, 1997.
Broker ------ For Against Withheld Abstentions Non-votes --- ------- -------- ----------- --------- 10,695,353 91,208 15,530
Item 5. Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 3(i) Articles of Amendment. Exhibit 3(ii) Third Amended and Restated By-Laws. Exhibit 4 Stock Certificate. Exhibit 27 Financial Data Schedule. (b) Reports on Form 8-K On January 21, 1997, the Company filed a Current Report on Form 8-K, Item 9, reporting the Company's acquisition of all of the issued share capital of Time (Open Systems) Limited, a corporation formed under the laws of the United Kingdom, in exchange for $2,793,450 in cash and 769,867 shares of the Company's Common Stock (the "Company Shares"). The Company Shares were issued by the Company pursuant to an exemption from registration provided by Regulation S under the Securities Act of 1933. On February 24, 1997, the Company filed a Current Report on Form 8-K, Item 5, reporting that the stockholders of the Company approved an amendment to the Restated Articles of Organization changing the corporate name to Infinium Software, Inc. from Software 2000, Inc., effective February 18, 1997. In connection with the change in name, the Company's Nasdaq National Market ticker symbol was changed to INFM from SFWR. 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Infinium Software, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: May 14, 1997 INFINIUM SOFTWARE, INC. by: /s/ DANIEL J. KOSSMANN ------------------------ Daniel J. Kossmann Chief Financial Officer 18 19 INFINIUM SOFTWARE, INC. EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 3(i) Articles of Amendment 20 3(ii) Third Amended and Restated By-Laws 24 4 Stock Certificate 37 27 Financial Data Schedule 38 19 EX-3.(I) 2 ARTICLES OF AMENDMENT 1 [Set on left side of page] /s/ ???????? - --------------------- Examiner /s/ ??????? - --------------------- Name Approved C P M R.A. - --------------------- P.C. FEDERAL IDENTIFICATION NO. 04-2734036 ---------------------- THE COMMONWEALTH OF MASSACHUSETTS WILLIAM FRANCIS GALVIN SECRETARY OF THE COMMONWEALTH ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108-1512 ARTICLES OF AMENDMENT (GENERAL LAWS, CHAPTER 156B, SECTION 72) We, Frederick J. Lizza , *President/ --------------------------------------------------------------- and Anne Marie Monk , *Clerk/ --------------------------------------------------------------- of Software 2000, Inc. , --------------------------------------------------------------- (Exact name of corporation) located at 25 Communications Way, Drawer 6000, Hyannis, MA 02601 , --------------------------------------------------------- (Street address of corporation in Massachusetts) certify that these Articles of Amendment affecting articles numbered: One (1) - -------------------------------------------------------------------------------- (Number those articles 1, 2, 3, 4, 5, and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on February 14, 1997, by vote of: ------------------ 10,637,652 shares of Common Stock of 10,802,091 shares outstanding, - ----------- ------------------------------ --------------- (type, class & series, if any) shares of of shares outstanding, and - ----------- ------------------------------ --------------- (type, class & series, if any) shares of of shares outstanding, - ----------- ------------------------------ --------------- (type, class & series, if any) 1**being at lease a majority of each type, class or series outstanding and entitled to vote thereon:/
Voted: That the name by which the corporation shall be known is hereby changed to : Infinium Software, Inc. *Delete the inapplicable words. ** Delete the inapplicable clause. 1 For amendments adopted pursuant to Chapter 156B, Section 70. 2 For amendments adopted pursuant to Chapter 156B, Section 71. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on one side only of separate 8 1/2 x 11 sheets of paper with a left margin of at least 1 inch. Additions to more than one article may be made on a single sheet so long as each article requiring each addition is clearly indicated. 2 To change the number of shares and the par value (if any) of any type, class or series of stock which the corporation is authorized to issue, fill in the following: The total presently authorized is: - -------------------------------------------------------------------------------- WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS - -------------------------------------------------------------------------------- TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - -------------------------------------------------------------------------------- Common: Common: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Preferred: Preferred: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Change the total authorized to : - -------------------------------------------------------------------------------- WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS - -------------------------------------------------------------------------------- TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - -------------------------------------------------------------------------------- Common: Common: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Preferred: Preferred: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 The foregoing amendment(s) will become effective when these Articles of Amendment are filed in accordance with General Laws, Chapter 156B, Section 6 unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. Later effective date: . ----------------------------------------------- SIGNED UNDER THE PENALTIES OF PERJURY, this 17th day of February, 1997. --------- ----------- ----- /s/ Frederick J. Lizza , *President/ - ------------------------------------------------------------- /s/ Anne Marie Monk , *Clerk/ - ------------------------------------------------------------- *Delete the inapplicable words. 4 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT (GENERAL LAWS, CHAPTER 156B, SECTION 72) ===================================== I hereby approve the within Articles of Amendment and, the filing fee in the amount of $100 having been paid, said articles are deemed to have been filed with me this 18th day of February 1997. Effective date: ------------------------------------------------------ /s/ WILLIAM FRANCIS GALVIN WILLIAM FRANCIS GALVIN Secretary of the Commonwealth TO BE FILLED IN BY CORPORATION Photocopy of document to be sent to: Infinium Software, Inc. - --------------------------------------------- Anne Marie Monk, Clerk - --------------------------------------------- 25 Communications Way - --------------------------------------------- Hyannis, MA 02601 EX-3.(II) 3 THIRD AMENDED AND RESTATED BY-LAWS 1 INFINIUM SOFTWARE, INC. **************** THIRD AMENDED AND RESTATED BY-LAWS **************** ARTICLE I --------- Stockholders ------------ 1. ANNUAL MEETING. The annual meeting of stockholders shall be held on the fifteenth (15th) day in February in each year (or if that be a legal holiday in the place where the meeting is to be held, on the next succeeding full business day) at 10:00 a.m. unless a different hour is fixed by the Directors or the President and stated in the notice of the meeting. The purposes for which the annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization of the corporation (the "Articles of Organization") or by these By-laws, may be specified by the Directors or the President. In the event an annual meeting has not been held on the date fixed in these By-laws, a special meeting in lieu of the annual meeting may be held with all the force and effect of an annual meeting. 2. SPECIAL MEETINGS. Special meetings of stockholders may be called by the President or by the Directors. Upon written application of one or more stockholders who hold at least 10% in interest of the capital stock entitled to vote at a meeting, a special meeting shall be called by the Clerk, or in the case of the death, absence, incapacity or refusal of the Clerk, by another officer. Notwithstanding the immediately preceding sentence, if the corporation has a class of voting stock registered under the Securities Exchange Act of 1934, as amended, upon written application of one or more stockholders who hold at least 40% in interest of the capital stock entitled to vote at a meeting, a special meeting shall be called by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer. 3. PLACE OF MEETINGS. All meetings of stockholders shall be held at the principal office of the corporation unless a different place (within or without Massachusetts, but within the United States) is fixed by the Directors or the President and stated in the notice of the meeting. 4. NOTICE OF MEETINGS. A written notice of the place, date and hour of all meetings of stockholders stating the purpose of the meeting shall be given by the Clerk or an Assistant Clerk or by the person calling the meeting at least seven days before the meeting or such longer period 2 -2- as is required by law to each stockholder entitled to vote thereat and to each stockholder who under the law, under the Articles of Organization or under these By-laws, is entitled to such notice, by leaving such notice with such stockholder or at his or her residence or usual place of business, or by mailing it, postage prepaid, and addressed to such stockholder at his or her address as it appears in the records of the corporation. Whenever notice of a meeting is required to be given a stockholder under any provision of the Massachusetts Business Corporation Law or of the Articles of Organization or these By-laws, a written waiver thereof, executed before or after the meeting by such stockholder or his or her attorney thereunto authorized and filed with the records of the meeting, shall be deemed equivalent to such notice. 5. NOTICE OF STOCKHOLDER BUSINESS. The following provisions of this Section 5 shall apply to the conduct of business at any meeting of the stockholders. (As used in this Section 5, the term annual meeting shall include a special meeting in lieu of annual meeting.) (a) At any meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the corporation who is a stockholder of record at the time of giving of the notice provided for in paragraph (b) of this Section 5, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in paragraph (b) of this Section 5. (b) For business to be properly brought before any meeting of the stockholders by a stockholder pursuant to clause (iii) of paragraph (a) of this By-law, the stockholder must have given timely notice thereof in writing to the Clerk of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation (i) in the case of any annual meeting, not less than ninety (90) days nor more than 120 days prior to the date specified in Section 1 above for such annual meeting, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if a special meeting in lieu of annual meeting of stockholders is to be held on a date prior to the date specified in Section 1 above, and if less than seventy (70) days' notice or prior public disclosure of the date of such special meeting in lieu of annual meeting is given or made, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the tenth day following the earlier of the date on which notice of the date of such special meeting in lieu of annual meeting was mailed or the day on which public disclosure was made of the date of such special meeting in lieu of annual meeting; and (ii) in the case of a special meeting (other than a special meeting in lieu of an annual meeting), not later than the tenth day following the earlier of the day on which notice of the date of the scheduled meeting was mailed or the day on which public disclosure was made of the date of the scheduled meeting. A stockholder's notice to the Clerk shall set forth as to each matter the stockholder proposes to bring before the meeting, (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, the name and address of the beneficial owner, if any, on whose behalf the proposal is made, and the name and address of any other stockholders or beneficial owners known by such stockholder to be supporting such proposal, (iii) the class and number of shares of the corporation which are owned 3 -3- beneficially and of record by such stockholder of record, by the beneficial owner, if any, on whose behalf the proposal is made and by any other stockholders or beneficial owners known by such stockholder of record and/or of the beneficial owner, if any, on whose behalf the proposal is made, in such proposed business and any material interest of any other stockholders or beneficial owners known by such stockholder to be supporting such proposal in such proposed business, to the extent known by such stockholder. (c) Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in these By-laws. The person presiding at the meeting shall, if the facts warrant, determine that business was not properly brought before the meeting and in accordance with the procedures prescribed by these By-laws, and if he should so determine, he shall so declare at the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provision of this By-law, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (or any successor provision), and the rules and regulations thereunder with respect to the matters set forth in this By-law. (d) This provision shall not prevent the consideration and approval or disapproval at the meeting of reports of officers, Directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at such meeting unless properly brought before the meeting as herein provided. 6. QUORUM. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum, but a lesser number may adjourn any meeting from time to time without further notice; except that, if two or more classes of stock are outstanding and entitled to vote as separate classes, then in the case of each such class, a quorum shall consist of the holders of a majority in interest of the stock of that class issued, outstanding and entitled to vote. 7. VOTING AND PROXIES. Each stockholder shall have one vote for each share of stock entitled to vote owned by him or her and a proportionate vote for a fractional share, unless otherwise provided by the Articles of Organization in the case that the corporation has two or more classes or series of stock. Capital stock shall not be voted if any installment of the subscription therefor has been duly demanded in accordance with the law of the Commonwealth of Massachusetts and is overdue and unpaid. Stockholders may vote either in person or by written proxy. Proxies shall be filed with the clerk of the meeting, or of any adjournment thereof, before being voted. No proxy dated more than six months before the date named therein shall be valid and no proxy shall be valid after the final adjournment of such meeting. Notwithstanding the provisions of the preceding sentence, a proxy coupled with an interest sufficient in law to support an irrevocable power, including, without limitation, an interest in shares or in the corporation generally, may be made irrevocable if it so provides, need not specify the meeting to which it relates, and shall be valid and enforceable until the interest terminates, or for such shorter period as may be specified in the proxy. Except as otherwise limited therein, proxies shall entitle the persons named therein to vote at any adjournment of such meeting but shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in 4 -4- the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. 8. ACTION AT MEETING. When a quorum is present, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on a matter), except where a larger vote is required by law, the Articles of Organization or these By-laws, shall decide any matter to be voted on by the stockholders. Broker non-votes will be counted for purposes of determining whether a quorum is present on any matter, but will not be counted as having been voted on any matter for which voting authority is withheld. Any election of Directors or officers by the stockholders shall be determined by a plurality of the votes cast by stockholders entitled to vote at the election. Any such elections shall be by ballot if so requested by any stockholder entitled to vote thereon. The corporation shall not directly or indirectly vote any share of its own stock. 9. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. ARTICLE II ---------- Directors --------- 1. POWERS. The business of the corporation shall be managed by a Board of Directors who may exercise all the powers of the corporation except as otherwise provided by law, by the Articles of Organization or by these By-laws. In the event of vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2. NUMBER, ELECTION AND QUALIFICATION. A Board of Directors (the "Board") shall be elected by the stockholders at the annual meeting. The number of Directors shall be fixed by the stockholders (except as that number may be enlarged by the Board of Directors acting pursuant to Section 4 of this Article), but shall be not less than three, except that whenever there shall be only two stockholders the number of directors shall be not less than two and whenever there shall be only one stockholder or prior to the issuance of any stock, there shall be at least one director, and shall be not more than nine. Notwithstanding the foregoing provisions, if the corporation is a "registered corporation" within the meaning of Section 50A of the Massachusetts Business Corporation Law and has not elected, pursuant to paragraph (b) of such Section 50A, to be exempt from the provisions of paragraph (a) of such Section 50A, then: 5 -5- (i) In accordance with paragraph (d), clause (iv) of such Section 50A, the number of Directors shall be fixed only by vote of the Board of Directors. (ii) In accordance with paragraph (a) of such Section 50A, the Directors of the corporation shall be classified with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible; the term of office of those of the first class ("Class I Directors") to continue until the first annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified; the term of office of those of the second class ("Class II Directors") to continue until the second annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified; and the term of office of those of the third class ("Class III Directors") to continue until the third annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified. At each annual meeting of the corporation, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term continuing until the annual meeting held in the third year following the year of their election and until their successors are duly elected and qualified. 3. VACANCIES. Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from the enlargement of the Board, may be filled by the stockholders or, in the absence of stockholder action, by the Directors. Each such successor shall hold office for the unexpired term of his or her predecessor and until his or her successor is chosen and qualified or until his or her earlier death, resignation or removal. Notwithstanding the foregoing provisions, if the Directors of the corporation are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of Section 50A of the Massachusetts Business Corporation Law, as it may be amended from time to time, any vacancy in the Board of Directors, however occurring, shall be filled in accordance with the provisions of paragraph (d) of such Section 50A. 4. ENLARGEMENT OF THE BOARD. The Board of Directors may be enlarged by the stockholders at any meeting or by vote of a majority of the Directors then in office. Notwithstanding the foregoing provisions, if the Directors of the corporation are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of Section 50A of the Massachusetts Business Corporation Law, as it may be amended from time to time, the Board of Directors may be enlarged only in accordance with the provisions of paragraph (d) of such Section 50A. 5. TENURE. Except as otherwise provided by law, by the Articles of Organization or by these By-laws, Directors shall hold office until the next annual meeting of stockholders and until their successors are chosen and qualified. Any Director may resign by delivering his or her written resignation to the corporation at its principal office or to the President, Clerk or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. 6. REMOVAL. A Director may be removed from office (a) with or without cause by the vote of the holders of a majority of the shares entitled to vote in the election of Directors, 6 -6- provided that the Directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of the particular class of stockholders entitled to vote for the election of such Directors; or (b) for cause by vote of a majority of the Directors then in office. A Director may be removed for cause only after a reasonable notice and opportunity to be heard before the body proposing to remove him or her. Notwithstanding the foregoing provisions, if the Directors of the corporation are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of Section 50A of the Massachusetts Business Corporation Law, as it may be amended from time to time, the removal of Directors shall be governed by the provisions of paragraph (c) of such Section 50A. 7. MEETINGS. Regular meetings of the Directors may be held without call or notice at such places and at such times as the Directors may from time to time determine, provided that any Director who is absent when such determination is made shall be given notice of the determination. A regular meeting of the Directors may be held without a call or notice at the same place as the annual meeting of stockholders. Special meetings of the Directors may be held at any time and place designated in a call by the President or two or more Directors. 8. TELEPHONE CONFERENCE MEETINGS. Members of the Board of Directors may participate in a meeting of the board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting. 9. NOTICE OF MEETINGS. Notice of all special meetings of the Directors shall be given to each Director by the Secretary, or Assistant Secretary, or if there be no Secretary or Assistant Secretary, by the Clerk, or Assistant Clerk, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the Directors calling the meeting. Notice shall be given to each Director in person or by telephone or by telegram sent to his or her business or home address at least twenty-four hours in advance of the meeting, or by written notice mailed to his or her business or home address at least forty-eight hours in advance of the meeting. Notice of a meeting need not be given to any Director if a written waiver of notice, executed by such Director before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. A notice or waiver of notice of a Directors' meeting need not specify the purposes of the meeting. 10. QUORUM. At any meeting of the Directors, a majority of the Directors then in office shall constitute a quorum. Less than a quorum may adjourn any meeting from time to time without further notice. 11. ACTION AT MEETING. At any meeting of the Directors at which a quorum is present, a majority of the Directors present may take any action on behalf of the Board except to the extent that a larger number is required by law or the Articles of Organization or these By-laws. 12. ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Directors may be taken without a meeting, if all the Directors consent to the action in writing 7 -7- and the written consents are filed with the records of the meetings of Directors. Such consents shall be treated for all purposes as a vote at a meeting. 13. COMMITTEES. The Directors may, by vote of a majority of the Directors then in office, elect from their number an executive or other committees and may by like vote delegate thereto some or all of their powers except those which by law, the Articles of Organization or these By-laws they are prohibited from delegating to such committee. Except as the Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Directors or in such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these By-laws for the Directors. ARTICLE III ----------- Officers -------- 1. ENUMERATION. The officers of the corporation shall consist of a President, a Treasurer, a Clerk, and such other officers, including a Chairman of the Board of Directors, one or more Vice-Presidents, Assistant Treasurers, Assistant Clerks, Secretary and Assistant Secretaries as the Directors may determine. 2. ELECTION. The President, Treasurer and Clerk shall be elected annually by the Directors at their first meeting following the annual meeting of stockholders. Other officers may be chosen by the Directors at such meeting or at any other meeting. 3. QUALIFICATION. The President may, but need not be, a Director. No officer need be a stockholder. Any two or more offices may be held by the same person, provided that the President and Clerk shall not be the same person. The Clerk shall be a resident of Massachusetts unless the corporation has a resident agent appointed for the purpose of service of process. Any officer may be required by the Directors to give bond for the faithful performance of his or her duties to the corporation in such amount and with such sureties as the Directors may determine. 4. TENURE. Except as otherwise provided by law, by the Articles of Organization or by these By-laws, the President, Treasurer and Clerk shall hold office until the first meeting of the Directors following the next annual meeting of stockholders and until their successors are chosen and qualified; and all other officers shall hold office until the first meeting of the Directors following the next annual meeting of stockholders and until their successors are chosen and qualified, unless a shorter term is specified in the vote choosing or appointing them. Any officer may resign by delivering his or her written resignation to the corporation at its principal office or to the President, Clerk or Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. 5. REMOVAL. The Directors may remove any officer with or without cause by vote of a majority of the Directors then in office; provided, that an officer may be removed for cause only after a reasonable notice and opportunity to be heard before the Board of Directors. 8 -8- 6. PRESIDENT, CHAIRMAN OF THE BOARD, AND VICE-PRESIDENT. The President shall, unless otherwise provided by the Directors, be the chief executive officer of the corporation and shall, subject to the direction of the Directors, have general supervision and control of its business. Unless otherwise provided by the Directors he or she shall preside, when present, at all meetings of stockholders and, unless a Chairman of the Board has been elected and is present, of the Directors. If a Chairman of the Board of Directors is elected he or she shall preside at all meetings of the Board of Directors at which he or she is present. The Chairman shall have such other powers as the Directors may from time to time designate. Any Vice-President shall have such powers as the Directors may from time to time designate. 7. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject to the direction of the Directors, have general charge of the financial affairs of the corporation and shall cause accurate books of account to be kept. He or she shall have custody of all funds, securities, and valuable documents of the corporation, except as the Directors may otherwise provide. Any Assistant Treasurer shall have such powers as the Directors may from time to time designate. 8. CLERK AND ASSISTANT CLERKS. The Clerk shall record all proceedings of the stockholders in a book to be kept therefor. Unless a transfer agent is appointed, the Clerk shall keep or cause to be kept in Massachusetts, at the principal office of the corporation or at his or her office, the stock and transfer records of the corporation, in which are contained the names of all stockholders and the record address and the amount of stock held by each. In case a Secretary is not elected, the Clerk shall record all proceedings of the Directors in a book to be kept therefor. In the absence of the Clerk from any meeting of the stockholders, an Assistant Clerk, if one be elected, otherwise a Temporary Clerk designated by the person presiding at the meeting, shall perform the duties of the Clerk. Any Assistant Clerk shall have such additional powers as the Directors may from time to time designate. 9. SECRETARY AND ASSISTANT SECRETARIES. If a Secretary is elected, he or she shall keep a record of the meetings of the Directors and in his or her absence, an Assistant Secretary, if one be elected, otherwise a Temporary Secretary designated by the person presiding at the meeting, shall keep a record of the meetings of the Directors. Any Assistant Secretary shall have such additional powers as the Directors may from time to time designate. 10. OTHER POWERS AND DUTIES. Each officer shall, subject to these By-laws, have in addition to the duties and powers specifically set forth in these By-laws, such duties and powers as are customarily incident to his or her office, and such duties and powers as the Directors may from time to time designate. ARTICLE IV ---------- Capital Stock ------------- 1. CERTIFICATES OF STOCK. Subject to the provisions of Section 2 below, each stockholder shall be entitled to a certificate of the capital stock of the corporation in such form as may be prescribed from time to time by the Directors. The certificate shall be signed by the President or 9 -9- a Vice-President, and by the Treasurer or an Assistant Treasurer; provided, however, such signatures may be facsimiles if the certificate is signed by a transfer agent, or by a registrar, other than a Director, officer or employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer at the time of its issue. Every certificate issued for shares of stock at a time when such shares are subject to any restriction on transfer pursuant to the Articles of Organization, these By-laws or any agreement to which the corporation is a party shall have the restriction noted conspicuously on the certificate and shall also set forth on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction and a statement that the corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every stock certificate issued by the corporation at a time when it is authorized to issue more than one class or series of stock shall set forth upon the face or back of the certificate either the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series, if any, authorized to be issued, as set forth in the Articles of Organization, or a statement of the existence of such preferences, powers, qualifications, and rights, and a statement that the corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. 2. STOCKHOLDER OPEN ACCOUNTS. The corporation may maintain or caused to be maintained stockholder open accounts in which may be recorded all stockholders' ownership of stock and all changes therein. Certificates need not be issued for shares so recorded in a stockholder open account unless requested by the stockholder. 3. TRANSFERS. Subject to the restrictions, if any, stated or noted on the stock certificates, shares of stock may be transferred in the records of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor, properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the corporation or its transfer agent may reasonably require. When such stock certificates are thus properly surrendered to the corporation or its transfer agent, the corporation or transfer agent shall cause the records of the corporation to reflect the transfer of the shares of stock. Except as may be otherwise required by law, by the Articles of Organization or by these By-laws, the corporation shall be entitled to treat the record holder of stock as shown in its records as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereof, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-laws. It shall be the duty of each stockholder to notify the corporation of his or her post office address. 4. RECORD DATE. The Directors may fix in advance a time which shall be not more than sixty (60) days before the date of any meeting of stockholders or the date for the payment of any 10 -10- dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent. In such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the corporation after the record date. Without fixing such record date the Directors may for any of such purposes close the transfer books for all or any part of such period. If no record date is fixed and the transfer books are not closed, the record date for determining stockholders having the right 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, and 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 acts with respect thereto. 5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss, mutilation or destruction of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms and conditions as the Directors may prescribe. 6. ISSUE OF CAPITAL STOCK. The whole or any part of the then authorized but unissued shares of each class of stock may be issued at any time or from time to time by the Board of Directors without action by the stockholders. 7. REACQUISITION OF STOCK. Shares of stock previously issued which have been reacquired by the corporation, may be restored to the status of authorized but unissued shares by vote of the Board of Directors, without amendment of the Articles of Organization. ARTICLE V --------- Provisions Relative to Directors, Officers, Stockholders and Employees ------------------------------------ 1. CERTAIN CONTRACTS AND TRANSACTIONS. In the absence of fraud or bad faith, no contract or transaction by this corporation shall be void, voidable or in any way affected by reason of the fact that the contract or transaction is (a) with one or more of its officers, Directors, stockholders or employees, (b) with a person who is in any way interested in this corporation or (c) with a corporation, organization or other concern in which an officer, Director, stockholder or employee of this corporation is an officer, director, stockholder, employee or in any way interested. The provisions of this section shall apply notwithstanding the fact that the presence of a Director or stockholder, with whom a contract or transaction is made or entered into or who is an officer, director, stockholder or employee of a corporation, organization or other concern with which a contract or transaction is made or entered into or who is in any way interested in such contract or transaction, was necessary to constitute a quorum at the meeting of the Directors (or any authorized committee thereof) or stockholders at which such contract or transaction was 11 -11- authorized and/or that the vote of such Director or stockholder was necessary for the adoption of such contract or transaction, provided that if said interest was material, it shall have been known or disclosed to the Directors or stockholders voting at said meeting on said contract or transaction. A general notice to any person voting on said contract or transaction that an officer, Director, stockholder or employee has a material interest in any corporation, organization or other concern shall be sufficient disclosure as to such officer, Director, stockholder or employee with respect to all contracts and transactions with such corporation, organization or other concern. This section shall be subject to amendment or repeal only by action of the stockholders. 2. INDEMNIFICATION. Each Director and officer of the corporation, and any person who, at the request of the corporation, serves as a director or officer of another organization shall be indemnified by the corporation against any cost, expense (including attorneys' fees), judgment, liability and/or amount paid in settlement reasonably incurred by or imposed upon him or her in connection with any action, suit or proceeding (including any proceeding before any administrative or legislative body or agency), to which he or she may be made a party or otherwise involved or with which he or she shall be threatened, by reason of his or her being, or related to his or her status as, a Director or officer of the corporation or of any other organization, which other organization he or she serves or has served as director or officer at the request of the corporation (whether or not he or she continues to be an officer or Director of the corporation or such other organization at the time such action, suit or proceeding is brought or threatened), unless such indemnification is prohibited by the Business Corporation Law of the Commonwealth of Massachusetts. The foregoing right of indemnification shall be in addition to any rights to which any such person may otherwise be entitled and shall inure to the benefit of the executors or administrators of each such person. The corporation may pay the expenses incurred by any such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit, or proceeding, upon receipt of an undertaking by such person to repay such payment if it is determined that such person is not entitled to indemnification hereunder. This section shall not affect any rights to indemnification to which corporate personnel other than Directors and officers may be entitled by contract or otherwise under law. This section shall be subject to amendment or repeal only by action of the stockholders, and any such amendment or repeal shall not affect the rights arising hereunder prior to the effective date of the amendment or repeal. ARTICLE VI ---------- Miscellaneous Provisions ------------------------ 1. FISCAL YEAR. Except as from time to time otherwise determined by the Directors, the fiscal year of the corporation shall be the twelve (12) months ending the last day of September. Following any change in the fiscal year previously adopted, a certificate of such change, signed under the penalties of perjury by the Clerk or an Assistant Clerk, shall be filed forthwith with the state secretary. 2. SEAL. The seal of this corporation shall, subject to alteration by the Directors, bear its name, the word "Massachusetts", and the year of its incorporation. 12 -12- 3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts, bonds, notes and other obligations authorized to be executed by an officer of the corporation in its behalf shall be signed by the President, any Vice President or the Treasurer except as the Directors may generally or in particular cases otherwise determine. 4. VOTING OF SECURITIES. Except as the Directors may otherwise designate, the President or Treasurer may waive notice of, and appoint any person or persons to act as proxy or attorney in fact for this corporation (with or without power of substitution) at any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by the corporation. 5. CORPORATE RECORDS. The original, or attested copies, of the Articles of Organization, By-laws and records of all meetings of incorporators and stockholders, and the stock and transfer records, which shall contain the names of all stockholders and the record address and the amount of stock held by each, shall be kept in Massachusetts at the principal office of the corporation or at an office of its transfer agent or of the Clerk or of its resident agent. Said copies and records need not all be kept in the same office. They shall be available at all reasonable times to the inspection of any stockholder for any proper purpose but not to secure a list of stockholders or other information for the purpose of selling said list or information or copies thereof or of using the same for a purpose other than in the interest of the applicant, as a stockholder, relative to the affairs of the corporation. 6. ARTICLES OF ORGANIZATION. All references in these By-laws to the Articles of Organization shall be deemed to refer to the Restated Articles of Organization of the corporation, as amended and in effect from time to time. 7. AMENDMENTS. These By-laws, to the extent provided in these By-laws, may be amended or repealed, in whole or in part, and new By-laws adopted either (a) by the stockholders at any meeting of the stockholders by the affirmative vote of the holders of at least a majority in interest of the capital stock present and entitled to vote, provided that notice of the proposed amendment or repeal or of the proposed making of new By-laws shall have been given in the notice of such meeting, or (b) if so authorized by the Restated Articles of Organization, by the Board of Directors at any meeting of the Board by the affirmative vote of a majority of the Directors then in office, but no amendment or repeal of a By-law shall be voted by the Board of Directors and no new By-law shall be made by the Board of Directors which alters the provisions of these By-laws with respect to removal of Directors, or the election of committees by Directors and the delegation of powers thereto, nor shall the Board of Directors make, amend or repeal any provision of the By-laws which by law, the Restated Articles of Organization or the By-laws requires action by the stockholders. Not later than the time of giving notice of the meeting of stockholders next following the making, amending, or repealing by the Directors of any By-law, notice thereof stating the substance of such change shall be given to all stockholders entitled to vote on amending the By-laws. Any By-law or amendment of a By-law made the Board of Directors may be amended or repealed by the stockholders by affirmative vote as above provided in this Section 7. 13 -13- 8. 1987 MASSACHUSETTS CONTROL SHARE ACQUISITION ACT. The 1987 Massachusetts Control Share Acquisition Act, Chapter 110D of the Massachusetts General Laws, as it may be amended from time to time, shall not apply to the corporation. EX-4 4 STOCK CERTIFICATE 1 Exhibit 4 Stock Certificate The form of the Company's stock certificate was modified as follows: (a) The name `Software 2000, Inc.' was replaced with the name `Infinium Software, Inc.' everywhere it appeared. (b) The `Software 2000' logo was replaced with the `Infinium Software' logo, including the words `Infinium Software" in capital letters, and an ellipse with the letter `i'. (c) In the stock certificate number box, the initial letters have been replaced with the letters `INF'. (d) The cusip number has been changed to `45662Y 10 9'. (e) The following legend has been added to the back of the certificate: "The Company is authorized to issue more than one class or series of stock. Upon written request the Company will furnish without charge to each stockholder a copy of the powers, designations, preferences and 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." 37 EX-27 5 FINANCIAL DATA SCHEDULE
5 1000 6-MOS SEP-30-1997 OCT-01-1996 MAR-31-1997 9,448 29,932 16,894 1,525 0 61,706 24,485 18,376 78,268 39,884 0 0 0 119 37,697 78,268 0 38,090 0 12,216 30,965 210 0 (4,306) (1,506) (2,800) 0 0 0 (2,800) (0.23) (0.23)
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