-----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, N4USX7I6VzfvBgxmPYx8Y/iRnG+QmOE2Kn9/Ml6T6Vfv+emY73e5h7Ado3e6DTho +1Yq0Y2wMVYgrJIKZeMTmw== 0000950135-01-000763.txt : 20010223 0000950135-01-000763.hdr.sgml : 20010223 ACCESSION NUMBER: 0000950135-01-000763 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROJECT SOFTWARE & DEVELOPMENT INC CENTRAL INDEX KEY: 0000920354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 042448516 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23852 FILM NUMBER: 1545480 BUSINESS ADDRESS: STREET 1: 100 CROSBY DRIVE CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 7812802000 MAIL ADDRESS: STREET 1: 100 CROSBY DRIVE CITY: BEDFORD STATE: MA ZIP: 01730 10-Q 1 b38314aqe10-q.txt PROJECT SOFTWARE & DEVELOPMENT, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000 (mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE - --- SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from _______________ to __________________ Commission File Number 0-23852 PROJECT SOFTWARE & DEVELOPMENT, INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2448516 (State or other jurisdiction (I.R.S employer incorporation or organization) identification number) 100 CROSBY DRIVE, BEDFORD MASSACHUSETTS 01730 (Address of principal executive offices, including zip code) (781) 280-2000 (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 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Number of shares outstanding of the Registrant's common stock as of the latest practicable date: 22,108,810 shares of common stock, $.01 par value per share, as of January 31, 2001. 2 PROJECT SOFTWARE & DEVELOPMENT, INC. 10-Q INDEX PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PAGE Consolidated Balance Sheets (unaudited) as of December 31, 2000 and September 30, 2000. 3 Consolidated Statements of Operations (unaudited) for the three months ended December 31, 2000 and 1999. 4 Consolidated Statements of Cash Flows (unaudited) for the three months ended December 31, 2000 and 1999. 5 Notes to Consolidated Financial Statements (unaudited). 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 28 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 29 SIGNATURE 31 2 3 PROJECT SOFTWARE & DEVELOPMENT, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS DECEMBER 31, SEPTEMBER 30, 2000 2000 ----------- ------------- (in thousands) Current assets: Cash and cash equivalents $ 36,330 $ 31,584 Marketable securities 2,243 4,241 Accounts receivable, trade, less allowance for doubtful accounts of $2,680 at December 31, 2000 and $2,825 at September 30, 2000, respectively 42,534 47,699 Prepaid expenses and other current assets 6,968 7,148 Deferred income taxes 7,080 6,097 --------- --------- Total current assets 95,155 96,769 --------- --------- Marketable securities 999 1,059 Property and equipment, net 15,322 14,571 Intangible assets, net 59,891 63,286 Other assets 2,105 2,168 Deferred income taxes 4,052 3,203 --------- --------- Total assets $ 177,524 $ 181,056 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 17,048 $ 16,013 Accrued compensation 6,253 8,551 Income taxes payable 2,996 660 Deferred revenue 20,371 19,080 Deferred income taxes --- 94 Line of credit --- 2,278 --------- --------- Total current liabilities 46,668 46,676 --------- --------- Deferred income taxes 17 17 Deferred rent 102 112 Deferred revenue 51 59 Other long term liabilities 35 --- Commitments and contingencies Stockholders' equity Preferred stock, $.01 par value;1,000 authorized, none issued and outstanding Common stock, $.01 par value;50,000 authorized; 22,109 and 22,069 issued at December 31, 2000 and September 30, 2000, respectively 221 220 Additional paid-in capital 86,786 83,185 Deferred compensation (214) (233) Retained earnings 44,617 52,312 Accumulated other comprehensive income (759) (1,292) --------- --------- Total stockholders' equity 130,651 134,192 --------- --------- Total liabilities and stockholders' equity $ 177,524 $ 181,056 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 3 4 PROJECT SOFTWARE & DEVELOPMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, ---------------------- 2000 1999 -------- -------- (in thousands, except per share data) Revenues: Software $ 12,597 $ 15,737 Support and services 28,871 22,249 -------- -------- Total revenues 41,468 37,986 -------- -------- Cost of revenues: Software 466 659 Support and services 16,069 12,528 -------- -------- Total cost of revenues 16,535 13,187 -------- -------- Gross margin 24,933 24,799 Operating expenses: Sales and marketing 21,086 13,821 Product development 5,560 4,495 General and administrative 4,246 3,095 Amortization of goodwill and other intangibles 3,636 169 -------- -------- Total operating expenses 34,528 21,580 -------- -------- (Loss)/income from operations (9,595) 3,219 Interest income 449 937 Interest expense (79) (1) Other income (expense), net 275 (194) -------- -------- (Loss)/income before income taxes (8,950) 3,961 (Benefit)/provision for income taxes (1,255) 1,365 -------- -------- Net (loss)/income $ (7,695) $ 2,596 ======== ======== Net (loss)/ income per share, basic $ (0.35) $ 0.12 -------- -------- Net (loss)/income per share, diluted $ (0.35) $ 0.11 -------- -------- Shares used to calculate net (loss)/income per share Basic 22,083 21,415 Diluted 22,083 22,706
The accompanying notes are an integral part of the consolidated financial statements. 4 5 PROJECT SOFTWARE & DEVELOPMENT, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, ------------------------------ 2000 1999 ------------ ------------ (IN THOUSANDS) Cash flows from operating activities: Net (loss)/income $ (7,695) $ 2,596 Adjustments to reconcile net (loss)/income to net cash provided by operating activities: Depreciation and amortization 5,022 1,427 Loss /(Gain )on sale and disposal of property and equipment 60 (15) Amortization of discount on marketable securities 4 62 Deferred rent (9) (6) Deferred compensation 19 -- Non-cash marketing expense 3,287 -- Deferred income taxes (1,904) (350) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable 5,508 (2,433) Prepaid expenses (1,607) (1,131) Other assets 1,491 (755) Accounts payable and accrued expenses 862 4,393 Accrued compensation (2,331) (4,042) Income taxes payable 2,313 930 Deferred revenue 1,151 (469) -------- -------- Net cash provided by operating activities 6,171 207 -------- -------- Cash flows from investing activities: Acquisitions of businesses, net of cash acquired -- 12 Acquisitions of property and equipment and other capital expenditures (2,029) (1,376) Purchase of marketable securities -- (17,797) Sale of marketable securities 2,058 20,640 -------- -------- Net cash provided by investing activities 29 1,479 -------- -------- Cash flows from financing activities: Payment of line of credit (2,278) -- Proceeds from exercise of stock options 315 2,185 -------- -------- Net cash (used in)/provided by financing activities (1,963) 2,185 -------- -------- Effect of exchange rate changes on cash 509 (194) -------- -------- Net increase in cash and cash equivalents 4,746 3,677 Cash and cash equivalents, beginning of period 31,584 59,903 -------- -------- Cash and cash equivalents, end of period $ 36,330 $ 63,580 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 5 6 PROJECT SOFTWARE & DEVELOPMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Project Software & Development, Inc. ("PSDI") and its majority-owned subsidiaries (collectively, the "Company"), as of December 31, 2000 and have been prepared by the Company in accordance with generally accepted accounting principles for interim reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair presentation of the Company's financial position, results of operations and cash flows at the dates and for the periods indicated. The results of operations for the periods presented herein are not necessarily indicative of the results of operations to be expected for the entire fiscal year, which ends on September 30, 2001, or for any other future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, for the year ended September 30, 2000 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 29, 2000. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. B. INCOME PER SHARE Basic income (loss) per share is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding. Diluted income per share is 6 7 computed by dividing income or loss available to common shareholders by the weighted average common shares outstanding plus dilutive potential common shares. For purposes of this calculation, stock options are considered dilutive potential common shares in periods in which they have a dilutive effect. All potential dilutive common shares are excluded from the computation of net loss per share because they are anti-dilutive. Basic and diluted income (loss) per share are calculated as follows: THREE MONTHS ENDED (IN THOUSANDS, EXCEPT PER SHARE DATA) 12/31/00 12/31/99 - ------------------------------------- --------- -------- Net (loss)/income $ (7,695) $ 2,596 Denominator: Weighted average common shares outstanding-basic 22,083 21,415 Effect of dilutive securities (1) -- 1,291 -------- ------- Weighted average common shares outstanding-diluted 22,083 22,706 ======== ======= Net (loss)/income per share-basic $ (0.35) $ 0.12 Net (loss)/income per share-diluted $ (0.35) $ 0.11 (1) In the period ended December 31, 2000 common stock equivalents of 168 thousand are not included because they are anti-dilutive. 7 8 C. COMPREHENSIVE INCOME The following table reflects the components of comprehensive income: (in thousands) - -------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31, 2000 1999 - -------------------------------------------------------------------------------- Net (loss)/income $(7,695) $ 2,596 - -------------------------------------------------------------------------------- Other comprehensive income, net of tax: Unrealized gain/(loss) on Securities arising during Period 4 (28) Foreign currency translation Adjustment 529 (165) - -------------------------------------------------------------------------------- Comprehensive (loss)/income $(7,162) $ 2,403 - -------------------------------------------------------------------------------- D. SEGMENT INFORMATION, GEOGRAPHIC DATA AND MAJOR CUSTOMERS: In December 2000, the Company announced the repositioning of its Internet-based business-to-business software products. The Company now operates in two new reportable industry segments: (1) the development, marketing and support of the "Demand-Side" software products and services, consisting of MAXIMO Enterprise and MAXIMO Extended Enterprise (which includes MAXIMO Buyer, the e-procurement application that was integrated with MAXIMO during fiscal 2000), and (2) the development, marketing and support of the MRO.COM "Supply-Side" software products and services, and the Internet-based content management tools and cataloging services developed and marketed by our INTERMAT, Inc. subsidiary. The MRO.COM Supply-Side products consist of the mroDistributor, mroManufacturer and mroConnect products. Asset information by reportable segment is not reported, since the Company does not produce such information internally. The Company also manages these segments across geographic reportable segments: United States, Other Americas (Canada and Latin America), Europe/Middle East and Africa, and Asia Pacific. All segments are managed by the same board of directors and executive officers. 8 9 A summary of the Company's operations by industry segment was as follows: THREE MONTHS ENDED DECEMBER 31, (IN THOUSANDS) 2000 1999 -------- -------- Revenues: Demand-Side $ 37,039 $ 35,822 Supply-Side 4,429 2,164 -------- -------- $ 41,468 $ 37,986 ======== ======== (Loss)/income from operations: Demand-Side $ 6,700 $ 5,459 Supply-Side (16,295) (2,240) -------- -------- $ (9,595) $ 3,219 ======== ======== 9 10 A summary of the Company's revenues by geographical area was as follows: THREE MONTHS ENDED DECEMBER 31, (IN THOUSANDS) 2000 1999 -------- -------- Revenues: United States $ 25,894 $ 21,019 Other Americas 2,541 2,774 Intercompany revenues 961 2,020 -------- -------- Subtotal $ 29,396 $ 25,813 -------- -------- Europe/Middle East and Africa 10,114 11,279 Asia/Pacific 2,919 2,914 Consolidating eliminations (961) (2,020) -------- -------- Total revenues $ 41,468 $ 37,986 ======== ======== The Company has subsidiaries in foreign countries, which sell the Company's products and services in their respective geographic areas. Intercompany revenues primarily represent shipments of software to international subsidiaries and are eliminated from consolidated revenues. Income (loss) from operations excludes interest income, interest expense, provision/(benefit) for income taxes and foreign currency translation gains and losses. E. COMMON STOCK: In December 2000, the Company issued a warrant to i2 Technologies, Inc. ("i2") under which i2 has the right to purchase up to 500,000 shares of the Company's common stock at an exercise price of $10.25 per share. The Company valued the warrant at $3.3 million using the Black-Scholes valuation model, with the following assumptions: (1) risk-free interest rate of 4.8%; (2) life of 2.5 years; and (3) volatility of 105%. The warrant is immediately exercisable and has been recorded as a one-time non-cash sales and marketing expense. The warrant was issued in connection with a strategic agreement for the two companies to resell each other's offerings and integrate their technologies to create a solution for the strategic maintenance, repair and operations market. F. SUBSEQUENT EVENT: On February 1, 2001, the Company's Board of Directors amended the Company's By-Laws to change the date of the annual meeting of stockholders from the second Tuesday in February to the first Tuesday in March of each year. 10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS In addition to historical information, this Quarterly report on Form 10-Q, as well as documents incorporated herein by reference, may contain forward-looking statements (within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended). The following and similar expressions identify forward-looking statements: "expects", "anticipates", and "estimates". Forward-looking statements include, but are not limited to, statements related to: the Company's plans, objectives, expectations and intentions; the timing of, availability and functionality of products under development or recently introduced; and market and general economic conditions. Actual results may differ materially from those suggested by the forward-looking statements for various reasons, including those discussed under "Factors Affecting Future Performance." These forward-looking statements speak only as of the date of this Quarterly Report, or in the case of forward-looking statements in documents incorporated by reference, as of the dates of those documents. OVERVIEW On December 11, 2000, the Company's Board of Directors voted to change the Company's name to MRO Software, Inc., and to propose this change at the next annual meeting of the Company's stockholders (the "Annual Meeting"). This change will become legally effective immediately following the Annual Meeting, assuming that the Company's stockholders vote in favor of the change. The Company also intends to change its NASDAQ trading symbol from "PSDI" to "MROI", effective at approximately the same time. In December 2000, the Company announced the repositioning of its Internet-based business-to-business marketplace software products. Commencing in fiscal 2001, the Company operates in the following two reportable industry segments: (1) the development, marketing and support of "Demand-Side" software products and services, consisting of MAXIMO Enterprise and MAXIMO Extended Enterprise (which includes MAXIMO Buyer, the e-procurement application that was integrated with MAXIMO during fiscal year 2000) and (2) the development, marketing and support of the 11 12 MRO.COM "Supply-Side" software products and services, and the Internet-based content management tools and cataloging services developed and marketed by our INTERMAT, Inc. subsidiary. The Supply-Side products consist of the mroDistributor, mroManufacturer and mroConnect products. The Company also offers application hosting services delivered through the mroHosting Center, and the MRO.COM website will act as an administrative hub for all activities generated by these solutions. As of September 30, 2000, the Company reported revenues related to two industry segments: the development, marketing and support of asset maintenance management software (MAXIMO) and the development, marketing and support of Internet e-commerce software products and the related network services (MRO.COM). All segment reported financial information contained in this report has been restated to reflect the Company's repositioning. RESULTS OF OPERATIONS REVENUES The Company's revenues are derived primarily from two sources: (i) software licenses, and (ii) fees for services, including support contracts, training and consulting services. The Company also offers data normalization services through its INTERMAT, Inc. subsidiary. Three Months Three Months Ended CHANGE Ended (in thousands) 12/31/00 % 12/31/99 - --------------------------------------------------------------------------- Software licenses $12,597 (20)% $15,737 Percentage of total revenues 30% 41% Support and services $28,871 30% $22,249 Percentage of total revenues 70% 59% Total revenues $41,468 9% $37,986 12 13 Total revenues for the quarter increased $3.5 million over the comparable quarter. Total revenues for the Demand-Side business segment increased 3% to $37.0 million from $35.8 million over the comparable quarter. Total revenues for the Supply-Side business segment increased 100% to $4.4 million from $2.2 million over the comparable quarter. Software license revenues decreased 20% or $3.1 million over the comparable quarter. Software licenses revenue for the Demand-Side business segment decreased 10% to $12.5 million from $13.9 million over the comparable quarter. The Company attributes this decline to soft market conditions. In the quarter ended December 31, 2000, the Company transitioned to an Application Service Provider ("ASP") subscription revenue model for the Supply-Side of the business. ASP revenues are recognized ratably over the contract period and are recognized as service revenues. Support and services revenue increased 30% or $6.6 million over the comparable quarter. Support revenues were $11.3 million and $8.1 million for the three months ended December 31, 2000 and 1999, respectively. Demand-Side support revenues represented 96% and 99% of total support revenues for the three months ended December 31, 2000 and 1999, respectively. Support revenues have increased as a result of an increase in the number of customers supported by the Company. Service revenues were $17.5 million and $14.1 million for the three months ended December 31, 2000 and 1999, respectively. Services revenues are comprised of consulting and training services offered to customers, data normalization services, annual commerce fees and ASP fees. The increase in total service revenues is primarily attributable to a large contract for data normalization services. Demand-Side service revenues represented 78% and 98% of total services revenues for the three months ended December 31, 2000 and 1999, respectively. 13 14 COST OF REVENUES Three Months Three Months Ended CHANGE Ended (in thousands) 12/31/00 % 12/31/99 - -------------------------------------------------------------------------------- Software licenses $ 466 (29)% $ 659 Percentage of software licenses 4% 4% Support and services $16,069 28% $12,528 Percentage of support and services 56% 56% Total cost of revenues $16,535 25% $13,187 Percentage of total revenues 40% 35% Cost of software license revenues consists of software purchased for resale, royalties paid to vendors of third-party software, the cost of software product packaging and media, and certain employee costs related to software duplication, packaging and shipping. The decrease in the cost of software licenses revenues was due primarily to a decrease in the amount of royalties paid to Demand-Side third-party vendors. Cost of support and services consists primarily of personnel costs for employees and the related costs of benefits and facilities. Cost of support revenues were $2.8 million and $1.9 million for the three months ended December 31, 2000 and 1999, respectively. Cost of support revenues as a percentage of total support revenues were 25% and 23% for the three months ended December 31, 2000 and 1999, respectively. The increase is primarily attributable to an increase in personnel to support the increase in revenues for both the Demand- and Supply-Side segments. Cost of services revenues were $13.3 million and $10.6 million for the three months ended December 31, 2000 and 1999, respectively. The increase in cost of services is primarily attributable to utilization of third-party consultants to perform services related to a large Supply-Side contract, as well as, additional personnel hired to support the growth of the Supply-Side segment. Cost of services revenues as a percentage of total services revenues was 76% for both the three months ended December 31, 2000 and 1999. 14 15 OPERATING EXPENSES Three Months Three Months Ended CHANGE Ended (in thousands) 12/31/00 % 12/31/99 - -------------------------------------------------------------------------------- Sales and marketing $21,086 53% $13,821 Percentage of total revenues 51% 36% Product development $ 5,560 24% $ 4,495 Percentage of total revenues 13% 12% General and administrative $ 4,246 37% $ 3,095 Percentage of total revenues 10% 8% Goodwill amortization and other intangibles $ 3,636 205% $ 169 Percentage of total revenues 9% --- --- The increase in sales and marketing expenses was due to increases in sales, sales support and marketing personnel, sales commissions, market research, telemarketing expenses and higher travel costs. The additional sales support and marketing personnel were hired to support the MRO.COM e-commerce organization. The Company has made significant investments in the MRO.COM e-commerce sales and marketing organization. Also contributing to the increase in sales and marketing expenses is a one-time charge of $3.3 million for a warrant to i2 Technologies, Inc. ("i2"). In December 2000, the Company issued a warrant to i2 under which i2 has the right to purchase up to 500,000 shares of the Company's common stock at an exercise price of $10.25 per share. The Company valued the warrant using the Black-Scholes valuation model. The warrant was issued in connection with a strategic agreement between the two companies to resell each other's offerings and integrate their technologies to create a solution for the strategic maintenance, repair and operations market. During the three months ended December 31, 2000, the Company also wrote off a $1 million receivable owed by a company that had ceased operations. The increase in product development expenses was primarily due to an increase in employees through recruiting and acquisitions of businesses, and the cost of third-party research and development consultants. The additional personnel were hired and acquired to further enhance and develop e-commerce technologies. 15 16 The Company intends to continue to make investments in electronic commerce products for MRO supply chain management and e-procurement. The Company will also make further enhancements to its MAXIMO (Demand-Side) products. The increase in general and administrative expenses were primarily due to an increase in personnel through recruiting and acquisitions of businesses, as well as other expenses to support the increase in revenues and global expansion of the Company. The increase in goodwill amortization expense is attributable to the acquisitions of businesses completed during fiscal year ended September 30, 2000. There were no acquisitions in the three months ended December 31, 2000. NON-OPERATING EXPENSES Three Months Three Months Ended CHANGE Ended (in thousands) 12/31/00 % 12/31/99 - -------------------------------------------------------------------------------- Interest income $ 449 (52)% $ 937 Interest expense $ (79) 78% $ (1) Other income (expense) $ 275 (242)% $(194) Interest income is attributable to interest earned on marketable securities and cash equivalents from cash flow generated from operations including accounts receivable collections. The Company liquidated a portion of its marketable securities in March 2000 in order to complete the purchase of INTERMAT, Inc. and has thus earned less interest income from investments. The Company may decide to make further investments in marketable securities in the future. The increase in interest expense was due to interest paid on a line of credit of $2.3 million that the Company assumed upon completion of an acquisition in September 2000. The Company terminated and paid off the line of credit in full in December 2000. Other income was primarily attributable to currency translation gains recorded in the current quarter. 16 17 PROVISION FOR INCOME TAXES The Company's effective tax rate for the current quarter was a benefit of 14%. The Company will not be able to benefit from all of its losses due to the non-deductible nature of certain intangible and goodwill costs. Also, the $3.3 million marketing expense related to the warrant issued to i2 is not deductible for tax purposes. The company's effective tax rate was 35% for the comparable quarter. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2000, the Company had cash and cash equivalents and marketable securities of approximately $39.6 million and working capital of $48.5 million. Cash provided by operations for the three months ended December 31, 2000 was $6.2 million, primarily attributable to collection of outstanding accounts receivable. Cash provided by investing activities totaled $29 thousand, primarily attributable to sales of marketable securities, offset by capital expenditures related to purchases of financial software. Cash used in financing activities was $2.0 million. The Company paid down a $2.3 million line of credit during the current quarter. As of December 31, 2000, the Company's principal commitments consist primarily of office leases for its U.S. and European headquarters. Under the terms of the U.S. lease agreement, upon termination of the lease, the Company has the right to extend the lease for an additional six year term for an agreed upon fixed cost. The Company leases its facilities and certain equipment under non-cancelable operating lease agreements that expire at various dates through June 2006. The Company may use a portion of its cash to acquire additional businesses, products and technologies complementary to its business. The Company also plans to make investments over the next year in its e-commerce products. The Company believes that its current cash balances and marketable securities combined with cash flow from operations 17 18 will be sufficient to meet its working capital and capital expenditure requirements through at least September 30, 2001. FACTORS AFFECTING FUTURE PERFORMANCE The nature of forward-looking information is that such information involves significant assumptions, risks and uncertainties. Certain public documents of the Company and statements made by authorized officers, directors, employees, agents and representatives of the Company, acting on its behalf, may include forward-looking information which will be influenced by the factors described below, and by other assumptions, risks and uncertainties. Forward-looking information is based on assumptions, estimates, forecasts and projections regarding the Company's future results as well as the future effectiveness of the Company's strategic plans and future operational decisions. Forward-looking statements made by or on behalf of the Company are subject to the risk that the forecasts, projections, and expectations of management, or assumptions underlying such forecasts, projections and expectations, may become inaccurate. Accordingly, actual results and the Company's implementation of its plans and operations may differ materially from forward-looking statements made by or on behalf of the Company. The following discussion identifies certain important factors that could affect the Company's actual results and actions and could cause such results and actions to differ materially from any forward-looking statements made by or on behalf of the Company that related to such results and actions. Other factors, which are not identified herein, could also have such an effect. RAPID TECHNOLOGICAL CHANGE The computer software industry is characterized by rapid technological advances, changes in customer requirements and frequent product introductions and enhancements. The Company's success depends upon its ability to continue to enhance its current products and to develop and introduce new products that keep pace with technological developments, respond to evolving customer requirements and industry standards, and achieve market acceptance. In particular, the Company believes that it must continue to respond quickly to users' needs for new functionality and to advances in hardware and operating systems, and that it must continue to create products that conform to industry 18 19 standards regarding the communication and interoperability between software products of different vendors. Any failure by the Company to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product development or introduction, could result in a loss of competitiveness and revenues. There can be no assurance that the Company will be successful in developing and marketing new products or product enhancements, or that the Company will not experience significant delays in developing such new products or product enhancements. Such delays could have a material adverse effect on the Company's results of operations. In addition, there can be no assurance that new products and product enhancements developed by the Company will achieve market acceptance. DEPENDENCE ON MAXIMO A significant portion of the Company's revenues are derived from the licensing of its MAXIMO family of products and to related services and support. Revenues from licenses of MAXIMO and related services and support accounted for approximately 83% of the Company's total revenues in fiscal 2000, but declined in absolute dollar amount compared with fiscal 1999. The Company's financial performance in 2001 depends largely on continued market acceptance of MAXIMO, and the acceptance of its Demand-Side e-commerce procurement application MAXIMO Buyer. The Company believes that continued market acceptance of MAXIMO will largely depend on its ability to enhance and broaden the capabilities of MAXIMO by among other things, developing additional application modules and by developing and incorporating into the MAXIMO product technologies that are emerging in connection with the Internet. Any factor adversely affecting sales of MAXIMO, such as delays in development, significant software flaws, incompatibility with significant hardware platforms, operating systems or databases, increased competition or negative evaluations of MAXIMO, would have a material adverse effect on the Company's business and financial results. NEW PRODUCTS; NEW MARKETS In the first quarter of fiscal 2001, the Company repositioned its MRO.COM brand Internet-based business-to-business marketplace as mroDistributor, mroManufacturer and mroConnect, offering the suppliers of MRO goods and services the ability to drive and control their Internet-based e-commerce initiatives. 19 20 There can be no assurance that the Company's Supply-Side products will be sold successfully, or that the Company's Supply-Side products will achieve market acceptance. There is also no assurance that the Company and its customers will create a large enough community of sellers, connected to a large enough community of buyers, for the Company to achieve leverage and market synergy between its Demand-Side and Supply-Side products. The Company's future success in the electronic commerce market may depend on its ability to accurately determine the functionality and features required by its customers, as well as the ability to enhance its Supply-Side products and deliver them in a timely manner. The Company may incur substantial costs to enhance and modify its Supply-Side products and services in order to meet the demands of this growing and changing market. The Company's Supply-Side product segment is not yet profitable and may not be profitable for sometime. MAXIMO Extended Enterprise is now marketed to satisfy prospective customers' e-procurement requirements, and its pricing has been changed from user-based pricing to demand capacity pricing, where the customer purchases the right to process a certain number of transactions during the year. There can be no assurance that this pricing model will be accepted in the market, and sales of MAXIMO could be delayed or lost if the Company has to change its pricing model. MAXIMO Buyer is also offered to non-MAXIMO customers who wish to engage in e-procurement. The Internet e-procurement market is a nascent market that may undergo rapid technological change and rapid influx of competing technologies and vendors. The Company cannot predict the present and future size of the potential market for its MAXIMO Extended Enterprise and MAXIMO Buyer products, or whether the Demand-Side products will achieve acceptance in that market. FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY The Company has experienced, and may in the future experience, significant period-to-period fluctuations in revenues and operating results, which may negatively impact the price of our stock. The Company's revenues and income from operations typically grow at a lower rate or decline in the first quarter of each fiscal year, compared to the fourth quarter of the preceding fiscal year. In addition, revenues are typically higher in the fourth quarter than in other quarters of the year. The Company believes that these quarterly patterns are partly attributable to 20 21 the Company's sales commission policies, which compensate members of the Company's direct sales force for meeting or exceeding annual quotas. In addition, the Company's quarterly revenues and operating results have fluctuated historically due to the number and timing of product introductions and enhancements, the budgeting and purchasing cycles of customers, the timing of product shipments and the timing of marketing and product development expenditures. The Company typically realizes a significant portion of its revenue from sales of software licenses in the last two weeks of a quarter, frequently even in the last days of a quarter. Failure to close a small number of large software license contracts may have a significant impact on revenues for any quarter and could, therefore, result in significant fluctuations in quarterly revenues and operating results. Accordingly, the Company believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as an indication of future performance. The Company generally ships its products upon receipt of orders and maintains no significant product backlog. As a result, revenues from license fees in any quarter are substantially dependent on orders booked and shipped in that quarter. A delay in or loss of orders can cause significant variations in operating results. A significant portion of the Company's operating expenses is fixed in the short term, and planned expenditures are based primarily on sales forecasts. Accordingly, if revenues do not meet the Company's expectations in any given quarter, operating results may be materially adversely affected. COMPETITION The market for enterprise asset maintenance software such as MAXIMO is fragmented by geography, by hardware platform and by industry orientation, and is characterized by a large number of competitors including both independent software vendors and certain enterprise resource planning ("ERP") vendors. Independent software vendors include Datastream, Manugistics and Indus. MAXIMO also competes with integrated ERP systems which include integrated maintenance modules provided by several large vendors, such as SAP, Oracle and JD Edwards and others. Currently, MAXIMO competes with products of a number of large vendors, some of which have traditionally provided maintenance software running on mainframes and minicomputers and are now offering systems for use in the client/server environment. MAXIMO also encounters 21 22 competition from vendors of low cost maintenance management systems designed initially for use by a single user or limited number of users as vendors of these products upgrade their functionality to enter the client/server market. Some of the companies mentioned above have also developed e-procurement applications that are competitive with MAXIMO Buyer. The Company's Supply-Side business has many diverse competitors offering a wide range of differing products, services and technologies. The Company expects competition to intensify as current competitors expand their product offerings and new competitors enter the market. We may not remain competitive, and increased competition could seriously harm our business. Our competitors offer a variety of e-business products that compete with ours including supply chain and other core Supply-Side business. We may compete with vendors who have established electronic marketplaces and indirect procurement capabilities, such as Ariba and Commerce One. Other competitive factors include internal development efforts by corporate information technology departments and companies offering customized products. Certain of the Company's competitors have greater financial, marketing, service and support and technological resources than the Company. To the extent that such competitors increase their focus on the asset maintenance or planning and cost systems markets, or on the industrial supply chain market, the Company could be at a competitive disadvantage. INTERNATIONAL OPERATIONS A significant portion of the Company's total revenues is derived from operations outside the United States. The Company derived 39%, 46%, and 46% of its total revenue from sales outside the United States in fiscal years 2000, 1999, and 1998, respectively. The Company continues to invest in international infrastructure, global product functionality and translated versions of financial and other software products. In the event international expansion and/or product globalization efforts are not successful, the Company's business operating results and financial condition may be adversely affected. This international business is subject to various risks common to international activities, including exposure to currency fluctuations, greater difficulty in collecting accounts receivable, political and economic instability, the greater difficulty of administering business 22 23 abroad and the need to comply with a wide variety of foreign import and United States export laws and regulatory requirements. A significant portion of the Company's total revenue is derived from international operations that are conducted in foreign currencies. Changes in the values of these foreign currencies relative to the United States dollar have in the past adversely affected, and may in the future affect, the Company's results of operations and financial position. Gains and losses on translation to United States dollars and settlement of receivables from international subsidiaries may contribute to fluctuations in the Company's results of operations. To date, the Company has not engaged in currency hedging transactions. The Company may in the future undertake currency hedging, although there can be no assurance that hedging transactions, if entered into, would materially reduce the effects of fluctuations in foreign currency exchange rates on the Company's results of operations. DEPENDENCE ON THIRD PARTIES The Company has entered into nonexclusive license agreements with other third-party software developers, pursuant to which the Company incorporates into its products software providing certain application development, user interface, business intelligence, content and graphics capabilities developed by these companies. If the Company were unable to renew these licenses (or unable to renew them on commercially reasonable terms), or if any of such vendors were to become unable to support and enhance its products, the Company could be required to devote additional resources to the enhancement and support of these products or to acquire or develop software providing equivalent capabilities, which could cause delays in the development and introduction of products incorporating such capabilities. The Supply-Side operations, is dependent on Digital Island, a third-party data center, which could be destroyed or damaged. In addition, the Company must stay on good terms with this vendor, and be able to renew its agreement with this vendor on commercially reasonably terms. If this data center were to become inoperable or unavailable on commercially reasonable terms, the Company would incur significant expense, and potentially lose its ability to provide these services altogether during the period of downtime and transition, resulting in customer dissatisfaction and market rejection of its Supply-Side offerings. The Company's Supply-Side operations are dependent upon the Company's ability to protect 23 24 computer equipment and the information stored in these third-party data centers against damage that may be caused by natural disasters, fire, power loss, telecommunication or Internet failures, unauthorized intrusions, computer viruses and other similar damaging events. The Company cannot assure that any of these damaging events would not result in a prolonged outage of the Company's network services or that the Company would not experience a reduction of revenues or unexpected expenses which could have a material adverse effect on our business and financial results. HOSTING The Company does not have extensive experience in hosting applications. We may not adequately predict the flow of traffic. If we do not predict the volume of traffic adequately, we may experience slower response times or other problems. Any delays in response time or performance problems could cause our customers to perceive this service as not functioning properly and they may discontinue use of our products and services. The Company's success and profitability in its Supply-Side business is dependent on the Company's ability to increase the scaleability and performance of its Supply-Side solutions, meaning that the Company must be able to host and operate a large number of mroDistributor, mroManufacturer and mroConnect product instances on a single computer using multiple processors. This is because the Company incurs fixed costs associated with the hosting environment, regardless of how many, or how few, Supply-Side products are hosted at the same time. If the Company is unable to host a certain number of Supply-Side solutions per computer, then the Supply-Side business may not become profitable for a long time. Moreover, if the Company is not able to operate a large number of Supply-Side product instances on the same computer without denigrating product performance, the Supply-Side solutions may not gain customer acceptance and market penetration. ERRORS IN DATA The Company needs to publish accurate catalog data, as this is critical to our customers' businesses. Our content management tools help suppliers manage the collection and publication of catalog content. Any defects or errors in these tools, or in the 24 25 catalog data produced by using them, could deter businesses from utilizing our Supply-Side solutions. PRODUCT DEVELOPMENT: INTERNET The Company has developed a Java-based component architect software application to incorporate into the MAXIMO product technologies emerging in conjunction with the Internet. Internet technologies and applications generally are developing and gaining acceptance rapidly in the market. MRO supply chain management using electronic commerce is a nascent market with many standards and technologies remaining to be developed. Accordingly, developing technologies pose risks to the Company. The Company believes that electronic commerce products and technologies complement the Company's enterprise asset management products. There can be no assurance that the Company will successfully anticipate trends in this market, that the Company will be successful in Internet technology development or acquisition efforts or that the Company's Internet applications, if developed, will achieve market acceptance. INTERNET RELATED RISKS If Internet usage continues to grow rapidly, its infrastructure may not be able to support customer and user demands and its performance and reliability may decline. If outages, delays, or viruses on the Internet occur frequently or increase in frequency, overall Internet usage including usage of the Company's products and services could grow more slowly or decline. The Company is dependent upon improvements being made to the entire Internet as well as to particular customers' networking infrastructures to alleviate overloading and congestion. If these improvements are not made, the ability of the Company's customers to utilize the Company's solution will be hindered, and the Company's business, operating results and financial condition may suffer. LIMITED INTELLECTUAL PROPERTY PROTECTION The Company's success is dependent upon its proprietary technology. The Company currently has one patent and protects its technology primarily through copyrights, trademarks, trade secrets and employee and third party nondisclosure agreements. The Company's software products are sometimes licensed to 25 26 customers under "shrink wrap" or "click wrap" licenses included as part of the product packaging or acknowledged by customers who register on-line. Although, in larger sales, the Company's shrink-wrap and click wrap licenses may be accompanied by specifically negotiated agreements signed by the licensee, in many cases its shrink-wrap and click wrap licenses are not negotiated with or signed by individual licensees. Certain provisions of the Company's shrink-wrap and click wrap licenses, including provisions protecting against unauthorized use, copying, transfer and disclosure of the licensed program, may be unenforceable under the laws of certain jurisdictions. In addition, the laws of some foreign countries do not protect the Company's proprietary rights to the same extent, as do the laws of the United States. There can be no assurance that the steps taken by the Company to protect its proprietary rights will be adequate to prevent misappropriation of its technology or development by others of similar technology. Although the Company believes that its products and technology do not infringe on any valid claim of any patent or any other proprietary rights of others, there can be no assurance that third parties will not assert infringement claims in the future. Litigation may be necessary to enforce the Company's intellectual property rights, to protect the Company's trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could potentially have a material adverse result on our operating results and financial condition. DEPENDENCE ON KEY PERSONNEL The Company is highly dependent on certain key executive officers, technical and sales employees, and the loss of one or more of who could have an adverse impact on the future operations of the Company. The Company does not have employment contracts with, and does not maintain key person life insurance policies on, any personnel. The Company continues to hire a significant number of additional sales, services and technical personnel. Competition for hiring of such personnel in the software industry is intense, and the Company from time to time experiences difficulty in locating candidates with the appropriate qualifications within the desired geographic locations, or with certain industry specific domain expertise. It is widely believed that the technology industry is at or beyond a condition of full employment. There can be no assurance that the Company will be 26 27 able to retain its existing personnel or attract additional qualified employees. CERTAIN RISKS ASSOCIATED WITH ACQUISITIONS As part of its overall strategy, the Company plans to continue to acquire or invest in complementary companies, products, or technologies and to enter into joint ventures and strategic alliances with other companies. There can be no assurance that the Company will be successful in overcoming the risks associated or problems encountered in connection with such business combinations, investments, or joint ventures, or that such transactions will not materially adversely affect the Company's business, financial condition, or operating results. POSSIBLE CONTINUED VOLATILITY OF STOCK PRICE Fiscal 1999 and 2000 was marked by significant fluctuations in the market price of the common stock, par value $.01 per share, of the Company (the "Common Stock"). Factors such as announcements of technological innovations or new products by the Company, its competitors and other third parties, as well as quarterly variations in the Company's results of operations and market conditions in the industry, may cause the market price of the Common Stock to continue to fluctuate significantly. In addition, the stock market in general has recently experienced substantial price and volume fluctuations, which have particularly affected the market prices of many software and e-commerce companies and which have often been unrelated to the operating performance of such companies. These broad market fluctuations also may adversely affect the market price of the common stock. NO REVISIONS OR UPDATES TO FORWARD-LOOKING STATEMENTS The Company has no obligation to release publicly any revision or update to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 27 28 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary exposures to market risk are the effect of fluctuations in interest rates earned on its cash equivalents and marketable securities and exposures to foreign currency exchange rate fluctuations. At December 31, 2000, the Company held $39.6 million in cash equivalents and marketable securities consisting of taxable and tax exempt municipal securities. Cash equivalents are classified as available for sale and valued at amortized cost, which approximates fair market value. A hypothetical 10 percent increase in interest rates would not have a material impact on the fair market value of these instruments due to their short maturity. The Company develops its products in the United States and markets them in North America, Europe, Middle East and Africa, Australia, Asia Pacific and Latin America. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Currently, the Company has no hedging contracts. 28 29 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Amended and Restated Articles of Organization of the Company (included as Exhibit 3.3 to the Company's Registration Statement on Form S-1, File No. 0-23852, and incorporated herein by reference) 3.2 Restated By-Laws of the Company, as amended (included as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1996, File No. 0-23852 and incorporated herein by reference) 3.3 Form of Certificate of Designation of Series A Junior Participating Preferred Stock of Project Software & Development, Inc. (which is attached as Exhibit A to the Rights Agreement included as Exhibit 4(b) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 3.4 Amendment to Articles of Organization adopted on December 15, 1999 (included as Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, File No. 0-23852, and incorporated herein by reference) 3.5 Restated By-Laws of the Company, as amended 4. Instruments defining the Rights of Security Holders, Including Indentures 4.1 Specimen certificate for the Common Stock of the Company (included as Exhibit 4.1 to the Company's Registration Statement on Form S-1, Registration No. 33-76420, and incorporated herein by reference) 4.2 Article 4B of the Amended and Restated Articles of Organization of the Company (included as Exhibit 4.1 to the Company's Registration Statement on Form S-1, Registration No. 33-76420, and incorporated herein by reference) 4.3 Rights Agreement dated as of January 27, 1998, between Project Software & Development, Inc. and BankBoston, N.A. as Rights Agent (included as Exhibit 4 (a) to the Company's 29 30 Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 4.4 Form of Certificate of Designation of Series A Junior Participating Preferred Stock of Project Software & Development, Inc. (included as Exhibit 4 (b) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 4.5 Form of Rights Certificate (included as Exhibit 4 (c) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 10. Material Contracts 10.1 i2 Technologies, Inc. warrant (b) Reports on Form 8-K There were no current reports filed on Form 8-K for the three months ended December 31, 2000. 30 31 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROJECT SOFTWARE & DEVELOPMENT, INC. Date: February 14, 2001 By: /s/ Peter J. Rice ----------------- ------------------------ Peter J. Rice Executive Vice President - Finance and Administration, Chief Financial Officer and Treasurer (Principal Financial Officer) 31 32 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE 3.1 Amended and Restated Articles of Organization of the Company (included as Exhibit 3.3 to the Company's Registration Statement on Form S-1, Registration No. 33-76420, and incorporated herein by reference) 3.2 Restated By-Laws of the Company, as amended (included as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1996 File No. 0-23852 and incorporated herein by reference) 3.3 Form of Certificate of Designation of Series A Junior Participating Preferred Stock of Project Software & Development, Inc. (which is attached as Exhibit A to the Rights Agreement included as Exhibit 4 (b) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 3.4 Amendment to Articles of Organization adopted on December 15, 1999 (included as Exhibit 3.4 to the Company's Form 10-Q for the quarter ended December 31, 1999, File No. 0-23852, and incorporated herein by reference) 3.5 Restated By-Laws of the Company, as amended 4.1 Specimen certificate for the Common Stock of the Company (included as Exhibit 4.1 to the Company's Registration Statement on Form S-1, Registration No. 33-76420, and incorporated herein by reference) 4.2 Article 4B of the Amended and Restated Articles of Organization of the Company (included as Exhibit 4.1 to the Company's Registration Statement on Form S-1, Registration No. 33-76420, and incorporated herein by reference) 4.3 Rights Agreement dated as of January 27, 1998, between Project Software & Development, Inc. and BankBoston, N.A. as Rights Agent (included as Exhibit 4 (a) to the Company's Current Report on Form 8-K dated February 2, 1998, File No.0-23852, and incorporated herein by reference) 4.4 Form of Certificate of Designation of Series A Junior Participating Preferred Stock of Project Software & Development, Inc. (included as Exhibit 4 (b) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 4.5 Form of Rights Certificate (included as Exhibit 4 (c) to the Company's Current Report on Form 8-K dated February 2, 1998, File No. 0-23852, and incorporated herein by reference) 32 33 9.1 1996 Daniels Voting Trust Agreement dated August 19, 1996 among Susan H. Daniels, Robert L. Daniels and Robert L. Daniels, as Trustee (included as Exhibit 9.1 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 19996, and incorporated herein by reference)File No. 0-23852 and incorporated herein by reference) 10.1 i2 Technologies, Inc. warrant 33 EX-3.5 2 b38314aqex3-5.txt BY LAWS OF PROJECT SOFTWARE & DEVELOPMENT,INC 1 EXHIBIT 3.5 BY-LAWS of PROJECT SOFTWARE & DEVELOPMENT, INC. ARTICLE I Articles of Organization The name and purposes of the Corporation shall be as set forth in the Articles of Organization. These By-Laws, the powers of the Corporation and its Directors and Stockholders, and all matters concerning the conduct and regulation of the business of the Corporation, shall be subject to such provisions in regard thereto, if any, as are set forth in the Articles of Organization. All references in these By-Laws to the Articles of Organization shall be construed to mean the Articles of Organization of the Corporation as from time to time amended or restated. ARTICLE II Fiscal Year Except as from time to time otherwise determined by the Directors, the fiscal year of the Corporation shall begin on the first day of October in each year and end on the last day of September next following. ARTICLE III Meetings of Stockholders Section 3.1. Annual Meetings. The annual meeting of Stockholders shall be held on the first Tuesday in March of 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 Board of Directors or the President. The purposes for which the annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization or these By-Laws, may be specified by the Board of Directors or the President. If no annual meeting has been held on the date fixed above, or by adjournment therefrom, a special meeting in lieu thereof may be held and any action taken at such special meeting shall have the same force and effect as if taken at the annual meeting. Notwithstanding any other provision in these By-Laws, the Board of Directors may change the date, time and location of any annual or special meeting of the Stockholders (other than a special meeting called upon the written application of Stockholders (a "Meeting Requested by Stockholders")) prior to the time for such meeting, including, without limitation, by postponing or deferring the date of any such annual or special meeting (other than a Meeting Requested by Stockholders) previously called or by cancelling any special meeting previously called (other than a Meeting Requested by Stockholders). 2 Section 3.2. Special Meetings. (a) Subject to the rights of the holders of any class or series of preferred stock of the Corporation, special meetings of the Stockholders entitled to vote may be called by the Board of Directors or the Chairman of the Board of Directors or the President. (b) If the Corporation shall not have a class of voting stock registered under the Securities Exchange Act of 1934, as amended, special meetings of the Stockholders entitled to vote shall be called by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more Stockholders who are entitled to vote and who hold at least ten percent (10%) in interest of the capital stock entitled to vote at the meeting. (c) If the Corporation shall have a class of voting stock registered under the Securities Exchange Act of 1934, as amended, special meetings of the Stockholders entitled to vote shall be called by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more Stockholders who are entitled to vote and who hold at least eighty percent (80%) in interest of the capital stock entitled to vote at the meeting. Section 3.3. Place of Meetings. All meetings of the Stockholders shall be held at the principal office of the Corporation in Massachusetts, unless a different place within Massachusetts or, if permitted by the Articles of Organization, elsewhere within the United States is designated by the President or by a majority of the Directors acting by vote or by written instrument or instruments signed by them. Any adjourned session of any meeting of the Stockholders shall be held at such place within Massachusetts or, if permitted by the Articles of Organization, elsewhere within the United States as is designated in the vote of adjournment. Section 3.4. Notice of Meetings. A written notice of the place, date and hour of all meetings of Stockholders stating the purposes of the meeting shall be given at least ten (10) days before the meeting to each Stockholder entitled to vote thereat and to each Stockholder who is otherwise entitled by law, the Articles of Organization or these By-Laws to such notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to such Stockholder at his address as it appears in the records of the Corporation. Such notice shall be given by the Clerk, or in case of the death, absence, incapacity, or refusal of the Clerk, by any other officer or by a person designated either by the Clerk, by the person or persons calling the meeting or by the Board of Directors. If notice is given by mail, such notice shall be deemed given when dispatched. If notice is not given by mail and is given by leaving such notice at the Stockholder's residence or usual place of business, it shall be deemed given when so left. Whenever notice of a meeting is required to be given to a Stockholder under any provision of law, of the Articles of Organization, or of these By-laws, a written waiver thereof, executed -2- 3 before or after the meeting by such Stockholder or his attorney thereunto authorized, and filed with the records of the meeting, shall be deemed equivalent to such notice. Every Stockholder who is present at a meeting (whether in person or by proxy) shall be deemed to have waived notice thereof. A waiver of notice of any meeting need not specify the purposes of such meeting. Section 3.5. Notice of Stockholder Business at a Meeting of the Stockholders. The following provisions of this Section 3.5 shall apply to the conduct of business at any meeting of the Stockholders. (As used in this Section 3.5, the term annual meeting shall include a special meeting in lieu of an 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 3.5, who is entitled to vote at such meeting and who complies with the notice procedures set forth in paragraph (b) of this Section 3.5. (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 Section 3.5, 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 to and received at the principal executive offices of the Corporation (i) in the case of an annual meeting, not less than sixty (60) days prior to the date specified in Section 3.1 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 3.1 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 (10th) 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 (1Oth) 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 (w) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (x) 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, (y) the class and number of shares of the Corporation which are owned 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 to be supporting such proposal, and (z) any material interest of such Stockholder of record and/or of the beneficial owner, if any, on whose behalf the proposal is -3- 4 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 this By-Law. 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 provisions 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. Section 3.6. Quorum. At any meeting of the Stockholders, a quorum shall consist of a majority in interest of all stock issued and outstanding and entitled to vote at the meeting; except that if two or more classes or series of stock are outstanding and entitled to vote on any matter as separate classes or series, then in case of each such class or series a quorum for that matter shall consist of a majority in interest of all stock of that class or series issued, outstanding and entitled to vote, except when a larger quorum is required by law, by the Articles of Organization or by these ByLaws. Stock owned directly or indirectly by the Corporation, if any, shall not be deemed outstanding for this purpose. Any meeting of the Stockholders may be adjourned from time to time to any other time and to any other place by a majority of the votes properly cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. Any business which could have been transacted at any meeting of the Stockholders as originally called may be transacted at any adjournment thereof. Section 3.7. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, a majority of the stock of that class present or represented and entitled to vote and voting) upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the Articles of Organization or by these ByLaws. No ballot shall be required for any election unless requested by a Stockholder present or represented at the meeting and entitled to vote in the election. The Corporation shall not directly or indirectly vote any share of its stock. Nothing in this section shall be construed to limit the right -4- 5 of the Corporation to vote any shares of stock held directly or indirectly by it in a fiduciary capacity. Section 3.8. Voting. Stockholders entitled to vote shall have one vote for each share of stock entitled to vote held by them of record according to the records of the Corporation and a proportionate vote for a fractional share, unless otherwise provided or required by law, the Articles of Organization or these By-Laws. The vote for each share of jointly-held stock shall be cast in accordance with the decision of a majority of the Stockholders jointly holding said share. Section 3.9. Action by Consent. 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 consents shall be treated for all purposes as a vote at a meeting. Section 3.10. Proxies. Stockholders entitled to vote may vote either in person or by proxy in writing dated not more than six (6) months before the meeting named therein, which proxies shall be filed with the Clerk or other person responsible to record the proceedings of the meeting before being voted. Unless otherwise specifically limited by their terms, such proxies shall entitle the holders thereof to vote at any adjournment of such meeting but shall not be valid after the final adjournment of such meeting. Proxies need not be sealed or attested. Notwithstanding the foregoing, a proxy coupled with an interest sufficient in law to support an irrevocable power, including, without limitation, an interest in the stock 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. A proxy with respect to stock held in 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. Section 3.11. Conduct of Business. The Chairman of the Board of Directors or his designee, or, if there is no Chairman of the Board or such designee, then the President or his designee, or, if the office of President shall be vacant, then a person appointed by a majority of the Board of Directors, shall preside at any meeting of Stockholders as the chairman of the meeting. In addition to his powers pursuant to Section 3.5(c), the person presiding at any meeting of Stockholders shall determine the order of business and the procedures at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him in order. -5- 6 ARTICLE IV Directors Section 4.1. Powers. The business of the Corporation shall be managed by a Board of Directors who shall have and may exercise all the powers of the Corporation except as otherwise reserved to the Stockholders by law, by the Articles of Organization or by these By-Laws. In the event of a 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. Without limiting the generality of the foregoing, the Board of Directors shall have the power, unless otherwise provided by law, to purchase and to lease, pledge, mortgage and sell all property of the Corporation (including to issue or sell the stock of the Corporation) and to make such contracts and agreements as they deem advantageous, to fix the price to be paid for or in connection with any property or rights purchased, sold, or otherwise dealt with by the Corporation, to borrow money, issue bonds, notes and other obligations of the Corporation, and to secure payment thereof by mortgage or pledge of all or any part of the property of the Corporation. The Board of Directors may determine the compensation of Directors. The Board of Directors or such officer or committee as the Board of Directors may designate, may determine the compensation and duties, in addition to those prescribed by these By-Laws, of all officers, agents and employees of the Corporation. Section 4.2. Enumeration, Election, and Term of Office. The Board of Directors, which shall be not less than three Directors, shall be composed of such number as shall be fixed from time to time by vote of a majority of the entire Board of Directors; provided, however, that no decrease in the number comprising the entire Board of Directors made pursuant to this Section 4.2 shall shorten the term of any incumbent director. The Board of Directors shall be divided into three classes, as nearly equal in number as possible. The Directors need not be stockholders. At each annual meeting of stockholders, 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 or until their earlier resignation, death or removal; provided, that in the event of failure to hold such an annual meeting or to hold such election at such meeting, the election of directors may be held at any special meeting of the stockholders called for that purpose. Directors, except those appointed by the Board of Directors to fill vacancies, shall be elected by a plurality vote of the stockholders, voting by ballot either in person or by proxy. As used in these By-Laws, the expression "entire Board of Directors" means the number of directors in office at a particular time. Section 4.3. Nomination of Directors. The following provisions of this Section 4.3 shall apply to the nomination of persons for election to the Board of Directors at any meeting of stockholders. -6- 7 (a) Nominations of persons for election to the Board of Directors of the Corporation may be made (i) by or at the direction of the Board of Directors or (ii) by any Stockholder of the Corporation who is a Stockholder of record at the time of giving of notice provided for in paragraph (b) of this Section 4.3, who is entitled to vote for the election of Directors at the meeting and who complies with the notice procedures set forth in paragraph (b) of this Section 4.3. (b) Nominations by Stockholders shall be made pursuant to timely notice in writing to the Clerk of the Corporation. To be timely, a Stockholder's notice shall be delivered to or mailed to and received at the principal executive offices of the Corporation, not less than sixty (60) days prior to the date specified in Section 3.1 above for the 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 3.1 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 (10th) day following the earlier of the day 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. Such Stockholder's notice shall set forth (x) as to each person whom the Stockholder proposes to nominate for election or reelection as a Director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or pursuant to any other then existing statute, rule or regulation applicable thereto (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); (y) as to the Stockholder giving the notice (1) the name and address, as they appear on the Corporation's books, of such Stockholder and (2) the class and number of shares of the Corporation which are beneficially owned by such Stockholder and also which are owned of record by such Stockholder; and (Z) as to the beneficial owner, if any, on whose behalf the nomination is made, (1) the name and address of such person and (2) the class and number of shares of the Corporation which are beneficially owned by such person. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee as a Director. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Clerk of the Corporation that information required to be set forth in a Stockholder's notice of nomination which pertains to the nominee. (c) No person shall be eligible to serve as a Director of the Corporation unless nominated in accordance with the procedures set forth in this By-Law. The person presiding at the meeting shall, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed by these By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions 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. -7- 8 Section 4.4. Regular Meetings. Regular meetings of the Board of Directors may be held at such times and places within or without The Commonwealth of Massachusetts as the Board of Directors may fix from time to time and, when so fixed, no notice thereof need be given, provided that any Director who is absent when such times and places are fixed shall be given notice of the fixing of such times and places. The first meeting of the Board of Directors following the annual meeting of the Stockholders may be held without notice immediately after and at the same place as the annual meeting of the Stockholders or the special meeting held in lieu thereof. If in any year a meeting of the Board of Directors is not held at such time and place, any action to be taken may be taken at any later meeting of the Board of Directors with the same force and effect as if held or transacted at such meeting. Section 4.5. Special Meetings. Special meetings of the Directors may be held at any time and at any place designated in the call of the meeting, when called by the President or the Treasurer or by one or more Directors, reasonable notice thereof being given to each Director by the Clerk or an Assistant Clerk, or by the officer or one of the Directors calling the meeting. Section 4.6. Notice. It shall be reasonable and sufficient notice to a Director to send notice by mail at least forty-eight (48) hours or by telegram or facsimile at least twenty-four (24) hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four (24) hours before the meeting. Notice of a meeting need not be given to any Director if a written waiver of notice, executed by him 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. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. Section 4.7. Quorum; Action at a Meeting. At any meeting of the Directors, a quorum for any election or for the consideration of any question shall consist of a majority of the Directors then in office. Whether or not a quorum is present any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, the votes of a majority of the Directors present shall be requisite and sufficient for election to any office and shall decide any question brought before such meeting, except in any case where a larger vote is required by law, by the Articles of Organization or by these By-Laws. -8- 9 Section 4.8. 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 and the written consents are filed with the records of the meetings of the Directors. Such consent shall be treated for all purposes as a vote of the Directors at a meeting. Section 4.9. Committees. The Board of Directors, by vote of a majority of the Directors then in office, may elect from its number an Executive Committee or other committees, composed of such number of its members as it may from time to time determine (but in any event not less than two), and may delegate thereto some or all of its powers except those which by law, by the Articles of Organization, or by these By-Laws may not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these By-Laws for the Board of Directors. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall upon request report its action to the Board of Directors. The Board of Directors shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect. Section 4.10. Telephone Conference Meetings. Any member of the Board of Directors or any committee thereof may participate in a meeting of such Board of Directors or committee thereof by means of a conference telephone (or similar communications equipment) call, 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. ARTICLE V Officers and Agents Section 5.1. Enumeration; Qualification. The officers of the Corporation shall be a Chief Executive Officer, a President, a Treasurer, a Clerk, and such other officers, if any, as the incorporators at their initial meeting, or the Directors from time to time, may in their discretion elect or appoint. The Corporation may also have such agents, if any, as the incorporators at their initial meeting, or the Directors from time to time, may in their discretion appoint. None of the officers of the Corporation need be a resident of Massachusetts if the Corporation has a resident agent appointed for the purpose of service of process. Any two or more offices may be held by the same person. Any officer may be required by the Directors to give bond for the faithful performance of his duties to the -9- 10 Corporation in such amount and with such sureties as the Directors may determine. The premiums for such bonds may be paid by the Corporation, Section 5.2. Powers. Subject to law, to the Articles of Organization and to the other provisions of these By-Laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such duties and powers as the Directors may from time to time designate. Section 5.3. Election. The President, the Treasurer and the Clerk shall be elected annually by the Directors at their first meeting following the annual meeting of the Stockholders or special meeting in lieu thereof. Other officers, if any, may be elected or appointed by the Board of Directors at said meeting or at any other time. Section 5.4. Tenure. Except as otherwise provided by law or by the Articles of Organization or by these By-Laws, the President, the Treasurer and the Clerk shall hold office until the first meeting of the Directors following the next annual meeting of the Stockholders or special meeting in lieu thereof and until their respective successors are chosen and qualified, and each other officer shall hold office until the first meeting of the Directors following the next annual meeting of the Stockholders and until their respective successors are chosen and qualified, unless a different period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed, or becomes disqualified. Each agent shall retain his authority at the pleasure of the Directors. Section 5.5. Chairman and Vice Chairman of the Board. The Board of Directors may annually elect a Chairman and may annually elect a Vice Chairman of the Board. Unless the Board of Directors otherwise provides, the Chairman of the Board shall be the Chief Executive Officer of the Corporation and shall preside, when present, at all meetings of the Stockholders, of the Board of Directors, and of any committee of the Board of Directors to which he shall have been elected. Section 5.6. Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general supervision and control of the Corporation's business. Section 5.7. President and Vice President. The President shall have such powers and shall perform such duties as the Board of Directors may from time to time designate and shall serve as the Chief Executive Officer of the -10- 11 Corporation if there is no Chairman of the Board. Unless otherwise provided by the Board of Directors, he shall preside, when present, at all meetings of the Stockholders and of the Board of Directors if a Chairman of the Board has not been elected or if the Chairman of the Board does not attend such meetings. Any Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate. Section 5.8. Treasurer and Assistant Treasurer. The Treasurer shall, subject to the direction of the Board of Directors, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. He shall have custody of all funds, securities and valuable documents of the Corporation, except as the Board of Directors may otherwise provide. Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate. Section 5.9. Clerk and Assistant Clerks. The Clerk shall keep a record of the meetings of Stockholders. In the event there is no Secretary or he is absent, the Clerk or an Assistant Clerk shall keep a record of the meetings of the Board of Directors. In the absence of the Clerk from any meeting of 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. Section 5.10. Secretary. The Secretary, if one be elected or appointed, shall keep a record of the meetings of the Board of Directors. In the absence of the Secretary, the Clerk and any Assistant Clerk, a Temporary Secretary shall be designated by the person presiding at such meeting to perform the duties of the Secretary. ARTICLE VI Resignations, Removals and Vacancies Section 6.1. Resignations. Any Director or officer may resign at any time by delivering his resignation in writing to the President or the Clerk or to a meeting of the Directors. Such resignation shall take effect at such time as is specified therein, or if no such time is so specified then upon delivery thereof. Section 6.2. Removals. (a) At any meeting of the Stockholders called for the purpose any Director may be removed from office with or without cause by the vote of a majority of the shares issued, -11- 12 outstanding and entitled to vote in the election of Directors. At any meeting of the Board of Directors any Director may be removed from office 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. (b) The Directors may remove any officer from office with or without cause by vote of a majority of the Directors then in office. An officer may be removed for cause only after a reasonable notice and opportunity to be heard before the body proposing to remove him. The Directors may terminate or modify the authority of any agent or employee. (c) Except as the Directors may otherwise determine, no Director or officer who resigns or is removed shall have any right to any compensation as such Director or officer for any period following his resignation or removal, or any right to damages on account of such removal whether his compensation be by the month or by the year or otherwise, provided, however, that the foregoing provision shall not prevent such Director or officer from obtaining damages for breach of any contract of employment legally binding upon the Corporation. Section 6.3. Vacancies. Subject to the Articles of Organization, any vacancy in the Board of Directors, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the Directors then in office or, in the absence of such election by the Directors, by the Stockholders at a meeting called for the purpose; provided, however, that, subject to the provisions of Section 4.3 of these By-Laws, any vacancy resulting from action by the Stockholders may be filled by the Stockholders at the same meeting at which such action was taken by them. If the office of any officer becomes vacant, the Directors may elect or appoint a successor by vote of a majority of the Directors present at the meeting at which such election or appointment is made. Each such successor shall hold office for the unexpired term of his predecessor and until his successor shall be elected or appointed and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. ARTICLE VII Stock Section 7.1. Issue of Authorized Unissued Capital Stock. Any unissued capital stock from time to time authorized under the Articles of Organization may be issued by vote of the Directors. No such stock shall be issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received by, or conveyed or rendered to, the Corporation, or is in its possession as surplus. -12- 13 Section 7.2. Certificates of Stock. Each Stockholder shall be entitled to a certificate in a form selected by the Board of Directors stating the number and the class and the designation of the series, if any, of the shares held by him, except that the Board of Directors may provide by resolution that some or all of any or all classes and series of shares of the Corporation shall be uncertificated shares, to the extent permitted by law. Such certificate shall be signed by the President or a Vice President and the Treasurer or an Assistant Treasurer. 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 were such officer at the time of its issue. Every certificate for shares of stock 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 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 certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series authorized to be issued 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. Section 7.3. Transfers. Subject to the restrictions, if any, imposed by the Articles of Organization, these By-Laws or any agreement to which the Corporation is a party, shares of stock shall be transferred on the books of the Corporation only by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment of such shares or by a written power of attorney to sell, assign or transfer such shares, properly executed, with necessary transfer stamps affixed, and with such proof that the endorsement, assignment or power of attorney is genuine and effective as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, 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 post office address. Section 7.4. Lost, Mutilated or Destroyed Certificates. Except as otherwise provided by law, the Board of Directors may determine the conditions upon which a new certificate of stock may be issued in place of any certificate alleged -13- 14 to have been lost, mutilated, or destroyed. It may, in its discretion, require the owner of a lost, mutilated or destroyed certificate, or his legal representative, to give a bond, sufficient in its opinion, with or without surety, to indemnify the Corporation against any loss or claim which may arise by reason of the issue of a certificate in place of such lost, mutilated, or destroyed stock certificate. Section 7.5. Transfer Agent and Registrar. The Board of Directors may appoint a transfer agent or a registrar or both for its capital stock of any class or series thereof and require all certificates for such stock to bear the signature or facsimile thereof of any such transfer agent or registrar. Section 7.6. Setting Record Date and Closing Transfer Records. The Board of Directors may fix in advance a time not more than sixty (60) days before: (i) the date of any meeting of the Stockholders; or (ii) the date for the payment of any dividend or the making of any distribution to Stockholders; or (iii) 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 and to vote at such meeting or any adjournment thereof, or the right to receive such dividend or distribution, or the right to give such consent or dissent. If a record date is set, only Stockholders of record on the 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 Board of Directors may close the transfer records of the Corporation for all or any part of such sixty (60) day period. If no record date is fixed and the transfer books are not closed, then 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. ARTICLE XIII Miscellaneous Provisions Section 8.1. Execution of Papers. All deeds, leases, transfers, contracts, licenses, bonds, notes, releases, checks, drafts and other obligations authorized to be executed on behalf of the Corporation shall be signed by the Chief Executive Officer, President or the Treasurer except as the Directors may generally or in particular cases otherwise determine. Section 8.2. Voting of Securities. Except as the Directors may generally or in particular cases otherwise specify, the Chief Executive Officer, President or the Treasurer may on behalf of the Corporation vote or take any -14- 15 other action with respect to shares of stock or beneficial interest of any other corporation, or of any association, trust or firm, of which any securities are held by this Corporation, and may appoint any person or persons to act as proxy or attorney-in-fact for the Corporation, with or without power of substitution, at any meeting thereof. Section 8.3. Corporate Seal. The seal of the Corporation shall be a circular die with the name of the Corporation, the word "Massachusetts" and the year of its incorporation cut or engraved thereon, or shall be in such other form as the Board of Directors may from time to time determine. Section 8.4. Corporate Records. The original, or attested copies, of the Articles of Organization, By-Laws and records of all meetings of the 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 its 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. Section 8.5. Evidence of Authority. A certificate by the Clerk or Secretary or an Assistant or temporary Clerk or Secretary as to any matter relative to the Articles of Organization, By-Laws, records of the proceedings of the incorporators, Stockholders, Board of Directors, or any committee of the Board of Directors, or stock and transfer records or as to any action taken by any person or persons as an officer or agent of the Corporation, shall as to all persons who rely thereon in good faith be conclusive evidence of the matters so certified. Section 8.6. Right to Repurchase. Except as otherwise provided by law, the Articles of Organization or by these By-Laws (including any amendments thereto), the Corporation, through its Board of Directors, shall have the right and power to repurchase any of its outstanding shares at such price and upon such terms as may be agreed upon between the Corporation and the selling Stockholder(s), or the predecessor(s) in interest thereof. Section 8.7. Dividends. Unless otherwise required by the Massachusetts Business Corporation Law or the Articles of Organization, the Board of Directors may declare and pay dividends upon the shares -15- 16 of capital stock of the Corporation, which dividends may be paid either in cash, securities of the Corporation or other property. Section 8.8. Ratification. Any action taken on behalf of the Corporation by the Directors or any officer or representative of the Corporation which requires authorization by the Stockholders or the Directors of the Corporation shall be deemed to have been authorized if subsequently ratified by the Stockholders entitled to vote or by the Directors, as the case may be, at a meeting held in accordance with these By-laws. Section 8.9. Reliance Upon Books, Records and Reports. Each Director or officer of the Corporation shall be entitled to rely on information, opinions, reports or records, including financial statements, books of account and other financial records, in each case presented by or prepared by or under the supervision of (i) one or more officers or employees of the Corporation whom the Director or officer reasonably believes to be reliable and competent in the matters presented, (ii) counsel, public accountants or other persons as to matters which the Director or officer reasonably believes to be within such person's professional or expert competence, or (iii) in the case of a Director, a duly constituted committee of the Board of Directors upon which he does not serve, as to matters within its delegated authority, which committee the Director reasonably believes to merit confidence, but he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. The fact that a Director or officer so performed his duties shall be a complete defense to any claim asserted against him by reason of his being or having been a Director or officer of the Corporation, except as expressly provided by statute. Section 8.10. Control Share Acquisition. Until such time as this section shall be repealed or these By-Laws shall be amended to provide otherwise, including, without limitation, during any time that the Corporation shall be an "issuing public corporation" as defined in Chapter 110D of the Massachusetts General Laws, the provisions of Chapter 110D of the Massachusetts General Laws shall not apply to "control share acquisitions" of the Corporation within the meaning of said Chapter 110D. -16- 17 ARTICLE IX Amendments Except as otherwise provided in the Articles of Organization, these By-Laws may be amended or repealed in whole or in part by the affirmative vote of the holders of eighty percent (80%) of the shares of each class of the capital stock at the time outstanding and entitled to vote at any annual or special meeting of Stockholders, provided that notice of the substance of the proposed amendment is stated in the notice of such meeting. If authorized by the Articles of Organization, the Directors may make, amend or repeal the By-Laws, in whole or in part, except with respect to any provision thereof which by law, the Articles of Organization or the By-Laws required 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 adopted, amended or repealed by the Directors may be repealed, amended or reinstated by the affirmative vote of the holders of eighty percent (80%) of the shares of each class of the capital stock at the time outstanding and entitled to vote on amending the By-Laws. -17- EX-10.1 3 b38314aqex10-1.txt I2 TECHNOLOGIES, INC. WARRANT 1 EXHIBIT 10.1 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT BY REGISTRATION OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933 ACT AND THE STATE ACTS. Common Stock December 31, 2000 WARRANT To Purchase 500,000 Shares of Common Stock of PROJECT SOFTWARE & DEVELOPMENT, INC. 1. GRANT OF WARRANT. THIS IS TO CERTIFY THAT i2 Technologies, Inc., a Delaware corporation, or its registered assigns (the "HOLDER"), is entitled to exercise this Warrant to purchase from Project Software & Development, Inc., a Massachusetts corporation (the "COMPANY"), 500,000 shares of Common Stock, $.01 par value, of the Company (the "COMMON STOCK"), all on the terms and conditions and pursuant to the provisions hereinafter set forth. This Warrant is being granted pursuant to the terms of that certain Business Partnership and Bilateral Reseller Agreement (the "AGREEMENT") dated as of the date hereof by and among Holder and the Company, and the Company and the Holder intend to be bound hereby and thereby. 2. EXERCISE PRICE AND ADJUSTMENTS. (a) EXERCISE PRICE. The exercise price per share of Common Stock shall be $10.25 (the "EXERCISE PRICE"). (b) STOCK SPLITS; DIVIDENDS AND COMBINATIONS. If the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on its outstanding shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such subdivision or to the issuance of such stock dividend shall be proportionately increased, and the Exercise Price shall be proportionately decreased, and in the event that the Company shall at any time combine the outstanding shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such combination shall be proportionately decreased, and the Exercise Price shall be proportionately increased, effective at the close of business on the date of such subdivision, stock dividend or combination, as the case may be. 2 3. EXERCISE. This Warrant may be exercised in whole or in part at any time or from time to time after the date hereof and on and until the earlier to occur of (a) June 30, 2003, or (b) 180 days after the expiration or termination of the Agreement by either party for any reason (such earlier date being the "EXPIRATION DATE"). In order to exercise this Warrant, in whole or in part, the Holder hereof shall deliver to the Company at its principal office, or at such other office as shall be designated by the Company in writing: (a) written notice of the Holder's election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased pursuant to such exercise; (b) either (i) cash payable to the order of the Company, (ii) upon the prior agreement with the Company pursuant to Section 4 below, if required, notice that the Exercise Price is satisfied by reduction of the number of shares to be received by the Holder upon exercise of this Warrant as provided in SECTION 4 below, with the amount of such reduction specified in such notice, (iii) some combination of the consideration identified in (i) and (ii); in each case such cash payment or reduction of shares to be such number of shares as have a fair market value equal to the aggregate purchase price for all shares of Common Stock to be purchased pursuant to such exercise; and (c) this Warrant, properly endorsed. The date that all such items are received by the Company is referred to as the "Exercise Date". Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within 10 days thereafter, execute or cause to be executed and deliver to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise. The stock certificate or certificates so delivered shall be registered in the name of the Holder. Such shares may be issued via electronic transfer to the Holder's designated account. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a Holder of record of such shares for all purposes, as of the date that said notice, together with said payment, if any, and this Warrant, is received by the Company as aforesaid. The Holder of this Warrant shall not, by virtue of its ownership of this Warrant, be entitled to any rights of a stockholder in the Company, either at law or in equity; PROVIDED, HOWEVER, the Holder shall, for all purposes, be deemed to have become the holder of record of such shares on the date on which this Warrant is surrendered to the Company in the immediately preceding sentence. If the exercise is for less than all of the shares of Common Stock issuable as provided in the Warrant, the Company will issue a new Warrant of like tenor and date for the balance of such shares issuable hereunder to the Holder. The Holder of this Warrant, by its acceptance hereof, consents to and agrees to be bound by and to comply with all of the provisions of this Warrant. 4. "CASHLESS" EXERCISE. At the option of the Holder during the Pre-Registration Period (defined below), after receipt by the Company of the items required under Section 3 above, the Holder may exercise this Warrant without a cash payment of the Exercise Price for up to half of the shares of Common Stock in each instance (up to 250,000 shares in total) underlying this Warrant. 3 During the Pre-Registration Period, the Holder may exercise this Warrant without a cash payment for more than half of the shares of Common Stock (250,000 shares) underlying this Warrant only with the written consent of Company. After the expiration of the Pre-Registration Period, this Warrant will be exercisable in cash or in kind as determined by the Company in its sole discretion. To the extent that this Warrant is exercised without cash payment, the non-cash portion of the total Exercise Price shall be paid by reducing the number of the shares of Common Stock issuable to the Holder upon such exercise by the number of shares having a fair market value equal to the non-cash portion of the amount of the total Exercise Price for such exercise. Fair market value will be calculated as the weighted average closing price of the Company's common stock for the trailing five day period ending on the Exercise Date. In such instance, no cash or other consideration will be paid by the Holder in connection with such exercise for the shares of Common Stock subject to this provision other than the surrender of the Warrant itself, and no commission or other remuneration will be paid or given by the Holder or the Company in connection with such exercise. If such exercise results in only a partial exercise of this Warrant, then the Company shall deliver to the Holder a new Warrant evidencing the remaining rights under the Warrant, as provided in SECTION 3 above. As used herein, the term "Pre-Registration Period" means the period of time beginning upon the execution of this Warrant and ending upon the earlier of (i) all of the shares of Common Stock underlying this Warrant having been registered pursuant to the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "SECURITIES ACT"), or (ii) the expiration of the waiting period under Rule 144 of the Securities Act. 5. TAXES. The issuance of any Common Stock or other certificate upon the exercise of this Warrant shall be made without charge to the registered Holder hereof, or for any tax in respect of the issuance of such certificate. 6. TRANSFER. This Warrant is not transferable, in whole or in part, without the Company's written consent, which may be withheld or denied by the Company in its reasonable discretion; PROVIDED, HOWEVER, that such consent shall not be required in the event that Holder desires to transfer this Warrant to any of its affiliates. If the Company so consents or such consent is not required, this Warrant may be transferred as to all or any part of the number of shares of Common Stock purchasable upon its exercise, by the Holder hereof in person or by its duly authorized attorney on the books of the Company upon surrender of this Warrant at the principal offices of the Company, together with the form of transfer authorization attached hereto duly executed. The Company shall deem and treat the registered Holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. If this Warrant is transferred in part, the Company shall at the time of surrender of this Warrant, issue to the transferee a Warrant covering the number of shares of Common Stock transferred and to the transferor a Warrant covering the number of shares not transferred. 7. CASH IN LIEU OF FRACTIONAL SHARES. The Company shall not be required to issue fractional shares upon the exercise of this Warrant. If the Holder of this Warrant would be entitled, upon the exercise of any rights evidenced hereby, to receive a fractional interest in a share, the Company shall pay the value of such fractional share within 30 days. 8. REGISTRATION RIGHTS. The Common Stock into which this Warrant is exercisable is subject to registration rights as provided in that certain Registration Rights Agreement by and 4 between Holder and the Company, to be negotiated between the parties within five (5) days after the date hereof. 9. RESERVATION OF SHARES. The Company will, at all times prior to the Expiration Date, reserve and keep available such number of authorized shares of its Common Stock, solely for the purpose of issue upon the exercise of the rights represented by this Warrant as herein provided for, as may at any time be issuable upon the exercise of this Warrant. 10. APPLICABLE LAW. THIS WARRANT SHALL BE INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE INTERNAL LAWS OF THE STATE OF DELAWARE. 11. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the Holder hereof and shall be enforceable by any such Holder. In the event that, with the prior written consent of the Company or if such consent is not required, this Warrant is sold, transferred or assigned, the transferor will give written notice within 15 days following the sale, assignment, or transfer to the Company and in such notice designate the name and address of the transferee. 12. REPRESENTATIONS AND WARRANTIES BY THE HOLDER. The Holder represents and warrants to the Company as follows: (a) This Warrant is being acquired for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Act. (b) The Holder understands that this Warrant and the underlying shares have not been registered under the Securities Act of 19333, as amended (the "ACT"), by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Act pursuant to Section 4(2) thereof, and that they must be held by the Holder indefinitely, and that the Holder must therefore bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Act or is exempted from such registration. (c) The Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of this Warrant and the underlying shares purchasable pursuant to the terms of this Warrant and of protecting its interests in connection therewith. (d) The Holder is able to bear the economic risk of the purchase of the underlying shares pursuant to the terms of this Warrant. (e) The Holder is an "accredited investor" within the meaning of Regulation D under the Act. (f) The Holder understands that the Shares shall be deemed "restricted" securities 5 under the Act and may not be resold unless they are registered thereunder and under any applicable state securities law, or in the opinion of counsel, in form and substance satisfactory to the Company, an exemption from such registration is available. IN WITNESS WHEREOF, the parties have caused this Warrant to be duly executed and the Company has caused this Warrant to be duly issued. PROJECT SOFTWARE & DEVELOPMENT, INC. I2 TECHNOLOGIES, INC. By: By: -------------------------- -------------------------- Name: Name: ------------------------- --------------------------- Title: Title: ------------------------- --------------------------- 6 SUBSCRIPTION FORM (To be executed only upon exercise of Warrant) The undersigned registered owner of this Warrant irrevocably exercises this Warrant for and purchases ________ shares of Common Stock of Project Software & Development, Inc. purchasable with this Warrant, and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to the Holder, whose address is ________________________________, and if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable thereunder to be delivered to the undersigned. DATED: ___________, ______ i2 TECHNOLOGIES, INC. By: --------------------------------- Name: ------------------------------- Title: ----------------------------- Address: ---------------------------- ---------------------------- ---------------------------- 7 ASSIGNMENT FORM FOR VALUE RECEIVED, but subject to the prior written consent of the Company, which may be withheld or denied for any reason, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Common Stock set forth below: No. of Shares Name & Address of Assignee Common Stock -------------------------- ------------- and does hereby irrevocably constitute and appoint as Attorney __________________________ to register such transfer on the books of _____________________________ maintained for the purpose, with full power of substitution in the premises. DATED: ____________, _____. By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatever. -----END PRIVACY-ENHANCED MESSAGE-----