Restricted stock purchases must be at a price equal to at least 85% of the stock's fair market value on the award date, but stock bonuses may be awarded in consideration of past services without a purchase payment. The Company's strategy is to continue to focus on the Java language in order to expand its suite of Java class libraries and related development tools. International revenue accounted for approximately 19% of total revenue in fiscal 1996 and 23% of total revenue for the nine months ended June 30, 1997. The Company currently leases other domestic sales, development and support offices in New York and North Carolina. These potential competitors have well-established relationships with current and potential customers and have the resources to enable them to more easily offer a single vendor solution. Under those provisions, the Company did not pay federal or state corporate income taxes on its income.
You represent and warrant that you have been authorized by each of the other Underwriters to enter into this Agreement on its behalf and to act for it in the manner herein provided. The Company also expects that competition will increase as a result of software industry consolidation. The Company is working to solidify its place as a leader in the newly developing Java tools market by developing additional products for Java. The Company has spent and will continue to devote resources on the development of new and enhanced products that address the Java market. Object Factory uses source drivers to control code generation. These potential competitors have well-established relationships with current and potential customers and have the resources to enable them to more easily offer a single vendor solution. Cost of service and maintenance revenue consists primarily of personnel-related and facilities costs incurred in providing customer support and training services, as well as third-party costs incurred in providing training services.
To the extent this trend continues, the failure to achieve such revenue during the last days of any given quarter will have a material adverse effect on the Company's business, financial condition and results of operations. Any failure by the Company to anticipate or respond adequately to changes in technology and customer preferences, or any significant delays in product development or introduction, would have a material adverse effect on the Company's business, financial condition and results of operations. More recently, the Company announced its intention to move its administrative operations from its current location in Corvallis, Oregon to Boulder, Colorado during fiscal 1998. The Company anticipates its fiscal 1997 effective tax rate will be approximately 34%; however, this rate could change based on a change in the percentage of total income derived from international sources. The increase in service and maintenance revenue was primarily attributable to increased sales volume of the Company's support and maintenance services, as well as an increase in consulting revenue as a result of the establishment of the Company's consulting business group in Boulder, Colorado in April 1997.
A sophisticated enterprise-wide information system can allow a company to take advantage of new markets before a competitor, reduce operating expenses and increase ties with suppliers and customers. The stock option was amended to make it consistent with the terms of stock options granted to other officers. Although the Company has not experienced material adverse effects resulting from any such errors to date, there can be no assurance that, despite testing by the Company and by current and potential customers, errors will not be found in new products or releases after commencement of commercial shipments, resulting in loss of revenue or delay in market acceptance, diversion of development resources, the payment of monetary damages, damage to the Company's reputation, or increased service and warranty costs, any of which could have a material adverse effect upon the Company's business, financial condition and results of operations. Notwithstanding the provisions of this paragraph d , no Underwriter shall be required to contribute any amount in excess of the underwriting discount applicable to the Stock purchased by such Underwriter. Shares subject to stock awards that have expired or otherwise terminated without having been exercised in full again become available for the grant of awards under the Equity Incentive Plan. In addition, the Company's Certificate of Incorporation provides that, to the fullest extent permitted by Delaware law, the Company's directors will not be liable for monetary damages for breach of the directors' fiduciary duty of care to the Company and its stockholders. Employees are eligible to participate if they are employed by the Company or an affiliate of the Company designated by the Board of Directors.
The Company anticipates that it will continue to devote substantial resources to product development and that product development expenses will increase in dollar amount through fiscal 1998 as the Company continues to increase its product development capacity, although the Company does not believe such expenses will increase as a percentage of total revenue. Copies of such material can be obtained in person at prescribed rates from the Public Reference Section of the Commission at its principal office located at 450 Fifth Street, N. Revenue from service contracts sold in conjunction with product sales is also recognized at the time of sale. . The Company faces direct competition in the Java market from Borland, JavaSoft a business unit of Sun Microsystems , Microsoft, Sybase, Symantec and other companies for its current Java products and it expects to face significant competition in the future from such companies with respect to other Java products the Company may introduce.
In April 1997, the Company established a consulting group in Boulder, Colorado consisting of 15 employees. These increases in service and maintenance revenue were generally attributable to the growing installed base of the Company's products and the associated increase in demand for maintenance and training services. It manages the details of data representation, enabling the programmer to concentrate on application development. . Accordingly, the Company has charged all such costs to product development expense. Common Stock offered by the Company.
In addition, the Company will port key products to the Rational Apex development environment. For example, using a standard object for database connectivity allows a programmer to develop an application without regard to the low level details of programming to any particular database while allowing the freedom to switch between different database vendors. The Company believes that in order to increase sales opportunities and profitability it will be required to expand its international operations. The decrease in product development expenses as a percentage of total revenue was primarily due to the higher growth in total revenue relative to the growth of product development expenses. The zApp Application Framework, which is built on top of the Tools. Most of the Company's software parts have been written to be cross-platform.
The Preferred Stock could be issued with voting, liquidation, dividend and other rights superior to those of the Common Stock. Any object it creates contains mouse sensitivity. The Company provides customers with proven object-oriented development technology so that they can better apply the principles of software reuse to their own software development efforts. In particular, the Company has recently acquired a European distributor with offices and personnel in several European countries. The Underwriters reserve the right to reject an order for the purchase of shares in whole or in part. The Company has duly filed a Nasdaq National Market Notification Form for Listing of Additional Shares and a Form 10-C with respect to the sale and issuance of the Stock in accordance with the rules and regulations of the National Association of Securities Dealers, Inc.
The Registrant's Certificate of Incorporation provides for the elimination of liability for monetary damages for breach of the directors' fiduciary duty of care to the Registrant and its stockholders. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Company also intends to develop strategic partnerships, extend its technological leadership, promote the enterprise-wide adoption of Rogue Wave products and expand its worldwide distribution. The Company's products are used by programmers to develop software applications for organizations in a wide variety of industries. The Company bundles its Tools. The Inmark graphical user interface library is currently being marketed by Rogue Wave as a component of its Visual User Interface family of products.
The Company believes that its existing facilities are adequate for its current needs and that suitable additional or alternative space will be available in the future on commercially reasonable terms as needed. The higher percentages of cost of service and maintenance revenue as a percentage of service and maintenance revenue for fiscal 1995 reflect the fact that the increase in such costs occurred prior to an anticipated increase in demand. Software development technologies and methods have not kept pace with the increasing reliance on software systems. Employees who participate in an offering can have up to 15% as determined by the Board for each offering of their earnings withheld pursuant to the Purchase Plan and applied, on specified dates determined by the Board of Directors, to the purchase of shares of Common Stock. Software applications can also be developed using software parts and programming tools in environments other than C++ or Java. The Equity Incentive Plan replaces the Company's 1994 Stock Option Plan and the Inmark Stock Option Plan.