<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ADVANCED BIOTHERAPY CONCEPTS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ADVANCED BIOTHERAPY CONCEPTS, INC.
6355 TOPANGA CANYON BOULEVARD, SUITE 510
WOODLAND HILLS, CALIFORNIA 91367
(818) 883-3956
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 24, 2000
TO THE STOCKHOLDERS OF ADVANCED BIOTHERAPY CONCEPTS, INC.:
The Annual Meeting of Stockholders of Advanced Biotherapy Concepts, Inc., a
Nevada corporation (the "Company"), will be held on Thursday, August 24, 2000,
at 4:00 p.m. local time at the Marriott Hotel, Los Angeles International
Airport, 5855 West Century Boulevard, Los Angeles, California 90045, for the
following purposes:
1. To elect eight (8) directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors are elected and
qualified, or until death, resignation or removal.
2. To approve and adopt the Agreement of Merger pursuant to which the Company
will be merged into its new, wholly-owned Delaware subsidiary resulting in
the reincorporation of the Company to Delaware from Nevada, the adoption of
a new corporate name, "Advanced Biotherapy, Inc.," the adoption of the
Certificate of Incorporation and the Bylaws of Advanced Biotherapy, Inc.,
which have the effect of adopting certain measures affecting stockholders'
rights, increasing the authorized number of shares of common stock to
100,000,000 shares and authorizing 20,000,000 shares of preferred stock.
3. To approve an amendment to the Company's Articles of Incorporation to
increase the authorized number of shares of common stock to 100,000,000
shares and to authorize 20,000,000 shares of preferred stock.
4. To approve an amendment to the Company's Articles of Incorporation to
change the Company's name to "Advanced Biotherapy, Inc."
5. To approve the authority of the Board of Directors, which authority is
contingent upon the Board of Directors making a determination within one
year after the Annual Meeting that such action is in the best interest of
the Corporation's stockholders, to effect a decrease in the number of
issued and outstanding shares of the Corporation's common stock (or shares
of Advanced Biotherapy, Inc. common stock if Proposal 2 shall be approved)
by means of a reverse stock split in a range not to exceed a one-for-four
reverse split.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
DRAFT - June 20, 2000
Page 1 of 38
<PAGE> 3
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on June 30, 2000, as
the record date for the determination of Stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournment or postponement thereof.
Only Stockholders of record as of the close of business on such date are
entitled to notice of and to vote in person or by proxy at the Annual Meeting.
By Order of the Board of Directors
Edmond Buccellato
President and Chief Executive Officer
Woodland Hills, California
July ____, 2000
All Stockholders are invited to attend the Annual Meeting in person, but even if
you expect to be present at the Annual Meeting, sign, date and return the
enclosed proxy card as promptly as possible in the postage-paid envelope
provided to ensure your representation at the Annual Meeting. Even if you have
given your proxy, you may still vote in person if you attend the Annual Meeting.
Please note, however, that if your shares are held of record by a broker, bank
or other nominee and you wish to vote at the Annual Meeting, you must obtain
from the record holder a proxy issued in your name.
DRAFT - June 20, 2000
Page 2 of 38
<PAGE> 4
ADVANCED BIOTHERAPY CONCEPTS, INC.
6355 TOPANGA CANYON BOULEVARD, SUITE 510
WOODLAND HILLS, CALIFORNIA 91367
PROXY STATEMENT
GENERAL
The enclosed proxy is solicited by the Board of Directors of Advanced
Biotherapy Concepts, Inc., a Nevada corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Thursday, August 24, 2000, at 4:00
p.m. local time (the "Annual Meeting"), and at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Marriott Hotel, Los
Angeles International Airport, 5855 West Century Boulevard, Los Angeles,
California 90045. This Proxy Statement and accompanying proxy card are being
mailed to the stockholders of the Company, on or about July __, 2000.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The only class of voting securities of the Company is its common stock, par
value $.001 per share (the "Common Stock"). Only holders of record of the
Company's Common Stock at the close of business on June 30, 2000 (the "Record
Date") will be entitled to notice of, and to vote at, the Annual Meeting. On the
Record Date, the Company had 39,398,265 shares of Common Stock outstanding. Each
share of Common Stock outstanding as of the Record Date is entitled to one vote
at the Annual Meeting.
As of the Record Date, there were approximately 3,200 beneficial owners,
according to information provided by American Stock Transfer & Trust, the stock
transfer agent of the Company.
The nominees for election to the Board of Directors who receive the
greatest number of votes cast for the election of Directors by the shares
present, in person or by proxy, shall be elected Directors. Holders of Common
Stock are not allowed to cumulate their votes in the election of Directors, and,
therefore, the holders of more than 50% of the shares of Common Stock, could, if
they chose to do so, elect all of the directors of the Company. Proposals 2, 3,
4, and 5 require the affirmative vote of at least a majority of the shares of
Common Stock present in person or by proxy at the Annual Meeting and entitled to
vote at the Meeting.
A majority of the outstanding shares of Common Stock present, in person or
represented by proxy constitutes a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions will be counted toward the tabulations of votes casted
on proposals presented to the stockholders and will have the same effect as
negative votes, whereas broker non-votes will not be counted for purposes of
determining whether a proposal has been approved. In the election of directors,
an abstention or broker non-vote will have no effect on the outcome.
DRAFT - June 20, 2000
Page 3 of 38
<PAGE> 5
PROXIES
Shares for which proxy cards are properly executed and returned will be
voted at the Annual Meeting in accordance with the instructions specified
thereon. If the proxy does not specify how the shares represented thereby are to
be voted, the proxy will be voted "FOR" the election of each of the nominees to
the Board of Directors, unless the authority to vote for the election of such
director is withheld and, if no contrary instructions are given, the proxy will
be voted "FOR" the approval of Proposals 2, 3, 4 and 5 described in the
accompanying Notice and Proxy Statement. You may revoke or change your Proxy at
any time before the Annual Meeting by filing with the Secretary of the Company
at the Company's offices at 6355 Topanga Canyon Boulevard, Suite 510, Woodland
Hills, California 91367, a notice of revocation or another signed Proxy with a
later date. You may also revoke your Proxy by attending the Annual Meeting and
voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to Stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of common stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of common stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telecopier or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals which Stockholders wish to be considered for inclusion in the
proxy statement and proxy card for the Company's 2001 Annual Meeting must be
received by the Secretary of the Company no later than March __, 2001, and must
comply with the requirements of Rule 14a- 8 under the Securities Exchange Act of
1934, as amended.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of May 31,
2000, by (i) all persons who are beneficial owners of five percent (5%) or more
of the Company's Common Stock, (ii) each director and nominee for director,
(iii) the executive officers of the Company; and (iv) all current directors and
executive officers of the Company as a group. Except as otherwise indicated, the
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole vesting and investment
power with respect to such shares.
DRAFT - June 20, 2000
Page 4 of 38
<PAGE> 6
<TABLE>
<CAPTION>
Number of Shares
Including Options,
Warrants and Percentage
Name and Address of Owner Convertible Securities Position of Shares
------------------------- ---------------------- -------- ---------
<S> <C> <C> <C>
Simon V. Skurkovich 5,992,770[1] Chairman of the Board 14.86%
802 Rollins Avenue of Directors
Rockville, MD 20852
Edmond Buccellato 2,141,343[2] President and Chief 5.40%
6716 Faust Avenue Executive Officer,
West Hills, CA 91307 Director
Boris V. Skurkovich 4,547,020[3] Director 11.45%
18 Blaisdell Avenue
Pawtucket, RI 01860
Joseph Bellanti 600,000[4] Director 1.51%
607 Corewood Lane
Bethesda, MD 20816
Larry Loomis 1,725,000[5] Director 4.37%
9110 Red Branch Rd.
Columbia, MD 21045
Leonard Millstein 3,665,159[6] Director 9.27%
1677 Calle Alta
La Jolla, CA 92037
Richard Eamer -0- Director 0.00%
2400 Broadway Avenue, Suite 500
Santa Monica, CA 90404
Paul J. Marangos 100,000[7] Director .25%
7402 Cadencia Street
Carlsbad, CA 92009
Alexander L. Cappello 1,315,061[8] Director 3.23%
1299 Ocean Ave., Suite 306
Santa Monica, CA 90401
John M. Bendheim 100,000[9] Director .25%
2001 S. Barrington St., Suite 100
Los Angeles, CA 90025
Jeanne Kelly 1,714,500[10] Secretary/Treasurer 4.31%
4515 Willard Avenue
Chevy Chase, MD 20815
All officers and directors 21,900,853 50.55%
as a group (11 persons)
</TABLE>
DRAFT - June 20, 2000
Page 5 of 38
<PAGE> 7
[1] Includes options to purchase up to 300,000 shares of common stock at an
exercise price of $0.10 per share, and options to purchase up to 623,000
shares of common stock at an exercise price of $0.10 per share.
[2] Shares held in the name of Edmond Buccellato (1,754,000 shares), Edmond and
Leana Buccellato Family Trust (153,000 shares), Edmond Buccellato and Leana
Buccellato FBO the Buccellato Living Trust (20,000 shares), Amy Buccellato
(8,400 shares) and Matthew Buccellato (10,490 shares). Includes options to
purchase up to 50,000 shares of common stock at an exercise price of $0.10
per share and options to purchase up to 50,000 shares of common stock at an
exercise price of $0.20 per share. Includes options to purchase up to
105,543 shares of common stock at an exercise price of $0.10 per share.
[3] Shares held in the name of Boris Skurkovich (2,075,020 shares), Carol
Marjorie Dorros (550,000 shares) Samuel Skurkovich (501,000 shares), and
Samuel Aaron Skurkovich (1,121,000 shares). Includes options to purchase up
to 100,000 shares of common stock at an exercise price of $0.01 per share;
options to purchase up to 150,000 shares of common stock at an exercise
price of $0.02 per share, and options to purchase 50,000 shares of common
stock at an exercise price of $0.10 per share.
[4] Includes options to purchase up to 10,000 shares of common stock at an
exercise price of $0.20 per share and options to purchase up to 350,000
shares of common stock at an exercise price of $0.01 per share. All of the
foregoing options have been assigned to I Care Foundation.
[5] Shares held in the name of Larry Loomis (1,325,000 shares) and new Horizons
Diagnostics, Inc. (200,000 shares). Includes options to purchase up to
75,000 shares of common stock at an exercise price of $0.20 per share and
options to purchase up to 10,000 shares of common stock at an exercise
price of $0.10 per share.
[6] Shares held in the names of Leonard Millstein (465,100 shares), Ellen
Millstein (1,278,359 shares), William Millstein (888,350 shares) and Melvin
Millstein (908,350 shares). Includes options to purchase up to 125,000
shares of common stock at an exercise price of $0.20 per share.
[7] Warrants held in the name of Paul J. Marangos to purchase 100,000 shares of
common stock at an exercise price of $0.25 per share of common stock.
[8] Includes warrants held in the name of Alexander L. Cappello to purchase
100,000 shares of common stock at an exercise price of $0.25 per share of
common stock and 1,115,061 shares at an exercise price of $0.15 per share
of common stock. Includes the right to acquire 100,000 shares of common
stock upon conversion of convertible demand notes, at a conversion price of
$0.25 per share.
DRAFT - June 20, 2000
Page 6 of 38
<PAGE> 8
[9] Warrants held in the name of John M. Bendheim to purchase 100,000 shares of
common stock at an exercise price of $0.25 per share of common stock.
[10] Includes options to purchase up to 150,000 shares of common stock at an
exercise price of $0.01 per share and options to purchase up to 100,000
shares of common stock at an exercise price of $0.10 per share and options
to purchase up to 50,000 shares of common stock at an exercise price of
$0.20 per share. Includes options to purchase up to 114,500 shares of
common stock at an exercise price of $0.10 per share.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation paid and accrued by the
Company since January 1, 1997 through December 31, 1999, for each officer and
director of the Company. No cash compensation and no other compensation was
received by officers and directors in 1999.
This information includes the dollar value of base salaries, bonus awards
and number of stock options granted, and certain other compensation, if any.
SUMMARY ACCRUED COMPENSATION TABLE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Annual Securities LTIP All Other
Principal Bonus Compensation Restricted Stock Underlying Payouts Compensation
Position Year Salary ($) ($) ($) Awards(s) ($) Options/SARs (#) ($) ($)
-------- ---- ---------- --- --- ------------- ---------------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Simon 1999 $100,000
Skurkovich 1998 $100,000 0 0 0 0 0 0
Chairman 1997 $150,000 0 0 0 0 0 0
Edmond 1999 $ 75,000
Buccellato 1998 $ 50,000 0 0 0 0 0 0
President 1997 $100,000 0 0 0 0 0 0
Boris 1999 0
Skurkovich 1998 0 0 0 0 0 0 0
Vice 1997 0 0 0 0 0 0 0
President
Joseph 1999 0
Bellanti 1998 0 0 0 0 0 0 0
Vice 1997 0 0 0 0 0 0 0
President
Lawrence 1999 0
Loomis 1998 0 0 0 0 0 0 0
Director 1997 0 0 0 0 0 0 0
Jeanne 1999 $45,000
Kelly 1998 0 0 0 0 0 0 0
Secretary/ 1997 $45,000 0 0 0 0 0 0
Treasurer
Leonard 1999
Millstein 1998 0 0 0 0 0 0 0
Director 1997 0 0 0 0 0 0 0
Richard 1999
Eamer 1998 0 0 0 0 0 0 0
Director 1997 0 0 0 0 0 0 0
</TABLE>
DRAFT - June 20, 2000
Page 7 of 38
<PAGE> 9
The Company anticipates paying the following salaries in 2000, subject to
the Company generating sufficient revenues and/or raising sufficient capital to
pay the same:
<TABLE>
<S> <C> <C>
Simon Skurkovich Chairman of the Board $ 80,000
Edmond Buccellato President and Chief Executive $ 120,000
Officer
Boris Skurkovich Vice President $ 30,000
Jeanne Kelly Secretary/Treasurer $ 15,000
</TABLE>
There are no retirement, pension, or profit sharing plans for the benefit
of the Company's officers and directors. The Company has granted non-qualified
stock options for the benefit of certain officers and directors. The aggregate
number of shares of Common Stock under option held by directors and officers as
of May 31, 2000, was 2,767,953.
OPTION/SAR GRANTS
The following grants of stock options, whether or not in tandem with stock
appreciation rights ("SARs") and freestanding SARs have been made to officers
and/or directors:
<TABLE>
<CAPTION>
Number of Securities Number
Number of Securities Underlying Options/ Exercise or of
Underlying Options SARS Granted During Base Price Options Expiration
Name SARS Granted Last 12 Months [1] ($/Share) Exercised Date
---- ------------ ------------------ --------- --------- ----
<S> <C> <C> <C> <C> <C>
Simon Skurkovich 300,000 0 $0.10 -0- 12/31/05
623,000 623,000 $0.10 -0- 12/31/05
Edmond Buccellato 50,000 0 $0.10 -0- 12/31/05
50,000 0 $0.20 -0- 12/31/05
105,453 105,453 $0.10 -0- 12/31/05
Boris Skurkovich 100,000 0 $0.01 -0- 12/31/05
150,000 0 $0.20 -0- 12/31/05
50,000 0 $0.10 -0- 12/31/05
Jeanne Kelly 150,000 0 $0.20 -0- 02/25/01
150,000 0 $0.01 -0- 02/01/03
50,000 0 $0.20 -0- 02/25/01
100,000 0 $0.10 -0- 12/01/05
114,500 114,500 $0.10 -0- 12/31/05
Laurence Loomis 100,000 0 $0.20 -0- 02/25/05
75,000 0 $0.20 -0- 02/25/05
25,000 0 $0.10 -0- 12/01/05
Leonard Millstein 100,000 0 $0.20 -0- 01/25/01
25,000 0 $0.20 -0- 02/25/01
Joseph Bellanti 100,000 0 $0.20 -0- 02/25/01
350,000 0 $0.01 -0- 11/20/05
</TABLE>
DRAFT - June 20, 2000
Page 8 of 38
<PAGE> 10
LONG-TERM INCENTIVE PLAN AWARDS
The Company does not have any long-term incentive plans that provide
compensation intended to serve as incentive for performance, other than a Stock
Bonus Plan adopted by the Company on January 11, 2000. The purpose of the Stock
Bonus Plan is to keep personnel of experience and ability in the employ of the
Company and to compensate them for their contributions to the growth of the
Company.
COMPENSATION OF DIRECTORS
Directors did not receive any compensation for serving as members of the
Board of Directors for the year ending December 31, 1999. The Board has not
implemented a plan to award options or shares to any Directors, except pursuant
to the Stock Bonus Plan approved by the Board of Directors on or about January
11, 2000. Under the Stock Bonus Plan, certain directors and officers were
awarded, in the aggregate, 9.2 million shares of the Company's Common Stock at a
price of $0.05 per share. The awards were made on January 11, 2000. Such stock
bonuses were issued at the weighted average price at which the Company had been
selling shares of Common Stock to third parties during the six months
immediately preceding the issuance of the bonus shares, or $0.05 per share.
Consideration for the purchase of such shares was in the form of a note in favor
of the Company issued by each director and officer to whom the Common Stock was
awarded. There are no other contractual arrangements with any member of the
Board of Directors, except as set forth in this Proxy Statement. See "Certain
Relationships and Related Transactions" below.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999, the Board of Directors did
not hold any formal meetings; however, the Board of Directors acted by written
consent. The Board has no Audit Committee nor Compensation Committee. Board
members receive no compensation for attendance at meetings except reimbursement
of expenses. The Board at large serves as the Nominating Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Simon Skurkovich, M.D., the Company's Chairman of the Board of Directors
and a shareholder of the Company advanced funds to pay a significant portion of
the Company's expenses since 1989. At December 31, 1999, the cumulative amounts
owed to Dr. Skurkovich by the Company for expenses paid by him on behalf of the
Company was $262,776, and $1,255,962 for unpaid salaries and accrued interest.
In consideration for writing off the unpaid salaries of $1,246,000 owed Dr.
Skurkovich as of December 31, 1999, the Board of Directors approved the grant of
non-qualified stock options to purchase 623,000 shares of Common Stock at an
exercise price of $0.10 per share, exercisable at any time between January 1,
2000 and December 31, 2005. The Company is currently indebted to Dr. Skurkovich
in the amount of $327,631.
DRAFT - June 20, 2000
Page 9 of 38
<PAGE> 11
Edmond Buccellato, the Company's President and Chief Executive Officer,
member of the Board of Directors and a shareholder, was owed $207,985 for
cumulative unpaid salaries as of December 31, 1999. In consideration for writing
off the unpaid salaries of $207,985 owed Mr. Buccellato as of December 31, 1999,
the Board of Directors approved the grant to Mr. Buccellato of non-qualified
stock options to purchase 105,543 shares of Common Stock at an exercise price of
$0.10 per share, exercisable at any time between January 1, 2000 and December
31, 2005.
The Company was indebted to Jeanne Kelly, the Company's Secretary and
Treasurer, in the amount of $229,000 for cumulative unpaid salaries and $13,381
for expenses advanced by Ms. Kelly through December 31, 1999. In consideration
for writing off the unpaid salaries of $229,000 owed Ms. Kelly as of December
31, 1999, the Board of Directors approved the grant to Ms. Kelly of
non-qualified stock options to purchase 114,500 shares of Common Stock at an
exercise price of $0.10 per share, exercisable at any time between January 1,
2000 and December 31, 2005. The Company is currently indebted to Ms. Kelly in
the amount of $13,381.
The Company subleases 500 square feet of office space on a rent-free basis
through December 31, 1999, and at the rate of $400 per month for the twelve
months ending December 31, 2000. The office space is owned by Buccellato &
Finkelstein, Inc. Mr. Buccellato is the Chief Executive Officer of the Company.
The Company is indebted to Alexander L. Cappello, a director, in the
principal amount of $25,000, pursuant to a convertible demand note issued by the
Company.
The following directors and officers are indebted to the Company in the
amount set forth opposite his or her name, respectively, in connection with the
grant of shares of Common Stock pursuant to the Company's Stock Bonus Plan:
Simon Skurkovich, M.D.: $ 200,000
Boris Skurkovich, M.D.: $ 75,000
Lawrence Loomis: $ 50,000
Edmond Buccellato: $ 75,000
Jeanne Kelly: $ 50,000
FAMILY RELATIONSHIPS
The only relationship between any directors or officers known to the
Company is that Simon Skurkovich is father to Boris Skurkovich, and
father-in-law to Leonard Millstein.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years, to the knowledge of the Company, no present or
former director, executive officer or person nominated to become a director or
an executive officer of the Company has been the subject matter of any legal
proceedings, including bankruptcy, criminal proceedings, or civil proceedings.
Further, no legal proceedings are known to be contemplated by governmental
authorities against any director, executive officer and person nominated to
become a director.
DRAFT - June 20, 2000
Page 10 of 38
<PAGE> 12
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director or officer, past or present, or any associate or affiliate of
such persons, or any person on behalf of whom this solicitation is made, has any
interest, direct or indirect, in any matter to be acted upon at the Annual
Meeting, except insofar as disclosed in this Proxy Statement and the materials
incorporated by reference herein.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information set forth in Item 9 of the Company's Report on Form
10-KSB/A for the year ended December 31, 1999, is incorporated herein by this
reference.
DRAFT - June 20, 2000
Page 11 of 38
<PAGE> 13
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws for the purpose of the election,
the Board of Directors has fixed the number of Directors constituting the Board
at eight (8) at the Annual Meeting. There are currently ten (10) Directors.
Joseph Bellanti, M.D., and Richard Eamer have not been renominated to serve as
Directors. The Board of Directors has proposed that the following eight (8)
nominees be elected at the Annual Meeting, each of whom will hold office until
his successor shall have been elected and qualified: Simon Skurkovich, M.D.,
Edmond Buccellato, Boris Skurkovich, M.D., Lawrence Loomis, Leonard Millstein,
Paul J. Marangos, Alexander L. Cappello and John M. Bendheim. Unless otherwise
instructed, it is the intention of the persons named as proxies on the Company
Proxy Card to vote shares represented by properly executed proxies for the
election of such nominees. Although the Board of Directors anticipates that the
eight (8) nominees will be available to serve as Directors of the Company, if
any of them should be unwilling or unable to serve, it is intended that the
proxies will be voted for the election of such substitute nominee or nominees as
may be designated by the Board of Directors. Each person nominated for election
has agreed to serve if elected.
NOMINEES FOR THE BOARD OF DIRECTORS
Each of the current directors of the Company are listed below.
<TABLE>
<CAPTION>
Name Age Position at Company Director Since
---- --- ------------------- --------------
<S> <C> <C> <C>
Simon Skurkovich, M.D. 77 Chairman of the Board of Directors November 1985
Edmond Buccellato 55 President and Chief Executive November 1995
Officer, Director
Boris Skurkovich, M.D. 45 Vice President, Director December 1986
Joseph Bellanti, M.D. 65 Vice President, Director December 1986
Lawrence Loomis 57 Director December 1986
Leonard Millstein 58 Director December 1986
Richard Eamer 77 Director March 1998
Paul J. Marangos 52 Director April 2000
Alexander L. Cappello 44 Director May 2000
John M. Bendheim 46 Director June 2000
</TABLE>
BIOGRAPHICAL INFORMATION REGARDING EACH OF THE NOMINEES FOR THE BOARD OF
DIRECTORS IS SET FORTH BELOW
Simon Skurkovich, M.D. - Since 1985, Dr. Skurkovich has served as Chairman
of the Board. He has previously been granted five (5) patents in Russia, and
eight (8) in the U.S. He is
DRAFT - June 20, 2000
Page 12 of 38
<PAGE> 14
the creator of immune preparations from human blood against antibiotic resistant
bacteria that saved thousands of lives in the Soviet Union and Eastern Europe.
In Russia, he was professor and Chief of the Immunology Laboratory of the
Institute of Hematology and Blood Transfusion and was awarded gold and silver
medals for his scientific discoveries. His laboratory was also awarded the
nation's highest honor, the Lenin Prize, for his patented work. Dr. Skurkovich
received an M.D., Ph.D. and a Doctorate in Medical Sciences (D.Sc.) from Pirogov
State Medical Institute in Moscow. He has written more than 200 articles for
scientific publications.
Edmond Buccellato - Since 1995, Mr. Buccellato has served as President and
Chief Executive Officer, and as a member of the Board of Directors. He was
co-founder, member of the Board of Directors and Vice President of Finance of
Phase Medical, Inc., an infusion therapy company sold to Becton Dickinson in
1994. He was also co-founder, member of the Board of Directors and Vice
President of Finance of Synergistic Systems, Inc., a company that became the
largest medical billing company in the western United States. He is also
co-founder and member of the Board of Directors of Polymer Safety, LLC, a
manufacturer of synthetic medical and industrial examination gloves. He is also
co-founder and member of Directors of Physicians' choice LLC, a medical billing
company. Mr. Buccellato received his undergraduate degree From California State
University at San Diego, and his graduate degree from the University of Southern
California.
Boris Skurkovich, M.D. - Since 1986, Mr. Skurkovich has served as Vice
President and member of the Board of Directors. He completed a clinical and
research fellowship at the Maxwell Finland Laboratory for Infectious Diseases,
Boston City Hospital, Boston, Massachusetts and presently is a professor at
Brown University Medical School. He has collaborated with his father on the
development of the Company's treatment of autoimmune diseases. Dr. Skurkovich
received his M.D. from the Moscow State Medical Institute.
Lawrence Loomis - Since 1986 Mr. Loomis has served as a member of the Board
of Directors. Mr. Loomis is President and sole stockholder of New Horizons
Diagnostics, Inc., a company that develops bacteriological screening methods,
monoclonal antibodies for detection of various infectious disease agents, and
rapid bacterial and viral assay kits. Prior to founding New Horizons
Diagnostics, Inc. in 1980, Mr. Loomis was in charge of the Immunology Department
for BBL, a division of Becton Dickinson. Mr. Loomis received his undergraduate
degree in chemistry from New York University and his graduate degree in
chemistry from City University.
Leonard Millstein - Since 1986, Mr. Millstein has served as a member of the
Board of Directors. Mr. Millstein received his M.S.C.E. and Ph.D. in Civil
Engineering from Moscow State Construction University in 1964 and 1974,
respectively. After immigrating to the United States in 1978 he held teaching
positions at Howard University in Washington D.C. and Johns Hopkins University
in Baltimore, Maryland. He has over 200 publications and is a member of the
American Concrete Institute and American Society of Civil Engineers. From 1981
to the present, he has been a Chief Executive Officer of Radcon Products, a
company involved in manufacturing of proprietary concrete sealants. From 1990
until the present, he has been Chairman of the Board of TTLTIC, a private
consulting company.
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<PAGE> 15
Paul J. Marangos - Since April 2000, Dr. Marangos has served as a member of
the Board of Directors. Dr. Marangos was founder, past Chief Executive Officer
and Chairman of the Board of Directors of Cypros Pharmaceutical Corporation (now
merged with Ribogene, Inc. to form Questcor Pharmaceuticals. Cypros was a
publicly held company previously listed on the NASDAQ and subsequently on the
American Stock Exchange prior to its merger with Ribogene. Dr. Marangos received
his B.A. degree (magna cum laude) and his Ph.D. from the University of Rhode
Island in biochemistry in 1973 and completed his postdoctoral fellowship at the
Roche Institute of Molecular Biology in 1975.
Alexander L. Cappello - Since May 2000, Mr. Cappello has served as a member
of the Board of Directors. Mr. Cappello has been an investment and merchant
banker facilitating project financing and venture capital to biotechnical and
companies in other industries since 1975. He received his B.S. degree in finance
(awarded the prestigious Order of the Palm) from the University of Southern
California in 1977.
John M. Bendheim - Since June 2000, Mr. Bendheim has served as a member of
the Board of Directors. Mr. Bendheim is Chairman of the Cedars-Sinai Medical
Center Board of Governors in Los Angeles, California and President of Bendheim
Enterprises, Inc., a real estate investment holding company. He received his
B.S. degree in Business Administration in 1975 and his M.B.A. in 1976 from the
University of Southern California.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES LISTED
ABOVE.
PROPOSAL 2
APPROVAL OF THE AGREEMENT OF MERGER AND A CHANGE IN THE
COMPANY'S STATE OF INCORPORATION FROM NEVADA TO DELAWARE
INTRODUCTION
At the Annual Meeting, the stockholders of the Company will consider and
vote upon a proposal to change the state of incorporation of the Company from
Nevada to Delaware ("Reincorporation Proposal") by adoption fo the Agreement of
Merger ("Agreement of Merger") attached hereto as Appendix A. Stockholder
approval of the Reincorporation Proposal will constitute approval of (i) the
Agreement of Merger and all transactions relating to it; (ii) the Certificate of
Incorporation and the Bylaws of Advanced Biotherapy, Inc.; (iii) an increase in
the authorized shares of common stock of the Company from 50,000,000 to
100,000,000; (iv) the authorization of 20,000,000 shares of Preferred Stock, and
(v) the change of the name of the surviving corporation from "Advanced
Biotherapy Concepts, Inc." to "Advanced Biotherapy, Inc."
The following discussion summarizes certain aspects of the Reincorporation
Proposal. The summary is not intended to be complete and is qualified in its
entirety by reference to the Agreement of Merger attached hereto as Appendix A
and to the Certificate of Incorporation and the Bylaws of Advanced Biotherapy,
Inc., attached hereto as Appendix B and Appendix C, respectively.
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<PAGE> 16
GENERAL
The Board of Directors of the Company has proposed that the state of
incorporation of the Company currently be changed to Delaware. Such change is
proposed to be effected by an Agreement of Merger, a copy of which is attached
to this Proxy Statement as Appendix A (the "Agreement of Merger"). The Agreement
of Merger provides for the merger (the "Reincorporation Merger") of the Company
with and into Advanced Biotherapy, Inc., a Delaware corporation ("Advanced
Biotherapy-Delaware"), which is a wholly-owned subsidiary of the Company, with
Advanced Biotherapy-Delaware being the surviving corporation. This
Reincorporation Merger will, in effect, cause the Company to be reincorporated
in Delaware.
On the effective date of the Reincorporation Merger, Advanced
Biotherapy-Delaware will succeed to all of the assets, liabilities and business
of the Company and will possess all of the rights and powers of the Company. The
business of the Company will continue to operate under the new corporate name,
"Advanced Biotherapy, Inc." The officers and directors of Advanced
Biotherapy-Delaware will be the current officers and directors of the Company,
subject to the election of new directors as set forth in Proposal 1 above.
Except as described below, stockholders of Advanced Biotherapy-Delaware, as
stockholders of a Delaware corporation, will, in general, have the same rights
that they possess as stockholders of the Company, a Nevada corporation, although
certain changes are inherent in being incorporated in Delaware rather than in
Nevada. A summary of these changes, as they might affect the stockholders, are
discussed below in the section entitled "Summary of Significant Differences
Between Delaware and Nevada Corporate Laws."
In addition, in connection with the Reincorporation Merger, Advanced
Biotherapy- Delaware will adopt the Certificate of Incorporation (the
"Certificate of Incorporation" or "Certificate") and the Bylaws, attached as
Appendix B and Appendix C to this Proxy Statement. Approval of the Agreement of
Merger by the stockholders will also constitute approval of the Certificate of
Incorporation and the Bylaws of Advanced Biotherapy-Delaware. See "Change in the
Company's Charter and Bylaws to be Effected by the Reincorporation Merger."
The Agreement of Merger will be terminated if it is not approved by the
stockholders or if certain other conditions are not met.
On the effective date of the Reincorporation Merger, each issued and
outstanding share of Common Stock will be converted automatically into one (1)
share of common stock, $.001 par value per share of Advanced Biotherapy-Delaware
("Advanced Biotherapy-Delaware Common Stock"). The substance of each
Stockholder's ownership interest in the Company will not undergo material change
as a result of the Reincorporation Merger.
EXCHANGE OF CERTIFICATES
Stockholders may, but are not required to, surrender their present Common
Stock certificates so that replacement certificates representing shares of
Advanced Biotherapy- Delaware Common Stock may be issued in exchange therefor.
After the Reincorporation Merger, certificates representing Common Stock of the
Company will constitute "good delivery"
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<PAGE> 17
in connection with sales through a broker, or otherwise, of shares of Advanced
Biotherapy- Delaware Common Stock. American Stock Transfer & Trust Co., the
Company's transfer agent, will act as transfer agent for Advanced
Biotherapy-Delaware after the Reincorporation Merger. Stockholders should not
hesitate to consult their stockbrokers or the Company with respect to any
questions regarding the mechanics of such transactions.
AMENDMENT
The Agreement of Merger provides that it may be amended at any time,
whether before or after approval by the stockholders of the Agreement of Merger,
by agreement of the Boards of Directors of the Company and Advanced
Biotherapy-Delaware, subject to any restrictions imposed by the laws of Nevada
and Delaware. Delaware law will not permit an amendment to the Agreement of
Merger, absent stockholder approval, if such amendment would adversely affect
the holders of any class of stock of either the Company or Advanced
Biotherapy-Delaware. The Company's Directors do not intend to make any material
amendment to the Agreement of Merger, nor do they intend to amend the
Certificate of Incorporation or the Bylaws of Advanced Biotherapy-Delaware
should the Reincorporation Merger be approved by the Company's stockholders.
REASONS FOR AND ADVANTAGES OF REINCORPORATION IN DELAWARE
The proposal to reincorporate in Delaware is made for several reasons. For
many years, Delaware has followed a policy of encouraging incorporation in that
state and, in furtherance of that policy, has adopted comprehensive, modern and
flexible corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many major corporations have initially
chosen Delaware for their domicile or have subsequently reincorporated in
Delaware. The Delaware courts have developed considerable expertise in dealing
with corporate issues, and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations, thereby providing greater predictability with respect to
legal affairs.
Delaware law permits a corporation to adopt a number of measures, through
amendment of the corporate certificate of incorporation or bylaws or otherwise,
designed to reduce a corporation's vulnerability to unsolicited takeover
attempts. There is substantial judicial precedent in the Delaware courts as to
the legal principles applicable to such defensive measures with respect to the
conduct of the Board of Directors under the business judgment rule with respect
to unsolicited takeover attempts. The Company's current Articles of
Incorporation do not include such "antitakeover" provisions. See "Change in
Company's Charter and Bylaws to be Effected by the Reincorporation Merger." The
Company's Board of Directors has no present intention following the
reincorporation in Delaware to amend the Certificate of Incorporation of
Advanced Biotherapy-Delaware or the Bylaws of Advanced Biotherapy-Delaware to
include any additional provisions which might deter an unsolicited takeover
attempt. However, in the discharge of its fiduciary obligations to the
stockholders, the Board of Directors may consider in the future certain
antitakeover strategies which may enhance the Board of Directors' ability to
negotiate with an unsolicited bidder. Further, Section 203 of the Delaware
General Corporation Law provides somewhat different protections to an incumbent
Board of Directors than available under Nevada laws. See "Comparative Rights of
Stockholders- Business Combinations."
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<PAGE> 18
In the opinion of management, such latitude affords Delaware corporations
more opportunities to raise capital. The procedures and degree of stockholder
approval required for Delaware corporations for the authorization of additional
shares of stock, and for approval of certain mergers and other transactions,
present fewer practical impediments to the capital raising process than those
which apply to Nevada corporations. For example, a Delaware corporation has
greater flexibility in declaring dividends, which can aid a corporation in
marketing various classes or series of dividend paying securities. Under
Delaware law, dividends may be paid out of surplus, or if there is no surplus,
out of net profits from the corporation's previous fiscal year or the fiscal
year in which the dividend is declared, or both, so long as there remains in the
stated capital account an amount equal to the par value represented by all
shares of the corporation's stock, if any, having a preference upon the
distribution of assets. Under Nevada law, dividends may be paid by the
corporation unless after giving effect to the distribution, the corporation
would not be able to pay its debts as they come due in the usual course of
business, or (unless the corporation's articles of incorporation permit
otherwise) the corporation's total assets would be less than the sum of its
total liabilities, plus amounts payable in dissolution to holders of shares
carrying a liquidation preference over the class of shares to which a dividend
is declared. These and other differences between Nevada's and Delaware's
corporate laws are more fully explained below in the section entitled "Summary
of Significant Differences between Delaware and Nevada Corporate Laws."
In management's opinion, underwriters and other members of the financial
services industry may be more willing and better able to assist in capital
raising programs for corporations having the greater flexibility reflected in
the examples mentioned.
DISADVANTAGES OF REINCORPORATION IN DELAWARE
Despite the belief of the Board of Directors of the Company as to the
benefits and advantages of reincorporation in Delaware, some stockholders may
find the Reincorporation Merger disadvantageous for several reasons. As
discussed below, Delaware law, unlike Nevada law, contains a statutory provision
intended to discourage certain takeover attempts of Delaware corporations which
are not approved by the Board of Directors. This anti-takeover provision could
have the effect of lessening the possibility that stockholders of Advanced
Biotherapy- Delaware would be able to receive a premium above market value for
their shares in the event of a takeover. This provision could also have an
adverse effect on the market value of the shares of Advanced Biotherapy-Delaware
Common Stock. To the extent that this provision may restrict or discourage
takeover attempts, it may render less likely a takeover opposed by the Company's
Board of Directors and may make removal of the Board of Directors or management
less likely as well.
As further discussed below, the Certificate of Incorporation of Advanced
Biotherapy- Delaware will contain a provision limiting director liability under
certain circumstances and the Bylaws of Advanced Biotherapy-Delaware will
contain provisions relating to indemnification of directors and officers. The
inclusion of these provisions could operate to the potential disadvantage of the
stockholders of Advanced Biotherapy-Delaware. For example, their inclusion may
have the effect of reducing the likelihood of Advanced Biotherapy-Delaware's
recovering monetary damages from directors as a result of derivative litigation
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have
DRAFT - June 20, 2000
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<PAGE> 19
benefitted Advanced Biotherapy-Delaware and its stockholders. In addition, if
the Reincorporation Merger is effected and the limitation on liability provision
is part of the Certificate of Incorporation of Advanced Biotherapy-Delaware, the
stockholders Advanced Biotherapy-Delaware will forego potential causes of action
for breach of duty of care involving grossly negligent business decisions,
including those relating to attempts to change control of Advanced
Biotherapy-Delaware. Although these provisions are not substantially different
from protections available to an incumbent Board of Directors under Nevada law
and the Company's Bylaws, there are no such limitations on director liability in
the Nevada Certificate of Incorporation of the Company.
Except as contemplated by the Agreement of Merger, the Reincorporation
Merger will not result in any change in the physical location, business,
management, assets, liabilities or net worth of the Company. Upon completion of
the Reincorporation Merger, the authorized capital stock of Advanced
Biotherapy-Delaware will consist of 100,000,000 shares of common stock, $.001
par value, and 20,000,000 shares of preferred stock, $.001 par value.
The Advanced Biotherapy-Delaware Common Stock initially will be listed on
the OTC Bulletin Board, as the Company's Common Stock is presently. At a later
date, and subject to Advanced Biotherapy-Delaware meeting qualification
requirements, management may seek trading privileges on the NASDAQ National
Market or the American Stock Exchange. However, at the present time the Company
does not meet, and, as of the effective date of the Reincorporation Merger,
Advanced Biotherapy-Delaware is not expected to meet, trading requirements for
those markets.
INDEMNIFICATION AND DIRECTORS' LIABILITY
The Company's Articles of Incorporation and Bylaws contain provisions
intended to eliminate the liability of the Company's directors for monetary
damages and to require the Company to indemnify its officers and directors (and
to permit the Company to similarly indemnify key employees, in the discretion of
the Board of Directors), in each case, to the maximum extent permitted by Nevada
law. The Advanced Biotherapy-Delaware Certificate of Incorporation and Bylaws
adopted in connection with the Reincorporation Merger will contain similar
provisions to the maximum extent permitted by Delaware law. For a comparison of
Nevada and Delaware law, see "Comparative Rights of Stockholders - Limitation of
Liability of Directors" and "- Indemnification of Directors and Officers."
DESCRIPTION OF ADVANCED BIOTHERAPY-DELAWARE CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Advanced Biotherapy-Delaware's authorized capital stock presently consists
of (i) 100,000,000 authorized shares of common stock, $.001 par value, of which
1,000 shares are issued and outstanding and are owned by the Company, and (ii)
20,000,000 authorized shares of preferred stock, $.001 par value ("Advanced
Biotherapy-Delaware Preferred Stock"). No shares of Advanced Biotherapy-Delaware
Preferred Stock will be issued in connection with the Reincorporation Merger.
All of the shares of Advanced Biotherapy-Delaware Common Stock
DRAFT - June 20, 2000
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<PAGE> 20
issued in connection with the Reincorporation Merger will be validly issued,
fully paid and non-assessable.
ADVANCED BIOTHERAPY-DELAWARE COMMON STOCK
The holders of Advanced Biotherapy-Delaware Common Stock will be entitled
to one (1) vote for each share on all matters voted on by stockholders,
including the election of directors and, except as otherwise required by law, or
provided in any resolution adopted by the Advanced Biotherapy-Delaware Board of
Directors with respect to any series of Advanced Biotherapy- Delaware Preferred
Stock, will exclusively possess all voting power. The holders of Advanced
Biotherapy-Delaware Common Stock will not have any cumulative voting,
conversion, redemption or preemptive rights. Subject to any preferential rights
of any outstanding series of Advanced Biotherapy-Delaware Preferred Stock
designated by the Advanced Biotherapy- Delaware Board of Directors from time to
time, the holders of Advanced Biotherapy-Delaware Common Stock will be entitled
to such dividends as may be declared from time to time by the Advanced
Biotherapy-Delaware Board of Directors from funds available therefor, and upon
liquidation will be entitled to receive pro rata all assets of Advanced
Biotherapy-Delaware available for distribution to such holders.
COMPARATIVE RIGHTS OF STOCKHOLDERS
GENERAL
As a result of the Reincorporation Merger, holders of Company Common Stock
will become stockholders of Advanced Biotherapy-Delaware and the rights of all
such former Company stockholders will thereafter be governed by the Advanced
Biotherapy-Delaware Certificate, the Advanced Biotherapy-Delaware Bylaws and the
Delaware General Corporation Law (the "Delaware Law"). The rights of the holders
of Company Common Stock are presently governed by the articles of incorporation
of the Company (the "Company Articles"), the bylaws of the Company (the "Company
Bylaws") and the Nevada General Corporation Law (the "Nevada Law").
The following summary, which does not purport to be a complete statement of
the general differences among the rights of the stockholders of Advanced
Biotherapy-Delaware and the Company sets forth certain differences between the
Delaware Law and the Nevada Law, between the Advanced Biotherapy-Delaware
Certificate and the Company Articles, and between the Advanced
Biotherapy-Delaware Bylaws and the Company's Bylaws. This summary is qualified
in its entirety by reference to the full text of each of such documents, the
Delaware Law and the Nevada Law. For information as to how such documents (other
than the Advanced Biotherapy-Delaware Certificate and Advanced
Biotherapy-Delaware Bylaws, which are attached to this Proxy Statement as
Appendices B and C, respectively) may be obtained, see "Available Information."
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
The Advanced Biotherapy-Delaware Certificate will provide that, subject to
any rights of holders of Advanced Biotherapy-Delaware Preferred Stock, the
number of directors will be fixed from time to time by action of not less than a
majority of the Advanced Biotherapy-Delaware
DRAFT - June 20, 2000
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<PAGE> 21
Board then in office, but in no event shall the number of directors be less than
three (3) nor more than eleven (11). In addition, the Advanced
Biotherapy-Delaware Certificate will provide that, subject to any rights of
holders of Advanced Biotherapy-Delaware Preferred Stock, any vacancies
(including newly-created directorships) will be filled only by the affirmative
vote of a majority of the remaining directors, though less than a quorum.
Directors appointed to fill vacancies created by the resignation or termination
of a director will serve the remainder of the term of the resigning or
terminated director. Accordingly, the Advanced Biotherapy-Delaware Board could
prevent any stockholder from enlarging the Advanced Biotherapy-Delaware Board
and filling the new directorships with such stockholder's own nominees.
Under the Delaware Law, unless otherwise provided in the certificate of
incorporation, directors serving on a board may only be removed by the
stockholders for cause. The Advanced Biotherapy-Delaware Certificate will
provide that directors may be removed only for cause and only upon the
affirmative vote of holders of at least 662/3% of the voting power of all the
then outstanding shares of stock entitled to vote generally in the election of
directors ("Voting Stock"), voting together as a single class, subject to any
rights of holders of Advanced Biotherapy-Delaware Preferred Stock.
Under the Nevada Law, a director may be removed by the vote of the holders
of not less than 662/3% of the voting power of the Voting Stock, subject to
certain restrictions concerning cumulative voting. However, a Nevada corporation
may include in its articles of incorporation a provision requiring the approval
of a larger percentage of the stockholders to remove a director. Any vacancy in
the board of directors may be filled by a majority of the remaining directors,
though less than a quorum, even if the vacancy is due to an increase in the
number of directors. The Company Articles provide that the number of directors
shall not be less than one (1) and may from time to time be fixed by either
amendment of the Company Articles or in such manner as shall be provided on the
Company Bylaws. The Company Bylaws provide that the number of directors shall
from time to time be fixed and determined by the vote of a majority of the
entire board of directors serving at the time of the vote, provided that the
number shall be not less than three (3) nor greater than twelve (12). There are
currently ten (10) members of the Company's Board of Directors. The Company
Articles do not permit cumulative voting.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
The Advanced Biotherapy-Delaware Certificate will contain provisions
requiring the affirmative vote of the holders of at least 662/3% of the voting
power of the Voting Stock, after approval by the Advanced Biotherapy-Delaware
Board, to amend certain provisions of the Advanced Biotherapy-Delaware
Certificate (including the provisions discussed above relating to directors), or
to amend any provision of the Advanced Biotherapy-Delaware Bylaws. These
provisions will make it more difficult for stockholders to make changes in the
Advanced Biotherapy-Delaware Certificate and Advanced Biotherapy-Delaware
Bylaws, including changes designed to facilitate the exercise of control over
Advanced Biotherapy-Delaware.
The Nevada Law requires most amendments to the articles of incorporation to
be approved by the board of directors, then by the vote of the holders of a
majority of the Voting Stock, unless the articles of incorporation require a
greater percentage of votes. If an amendment would alter any preferences or
relative rights of a class or series of outstanding shares, it must be
DRAFT - June 20, 2000
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<PAGE> 22
approved by a majority of the outstanding shares of each class or series so
affected, regardless of limitations or restrictions on the voting power thereof.
The Nevada Law gives the board of directors the power to make bylaws, subject to
any limitations contained in bylaws adopted by the stockholders. The Company
Articles do not contain any provisions requiring a greater percentage of votes
for amendment. The Company Bylaws may be amended by either the Company's Board
of Directors or the Company's stockholders.
BUSINESS COMBINATIONS
Section 203 of the Delaware Law provides that, subject to certain
exceptions specified therein, a corporation shall not engage in any business
combination with any "interested stockholder" for a three-year period following
the date that such stockholder becomes an interested stockholder unless (i)
prior to such date, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares held by
directors who are also officers and employee stock purchase plans in which
employee participants do not have the right to determine confidentially whether
plan shares will be tendered in a tender or exchange offer) or (iii) on or
subsequent to such date, the business combination is approved by the board of
directors of the corporation and by the affirmative vote at an annual or special
meeting, and not by written consent, of at least 662/3% of the outstanding
voting stock which is not owned by the interested stockholder. Except as
specified in Section 203 of the Delaware Law, an interested stockholder is
defined to include (a) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation, at any time within three years immediately prior to the
relevant date and (b) the affiliates and associates of any such person.
Under certain circumstances, Section 203 of the Delaware Law may make it
more difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period,
although the corporation's certificate of incorporation or stockholders may
elect to exclude a corporation from the restrictions imposed thereunder. The
Advanced Biotherapy-Delaware Certificate does not exclude Advanced
Biotherapy-Delaware from the restrictions imposed under Section 203 of the
Delaware Law. It is anticipated that the provisions of Section 203 of the
Delaware Law may encourage companies interested in acquiring Advanced
Biotherapy-Delaware to negotiate in advance with the Advanced
Biotherapy-Delaware Board, since the stockholder approval requirement would be
avoided if a majority of the directors then in office approve either the
business combination or the transaction which results in the stockholder
becoming an interested stockholder.
The Nevada Law also prohibits certain business combinations between a
corporation and an "interested stockholder" (one beneficially holding, directly
or indirectly, at least 10% of the outstanding voting stock) for five years
after such person became an interested stockholder unless such interested
stockholder, prior to becoming an interested stockholder, obtained the approval
of the board of directors of either the business combination or the transaction
that resulted in such person becoming an interested stockholder. Notwithstanding
the foregoing, the
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<PAGE> 23
Nevada Law permits business combinations that meet all requirements of the
corporation's articles of incorporation and (i) are approved by the board of
directors before the interested stockholder became an interested stockholder (or
as to which the purchase of shares made by the interested stockholder had been
approved by the board of directors before the date of purchase), (ii) are
approved by the affirmative vote of the holders of stock representing a majority
of the voting stock (excluding voting stock of the interested stockholder and
its affiliates and associates) at a meeting called for such purpose no earlier
than five years after the interested stockholder became an interested
stockholder, or (iii) the form and amount of consideration to be received by
stockholders (excluding the interested stockholder) of the corporation satisfy
certain tests and, with limited exceptions, the interested stockholder has not
become the beneficial owner of additional voting shares of the corporation after
becoming an interested stockholder and before the business combination is
consummated. A corporation may expressly exclude itself from application of the
foregoing business combination provisions of the Nevada Law but the Company has
not done so.
LIMITATION OF LIABILITY OF DIRECTORS
Both the Nevada Law and the Delaware Law permit a corporation to include a
provision in its articles or certificate of incorporation eliminating or
limiting the personal liability of a director or officer to the corporation or
its stockholders for damages for breach of the director's fiduciary duty,
subject to certain limitations. The Company Bylaws include such a provision, and
the Advanced Biotherapy-Delaware Certificate will, as set forth below, include
such a provision, in each case, to the maximum extent permitted by law.
The Advanced Biotherapy-Delaware Certificate will provide, that a director
will not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law, which concerns unlawful payments of dividends,
stock purchases or redemptions or (iv) for any transaction from which the
director derived an improper personal benefit.
While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care. The provisions described above apply to an
officer of the corporation only if he or she is a director of the corporation
and is acting in his or her capacity as director, and do not apply to officers
of the corporation who are not directors. Nevada law limits a director's
liability for monetary damages, except for breach of a director's duties under
certain circumstances. See "Summary of Significant Differences between Delaware
and Nevada Corporate Laws - Liability of Directors."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Both the Nevada Law and the Delaware Law permit a corporation to indemnify
officers, directors, employees and agents for actions taken in good faith and in
a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation, and with respect to any
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<PAGE> 24
criminal action, which they had no reasonable cause to believe was unlawful.
Both states' laws provide that a corporation may advance expenses of defense
(upon receipt of a written undertaking to reimburse the corporation if
indemnification is not appropriate) and must reimburse a successful defendant
for expenses, including attorney's fees, actually and reasonably incurred, and
both states permit a corporation to purchase and maintain liability insurance
for its directors and officers. Both Delaware Law and Nevada Law provide that
indemnification may not be made for any claim, issue or matter as to which a
person has been adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable to the corporation, unless and only to
the extent a court determines that the person is entitled to indemnity for such
expenses as the court deems proper.
The Advanced Biotherapy-Delaware Certificate will provide that each person
who is involved in any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan, will be indemnified by the corporation to the full extent permitted by the
Delaware Law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
prior to such amendment) or by other applicable laws then in effect. The
indemnification rights to be conferred by the Advanced Biotherapy-Delaware
Certificate are not exclusive of any other right to which a person seeking
indemnification may be entitled under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. The Company is, and
Advanced Biotherapy-Delaware will be, authorized to purchase and maintain
insurance on behalf of its directors, officers, employees and agents.
As described below, with certain exceptions, Delaware law is similar to
Nevada law with respect to indemnification of officers and directors. See
"Summary of Significant Differences between Delaware and Nevada Corporate Laws -
Liability of Directors."
Further, the Company may enter into an agreement of indemnification with
its directors to provide for indemnification to the fullest extent permitted, as
currently provided under Nevada law, and under Delaware law, if the Company
effectuates the Reincorporation Merger.
The members of the Board of Directors of the Company have a personal
interest in seeing that the Reincorporation Merger is effected and that the
limitation on liability and indemnification provisions are included as a part of
the Certificate of Incorporation and Bylaws of Advanced Biotherapy-Delaware.
CHANGE IN THE COMPANY'S CHARTER AND BYLAWS TO BE EFFECTED BY
THE REINCORPORATION MERGER
Approval of the Agreement of Merger by the stockholders will also
constitute approval of the provisions of the Certificate of Incorporation of
Advanced Biotherapy-Delaware (See Exhibit B to the Agreement of Merger and
Appendix B) and the Bylaws of Advanced Biotherapy- Delaware (see Exhibit C to
the Agreement of Merger and Appendix C). The Certificate of
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<PAGE> 25
Incorporation and Bylaws of Advanced Biotherapy-Delaware differ from the
Company's Articles of Incorporation and Bylaws in certain respects, the most
important of which are described below.
SUPERMAJORITY REQUIRED FOR AMENDMENT
The Certificate of Incorporation permits the Board of Directors to adopt,
amend or repeal any or all of the Company's bylaws without stockholder action
and provide that such bylaws may also be adopted, amended or repealed by its
stockholders, but only if approved by holders of 662/3% or more of the voting
power of all outstanding shares of voting stock, including in any instance in
which the alteration is proposed by an Interested Stockholder or by affiliates
or associate of any Interested Stockholder, the affirmative vote of the holders
of at least a majority of voting power of all outstanding shares of voting stock
held by persons other than the Interested Stockholder who proposed such action.
However, the only stockholder vote required if the modification is approved by a
majority of the continuing directors is the affirmative vote of the majority of
the voting power of all outstanding shares of voting stock.
AUTHORIZED CAPITAL
The Company's current Articles of Incorporation authorize the issuance of
up to 50,000,000 shares, par value $.001 per share. The proposed Certificate of
Incorporation will increase the authorized number of shares of common stock to
100,000,000 shares, par value $.001 per share, and will further authorize the
issuance of 20,000,000 shares of preferred stock, par value $.001 per share.
Each share of Advanced Biotherapy-Delaware Common Stock will have the same par
value as the Common Stock. The current Articles of Incorporation do not include
a provision for the authorization of a class of preferred stock. The proposed
Certificate of Incorporation authorizes a class of preferred stock commonly
known as "blank check" preferred stock. The preferred stock may be issued from
time to time in one or more series, and the Board of Directors of Advanced
Biotherapy-Delaware, without further approval of its stockholders, is authorized
to fix the relative rights, preferences, privileges and restrictions applicable
to each series of preferred stock. Such shares of preferred stock, if and when
issued, may have rights, powers and preferences superior to those of the
Advanced Biotherapy-Delaware Common Stock. Nevada law does not allow for the
issuance of "blank check" preferred stock, but requires the Company to amend the
articles of incorporation to authorize the issuance of each series of preferred
stock. While there are no current plans, commitments or understandings, written
or oral, to issue any preferred stock, in the event of any issuances, the
holders of Advanced Biotherapy-Delaware Common Stock will not have any
preemptive or similar rights to acquire any preferred stock.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN DELAWARE AND
NEVADA CORPORATE LAWS
The following is a brief summary of certain material ways in which Nevada
and Delaware corporate laws differ and does not purport to be a complete
statement of such laws.
LIABILITY OF DIRECTORS
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<PAGE> 26
Delaware law permits a Delaware corporation to include in its certificate
of incorporation a provision which eliminates or limits the personal liability
of a director to the corporation or its stockholders for monetary damages for
breach of fiduciary duties as a director. However, no such provision may
eliminate or limit the liability of a director: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for declaration of unlawful dividends or illegal
redemptions or stock repurchases; or (iv) for any transaction from which the
director derived an improper personal benefit. The proposed Certificate of
Incorporation includes such a provision.
Under Nevada law, a director is not personally liable for monetary damages
to any person for his actions as a director unless the director breached his
duties by way of: (i) a criminal violation, unless the director has reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (ii) a transaction from which the director derived an
improper personal benefit; (iii) declaration of unlawful distributions; (iv) in
a derivative action, conscious disregard by the director for the best interests
of the corporation or willful misconduct by the director; or (v) in a third
party action, recklessness or actions or omissions committed in bad faith or
with malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety or property.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware and Nevada law generally provide for similar provisions with
respect to the power of a corporation to indemnify its directors and officers.
However, unlike under Delaware law, Nevada law provides that no indemnification
is permitted for criminal violations (unless the director, officer, employee or
agent had reasonable cause to believe his conduct was unlawful), transactions in
which the director or officer derived an improper personal benefit, declaration
of unlawful dividends or, in derivative actions, willful misconduct or conscious
disregard for the best interests of the corporation.
SPECIAL MEETINGS OF STOCKHOLDERS
Under Delaware law, a special meeting of stockholders may be called by the
corporation's board of directors or by such persons as may be authorized by the
corporation's certificate of incorporation or bylaws. The proposed Bylaws of
Advanced Biotherapy-Delaware provide that a special meeting may be called by the
Chairman of the Board of Directors, the President, a majority of the Board of
Directors or 50% of the stockholders of record of all shares entitled to vote.
Nevada law provides that a special meeting of stockholders may be called
by: (i) a corporation's board of directors; (ii) the persons authorized by the
articles of incorporation or bylaws; or (iii) the holders of not less than 10%
of all votes entitled to be cast on any issue to be considered at the proposed
special meeting. A corporation's articles of incorporation may require a higher
percentage of votes, up to a maximum of 50% to call a special meeting of
stockholders. The Company's current Articles of Incorporation do not include any
such provision. The current Bylaws of the Company provide that a special meeting
of stockholders
DRAFT - June 20, 2000
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<PAGE> 27
may be called by a majority of the Board of Directors, the President, a Vice
President or 50% of the stockholders of record of all shares entitled to vote.
MERGER WITH SUBSIDIARY
Under Delaware law, a parent corporation may merge into a subsidiary and a
subsidiary may merge into its parent, without stockholder approval, where such
parent corporation owns at least 90% of the outstanding shares of each class of
capital stock of its subsidiary. Nevada law permits such a merger of a
subsidiary without stockholder approval if 80% of each class of capital stock of
the subsidiary is owned by the parent corporation.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law, any director or the entire board of directors generally
may be removed with or without cause by the holders of a majority of the shares
entitled to vote at an election of directors. Under Nevada law, stockholders may
remove one or more directors, with or without cause, unless the articles of
incorporation provide that directors may be removed only with cause, at a
meeting of stockholders called expressly at least in part for that purpose. The
Company's current Articles of Incorporation do not refer to removal of
directors. Therefore, any member of the Company's Board of Directors may be
removed with or without cause.
Under the proposed Bylaws of Advanced Biotherapy-Delaware, newly created
directorships resulting from any increase in the number of directors or any
vacancies on the Board of Directors may be filled by the affirmative vote of a
majority of the directors then in office. In addition, the proposed Bylaws of
Advanced Biotherapy-Delaware provide that the directors elected to fill
vacancies on the Board of Directors will hold office until the next election of
directors. The Company's existing Bylaws provide that vacancies on the Board of
Directors may be filled by a majority vote of the remaining members of the Board
of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
Nevada and Delaware law both provide that the board of directors may
delegate certain of their duties to one or more committees elected by a majority
of the board. A Delaware corporation can delegate to a committee of the board of
directors, among other things, the responsibility of nominating candidates for
election to the office of director, to fill vacancies on the board of directors,
and to reduce earned or capital surplus and authorize the acquisition of the
corporation's own stock. Moreover, if either the corporation's certificate of
incorporation or bylaws, or the resolution of the board of directors creating
the committee so permits, a committee of the board of directors may declare
dividends and authorize the issuance of stock. Nevada law places more
limitations on the types of activities that can be delegated to committees of
the board. Under Nevada law, a committee of the board of directors may not
approve or recommend to stockholders actions or proposals required to be
approved by the stockholders, fill a vacancy on the board, adopt, amend or
repeal the bylaws, authorize the issuance of stock, or authorize the
reacquisition of the corporation's own stock.
AMENDMENT OR REPEAL OF THE CERTIFICATE
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Page 26 of 38
<PAGE> 28
Under Delaware law, unless the certificate of incorporation otherwise
provides, amendments to the certificate of incorporation generally require the
approval of the holders of a majority of the outstanding stock entitled to vote
thereon, and if the amendment would increase or decrease the number of
authorized shares of any class or series or the par value of such shares or
would adversely affect the rights, powers or preferences of such class or
series, a majority of the outstanding stock of such class or series also would
have to approve the amendment. The proposed Certificate of Incorporation does
not provide otherwise. However, the proposed Certificate of Incorporation
imposes certain supermajority requirements on the vote of stockholders to amend
the proposed Certificate of Incorporation of Advanced Biotherapy- Delaware,
unless such amendments are also adopted by the Board of Directors of Advanced
Biotherapy-Delaware. Except with regard to minor amendments, all amendments to
the articles of incorporation of a Nevada corporation must be approved by a
majority of all the votes entitled to be cast by each voting group, unless the
articles of incorporation require a greater or lesser vote. The Company's
current Articles of Incorporation do not provide for a greater or lesser vote.
See "Change in the Company's Charter and Bylaws to be Effected by the
Reincorporation Merger - Supermajority Required for Amendment."
AMENDMENTS TO BYLAWS
Under Delaware law, directors may amend the bylaws of a corporation only if
such right is expressly conferred upon the directors in its certificate of
incorporation. Under Nevada law, a corporation's board of directors may amend or
repeal the bylaws unless such power is expressly reserved to the stockholders in
the articles of incorporation or under Nevada law, or the stockholders expressly
provide in amending or repealing all or any part of the bylaws, that the board
of directors may not amend or repeal the affected bylaws. The proposed
Certificate of Incorporation permits the Board of Directors to adopt, alter or
amend the proposed Bylaws of Advanced Biotherapy-Delaware. However, the proposed
Certificate of Incorporation imposes certain supermajority requirements on the
vote of stockholders to amend the proposed Bylaws of Advanced
Biotherapy-Delaware, unless such amendments are also adopted by the Board of
Directors of Advanced Biotherapy-Delaware. The Company's current Articles of
Incorporation provide the Board of Directors with the authority to adopt, alter
or amend the Bylaws. See "Change in the Company's Charter and Bylaws to be
Effected by the Reincorporation Merger - Supermajority Required for Amendment."
VOTE REQUIRED FOR MERGERS
Nevada law provides that the sale, lease, exchange or disposal of all, or
substantially all, of the assets of a Nevada corporation, not in the ordinary
course of business, as well as any merger, consolidation or share exchange
generally must be recommended by the Board of Directors and approved by a vote
of a majority of the shares of each class of the stock of the corporation
entitled to vote on such matters. Under Nevada law, the vote of the stockholders
of a corporation surviving a merger is not required if: (i) the articles of
incorporation of the surviving corporation will not substantially differ from
its articles of incorporation before the merger; and (ii) each stockholder of
the surviving corporation before the effective date will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights immediately after the merger. Delaware law has a similar provision
requiring stockholder approval in the case of the disposition of assets or a
merger or a share exchange. However, with
DRAFT - June 20, 2000
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<PAGE> 29
respect to mergers which do not require the vote of the corporation's
stockholders, Delaware law, unlike Nevada law, also requires that either no
shares of common stock of the surviving corporation and no shares, securities or
obligations convertible into such stock are to be issued or delivered under the
plan of merger or the authorized unissued shares or the treasury shares of
common stock of the surviving corporation to be issued or delivered under the
plan of merger, plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered under such plan, do
not exceed 20% of the shares of common stock of such constituent corporation
outstanding immediately prior to the effective date of the merger.
STOCK REDEMPTIONS AND REPURCHASES
Both Delaware and Nevada corporations may generally purchase or redeem
their own shares of capital stock. Under Delaware law, a Delaware corporation
may purchase or redeem its own shares of capital stock, except when the capital
of the corporation is impaired or when such purchase or redemption would cause
any impairment of the capital of the corporation. Subject to any restrictions
imposed by its articles of incorporation, a Nevada corporation may make
distributions to stockholders, so long as, after giving effect to such
distribution: (i) the corporation would be able to pay its debts as they become
due in the usual course of business; or (ii) the corporation's total assets
would not be less than the sum of its total liabilities plus (unless the
articles of incorporation permit otherwise), the amount that would be needed if
the corporation were to be dissolved at the time of the distribution to satisfy
the preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution. The Company's current
Articles of Incorporation do not contains any additional restrictions on
distributions to stockholders or provide for the authorization of a class of
preferred stock.
PROXIES
Under Delaware law, a proxy executed by a stockholder will remain valid for
a period of three years unless the proxy provides for a longer period. Under
Nevada law, a proxy is effective only for a period of six (6) months, unless it
is coupled with an interest or unless otherwise provided in the proxy which
duration may not exceed seven (7) years.
CONSIDERATION FOR STOCK
Under Nevada law, a corporation may issue its capital stock only in return
for certain tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed, promises to perform
services evidenced by a written contract, and other securities of the
corporation. Shares may be issued for less than par value. Under Delaware law, a
corporation may accept as consideration for its stock a combination of cash,
property or past services in an amount not less than the par value of the shares
being issued, and a secured promissory note or other binding obligation executed
by the subscriber for any balance, the total of which must equal at least the
par value of the issued stock, as determined by the board of directors.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
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Page 28 of 38
<PAGE> 30
Delaware law provides that any stockholder of record may demand to examine
the corporation's books and records for any proper purpose. If management of the
corporation refuses, the stockholder can compel release of the books by court
order. Under Nevada Law, any stockholder who owns at least 15% of the
outstanding shares of the corporation's capital stock may inspect, copy and
audit the books of account and all financial records of the corporation.
However, only a stockholder whose demand is made with a proper purpose may
undertake any such inspection or audit. Under Nevada law, if any officer or
agent keeping records in Nevada refuses to allow a stockholder of a corporation
to inspect or audit the corporation's books of account and financial records,
the corporation and the officer or agent will be liable to the stockholder for
all damages incurred by the stockholder, and the corporation may be liable for
fines payable to the State of Nevada. There is no such corresponding provision
in Delaware law.
DIVIDENDS
Delaware law provides that the corporation may pay dividends out of
surplus, out the corporation's net profits for the preceding fiscal year, or
both provided that there remains in the stated capital account an amount equal
to the par value represented by all shares of the corporation's stock having a
distribution preference. Nevada law provides that dividends may be paid, unless
after giving effect to such distribution, the corporation would not be able to
pay its debts as they come due in the usual course of business, or the
corporation's total assets would be less than the sum of its total liabilities,
plus (unless the corporation's articles of incorporation permit otherwise) the
amount needed to satisfy preferential distributions.
CORPORATE ACTION WITHOUT A STOCKHOLDER MEETING
Delaware and Nevada law both permit corporate action without a meeting of
stockholders upon the written consent of the holders of that number of shares
necessary to authorize the proposed corporate action being taken, unless the
certificate of incorporation or articles of incorporation, respectively,
expressly provide otherwise. The Company's current Articles of Incorporation do
not include any such contrary provision. The proposed Certificate of
Incorporation does not include any such contrary provision. In the event such
proposed corporate action is taken without a meeting by less than the unanimous
written consent of stockholders, Delaware law requires that prompt notice of the
taking of such action be sent to those stockholders who have not consented in
writing. Nevada law provides that such notice must be given within ten (10) days
of the date such stockholder authorization is granted.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
Treasury regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion should not be considered tax or investment advice,
and the tax consequences of the reverse stock split may not be the same for all
stockholders. In particular, this discussion does not address the tax treatment
of special classes of stockholders, such as banks, insurance companies,
tax-exempt entities and foreign persons. Stockholders desiring to know their
individual federal, state, local and foreign tax consequences should consult
their own tax advisors.
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Page 29 of 38
<PAGE> 31
The Reincorporation Merger is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(F) or 368(a)(1)(A) of the Code. Assuming
such tax treatment, no taxable income, gain, or loss will be recognized by the
Company or the stockholders as a result of the exchange of shares of Common
Stock for shares of Advanced Biotherapy-Delaware Common Stock upon consummation
of the transaction.
The combination and change of each share of the Company's Common Stock into
one share of Advanced Biotherapy-Delaware Common Stock will be a tax-free
transaction, and the holding period and tax basis of Common Stock will be
carried over to a portion of Advanced Biotherapy-Delaware Common Stock received
in exchange therefor.
SECURITIES ACT CONSEQUENCES
The shares of Advanced Biotherapy-Delaware Common Stock to be issued in
exchange for shares of Common Stock are not being registered under the
Securities Act of 1933, as amended (the "1933 Act"). In that regard, Advanced
Biotherapy-Delaware is relying on Rule 145(a)(2) under the 1933 Act, which
provides that a merger which has "as its sole purpose" a change in the domicile
of a corporation does not involve the sale of securities for purposes of the
1933 Act, and on interpretations of the Rule by the Securities and Exchange
Commission (the "Commission") which indicate that the making of certain changes
in the surviving corporation's charter documents which could otherwise be made
only with the approval of the stockholders of either corporation does not render
Rule 145(a)(2) inapplicable.
After the Reincorporation Merger, Advanced Biotherapy-Delaware will be a
publicly- held company, Advanced Biotherapy-Delaware Common Stock will be listed
for trading in the over-the-counter market, and Advanced Biotherapy-Delaware
will file periodic reports and other documents with the Commission and provide
to its stockholders the same types of information that the Company has
previously filed and provided. Stockholders whose Common Stock is freely
tradeable before the Reincorporation Merger will have freely tradeable shares of
Advanced Biotherapy-Delaware Common Stock. Stockholders holding restricted
shares of Common Stock will have shares of Advanced Biotherapy-Delaware Common
Stock which are subject to the same restrictions on transfer as those to which
their present shares of Common Stock are subject, and their stock certificates,
if surrendered for replacement certificates representing shares of Advanced
Biotherapy-Delaware Common Stock, will bear the same restrictive legend as
appears on their present stock certificates. For purposes of computing
compliance with the holding period requirement of Rule 144 under the 1933 Act,
stockholders will be deemed to have acquired their shares of Advanced
Biotherapy-Delaware Common Stock on the date they acquired their shares of
Common Stock. In summary, Advanced Biotherapy-Delaware and its stockholders will
be in the same respective positions under the federal securities laws after the
Reincorporation Merger as were the Company and the stockholders prior to the
Reincorporation Merger.
DISSENTERS' RIGHTS OF APPRAISAL
Nevada law generally provides that stockholders may have dissenters' rights
in connection with a plan of merger in connection with which the approval of the
corporation's stockholders is required. However, Nevada law provides that there
is no right of dissent with
DRAFT - June 20, 2000
Page 30 of 38
<PAGE> 32
respect to a plan of merger, such as the Reincorporation Merger, in favor of
holders of any class or series which, at the record date for the stockholders'
meeting to approve the plan, were either: (i) listed on a national securities
exchange or designated as a national market system security by the National
Association of Securities Dealers ("NASD"), or (ii) held by at least 2,000
stockholders of record, as that term is defined in Section 92A.330 of the Nevada
Law. The Company's Common Stock is listed for trading in the over-the-counter
market, which is not designated as a national market system by the NASD.
However, as of the Record Date, the Company had approximately 3,200 stockholders
of record.
Therefore, the Company believes there are no dissenters' or appraisal
rights available to stockholders with respect to the Reincorporation Merger.
ABANDONMENT
Notwithstanding a favorable vote of the stockholders, the Company reserves
the right by action of the Board of Directors to abandon the proposed
reincorporation prior to effectiveness of the Reincorporation Merger if it
determines that such abandonment is in the best interests of the Company. The
Board of Directors has made no determination as to any circumstances which may
prompt a decision to abandon the proposed reincorporation.
APPROVAL BY STOCKHOLDERS OF THE REINCORPORATION MERGER WILL CONSTITUTE APPROVAL
OF THE AGREEMENT OF MERGER, THE CERTIFICATE OF INCORPORATION OF ADVANCED
BIOTHERAPY-DELAWARE, THE BYLAWS OF ADVANCED BIOTHERAPY-DELAWARE, AND THE CHANGE
OF THE CORPORATE NAME.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and Nevada law, this Proposal
2 to reincorporate the Company in Delaware pursuant to the Reincorporation
Merger must be approved by the affirmative vote of at least a majority of the
shares of Common Stock present in person or by proxy at the Annual Meeting and
entitled to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL 2.
PROPOSAL 3
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK AND APPROVE AUTHORIZATION OF PREFERRED STOCK
GENERAL
The Company's current Articles of Incorporation authorize the issuance of
up to 50,000,000 shares, par value $.001 per share. The current Articles of
Incorporation do not include a provision for the authorization of a class of
preferred stock. This Proposal 3 seeks the approval of the Company's
stockholders to increase the aggregate number of shares that the Company shall
have authority to issue up to 120,000,000 shares, consisting of 100,000,000
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Page 31 of 38
<PAGE> 33
shares of common stock, par value $.001 per share, and 20,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Stock").
As of May 31, 2000, The Company had issued and outstanding 39,398,265
shares of Common Stock. The Board of Directors has approved (i) an increase in
the authorized number of shares of Common Stock from 50,000,000 shares to
100,000,000 shares, and (ii) the authorization of 20,000,000 shares of Preferred
Stock commonly known as "blank check" preferred stock, in order to facilitate
the Company's ability to raise capital, to facilitate acquisitions and mergers
and to attract qualified employees by offering stock options for shares of
Common Stock as incentive compensation for such persons, by authorizing the
issuance of additional securities of the Company for purposes of effectuating
such transactions. The Preferred Stock may be issued from time to time in one
(1) or more series, and the Board of Directors, without further approval of its
stockholders, is authorized to fix the relative rights, preferences, privileges
and restrictions applicable to each series of Preferred Stock. Such shares of
Preferred Stock, if and when issued, may have rights, powers and preferences
senior to those of the Company's Common Stock. While the Company has no current
plans or commitments to issue any Preferred Stock, in the event of any
issuances, the holders of the Common Stock will not have any preemptive or
similar rights to acquire any Preferred Stock.
Although approval of Proposal 3 would increase the number of shares of
authorized capital stock, it would not result in any change in the voting power
of or equity percentages of the Company owned by stockholders. Sale and issuance
of such authorized but unissued shares of capital stock would remain within the
discretion of the Board of Directors, in the exercise of their fiduciary duties
and subject to applicable corporate, securities and other laws and regulations.
The proposed change would cause Article 4 of the Company's Articles of
Incorporation to read as follows:
"4. The Corporation is authorized to issue two (2) classes of stock to be
designated Common Stock and Preferred Stock. The aggregate number of shares that
the Corporation shall have authority to issue is Million (100,000,000) shares of
Common Stock, $.001 par value per share, and Twenty Million (20,000,000) shares
of Preferred Stock, $.001 par value per share.
The shares of Preferred Stock may be issued from time to time in one (1) or
more series. The Board of Directors is authorized, subject to limitations
prescribed by law, to provide by resolution of the Board of Directors for the
issuance of the shares of Preferred Stock in series to establish from time to
time the number of shares to be included in each such series, and to fix by
resolution of the Board of Directors the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions thereof. The authority of the Board of Directors with respect to
each series shall include, but not be limited to, determination of the
following: (a) the number of shares constituting that series and the distinctive
designation of that series; (b) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of
that series; (c) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
DRAFT - June 20, 2000
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<PAGE> 34
(d) whether that series shall have conversion privileges, and, if so, the terms
and conditions of such conversion, including provisions for adjustment of the
conversion rate in such events as the Board of Directors shall determine; (e)
whether or not the shares of that series shall be redeemable and, if so, the
terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates; (f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms and amount
of such sinking fund; (g) the rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and the relative rights of priority, if any, of payment of shares of
that series; and (h) any other relative or participating rights, preferences and
limitations of that series. The Board of Directors is further authorized to
increase or decrease (but not below the number of shares of such class or series
then outstanding) the number of shares of any series subsequent to the issuance
of shares of that series."
In the event that the Company's stockholders approve Proposal 2 of this
Proxy Statement, which includes, in part, a proposal to increase the authorized
number of shares of Common Stock to 100,000,000 shares and to authorize
20,000,000 shares of Preferred Stock, the Board of Directors will withdraw this
Proposal 3 from consideration by the stockholders at the Annual Meeting.
If the Company's stockholders do not approve Proposal 2 of this Proxy
Statement, but approve this Proposal 3, the current Articles of Incorporation
will be revised as set forth in this Proxy Statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and Nevada law, this Proposal
3 to increase the authorized number of shares of Common Stock and to authorize
shares of Preferred Stock in the Company's Articles of Incorporation must be
approved by the affirmative vote of at least a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting and entitled to vote
at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL 3.
PROPOSAL 4
CHANGE OF NAME OF THE COMPANY
GENERAL
The Company's Board of Directors voted to change the name of the Company to
"Advanced Biotherapy, Inc.," subject to the approval of the Company's
stockholders.
The Board of Directors believes the proposed name change reflects the
recognition of the Company name as it is referred to in the investor community
and the industry.
In the event that the Company's stockholders approve Proposal 2 of this
Proxy Statement, which includes, in part, the proposed change of the Company's
name to "Advanced Biotherapy,
DRAFT - June 20, 2000
Page 33 of 38
<PAGE> 35
Inc.," this Proposal 4 of this Proxy Statement will be moot, and the Board of
Directors will withdraw this Proposal 4 from consideration by the stockholders
at the Annual Meeting. If the Company's stockholders do not approve Proposal 2
of this Proxy Statement, but only approve this Proposal 4, the current Articles
of Incorporation will be revised to change the Company's name to "Advanced
Biotherapy, Inc."
RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and Nevada law, this Proposal
4 to change the name of the Company must be approved by the affirmative vote of
at least a majority of the shares of Common Stock present in person or by proxy
at the Annual Meeting and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL 4.
PROPOSAL 5
APPROVAL OF THE AUTHORITY OF THE BOARD OF DIRECTORS
TO EFFECT A DECREASE IN THE NUMBER OF THE COMPANY'S
COMMON SHARES IN THE FUTURE BY A 'REVERSE STOCK SPLIT'
GENERAL
The Board of Directors seeks approval of its authority to effect a decrease
in the number of shares of Company Common Stock outstanding (or shares of
Advanced Biotherapy-Delaware Common Stock if Proposal 2 shall be approved) by
means of a reverse stock split ("Reverse Stock Split") at a ratio of at least
1:4, that is, one (1) share for four (4) shares, which authority is contingent
upon the Board of Directors making a determination within one year after the
Annual Meeting that such action is in the best interest of the Corporation's
stockholders. As a consequence, for example, the Board of Directors would have
the authority in its discretion to effect a Reverse Stock Split in the future at
a ratio of one (1) share for two (2) shares, or three (3) shares, or four (4)
shares, but not one (1) share for five (5) shares. Fractional shares will be
rounded up to the next whole number. For example, in the event that the Board of
Directors were to approve a ratio of one (1) share to four (4) shares, after the
Reverse Stock Split, each Stockholder will own 1/4th of the number of shares of
Common Stock that such Stockholder owned prior to the Reverse Stock Split,
subject to such roundoff. If this Proposal 5 is approved and effectuated, the
authorized but unissued shares of Common Stock will not be reduced from, but
rather will remain, 50,000,000 shares, subject to increase to 100,000,000 shares
if Proposal 2 or Proposal 3 is approved. Moreover, in the foregoing example,
stock options outstanding would similarly be proportionately reduced by a factor
of one-fourth (1/4) and the exercise price would be increased by a factor of
four (4). The implementation of a possible future Reverse Stock Split would not
result in a change in the relative equity positions or voting power of
Stockholders, except for the effect of the elimination of fractional shares.
However, there can be no assurance that the Reverse Stock Split would not have a
material adverse effect on the total value of the Company's common stock or on
the Stockholders, whether collectively or on any Stockholder individually.
FUTURE DETERMINATION BY THE BOARD OF DIRECTORS
DRAFT - June 20, 2000
Page 34 of 38
<PAGE> 36
Notwithstanding a favorable vote by the stockholders, the Company reserves
the right by action of the Board of Directors to determine if, and when, a
Reverse Stock Split shall be effected, provided that no such Reverse Stock Split
shall occur unless the Board of Directors shall have determined that such
Reverse Stock Split is in the best interests of the Company's stockholders and
such determination, if at all, shall have been made on or prior to the date
which is the first anniversary of the date of the Annual Meeting.
As of the date of this Proxy Statement, the Board of Directors has made no
determination to effect a Reverse Stock Split.
PURPOSES FOR A REVERSE STOCK SPLIT
The Company's shares currently trade only over-the-counter on the "OTC
Bulletin Board" (the "OTC Bulletin Board"). The proposal, which grants the Board
of Directors the authorization to effect a Reverse Stock Split if the Board
deems such future possible action to be in the best interest of the
stockholders, would be designed to help the Company meet certain of the listing
requirements of the American Stock Exchange or the NASD National Market System.
The bid price of the Common Stock of the Company has been generally below
$3.00 for some time. Management believes it is in the best interest of
stockholders to approve this Proposal so that the Company's Common Stock might
trade at a level greater than the American Stock Exchange minimum bid price,
thus enabling the Company's Common Stock to satisfy such listing requirement
although the Company has not submitted a listing application and presently does
not meet certain other listing requirements. There can be no assurance that the
Company would be able to satisfy the requirements for listing of its Common
Stock on the American Stock Exchange. The Common Stock of the Company which is
traded, if at all, on the "OTC Bulletin Board" might be substantially less
liquid and less active than if the Common Stock were traded on the American
Stock Exchange or the NASD National Market System.
The Company further believes that the total number of shares of the
Company's Common Stock outstanding is disproportionately large in relation to
the Company's level of sales, net income and net worth, and that the current per
share price of Common Stock may limit the marketability of the shares because of
the reluctance of many brokerage firms and institutional investors to recommend
or trade in low priced or "penny" stocks. In addition, certain policies and
procedures in the securities industry may tend to discourage individual brokers
from dealing in penny stocks. Some of those policies and practices involve
time-consuming procedures that make the handling of lower-priced stocks
economically unattractive. The Board of Directors believes that a decrease in
the number of shares of Common Stock outstanding without material alteration of
the respective economic interests in the Company of stockholders would likely
increase the perception of, and thereby the valuation of, such shares. However,
no assurance can be given that the market price of the Common Stock would rise
in exact proportion to the reduction in the number of outstanding shares
resulting from the Reverse Stock Split.
Another projected economic benefit of the Reverse Stock Split would be a
likely reduction in the costs of trading in the shares of the Company. In most
cases trading costs include both the indirect cost of "dealer markup," that is,
the difference between the buying and selling prices of dealers in a given stock
(i.e., the "bid-ask" spread), as well as the commission
DRAFT - June 20, 2000
Page 35 of 38
<PAGE> 37
applied to a given transaction. Most broker-dealers, including both
"full-commission" and "discount" broker-dealers, use both a "bid-ask spread" and
a transaction commission in connection with trades in all OTC Bulletin
Board-listed shares. Generally speaking, a substantial increase in the price per
share of a stock may decrease both the "bid-ask" spread as a proportion of
the stock price, and the per share commission on the vast majority of retail
transactions in any listed stock.
The market price of the Common Stock is based on Company performance
and other factors, some of which may be partially or even wholly unrelated to
the number of shares outstanding.
The following table sets forth quotations for the bid prices for the
Common Stock for the periods indicated below, as reported to the Company by
Bloomberg, without adjustments for retail mark-ups, mark-downs or commissions.
These prices may not represent actual transactions:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Year Ending December 31, 2000
Bid Prices Bid Prices
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1st Quarter $0.24 $0.12 $3.937 $0.24
2nd Quarter $0.20 $0.09
3rd Quarter $0.10 $0.01
4th Quarter $0.35 $0.05
</TABLE>
No dividend has ever been declared or paid by the Company with respect to
its Common Stock. The Company does not anticipate that any dividend will be
declared or paid in the foreseeable future on the Company's Common Stock.
EFFECTS OF A REVERSE STOCK SPLIT
In the event the Board of Directors were to approve a Reverse Stock Split
on the effective date of the Reverse Stock Split, as further described below,
the number of shares of each stockholder would automatically be adjusted on the
records of the Company to the number of shares of Common Stock previously held,
divided by the share split ratio number, and no fractional shares will be issued
to any stockholder, but rather fractional shares would be rounded up to the next
whole number.
For stockholders who own less than 100 shares of the Company, the Reverse
Stock Split will result in such stockholders owning "odd lots" (i.e., lots of
less than 100 shares) of Common Stock. Odd lot shares may be more difficult to
sell, or may require a somewhat greater commission per share to sell, than
shares in lots of 100. There can be no assurances that the Reverse Stock Split
will not otherwise have a detrimental effect on the total value of the Company's
Common Stock.
DRAFT - June 20, 2000
Page 36 of 38
<PAGE> 38
CERTIFICATES AND ELIMINATION OF FRACTIONAL SHARE INTERESTS
If this Proposal 5 is approved, and if the Board of Directors determines to
undertake a Reverse Stock Split in the future, stockholders will be required to
exchange their certificates representing shares of Common Stock held prior to
the Reverse Stock Split for new certificates representing their shares after the
Reverse Stock Split. Stockholders will be furnished the necessary materials and
instructions to effect such exchange of certificates promptly following the
effective date thereof by the Company's transfer agent. CERTIFICATES
REPRESENTING SHARES OF COMMON STOCK BEFORE THE REVERSE STOCK SPLIT WILL NOT BE
TRANSFERRED ON THE BOOKS AND RECORDS OF THE COMPANY UNTIL SUCH CERTIFICATES HAVE
BEEN EXCHANGED FOR CERTIFICATES REPRESENTING SHARES OF COMMON STOCK AFTER THE
REVERSE STOCK SPLIT.
In the event any certificate representing Common Stock is not returned to
the Company, any dividends that may be declared after the effective date with
respect to the Common Stock represented thereby will be withheld until such
certificate has been properly presented for exchange, at which time all such
withheld dividends which have not yet been paid to the public official pursuant
to relevant abandoned property laws will be paid to the holder thereof or his
designee, without interest.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following description of United States federal income tax consequences
of the Reverse Stock Split is based on the Internal Revenue Code of 1986, as
amended (the "Code"), and applicable Treasury Regulations issued thereunder,
judicial authority and current administrative rulings and practices as of the
date of this Proxy Statement. This discussion should not be considered tax or
investment advice, and the tax consequences of the reverse split may not be the
same for all stockholders. In particular, this discussion does not address the
tax treatment of special classes of shareholders, including banks, insurance
companies, tax-exempt entities and foreign persons. All stockholders desiring
specification of the federal state, local and foreign tax consequences to them
should consult their individual tax advisors.
RECOMMENDATION OF BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and Nevada law, this Proposal
5 to grant authority to the Board of Directors to effect a decrease the number
of shares of the Company's Common Stock (or shares of Advanced
Biotherapy-Delaware Common Stock, if Proposal 2 shall be approved) by Reverse
Stock Split must be approved by the affirmative vote of at least a majority of
the shares of Common Stock present in person or by proxy at the Annual Meeting
and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THIS PROPOSAL 5.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, the persons
DRAFT - June 20, 2000
Page 37 of 38
<PAGE> 39
named as proxies on the enclosed proxy card or their substitutes will vote such
proxy in accordance with their discretion with respect to such matters.
AVAILABLE INFORMATION
Portions of the Company's Form 10-KSB/A for the year ended December 31,
1999, filed with the Commission on May 4, 2000, are incorporated by reference in
this Proxy Statement.
As part of this Proxy Statement, the Company also incorporates by reference
the following documents filed herewith as exhibits to this Proxy Statement:
1. Appendix A - Agreement of Merger between Advanced Biotherapy Concepts,
Inc., a Nevada corporation, and Advanced Biotherapy, Inc., a Delaware
corporation.
2. Appendix B - Certificate of Incorporation of Advanced Biotherapy, Inc., a
Delaware corporation.
3. Appendix C - Bylaws of Advanced Biotherapy, Inc., a Delaware corporation.
FORM 10-KSB
Upon written request, the Company will provide, without charge: a copy of
its Annual Report on Form 10-KSB/A (without exhibits) filed with the Securities
and Exchange Commission on May 4, 2000, to any Stockholder of record or any
Stockholder who owned Common Stock listed in the name of a bank or broker, as
nominee, at the close of business on the Record Date. Requests should be
addressed to the Company, to the attention of Edmond Buccellato, Chief Executive
Officer, 6355 Topanga Canyon Boulevard, Suite 510, Woodland Hills, California
91367, or by calling (818) 883-3956.
Board of Directors of
Advanced Biotherapy Concepts, Inc.
Dated: July , 2000
DRAFT - June 20, 2000
Page 38 of 38
<PAGE> 40
APPENDIX A
AGREEMENT OF MERGER
This Agreement of Merger (the "Merger Agreement"), made as of August ___,
2000, is between ADVANCED BIOTHERAPY CONCEPTS, INC., a Nevada corporation
("Advanced Biotherapy"), and ADVANCED BIOTHERAPY, INC., a Delaware corporation
and a wholly-owned subsidiary of Advanced Biotherapy ("New Advanced Biotherapy")
(Advanced Biotherapy and New Advanced Biotherapy collectively referred to as the
"Constituent Corporations").
RECITALS
A. Advanced Biotherapy is a corporation duly organized and existing under
the laws of the State of Nevada;
B. New Advanced Biotherapy is a corporation duly organized and existing
under the laws of the State of Delaware and is a newly-formed, wholly-owned
subsidiary of Advanced Biotherapy;
C. The Boards of Directors of the Constituent Corporations deem it
advisable and in the best interests of their respective corporations and
stockholders that Advanced Biotherapy be merged with and into New Advanced
Biotherapy, with New Advanced Biotherapy being the surviving corporation (the
"Merger");
D. The Boards of Directors of the Constituent Corporations have approved
this Merger Agreement by resolutions duly adopted by their respective Boards of
Directors in accordance with the laws of their respective jurisdictions of
incorporation; and
E. The Constituent Corporations desire to adopt this Merger Agreement as a
plan of reorganization in accordance with the provisions of Section 366 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and agreements,
and in accordance with applicable law, the parties agree as follows:
1. SURVIVING CORPORATION. At the Effective Time (as defined in Section 12),
Advanced Biotherapy shall be merged with and into New Advanced
DRAFT - June 20, 2000
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<PAGE> 41
Biotherapy, with New Advanced Biotherapy being the surviving corporation (the
"Surviving Corporation") of the Merger. At the Effective Time, the corporate
existence of Advanced Biotherapy shall cease, and the Surviving Corporation
shall succeed to all the business, properties, assets, and liabilities of the
Constituent Corporations. At the Effective Time, the name of the Surviving
Corporation shall continue to be Advanced Biotherapy Concepts, Inc.
2. AUTHORIZED SHARES. The authorized capital stock of the Surviving
Corporation shall, upon adoption of the Amended and Restated Certificate of
Incorporation described in Section 3(a), consist of 100,000,000 shares of Common
Stock, $.001 par value ("New Advanced Biotherapy Common Stock"), and 20,000,000
shares of Preferred Stock, $.001 par value ("New Advanced Biotherapy Preferred
Stock").
3. CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) The certificate of incorporation of the Surviving Corporation from
and after the Effective Time shall be the Amended and Restated Certificate of
Incorporation attached hereto as Exhibit A.
(b) The Bylaws of the Surviving Corporation from and after the
Effective Time shall be the Bylaws attached hereto as Exhibit B.
4. DIRECTORS AND OFFICERS.
(a) The directors of Advanced Biotherapy immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, to hold
office from and after the Effective Time, in accordance with the Bylaws of the
Surviving Corporation, until their respective successors are duly appointed or
elected and qualified.
(b) The officers of Advanced Biotherapy immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, to hold the
same offices from and after the Effective Time, in accordance with the Bylaws of
the Surviving Corporation, until their respective successors are duly appointed
or elected and qualified.
5. REGISTERED OFFICE. The registered office of the Surviving Corporation in
the State of Delaware shall be at 9 East Lookerman, Suite 1 (B), City of Dover,
County of Kent, Delaware 19901.
DRAFT - June 20, 2000
Page 2 of 5
<PAGE> 42
6. CORPORATE PURPOSES. The purposes for which the Surviving Corporation is
formed are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
7. TERMS OF MERGER.
(a) At the Effective Time, each issued and outstanding share of Common
Stock, $.001 par value ("Advanced Biotherapy Common Stock"), of Advanced
Biotherapy shall, automatically and without further act of either of the
Constituent Corporations or of any holder thereof, be extinguished and converted
into one issued and outstanding and fully paid and nonassessable share of New
Advanced Biotherapy Common Stock. At the Effective Time, each issued share of
Advanced Biotherapy Common Stock held in the treasury of Advanced Biotherapy
prior to the Effective Time shall, automatically and without further act of
either of the Constituent Corporations, be extinguished and converted into one
fully paid and nonassessable share of New Advanced Biotherapy Common Stock held
in the treasury of the Surviving Corporation. The holder of each share so
extinguished and converted (of record on the stockholder records of Advanced
Biotherapy at the Effective Time) shall be recorded on the books of the
Surviving Corporation as the holder of the number of shares of New Advanced
Biotherapy Common Stock that such holder is entitled to receive; and each
certificate representing one or more shares of Advanced Biotherapy Common Stock
shall be deemed, for all corporate purposes, to evidence ownership of the same
number of shares of New Advanced Biotherapy Common Stock that the holder of such
certificate is entitled to receive.
(b) Each person who, as a result of the Merger, holds one or more
certificates representing one or more shares of Advanced Biotherapy Common Stock
may surrender any such certificate to the Surviving Corporation and, upon such
surrender, the Surviving Corporation shall, within a reasonable time, deliver to
such person, in substitution and exchange therefor, one or more certificates
evidencing the number of shares of New Advanced Biotherapy Common Stock that
such person is entitled to receive in accordance with the terms of this Merger
Agreement, in substitution for the number of shares of Advanced Biotherapy
Common Stock represented by each certificate so surrendered: however, no such
holder shall be required to surrender any such certificate until such
certificate otherwise would be surrendered for transfer on the books of the
issuing corporation in the ordinary course of business.
(c) At the Effective Time, all of the issued and outstanding shares of
New Advanced Biotherapy Common Stock authorized, issued, or outstanding
DRAFT - June 20, 2000
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<PAGE> 43
immediately prior to the Effective Time shall be cancelled and cease to exist,
without any consideration being payable therefor.
(d) At the Effective Time, each option to purchase shares of Advanced
Biotherapy Common Stock outstanding immediately prior to the Effective Time
shall, automatically and without further act of either of the Constituent
Corporations, become an option to purchase shares of New Advanced Biotherapy
Common Stock, subject to the same terms and conditions and at the same option
price applicable to each such option immediately prior to the Effective Time.
(e) At the Effective Time, each right to purchase any security of
Advanced Biotherapy outstanding immediately prior to the Effective Time shall,
automatically and without further act of either of the Constituent Corporations,
become a right to purchase and identical amount and type of security of the
Surviving Corporation, subject to the same terms and conditions and at the same
exercise price applicable to such right immediately prior to the Effective Time.
(f) At the Effective Time, each outstanding debt security of Advanced
Biotherapy that is convertible into shares of Advanced Biotherapy Common Stock
shall, automatically and without further act of either of the Constituent
Corporations, become convertible into shares of New Advanced Biotherapy Common
Stock, subject to the same terms and conditions and at the same conversion price
applicable immediately prior to the Effective Time.
8. TERMINATION AND ABANDONMENT At any time prior to the Effective Time and
for any reason, this Merger Agreement may be terminated and abandoned by the
Board of Directors of Advanced Biotherapy, notwithstanding approval of this
Merger Agreement by the stockholders of either or both of the Constituent
Corporations.
9. AMENDMENT. At any time prior to the Effective Time, this Merger
Agreement may be amended, either before or after stockholder approval, by an
agreement in writing executed in the same manner as this Merger Agreement, after
due authorization thereof by the Boards of Directors of the Constituent
Corporation; except that this Merger Agreement may not be amended after
stockholder approval to the extent that such amendment would violate applicable
law.
10. APPROVAL, This Merger Agreement shall be submitted for approval by the
stockholders of Advanced Biotherapy at a special meeting of stockholders. The
DRAFT - June 20, 2000
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<PAGE> 44
approval of the Merger Agreement and the Merger by the stockholders of Advanced
Biotherapy shall be a condition precedent to the Merger.
11. GOVERNING LAW. The substantive law of the States of Nevada and
Delaware, respectively, shall govern the validity, interpretation, effect and
enforcement of this Agreement.
12. EFFECTIVE TIME OF MERGER. The Effective Time of the Merger shall be the
later of the date on which (a) a Certificate of Merger shall have been duly
filed in the office of the Secretary of State of Delaware, and (b) Articles of
Merger shall have been duly filed in the office of the Secretary of State of
Nevada (the "Effective Time").
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
ADVANCED BIOTHERAPY CONCEPTS,
INC., a Nevada corporation
By: /s/ EDMOND BUCCELLATO
------------------------------
Edmond Buccellato
CHIEF EXECUTIVE OFFICER
By: /s/ JEANNE KELLY
------------------------------
Jeanne Kelly
SECRETARY
ADVANCED BIOTHERAPY, INC., a
Delaware corporation
By: /s/ EDMOND BUCCELLATO
------------------------------
Edmond Buccellato
CHIEF EXECUTIVE OFFICER
By: /s/ JEANNE KELLY
------------------------------
Jeanne Kelly
SECRETARY
DRAFT - June 20, 2000
Page 5 of 5
<PAGE> 45
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
ADVANCED BIOTHERAPY, INC.
FIRST: The name of the corporation is Advanced Biotherapy, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware shall be at 9 East Lookerman, Suite 1 B, City of Dover, County
of Kent, Delaware 19901. The name and address of the Corporation's registered
agent in the State of Delaware is National Registered Agents, 9 East Lookerman,
Suite 1 B, City of Dover, County of Kent, Delaware 19901.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
General Corporation Law of the State of Delaware.
FOURTH:
1. The total number of shares of stock which the Corporation shall have
authority to issue is One Hundred and Twenty Million (120,000,000), consisting
of One Hundred Million (100,000,000) shares of Common Stock, $0.001 par value
per share, and Twenty Million (20,000,000) shares of Preferred Stock, $0.001 par
value per share.
2. Shares of Preferred Stock may be issued from time to time in one (1) or
more series. The Board of Directors is authorized, subject to limitations
prescribed by law, to provide by resolution of the Board of Directors for the
issuance of the shares of Preferred Stock in series to establish from time to
time the number of shares to be included in each such series, and to fix by
resolution of the Board of Directors the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions thereof. The authority of the Board of Directors with respect to
each series shall include, but not be limited to, determination of the
DRAFT - June 15, 2000
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<PAGE> 46
following: (a) the number of shares constituting that series and the distinctive
designation of that series; (b) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of
that series; (c) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether that series shall have conversion privileges, and, if so, the terms
and conditions of such conversion, including provisions for adjustment of the
conversion rate in such events as the Board of Directors shall determine; (e)
whether or not the shares of that series shall be redeemable and, if so, the
terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates; (f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms and amount
of such sinking fund; (g) the rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and the relative rights of priority, if any, of payment of shares of
that series; and (h) any other relative or participating rights, preferences and
limitations of that series. The Board of Directors is further authorized to
increase or decrease (but not below the number of shares of such class or series
then outstanding) the number of shares of any series subsequent to the issuance
of shares of that series.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute and subject to Article Sixth hereof, the Board of Directors is expressly
authorized to adopt, repeal, rescind, alter or amend in any respect the Bylaws
of the Corporation (the "Bylaws").
SIXTH: Notwithstanding Article Fifth hereof, the Bylaws may be adopted,
rescinded, altered or amended in any respect by the stockholders of the
Corporation, but only by the affirmative vote of the holders of not less than 66
2/3% of all outstanding shares of common stock; PROVIDED, HOWEVER, that where
such action is approved by a majority of the directors the affirmative vote of
only a majority of the holders of all outstanding shares of common stock shall
be required for approval of such action.
SEVENTH: The business and affairs of the Corporation shall be managed by
and under the direction of the Board of Directors. Except as may otherwise be
provided pursuant to Section 2 of Article Fourth hereof in connection with
rights to elect additional directors under specified circumstances which may be
granted to the holders
DRAFT - June 15, 2000
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<PAGE> 47
any series of Preferred Stock, the exact number of directors of the Corporation
shall be determined from time to time by a Bylaw or Amendment thereto provided
that the number of directors shall not be reduced to less than three (3), except
that there need be only as many directors as there are stockholders in the event
that the outstanding shares are held of record by fewer than three (3)
stockholders, and elections of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
EIGHTH: The powers of the incorporator are to terminate upon the filing of
this certificate of incorporation. The name and mailing address of the persons
who are to serve as the directors of the Corporation until the first annual
meeting of stockholders or until their successors are elected and qualify are:
Name Address
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
NINTH: Each director shall serve until his successor is elected and
qualified or until his death, resignation or removal; and no decrease in the
authorized number of directors shall shorten the term of any incumbent director;
and additional directors, elected pursuant to Section 2 of Article Fourth hereof
in connection with rights to elect such additional directors under specified
circumstances which may be granted to holders of any series of Preferred Stock
shall serve for such term or terms and pursuant to such other provisions as are
specified in the resolution of the Board of Directors establishing such series.
TENTH: Except as may otherwise be provided pursuant to Section 2 of Article
Fourth hereof in connection with rights to elect additional directors under
specified circumstances which may be granted to the holders of any series of
Preferred Stock, newly created directorships resulting from any increase in the
number of directors, or any vacancies on the Board of Directors resulting from
death, resignation, removal or other causes, shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until such director's death, resignation or
removal, whichever first occurs.
DRAFT - June 15, 2000
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<PAGE> 48
ELEVENTH: Except for such additional directors as may be elected by the
holders of any series of Preferred Stock pursuant to the terms thereof
established by a resolution of the Board of Directors pursuant to Section 2 of
Article Fourth hereof, any director may be removed from office with or without
cause and only by the affirmative vote of the holders of not less than 66 2/3%
of outstanding shares of common stock; PROVIDED, HOWEVER, that where such
removal is approved by a majority of the directors the affirmative vote of only
a majority of the holders of all outstanding shares of common stock shall be
required for approval of such removal.
TWELFTH: Any action required or permitted to be taken by the stockholders
of the Corporation shall be effected at a duly called Annual Meeting or at a
special meeting of stockholders of the Corporation; PROVIDED, HOWEVER, in the
event that where such action is approved by the majority of the directors, such
action required or permitted to be taken by the stockholders of the Corporation
may be effected either at a duly called Annual Meeting or at a special meeting
of stockholders of the Corporation or by the written consent of the stockholders
of the Corporation.
THIRTEENTH: Meetings of stockholders of the Corporation may be held within
or without the State of Delaware, as the Bylaws may provide. The books of the
Corporation may be kept (subject to any provision of applicable law) outside the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Bylaws.
FOURTEENTH: The provisions set forth in this Article Fourteenth and in
Articles Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh and Twelfth
hereof may not be repealed, rescinded, altered or amended in any respect, and no
other provision or provisions may be adopted which impair(s) in any respect the
operation or effect of any such provision, except by the affirmative vote of the
holders of not less than 66 2/3% of all outstanding shares of common stock;
PROVIDED, HOWEVER, that where such action is approved by a majority of the
directors the affirmative vote of only a majority of the holders of all
outstanding shares of common stock shall be required for approval of such
action.
FIFTEENTH: The Corporation reserves the right to adopt, repeal, rescind,
alter or amend in any respect any provision contained in this Certificate in the
manner now or hereafter prescribed by applicable law, and all rights conferred
on stockholders herein are granted subject to this reservation. Notwithstanding
the preceding sentence, the provisions set forth in Articles Fifth, Sixth,
Seventh, Eighth, Ninth, Tenth, Eleventh,
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Twelfth, and Fourteenth may not be repealed, rescinded, altered or amended in
any respect, and no other provision or provisions may be adopted which impair(s)
in any respect the operation or effect of any such provision, unless such action
is approved as specified in Article Fourteenth hereof.
SIXTEENTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law,
or (d) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
SEVENTEENTH: No contract or other transaction of the Corporation with any
other person, firm or corporation, or in which this corporation is interested,
shall be affected or invalidated by: (a) the fact that any one or more of the
directors or officers of the Corporation is interested in or is a director or
officer of such other firm or corporation; or, (b) the fact that any director or
officer of the Corporation, individually or jointly with others, may be a party
to or may be interested in any such contract or transaction, so long as the
contract or transaction is authorized, approved or ratified at a meeting of the
Board of Directors by sufficient vote thereon by directors not interested
therein, to which such fact of relationship or interest has been disclosed, or
the contract or transaction has been approved or ratified by vote or written
consent of the stockholders entitled to vote, to whom such fact of relationship
or interest has been disclosed, or so long as the contract or transaction is
fair and reasonable to the Corporation.
I, the undersigned, being the incorporator, for the purposes of forming a
corporation under the laws of the State of Delaware, do make, file and record
this certificate of incorporation, do certify that the facts herein stated are
true and,
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accordingly, have hereto set my hand and seal on this _______day of
_______________, 2000.
--------------------------------
Edmond Buccellato, Incorporator
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APPENDIX C
BYLAWS
OF
ADVANCED BIOTHERAPY, INC.
(A DELAWARE CORPORATION)
The foregoing are the Bylaws of ADVANCED BIOTHERAPY, INC., a Delaware
corporation (the "Corporation"), effective as of ________ __, 2000, after
approval by the Corporation's Board of Directors and stockholders:
ARTICLE I
Offices
Section 1.01. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the Corporation shall be located at 6355 Topanga Canyon Boulevard, Suite 510,
Woodland Hills, California 91367. The Board of Directors of the Corporation (the
"Board of Directors") may change the location of said principal executive
office.
Section 1.02. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of the
Corporation shall be held at a date and at such time as the Board of Directors
shall determine. At each annual meeting of stockholders, directors shall be
elected in accordance with the provisions of Section 3.03 hereof and any other
proper business may be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by a majority of the Board of
Directors, by
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the Chairman of the Board or by holders of not less than fifty percent (50%) of
the voting power of all outstanding shares of voting stock regardless of class
and voting together as a single voting class. The term "voting stock" as used in
these Bylaws shall have the meaning set forth in Section 203(c) of the Delaware
General Corporation Law. Special meetings may not be called by any other person
or persons. Each special meeting shall be held at such date and time as is
requested by the person or persons calling the meeting, within the limits fixed
by law.
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board of
Directors or, if no such determination is made, at such place as may be
determined by the Chairman of the Board. If no location is so determined, any
annual or special meeting shall be held at the principal executive office of the
Corporation.
Section 2.04. NOTICE OF MEETINGS. Written notice of each annual or special
meeting of stockholders stating the date and time when, and the place where, it
is to be held shall be delivered either personally or by mail to stockholders
entitled to vote at such meeting not less than ten (10) nor more than sixty (60)
days before the date of the meeting. The purpose or purposes for which the
meeting is called may, in the case of an annual meeting, and shall, in the case
of a special meeting, also be stated. If mailed, such notice shall be directed
to a stockholder at his address as it shall appear on the stock books of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be mailed to some other address,
in which case such notice shall be mailed to the address designated in such
request.
Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine subject to the requirements of applicable
law and, as to matters not governed by such rules and procedures, as the
chairman of such meeting shall determine. The chairman of any annual or special
meeting of stockholders shall be the Chairman of the Board. The Secretary, or in
the absence of the Secretary, a person designated by the Chairman of the Board,
shall act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders of the Corporation,
the presence, in person or by proxy, of the holders of record of a majority of
the shares then issued and outstanding and entitled to vote at the meeting shall
constitute a quorum for the transaction of business; PROVIDED, HOWEVER, that
this Section 2.06 shall not affect any different requirement which may exist
under statute, pursuant to the rights of
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any authorized class or series of stock, or under the Certificate of
Incorporation of the Corporation, as amended or restated from time to time (the
"Certificate"), for the vote necessary for the adoption of any measure governed
thereby.
In the absence of a quorum, the stockholders present in person or by proxy,
by majority vote and without further notice, may adjourn the meeting from time
to time until a quorum is attained. At any reconvened meeting following such
adjournment at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally notified.
Section 2.07. VOTES REQUIRED. The affirmative vote of a majority of the
shares present in person or represented by proxy at a duly called meeting of
stockholders of the Corporation, at which a quorum is present and entitled to
vote on the subject matter, shall be sufficient to take or authorize action upon
any matter which may properly come before the meeting, except that the election
of directors shall be by plurality vote, unless the vote of a greater or
different number thereof is required by statute, by the rights of any authorized
class of stock or by the Certificate.
Unless the Certificate or a resolution of the Board of Directors adopted in
connection with the issuance of shares of any class or series of stock provides
for a greater or lesser number of votes per share, or limits or denies voting
rights, each outstanding share of stock, regardless of class or series, shall be
entitled to one (l) vote on each matter submitted to a vote at a meeting of
stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of record by
him either in person or by proxy executed in writing (which shall include
writings sent by telex, telegraph, cable or facsimile transmission) by the
stockholder himself or by his duly authorized attorney-in-fact. No proxy shall
be valid after three (3) years from its date, unless the proxy provides for a
longer period. Each proxy shall be in writing, subscribed by the stockholder or
his duly authorized attorney-in-fact, and dated, but it need not be sealed,
witnessed or acknowledged.
Section 2.09. STOCKHOLDER ACTION. Any action required or permitted to be
taken by the stockholders of the Corporation must be effect at a duly called
Annual Meeting or at a special meeting of stockholders of the Corporation.
Section 2.10. LIST OF STOCKHOLDERS. The Secretary of the Corporation shall
prepare and make (or cause to be prepared and made), at least ten (10) days
before
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every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of,
and the number of shares registered in the name of, each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
duration thereof, and may be inspected by any stockholder who is present.
Section 2.11. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint Inspectors of Election to act
at such meeting or at any adjournment or adjournments thereof. If such
Inspectors are not so appointed or fail or refuse to act, the chairman of any
such meeting may (and, upon the demand of any stockholder or stockholder's
proxy, shall) make such an appointment.
The number of Inspectors of Election shall be one (1) or three (3). If
there are three (3) Inspectors of Election, the decision, act or certificate of
a majority shall be effective and shall represent the decision, act or
certificate of all. No such Inspector need be a stockholder of the Corporation.
Subject to any provisions of the Certificate of Incorporation, the
Inspectors of Election shall determine the number of shares outstanding, the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies; they shall receive
votes, ballots or consents, hear and determine all challenges and questions in
any way arising in connection with the right to vote, count and tabulate all
votes or consents, determine when the polls shall close and determine the
result; and finally, they shall do such acts as may be proper to conduct the
election or vote with fairness to all stockholders. On request, the Inspectors
shall make a report in writing to the secretary of the meeting concerning any
challenge, question or other matter as may have been determined by them and
shall execute and deliver to such secretary a certificate of any fact found by
them.
Section 2.12. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action
required to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the
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holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the Corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be made by
hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the date
the earliest dated consent is delivered to the Corporation, a written consent or
consents signed by a sufficient number of holders to take action are delivered
to the Corporation in the manner prescribed in the first paragraph of this
Section.
ARTICLE III
Directors
Section 3.01. POWERS. The business and affairs of the Corporation shall be
managed by and be under the direction of the Board of Directors. The Board of
Directors shall exercise all the powers of the Corporation, except those that
are conferred upon or reserved to the stockholders by statute, the Certificate
or these Bylaws.
Section 3.02. NUMBER. The number of directors shall be fixed from time to
time by resolution of the Board of Directors but shall not be less than three
(3) nor more than eleven (11).
Section 3.03. ELECTION AND TERM OF OFFICE. Each director shall serve until
his successor is elected and qualified or until his death, resignation or
removal, no decrease in the authorized number of directors shall shorten the
term of any incumbent director, and additional directors elected in connection
with rights to elect such additional directors under specified circumstances
which may be granted to the holders of any series of Preferred Stock shall not
be included in any class, but shall serve for such term or terms and pursuant to
such other provisions as are specified in the resolution of the Board of
Directors establishing such series.
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Section 3.04. ELECTION OF CHAIRMAN OF THE BOARD. At the organizational
meeting immediately following the annual meeting of stockholders, the directors
shall elect a Chairman of the Board from among the directors who shall hold
office until the corresponding meeting of the Board of Directors in the next
year and until his successor shall have been elected or until his earlier
resignation or removal. Any vacancy in such office may be filled for the
unexpired portion of the term in the same manner by the Board of Directors at
any regular or special meeting.
Section 3.05. REMOVAL. Any director may be removed from office only as
provided in the Certificate of Incorporation.
Section 3.06. VACANCIES AND ADDITIONAL DIRECTORSHIPS. Newly created
directorships resulting from death, resignation, disqualification, removal or
other cause shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of directors
in which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
Section 3.07. REGULAR AND SPECIAL MEETINGS. Regular meetings of the Board
of Directors shall be held immediately following the annual meeting of the
stockholders; without call at such time as shall from time to time be fixed by
the Board of Directors; and as called by the Chairman of the Board in accordance
with applicable law.
Special meetings of the Board of Directors shall be held upon call by or at
the direction of the Chairman of the Board, the President or any two (2)
directors, except that when the Board of Directors consists of one (1) director,
then the one director may call a special meeting. Except as otherwise required
by law, notice of each special meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least three (3)
days before the day on which the meeting is to be held, or shall be sent to him
at such place by facsimile transmission (with evidence of receipt), electronic
mailing (with evidence of receipt), or telephoned or delivered to him
personally, not later than the day before the day on which the meeting is to be
held. Such notice shall state the time and place of such meeting, but need not
state the purpose or purposes thereof, unless otherwise required by law, the
Certificate of Incorporation or these Bylaws ("Bylaws").
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Notice of any meeting need not be given to any director who shall attend
such meeting in person (except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened) or who shall
waive notice thereof, before or after such meeting, in a signed writing.
Section 3.08. QUORUM. At all meetings of the Board of Directors, a majority
of the fixed number of directors shall constitute a quorum for the transaction
of business, except that when the Board of Directors consists of one (1)
director, then the one director shall constitute a quorum.
In the absence of a quorum, the directors present, by majority vote and
without notice other than by announcement, may adjourn the meeting from time to
time until a quorum shall be present. At any reconvened meeting following such
an adjournment at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 3.09. VOTES REQUIRED. Except as otherwise provided by applicable
law or by the Certificate of Incorporation, the vote of a majority of the
directors present at a meeting duly held at which a quorum is present shall be
sufficient to pass any measure.
Section 3.10. PLACE AND CONDUCT OF MEETINGS. Each regular meeting and
special meeting of the Board of Directors shall be held at a location determined
as follows: The Board of Directors may designate any place, within or without
the State of Delaware, for the holding of any meeting. If no such designation is
made: (a) any meeting called by a majority of the directors shall be held at
such location, within the county of the Corporation's principal executive
office, as the directors calling the meeting shall designate; and (b) any other
meeting shall be held at such location, within the county of the Corporation's
principal executive office, as the Chairman of the Board may designate or, in
the absence of such designation, at the Corporation's principal executive
office. Subject to the requirements of applicable law, all regular and special
meetings of the Board of Directors shall be conducted in accordance with such
rules and procedures as the Board of Directors may approve and, as to matters
not governed by such rules and procedures, as the chairman of such meeting shall
determine. The chairman of any regular or special meeting shall be the Chairman
of the Board, or, in his absence, a person designated by the Board of Directors.
The Secretary, or, in the absence of the Secretary, a person designated by the
chairman of the meeting, shall act as secretary of the meeting.
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Section 3.11. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of
the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
Section 3.12. FEES AND COMPENSATION. Directors shall be paid such
compensation as may be fixed from time to time by resolution of the Board of
Directors: (a) for their usual and contemplated services as directors; (b) for
their services as members of committees appointed by the Board of Directors,
including attendance at committee meetings as well as services which may be
required when committee members must consult with management staff; and (c) for
extraordinary services as directors or as members of committees appointed by the
Board of Directors, over and above those services for which compensation is
fixed pursuant to items (a) and (b) in this Section 3.12. Compensation may be in
the form of an annual retainer fee or a fee for attendance at meetings, or both,
or in such other form or on such basis as the resolutions of the Board of
Directors shall fix. Directors shall be reimbursed for all reasonable expenses
incurred by them in attending meetings of the Board of Directors and committees
appointed by the Board of Directors and in performing compensable extraordinary
services. Nothing contained herein shall be construed to preclude any director
from serving the Corporation in any other capacity, such as an officer, agent,
employee, consultant or otherwise, and receiving compensation therefor.
Section 3.13. COMMITTEES OF THE BOARD OF DIRECTORS. To the full extent
permitted by applicable law, the Board of Directors may from time to time
establish committees, including, but not limited to, standing or special
committees and an executive committee with authority and responsibility for
bookkeeping, with authority to act as signatories on Corporation bank or similar
accounts and with authority to choose attorneys for the Corporation and direct
litigation strategy, which shall have such duties and powers as are authorized
by these Bylaws or by the Board of Directors. Committee members, and the
chairman of each committee, shall be appointed by the Board of Directors. The
Chairman of the Board, in conjunction with the several committee chairmen, shall
make recommendations to the Board of Directors for its final action concerning
members to be appointed to the several committees of the Board of Directors. Any
member of any committee may be removed at any time with or without cause by the
Board of Directors. Vacancies which occur on any committee shall be filled by a
resolution of the Board of Directors. If any vacancy shall occur in any
committee by
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reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, so long as a quorum is present, may
continue to act until such vacancy is filled by the Board of Directors. The
Board of Directors may, by resolution, at any time deemed desirable, discontinue
any standing or special committee. Members of standing committees, and their
chairmen, shall be elected yearly at the regular meeting of the Board of
Directors which is held immediately following the annual meeting of
stockholders. The provisions of Sections 3.07, 3.08, 3.09 and 3.10 of these
Bylaws shall apply, altered where necessary, to any such Committee of the Board
of Directors.
ARTICLE IV
Officers
Section 4.01. DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Chairman of the Board, a President, Treasurer, such senior vice
presidents and vice presidents as the Board of Directors deems appropriate, a
Secretary and such other officers as the Board of Directors may deem
appropriate. These officers shall be elected annually by the Board of Directors
at the organizational meeting immediately following the annual meeting of
stockholders, and each such officer shall hold office until the corresponding
meeting of the Board of Directors in the next year and until his successor shall
have been elected and qualified or until his earlier resignation, death or
removal. Any vacancy in any of the above offices may be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors
shall preside at all meetings of the directors and shall have such other powers
and duties as may from time to time be assigned to him by the Board of
Directors.
Section 4.03. PRESIDENT. The President shall be the chief executive officer
of the Corporation and shall, subject to the power of the Board of Directors,
have general supervision, direction and control of the business and affairs of
the Corporation. He shall preside at all meetings of the stockholders and, in
the absence of the Chairman of the Board, at all meetings of the directors. He
shall have the general powers and duties of management usually vested in the
office of president of a corporation, and shall have such other duties as may be
assigned to him from time to time by the Board of Directors.
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Section 4.04. TREASURER. The Treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct books and records of account of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by the directors.
The Treasurer shall deposit all moneys and other valuables in the name and
to the credit of the Corporation with such depositories as may be designated by
the Board of Directors. He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, shall render to the President and directors,
whenever they request it, an account of all of his transactions as the Treasurer
and of the financial condition of the Corporation, and shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or the Bylaws.
Section 4.05. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board of Directors and all committees. He
shall be the custodian of the corporate seal and shall affix it to all documents
which he is authorized by law or the Board of Directors to sign and seal. He
also shall perform such other duties as may be assigned to him from time to time
by the Board of Directors or the Chairman of the Board or President.
Section 4.06. ASSISTANT OFFICERS. The President may appoint one or more
assistant secretaries and such other assistant officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as may be specified from time to time by
the President.
Section 4.07. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case of
absence or disability of an officer of the Corporation or for any other reason
that may seem sufficient to the Board of Directors, the Board of Directors or
any officer designated by it, or the President, may, for the time of the absence
or disability, delegate such officer's duties and powers to any other officer of
the Corporation.
Section 4.08. OFFICERS HOLDING TWO OR MORE OFFICES. The same person may
hold any two (2) or more of the above-mentioned offices.
Section 4.09. COMPENSATION. The Board of Directors shall have the power to
fix the compensation of all officers and employees of the Corporation.
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Section 4.10. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors, to the President, or to the Secretary
of the Corporation. Any such resignation shall take effect at the time specified
therein unless otherwise determined by the Board of Directors. The acceptance of
a resignation by the Corporation shall not be necessary to make it effective.
Section 4.11. REMOVAL. Any officer of the Corporation may be removed, with
or without cause, by the affirmative vote of a majority of the entire Board of
Directors. Any assistant officer of the Corporation may be removed, with or
without cause, by the President or by the Board of Directors.
Section 4.12 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V
Indemnification of Directors, Officers
Employees end other Corporate Agents
Section 5.01. ACTION, ETC. OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise (all such persons being
referred to hereinafter as an "Agent"), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his
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conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
Section 5.02. ACTION, ETC., BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was an Agent against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
Section 5.03. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Sections 5.01 or 5.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the Agent is proper in the circumstances
because the Agent has met the applicable standard of conduct set forth in
Sections 5.01 and 5.02 hereof, which determination is made (a) by the Board of
Directors, by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
Section 5.04. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article V, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense
DRAFT - June 15, 2000
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<PAGE> 63
of any action, suit or proceeding referred to in Sections 5.01 or 5.02 hereof,
or in defense of any claim, issue or matter therein, such Agent shall be
indemnified against expenses, including attorneys' fees actually and reasonably
incurred by such Agent in connection therewith.
Section 5.05. ADVANCES OF EXPENSES. Except as limited by Section 5.06 of
this Article V, expenses incurred by an Agent in defending any civil or criminal
action, suit, or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if the Agent shall
undertake to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified as authorized in this Article V.
Notwithstanding the foregoing, no advance shall be made by the Corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum of disinterested directors, or (if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested directors so
directs) by independent legal counsel in a written opinion, that, based upon the
facts known to the Board of Directors or counsel at the time such determination
is made, such person acted in bad faith and in a manner that such person did not
believe to be in or not opposed to the best interest of the Corporation, or,
with respect to any criminal proceeding, that such person believed or had
reasonable cause to believe his conduct was unlawful.
Section 5.06. RIGHT OF AGENT TO INDEMNIFICATION UPON APPLICATION; PROCEDURE
UPON APPLICATION. Any indemnification or advance under this Article V shall be
made promptly, and in any event within ninety days, upon the written request of
the Agent, unless a determination shall be made in the manner set forth in the
second sentence of Subsection 5.05 hereof that such Agent acted in a manner set
forth therein so as to justify the Corporation's not indemnifying or making an
advance to the Agent. The right to indemnification or advances as granted by
this Article V shall be enforceable by the Agent in any court of competent
jurisdiction, if the Board of Directors or independent legal counsel denies the
claim, in whole or in part, or if no disposition of such claim is made within
ninety (90) days. The Agent's expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
proceeding shall also be indemnified by the Corporation.
Section 5.07 RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Sections
5.01 or 5.02 of this Article V is not paid in full by the Corporation within
sixty (60) days after a written claim has been received by the Corporation,
except in the case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty (20) days, the indemnitee may at any time
thereafter bring suit against the
DRAFT - June 15, 2000
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<PAGE> 64
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation, including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article V or otherwise shall be on the Corporation.
Section 5.08. OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article V
shall not be deemed exclusive of any other rights to which an Agent seeking
indemnification or advancement of expenses may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be an Agent and shall inure
to the benefit of the heirs, executors and administrators of such a person. All
rights to indemnification under this Article V shall be deemed to be provided by
a contract between the Corporation and the Agent who serves in such capacity at
any time while these Bylaws and other relevant provisions of the Delaware
General Corporation Law and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations then
existing.
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<PAGE> 65
Section 5.09. INSURANCE. Upon resolution passed by the Board of Directors,
the Corporation may purchase and maintain insurance on behalf of any person who
is or was an Agent against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under the provisions of this Article V.
Section 5.10. CONSTITUENT CORPORATIONS. For the purposes of this Article V,
references to "the Corporation" shall include, in addition to the resulting
corporation, all constituent corporations (including all constituents of
constituents) absorbed in a consolidation or merger as well as the resulting or
surviving corporation, which, if the separate existence of such constituent
corporation had continued, would have had power and authority to indemnify its
Agents, so that any Agent of such constituent corporation shall stand in the
same position under the provisions of the Article V with respect to the
resulting or surviving corporation as that Agent would have with respect to such
constituent corporation if its separate existence had continued.
Section 5.11. OTHER ENTERPRISES, FINES, AND SERVING AT CORPORATION'S
REQUEST. For purposes of this Article V, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
V.
Section 5.12. SAVINGS CLAUSE. If this Article V or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Agent as to expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article V that shall not have been invalidated, or by any other applicable law.
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<PAGE> 66
ARTICLE VI
Stock
Section 6.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board or a
Vice-Chairman of the Board or the President or a Vice President, together with
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary. Any or all of the signatures on any certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
Section 6.02. TRANSFER OF SHARES. Shares of stock shall be transferable on
the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's transfer
agent, if the Corporation has a transfer agent, or to the Corporation's
registrar, if the Corporation has a registrar, or to the Secretary, if the
Corporation has neither a transfer agent nor a registrar. The Board of Directors
shall have power and authority to make such other rules and regulations
concerning the issue, transfer and registration of certificates of the
Corporation's stock as it may deem expedient.
Section 6.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have one
or more transfer agents and one or more registrars of its stock whose respective
duties the Board of Directors or the Secretary may, from time to time, define.
No certificate of stock shall be valid until countersigned by a transfer agent,
if the Corporation has a transfer agent, or until registered by a registrar, if
the Corporation has a registrar. The duties of transfer agent and registrar may
be combined.
Section 6.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
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<PAGE> 67
Section 6.05. RECORD DATES. The Board of Directors may fix, in advance, a
date as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or in order to make a
determination of stockholders for any other proper purpose. Such date in any
case shall be not more than sixty (60) days, and in case of a meeting of
stockholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors.
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<PAGE> 68
PROXY
ADVANCED BIOTHERAPY CONCEPTS, INC.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
FOR AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 24, 2000
The undersigned stockholder appoints Edmond Buccellato and Alexander L.
Cappello, or either of them, as proxy with full power of substitution, to vote
the shares of voting common stock of Advanced Biotherapy Concepts, Inc., a
Nevada corporation (the "Company"), which the undersigned is entitled to vote at
an Annual Meeting of Stockholders to be held at the Marriott Hotel, Los Angeles
International Airport, 5855 West Century Boulevard, Los Angeles, California
90045 on August 24, 2000, at 4:00 p.m., local time, and at any adjournments
thereof (the "Meeting"), upon matters properly coming before the meeting, as set
forth in the Notice of Annual Meeting and Proxy Statement, both of which have
been received by the undersigned. Without otherwise limiting the general
authorization given hereby, such proxy is instructed to vote as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE PROPOSALS INDICATED ON THIS CARD AND AS SUCH
PROXIES DEEM ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
1. To elect to the Board of Directors eight (8) directors to serve until the
next Annual Meeting of Stockholders of the Company and until their
successors are elected and qualified, or until death, resignation or
removal.
[ ] FOR all nominees listed herein (except as marked up to the contrary
below).
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name listed below)
SIMON SKURKOVICH, M.D. BORIS SKURKOVICH, M.D.
LAWRENCE LOOMIS EDMOND BUCCELLATO
LEONARD MILLSTEIN PAUL J. MARANGOS
ALEXANDER L. CAPPELLO JOHN M. BENDHEIM
2. To approve and adopt the Agreement of Merger pursuant to which the Company
will be merged into its new, wholly-owned Delaware subsidiary resulting in
the reincorporation of the Company to Delaware from Nevada, the adoption of
a new corporate name,
<PAGE> 69
"Advanced Biotherapy, Inc.," the adoption of the Certificate of
Incorporation and the Bylaws of Advanced Biotherapy, Inc., which have the
effect of adopting certain measures affecting stockholders' rights,
increasing the authorized number of shares of common stock to 100,000,000
shares and authorizing 20,000,000 shares of preferred stock, all as more
fully described in the Proxy Statement. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve and adopt an amendment to the Company's Articles of
Incorporation to increase the authorized number of shares of common stock
to 100,000,000 shares and to authorize 20,000,000 shares of preferred
stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve and adopt an amendment to the Company's Articles of
Incorporation to change the Company's name to "Advanced Biotherapy, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve the authority of the Board of Directors, which authority is
contingent upon the Board of Directors making a determination within one
year after the Annual Meeting that such action is in the best interest of
the Corporation's stockholders, to effect a decrease in the number of
issued and outstanding shares of the Corporation's common stock (or shares
of Advanced Biotherapy, Inc. common stock if Proposal 2 shall be approved)
by means of a reverse stock split in a range not to exceed a one-for-four
reverse split.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In the discretion of the Board of Directors, the proxy is authorized to
vote upon such other business as may properly come before the meeting.
DATED:
--------------------- -------------------------------------------
Signature
-------------------------------------------
Signature of joint holder (if applicable)
-------------------------------------------
Print Name(s)
(Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are jointly held, each holder must sign. If a corporation, please sign in
full corporate name by President or other authorized officer and Secretary or
other additional officer. If a partnership, trust or other entity, please sign
in the partnership or trust or other entity name by an authorized person).
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE CHECK THE BOXES ABOVE
AND, IF DESIRED, MARK ANY INDIVIDUAL DIRECT-NOMINEE'S NAME, SIGN, DATE AND
RETURN THIS PROXY TO AMERICAN STOCK TRANSFER &
<PAGE> 70
TRUST, 40 WALL STREET, NEW YORK, NEW YORK 10005, ATTN: PROXY SERVICES,
IN THE SELF-ADDRESSED ENVELOPE PROVIDED.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY CARD ARE DIRECTORS OR OFFICERS OF
THE COMPANY. A STOCKHOLDER HAS THE RIGHT TO APPOINT A PERSON OTHER THAN THE
PERSON NAMED IN THE ENCLOSED PROXY CARD TO ATTEND AND ACT FOR HIM ON HIS BEHALF
AT THE MEETING. TO EXERCISE THIS RIGHT, A STOCKHOLDER SHALL STRIKE OUT THE NAMES
OF THE PERSONS NAMED IN THE PROXY CARD AND INSERT THE NAME OF HIS OR HER NOMINEE
IN THE BLANK SPACE PROVIDED, OR COMPLETE ANOTHER PROXY CARD. THE COMPLETED PROXY
CARD SHOULD BE DEPOSITED WITH THE COMPANY'S TRANSFER AGENT, AMERICAN STOCK
TRANSFER & TRUST, 40 WALL STREET, NEW YORK, NEW YORK 10005, AT LEAST 10 DAYS
PRIOR TO THE MEETING OR DELIVERED TO THE COMPANY AT 6355 TOPANGA CANYON
BOULEVARD, CALIFORNIA 91367 AT LEAST 48 HOURS BEFORE THE TIME OF THE MEETING OR
ANY ADJOURNMENT THEREOF. IN ADDITION, A STOCKHOLDER MAY REVOKE A PROXY
PREVIOUSLY GIVEN BY ATTENDING THE ANNUAL MEETING IN PERSON AND VOTING.
