<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities and Exchange Act of 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
SVI HOLDINGS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(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:
--------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
<PAGE>
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):
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------
[ ] 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
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------------
2) Form, Schedule or Registration Statement Number:
-------------------------------------------------------------
3) Filing party:
-------------------------------------------------------------
4) Date filed:
-------------------------------------------------------------
<PAGE>
July ___, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
on Monday, August 30, 1999 at 9:00 a.m., Pacific Daylight Time. The meeting will
be held at La Valencia Hotel, 1132 Prospect Street, La Jolla, California 92037.
The matters to be voted upon at the meeting will be the election of
directors, the approval of the Company's change in state of incorporation from
Nevada to Delaware, including a change in the corporate name to "SVI Systems,
Inc." and other related changes to the Company's Articles of Incorporation and
Bylaws, and ratification of the Company's continued engagement of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year ending
March 31, 2000.
Please complete and sign the enclosed proxy card and return it
promptly. This will ensure that your shares are represented at the meeting even
if you cannot attend. Returning your proxy card to us will not prevent you from
voting in person at the meeting if you are present and wish to do so.
Thank you for your cooperation in returning your proxy card as promptly
as possible. We hope to see many of you at our meeting in La Jolla.
Very truly yours,
Barry M. Schechter
Chairman of the Board
<PAGE>
SVI HOLDINGS, INC.
7979 Ivanhoe Avenue, Suite 500
La Jolla, California 92037
(858) 551-2365
-----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------------------------------------------------
TO BE HELD ON
August 30, 1999
-----------------------------------------------------------------
TO ALL STOCKHOLDERS:
An annual meeting of the stockholders of SVI Holdings, Inc. (the
"Company") will be held on August 30, 1999 at 9:00 a.m., Pacific Daylight Time.
The meeting will be held at La Valencia Hotel, 1132 Prospect Street, La Jolla,
California 92037. The following items will be on the agenda:
1. The election of eight directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected
and qualified;
2. The approval of the Company's change of its state of
incorporation from Nevada to Delaware, including
o a change of the corporate name to "SVI Systems, Inc."
o an increase in the authorized common stock from
50,000,000 shares to 100,000,000 shares, and
o other related changes to the Company's Articles of
Incorporation and Bylaws;
3. The ratification of the Company's continued engagement of
Deloitte & Touche LLP as the Company's independent auditors
for the fiscal year ending March 31, 2000; and
4. The transaction of any other business which may properly come
before the meeting.
<PAGE>
Only stockholders of record at the close of business on July 30, 1999
will be entitled to vote at this meeting.
Please execute and return the accompanying proxy card as soon as
possible. Any Stockholder who signs and returns the accompanying proxy may
revoke it at any time before it is exercised.
By Order of the Board of Directors
/s/ David L. Reese
DAVID L. REESE
Secretary
La Jolla, California
July ___, 1999
<PAGE>
SVI HOLDINGS, INC.
7979 Ivanhoe Avenue, Suite 500
La Jolla, California 92037
(858) 551-2365
-----------------------------------------
PROXY STATEMENT
-----------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 30, 1999
-----------------------------------------
THE ACCOMPANYING PROXY IS SOLICITED
BY THE BOARD OF DIRECTORS OF SVI HOLDINGS, INC.
-----------------------------------------
An annual meeting of the Stockholders ("Annual Meeting") of SVI
Holdings, Inc. (the "Company" or "SVI Holdings") will be held at La Valencia
Hotel, 1132 Prospect Street, La Jolla, California 92037, on August 30, 1999 at
9:00 a.m. Pacific Daylight Time.
The purposes of the Annual Meeting are:
1) to elect eight directors;
2) to approve the Company's reincorporation in Delaware from
Nevada, including
o a change in corporate name to "SVI Systems, Inc."
o an increase in the authorized common stock from
50,000,000 shares to 100,000,000 shares, and
o related changes to the Company's Articles of
Incorporation and Bylaws;
3) to ratify the Company's continued engagement of Deloitte &
Touche LLP as the Company's independent auditors for the
fiscal year ending March 31, 2000; and
4) to conduct any other business which may properly come before
the meeting.
<PAGE>
The Company anticipates that this Proxy Statement and the accompanying
form of proxy will be first sent or given to stockholders on or about August 6,
1999.
Financial information for the Company's fiscal year ended March 31,
1999 is available in the Company's March 31, 1999 Report on Form 10-KSB.
Stockholders receiving this Proxy Statement are simultaneously receiving an
annual report containing a copy of the Company's Form 10-KSB for the fiscal year
ended March 31, 1999. The Company will provide an additional copy of the latest
Form 10-KSB or a Form 10-KSB for a prior fiscal year without charge, to each
record or beneficial owner of its common stock on the record date, if so
requested. If the requestor asks the Company to provide copies of exhibits to
the Form 10-KSB, there will be a reasonable charge for copies of the exhibits to
the report. Requests for these copies should be directed to the Company at 7979
Ivanhoe Avenue, Suite 500, La Jolla, California 92037, attention: David L.
Reese, Secretary.
The Company will pay all expenses in connection with the solicitation
of proxies. The Company will also supply brokers or persons holding stock in the
names of brokers or their nominees with the number of proxies, proxy statements
and annual reports as they may require for mailing to beneficial owners and will
reimburse them for their reasonable mailing expenses. Certain directors,
officers and employees of the Company may, without additional compensation,
solicit proxies by mail, telephone, facsimile transmission, telegraph or
personal interview.
VOTING SECURITIES
The close of business on July 30, 1999 has been fixed by the Board of
Directors of the Company as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. As of July
30, 1999 the Company had outstanding 32,722,445 shares of common stock, all of
which are entitled to vote on the matters to come before the Annual Meeting.
Each outstanding share of common stock entitles the holder to one vote.
A quorum must be present at the meeting in order to conduct a vote of the
matters outlined above. The presence in person or by proxy of a majority of the
outstanding shares of common stock is necessary to constitute a quorum. If a
quorum is not present, the Annual Meeting may be adjourned from time to time
until a quorum is obtained. If a quorum is present, the affirmative vote of a
majority of shares represented in person or by proxy will be required to approve
each matter upon which the stockholders are to vote. Accordingly, any shares
present but not voted will be treated as shares voted against approval.
Any stockholder giving a proxy has the right, at any time before it is
voted, to revoke the proxy by giving written notice to the Secretary of the
Company, by executing a new proxy containing a later date, or by voting in
person at the Annual Meeting. A proxy, when executed and not revoked, will be
voted in accordance with its instructions. If a proxy is provided but no
instructions are given, the proxy will be voted FOR management's slate of
directors, FOR approval of the Company's reincorporation in Delaware from Nevada
including the change in corporate name, increase in authorized capitalization
and related changes in the Company's Articles of Incorporation and Bylaws,
2
<PAGE>
and FOR ratification of the Company's continued engagement of Deloitte & Touche
LLP as the Company's independent auditors for the fiscal year ending March 31,
2000.
NOMINEES FOR THE BOARD OF DIRECTORS
Management has nominated the eight persons listed in the chart below
for re-election to the Board of Directors of the Company. All nominees have
indicated their willingness to serve as directors of the Company. However, if
any nominee is unable or should decline to serve as a director, it is the
intention of the persons named in the proxy to vote for another person in their
discretion.
<TABLE>
<CAPTION>
Director
Directors/Occupation and Background Age Since
------------------------------------- ---- -------
<S> <C> <C>
BARRY M. SCHECHTER. Mr. Schechter has been Chairman of the 45 1994
Board and Chief Executive Officer of the Company from
February 1994 to the present. He has been Chief Executive
Officer of the Company's predecessor and wholly-owned
subsidiary, Sabica Ventures, Inc., since its inception in February
1990. He also serves as Chairman of the Board of each of the
Company's other subsidiaries. Mr. Schechter is also a director of
Softline Limited, which owns approximately 58% of the issued
and outstanding stock of the Company, and which is listed on
the Johannesburg Stock Exchange. Mr. Schechter is a Chartered
Accountant (South Africa).
ARTHUR S. KLITOFSKY. Mr. Klitofsky has been Vice President and 45 1994
a director of the Company from February 1994 to the present. He
has been Chief Executive Officer of SVI Training Products, Inc.
since 1991. From 1985 to 1991, he was Managing Director of
Punch Line Columbia Training Ltd., which became the largest
computer education company in South Africa. Mr. Klitofsky has
a Bachelor of Science Degree in Electrical Engineering from the
University of Witwatersrand, Johannesburg, South Africa and a
Bachelor in Accounting Science Degree from the University of
South Africa.
3
<PAGE>
Director
Directors/Occupation and Background Age Since
------------------------------------- ---- -------
DAVID L. REESE. Mr. Reese became a director of the Company 54 1998
in July 1998. He joined the Company in November 1997 and
became Chief Financial Officer and Secretary in February 1998.
Prior to joining the Company, Mr. Reese served as Chief
Financial Officer for Pygmalion Asset Management Company
from 1993 to 1997. Mr. Reese has served in various financial
and accounting capacities for a number of public companies over
the past twenty years. Mr. Reese received a B.S. and an M.S.
from the University of Southern California. He is also a certified
public accountant.
DONALD S. RADCLIFFE. Mr. Radcliffe became a director of the 54 1998
Company in May 1998. He has been President of Radcliffe &
Associates since 1990. Radcliffe & Associates provides financial
consulting services to public companies, and currently provides
financial advisory services to the Company. Since 1984 he has
also been Executive Vice President and Chief Operating and
Financial Officer of World-Wide Business Centres, which is a
privately held operator of shared office space facilities. Mr.
Radcliffe is also a director of Pallet Management Systems Inc.,
a publicly held company. Mr. Radcliffe received a B.S. from
Lehigh University and an M.B.A. from Dartmouth College. He
is also a certified public accountant.
IVAN M. EPSTEIN. Mr. Epstein became a director of the 38 1998
Company in May 1998. He is the Chief Executive Officer and a
director of Softline Limited, which he co-founded in 1988.
Softline is listed in the Electronics sector of the Johannesburg
Stock Exchange and is a developer of specialist information
technology products, with operations throughout southern
Africa, the United Kingdom, Australia and the United States.
Softline Limited owns approximately 58% of the issued and
outstanding stock of the Company.
4
<PAGE>
Director
Directors/Occupation and Background Age Since
------------------------------------- ---- -------
GERALD RUBENSTEIN. Mr. Rubenstein became a director of the 65 1998
Company in May 1998. He is an attorney in South Africa and is
currently a consultant to the law firm of Fluxman Rabinowitz -
Raphaely Weiner. He specializes in corporate finance and
mergers and acquisitions. He is also the Chairman of Protea
Furnishers Limited and Vestacor Limited. He currently serves as
a director of seven public companies in South Africa, including
Softline Limited, which owns approximately 58% of the issued
and outstanding stock of the Company.
IAN BONNER. Mr. Bonner became a director of the Company in 44 1998
May 1998. Since 1993 he has held various positions with IBM
Corporation, and he currently serves as Vice President of Partner
Marketing and Programs for the IBM/Lotus/Tivoli Software
Group. His responsibilities include the development and
implementation of marketing campaigns and programs designed
to serve the business partners of IBM, Lotus and Tivoli,
including major accounts, independent software vendors and
global systems integrators. He also oversees the IBM BESTeam
and the Lotus Business Partner programs which are designed to
provide enhanced opportunities, including education, marketing
and training support, to qualified providers of IBM's and Lotus's
portfolio of network solutions. Mr. Bonner received a Bachelor
of Commerce from the University of the Witwatersrand in 1976
and a graduate degree in Marketing Management and Market
Research and Advertising from the University of South Africa
in 1978.
5
<PAGE>
Director
Directors/Occupation and Background Age Since
------------------------------------- ---- -------
MARCEL GOLDING. Mr. Golding became a director of the 38 1998
Company in July 1998. Mr. Golding is Chairman of Hosken
Consolidated Investments Limited and Softline Limited, which
owns approximately 58% of the issued and outstanding stock
of the Company. He is also a director of Johannesburg
Consolidated Investments Limited and Global Capital Limited.
All of these companies are public companies listed on the
Johannesburg Stock Exchange. From 1994 to 1997, Mr. Golding
was a member of Parliament in South Africa. In Parliament
he chaired the Minerals and Energy Committee and the Audit
Commission, which was the oversight committee of the office
of the Auditor General. Prior to his election to Parliament,
Mr. Golding served as Deputy General Secretary of the National
Union of Mineworkers in South Africa. Mr. Golding holds a
Business Management degree from the University of Capetown.
</TABLE>
There are no family relationships among the directors. There are no
arrangements or understandings between any director and any other person
pursuant to which that director was or is to be elected.
BOARD OF DIRECTORS AND COMMITTEES
All directors of the Company are elected annually. The eight directors
elected at this meeting will serve until the next annual meeting of stockholders
or until their successors are elected and qualified.
During fiscal year 1999, the Board of Directors met 13 times. No
director attended less than 75% of the total of Board and committee meetings
held during the director's tenure on the Board and its committees.
DIRECTOR COMPENSATION
There are no standard arrangements by which directors are compensated
for their services as directors. Directors of the Company have received no
compensation for their service as directors of the Company except stock option
grants as follows:
6
<PAGE>
<TABLE>
<CAPTION>
NAME DATE NUMBER OF SHARES EXERCISE PRICE
---- ---- ---------------- --------------
<S> <C> <C> <C>
Ian Bonner July 1, 1998 20,000 $5.00
Ivan M. Epstein November 18, 1998 5,000 $6.13
Donald S. Radcliffe November 18, 1998 5,000 $6.13
Marcel Golding November 18, 1998 5,000 $6.13
Gerald Rubenstein November 18, 1998 5,000 $6.13
Ian Bonner November 18, 1998 40,000 $6.13
Barry M. Schechter November 18, 1998 5,000 $6.13
David L. Reese November 18, 1998 5,000 $6.13
Arthur S. Klitofsky November 18, 1998 5,000 $6.13
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors formed a Compensation Committee in April 1998.
The Compensation Committee's primary function is to oversee the administration
of the Company's employee benefit plans and to establish the Company's
compensation policies. The Compensation Committee recommends to the Board the
compensation arrangements for senior management and directors, adoption of
compensation plans in which officers and directors are eligible to participate,
and the granting of stock options or other benefits under compensation plans.
The Board of Directors as a whole currently approves all grants of stock options
under the Company's stock option plans. Current members of the Compensation
Committee are Ian Bonner and Donald S. Radcliffe.
The Board of Directors also formed an Audit Committee in April 1998.
The purpose of the Audit Committee is to assist the Board in fulfilling its
responsibilities for financial reporting by the Company. The Audit Committee
recommends the engagement and discharge of independent auditors, reviews with
independent auditors the audit plan and the results of the audit, reviews the
independence of the independent auditors, considers the range of audit fees, and
reviews the scope and results of the Company's procedures for internal auditing
and the adequacy of its system of internal accounting controls. Current members
of the Audit Committee are Ian Bonner and Donald S. Radcliffe.
7
<PAGE>
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF THE COMPANY
The following background information is provided on the Company's
executive officers.
<TABLE>
<CAPTION>
Name/Position and Background Age Officer Since
------------------------------ ---- ----------
<S> <C> <C>
BARRY M. SCHECHTER. Chairman of the Board and Chief 45 1994
Executive Officer. See "Board of Directors."
ARTHUR S. KLITOFSKY. Vice President of the Company and 45 1994
Chief Executive Officer of SVI Training Products, Inc.
See "Board of Directors."
DAVID L. REESE. Chief Financial Officer and Secretary. 54 1998
See "Board of Directors."
SHAUN ROSEN. Mr. Rosen currently serves as Chief 41 1996
Executive Officer of the Company's Retail Operations
division. Mr. Rosen previously served as Managing
Director of the Company's wholly-owned subsidiary
Divergent Technologies Pty. Ltd. Mr. Rosen founded
Divergent in South Africa in 1983. He has a B.Sc. in
Computer Science from the University of Cape Town.
COLIN CHAPMAN. Mr. Chapman serves as Managing 52 1998
Director of the Company's Divergent Technologies Pty.
Ltd. subsidiary. He formed Chapman Computers Pty.
Ltd., an Australian provider of accounting and
management computer systems for the retail industry, in
1980. Divergent acquired the principal technology and
computer software programs of Chapman in April 1997,
and Mr. Chapman has served in various positions at
Divergent since that date.
SAM PICKARD. Mr. Pickard co-founded and has served as 65 1998
President of Applied Retail Solutions, Inc. since 1987. He
retained that title after the Company acquired Applied
Retail Solutions in July 1998.
8
<PAGE>
Name/Position and Background Age Officer Since
------------------------------ ---- ----------
MARK WULFF. Mr. Wulff joined Island Pacific Systems 38 1999
Corporation in 1986 and held various positions including
Vice President. Island Pacific is an Irvine, California based
provider of retail merchandising and management software
systems marketed under the I3TM brand name. Upon the
acquisition of Island Pacific by the Company in June 1999, Mr.
Wulff became President and Chief Executive Officer and a
director of Island Pacific.
PHIL FRIESEN. Mr. Friesen joined Island Pacific in 1982 42 1999
and held various positions including Vice President. Upon
the acquisition of Island Pacific by the Company in June
1999, Mr. Friesen remained Vice President of Island
Pacific.
TODD HAMMETT. Mr. Hammett joined Island Pacific in 38 1999
1990 as Chief Financial Officer. Mr. Hammett is a
Certified Public Accountant, and prior to joining Island
Pacific, he was employed for seven years at Arthur Andersen
& Co. Upon the acquisition of Island Pacific by the Company
in June 1999, Mr. Hammett remained Chief Financial
Officer and became a director of Island Pacific.
</TABLE>
The executive officers of the Company serve at the pleasure of the
Board of Directors and do not have fixed terms. The Board generally elects
executive officers at the regular meeting of the Board immediately following the
annual stockholder meeting. The Board of Directors may remove any officer of the
Company at any time. Persons removed may, however, continue to have contractual
rights through employment agreements with the Company.
There are no family relationships among the executive officers. There
are no arrangements or understandings between any executive officer and any
other person pursuant to which that officer was elected.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the periods indicated, a summary of
certain compensation of the Company's Chief Executive Officer and the executive
officers of the Company who earned more than $100,000 during any of the last
three fiscal years (collectively, the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Securities
Underlying
Name and Principal Position Annual Compensation Options
- - --------------------------- ------------------- -------
Year Salary
---- ------
<S> <C> <C> <C>
Barry M. Schechter 1999(1) $198,000 110,675
Chairman, President and Chief 1998(2) 86,000 50,000
Executive Officer 1997(3) 156,000 0
1996(4) 138,000 0
Arthur S. Klitofsky 1999(1) $134,100 35,000
President of SVI Training 1998(2) 66,000 20,000
1997(3) 127,000 57,000
1996(4) 114,000 200,000
Shaun Rosen 1999(1) $165,000 80,000
Chief Executive Officer, Retail 1998(2) 82,500 0
Operations 1997(3) 165,000 0
1996(4) 0 0
</TABLE>
(1) For the twelve month period ended March 31, 1999.
(2) For the six month period ended March 31, 1998.
(3) For the twelve month period ended September 30, 1997.
(4) For the twelve month period ended September 30, 1996.
The Company also provides certain compensatory benefits and other non-cash
compensation to the Named Executive Officers. The incremental cost to the
Company of all such benefits and other compensation paid in the years indicated
to each such person was less than 10% of his reported compensation and also less
than $50,000.
The following table sets forth the information concerning individual grants of
stock options during the last fiscal year to the Named Executive Officers.
10
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<CAPTION>
Number of Percent of Total
Securities Options Granted
Underlying to Employees in
Options Granted Fiscal Year Exercise or
Name (#) ($/SH) Base Price Expiration
---- --- ------ ---------- ----------
<S> <C> <C> <C> <C>
Barry M. Schechter 65,375 6.6% $4.54 April 2001
Barry M. Schechter 40,300 4.1% $6.70 November 2003
Barry M. Schechter 5,000 0.5% $6.13 November 2001
Arthur S. Klitofsky 30,000 3.0% $3.00 April 2001
Arthur S. Klitofsky 5,000 0.5% $6.13 November 2001
Shaun Rosen 80,000 8.1% $3.00 April 2001
</TABLE>
The following table sets forth the information concerning each exercise of stock
options during the last fiscal year by each of the Named Executive Officers and
the fiscal year end value of unexercised options.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised The-Money
Options at FY- Options At FY-
End (#) End($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name On Exercise (#) ($) Unexercisable Unexercisable
---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Barry M. Schechter 0 0 160,675/0 $1,486,028/$0
Arthur S. Klitofsky 205,000 $1,254,375 112,000/0 $1,278,625/$0
Shaun Rosen 0 0 80,000/0 $870,000/$0
</TABLE>
11
<PAGE>
STOCK OPTION PLANS
The Company has two stock option plans. The Incentive Stock Option Plan (the
"1989 Plan") provides for issuance of incentive stock options to purchase up to
1,500,000 shares of the Company's common stock to employees of the Company.
The 1989 Plan is administered by the Board of Directors, which establishes the
terms and conditions of each option grant. Incentive stock options must be
granted at an exercise price of at least the market value of the common stock on
the date of grant, except for recipients who own 10% or more of the Company's
outstanding common stock, in which case the exercise price on the date of grant
must be at least 110% of the market value of the common stock. Additionally, the
options must not have a term of in excess of 10 years, or five years if the
recipient owns more than 10% of the outstanding common stock.
The 1998 Incentive Stock Plan (the "1998 Plan") reserves 3,500,000 shares of
common stock for issuance pursuant to incentive stock options, non-statutory
options, stock bonuses, stock appreciation rights and stock purchase agreements.
The exercise price of options is determined by the Board of Directors, but the
exercise price may not be less than 100% of the fair market value on the date of
the grant, in the case of incentive stock options, or 85% of the fair market
value on the date of the grant, in the case of non-statutory stock options.
Options under the 1998 Plan must vest over a period not to exceed five years.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Barry M.
Schechter effective October 1, 1997. This agreement will continue until
September 30, 2000 unless earlier terminated for cause. Under the agreement Mr.
Schechter has the right to annual compensation of $180,000 for the first year of
the agreement, $240,000 for the second year of the agreement and $300,000 for
the third year of the agreement. In addition, Mr. Schechter is entitled to
receive options on each anniversary of the agreement to purchase the number of
shares equal to 150% of his annual compensation for the prior year divided by
the average price per share for the 30 day period preceding such anniversary.
This average price per share will also be the exercise price of the options. The
agreement states that options will be fully vested when issued, assignable, and
exercisable for five years after the date of the grant. Mr. Schechter has agreed
to receive non-assignable options for his first and second annual grants so that
these options could be issued under the 1989 Plan.
Shaun Rosen entered into an employment agreement with Divergent dated
November 5, 1996. The agreement will continue in effect until November 4, 2001,
unless earlier terminated by Divergent or Mr. Rosen. Mr. Rosen continues to be
employed under this agreement although his position is now with the Company's
main operating subsidiary. The agreement provides for an initial annual salary
of $147,500. The salary is subject to annual increases to reflect inflation and
discretionary annual increases. If Divergent terminates the agreement without
cause, it will be required to pay all salary and benefits which would have
accrued for the remainder of the five-year term of the agreement. The
12
<PAGE>
agreement further provides that Mr. Rosen will not compete with Divergent in
Australia for three years after termination of the agreement.
REINCORPORATION IN DELAWARE
The following discussion summarizes certain aspects of the proposed
reincorporation in Delaware (the "Reincorporation") and the related name change.
It is a summary only and is subject to:
o the Nevada Revised Statutes ("Nevada Law")
o the General Corporation Law of the State of Delaware
("Delaware Law")
o the Agreement and Plan of Merger (the "Merger Agreement"), a
copy of which is attached as Exhibit A
o the current Articles of Incorporation of the Company (the
"Nevada Charter")
o the Certificate of Incorporation of SVI Systems, Inc. (the
"Delaware Charter"), a copy of which is attached as Exhibit B
o the current Bylaws of the Company (the "Nevada Bylaws")
o the Bylaws of SVI Systems, Inc. (the "Delaware Bylaws"), a
copy of which is attached as Exhibit C.
Copies of the Nevada Charter and the Nevada Bylaws are available from
the Company at no charge upon written request.
PURPOSE OF THE REINCORPORATION
The primary reason for the Board's recommendation of the
Reincorporation is the well-developed case law interpreting Delaware Law. The
Board believes the guidance of prior Delaware decisions will allow it to more
effectively perform its duties. Although the provisions of Nevada Law are
similar in a number of respects to those of Delaware Law, there is a lack of
predictability under Nevada Law resulting from the limited body of case law
interpreting Nevada Law. Delaware law and the court decisions construing it are
widely regarded as the most extensive and well-defined body of corporate law in
the United States.
Delaware has a long-established policy of encouraging companies to
incorporate in that state. In furtherance of that policy, Delaware has been a
leader in adopting 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 in a manner similar to that
proposed by the Company. Delaware's courts have therefore developed considerable
expertise in dealing with corporate issues
13
<PAGE>
and a substantial body of case law has developed construing Delaware Law and
establishing public policies with respect to corporate legal issues.
The Board therefore believes that the overall effect of the
Reincorporation will be to enhance the Board's ability to consider all
appropriate courses of action with respect to significant transactions, along
with more general corporate matters, for the benefit of all stockholders.
Moreover, the Board believes that enhanced certainty with respect to the duties
of directors could be an important factor in attracting and retaining quality
persons to serve on the Board of Directors.
MECHANICS OF THE REINCORPORATION
The Reincorporation will be effected by merging the Company with and
into SVI Systems, Inc. ("SVI Systems"), a Delaware corporation. SVI Systems has
been formed solely for the purpose of this merger (the "Merger") and has no
operations. At the effective time of the Merger, the corporate existence of the
Company will cease and each share of SVI Holdings common stock issued and
outstanding immediately prior to the Merger will be converted automatically into
one share of SVI Systems common stock. Each outstanding option to purchase SVI
Holdings common stock will be converted into an option to purchase the same
number of shares of SVI Systems common stock. Holders of SVI Holdings common
stock certificates may be asked to surrender such certificates in exchange for
an SVI Systems common stock certificate. Unless and until surrendered, each
certificate representing SVI Holdings common stock will be deemed to represent
the same number of shares of SVI Systems.
From and after the effective time of the Merger: (i) the name of the
surviving corporation will be "SVI Systems, Inc."; (ii) SVI Systems will conduct
business as presently conducted by the Company; (iii) the charter and bylaws of
SVI Systems in effect immediately prior to the Merger will be the charter and
bylaws of the surviving corporation; and (iv) the directors and officers of SVI
Holdings immediately prior to the Merger will be the directors and officers of
SVI Systems.
Following the consummation of the Merger and the resulting change of
the Company's name to "SVI Systems, Inc.," the SVI Systems common stock will be
identified by a new CUSIP number and will trade on the American Stock Exchange
under the symbol "SVI." The Merger may be abandoned by the Boards of Directors
of the Company and SVI Systems at any time prior to the effective time of the
Merger.
The Boards of Directors of the Company and SVI Systems may amend the
Merger Agreement at any time prior to the effective time of the Merger. If the
amendment would alter or change the amount or nature of the securities of SVI
Systems to be received in the merger, or would otherwise adversely affect the
holders of SVI Holdings common stock, the Company will seek shareholder approval
of such amendment. The Boards of Directors may also abandon the Merger and the
Merger Agreement at any time prior to the filing of the Merger Agreement with
the Delaware Secretary of State, notwithstanding the approval of the Merger by
the Company's stockholders.
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REQUIRED STOCKHOLDERS VOTE
The Board of Directors has approved and adopted the Merger and the
Merger Agreement by resolutions dated as of July 29, 1998. Under Nevada Law, the
Merger and the Merger Agreement must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of Company common stock.
Softline Limited ("Softline") owns a sufficient number of shares of Company
common stock in order for the Merger and the Merger Agreement to be approved
without the concurrence of any other holders of shares of Company common stock.
Softline has indicated that it intends to vote FOR the Reincorporation.
NO DISSENTERS RIGHT IN RESPECT OF THE MERGER
The Company's stockholders will have no right of dissent in connection
with the Merger due to a Nevada statutory exemption for companies whose
securities trade on a national securities exchange. SVI Holdings common stock is
listed on the American Stock Exchange and after the Merger, the shares of SVI
Systems common stock will be listed on the American Stock Exchange. The Board of
Directors of SVI Systems has no present intention to take any action to delist
the SVI Systems common stock from the American Stock Exchange.
CONVERSION OF COMPANY COMMON STOCK
By virtue of the Merger, each share of SVI Holdings common stock will
be converted, without any action on the part of the holder thereof, into one
share of SVI Systems common stock.
PLEASE DO NOT SEND IN ANY OF YOUR STOCK CERTIFICATES REPRESENTING
SHARES OF COMPANY COMMON STOCK. UNTIL SUCH TIME AS SURRENDER OF SVI HOLDINGS
COMMON STOCK IS REQUIRED, DELIVERY OF SVI HOLDINGS STOCK CERTIFICATES WILL
CONSTITUTE DELIVERY FOR TRANSACTIONS IN SHARES OF SVI SYSTEMS COMMON STOCK AFTER
THE EFFECTIVE DATE OF THE MERGER. FOLLOWING CONSUMMATION OF THE MERGER,
POSITIONS IN SHARES OF SVI HOLDINGS COMMON STOCK HELD WITH THE DEPOSITORY TRUST
COMPANY WILL BE TRANSFERRED AUTOMATICALLY TO POSITIONS IN THE SAME NUMBER OF
SHARES OF SVI SYSTEMS COMMON STOCK.
APPROVALS
A Certificate of Merger must be filed with the State of Delaware and
Articles of Merger must be filed with the State of Nevada to effect the Merger.
In addition, SVI Systems will be required to file a new registration statement
with the Securities and Exchange Commission on Form 8-A, and a substitution
listing application with the American Stock Exchange. Except for these filings,
no federal or state regulatory requirements apply and no approvals are required
in connection with the Merger.
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INCREASE IN AUTHORIZED CAPITALIZATION
The Delaware Charter will authorize 100,000,000 shares of $0.0001 par value
common stock and 5,000,000 shares of $0.0001 par value preferred stock. The
Nevada Charter authorizes 50,000,000 shares of $0.0001 par value common stock
and 5,000,000 shares of $0.0001 preferred stock. The Company currently has
issued and outstanding 32,722,445 shares of common stock. The Company also has
reserved for issuance under currently outstanding options and warrants, and for
options or other convertible securities authorized but not yet issued under the
1989 Plan and the 1998 Plan, a total of 3,152,015 shares of common stock.
Authorization of 50,000,000 additional shares of common stock in the
Delaware Charter will give the Company additional flexibility to raise capital
in public or private transactions through the issuance of common stock, and to
issue common stock in acquisitions of businesses or assets, without the time and
expense needed to obtain further stockholder approval. However, the rules of the
American Stock Exchange will require the Company to seek stockholder approval as
a prerequisite to listing additional shares issued in the following
circumstances:
o If the Company proposes to issue, as consideration for an
acquisition of the stock or assets of another company, shares
representing 5% or more of the total outstanding shares prior
to the transaction, if any director, officer or substantial
shareholder of the Company has a 5% or greater interest (or
such persons collectively have a 10% or greater interest) in
the company or assets to be acquired or in the consideration
to be paid in the transaction.
o If the Company proposes to issue, as consideration for an
acquisition of the stock or assets of another company, shares
representing 20% or more of the total outstanding shares prior
to the transaction.
o If the Company proposes to issue shares at a price less than
fair market value (or book value, if higher than fair market
value) which together with sales by officers, directors or
principal shareholders of the company, if any, equals 20% of
more of the total outstanding shares prior to the transaction.
Where such rules do not apply, the Company may issue or reserve shares in merger
or acquisition transactions, in capital raising transactions or otherwise,
without further stockholder approval. Any such issuances will have the effect of
diluting existing stockholders.
The Company has no current plans to issue or reserve any additional shares of
common stock or preferred stock.
COMPARISON OF DELAWARE LAW TO NEVADA LAW
The corporation laws of Delaware and Nevada differ in some respects. It
is impracticable to summarize all of the differences in this Proxy Statement,
but certain differences between Nevada Law and Delaware Law that could affect
the rights of stockholders of the Company are as follows:
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1. LIMITATION ON CALL OF SPECIAL MEETINGS OF STOCKHOLDERS. The Delaware
Bylaws provide that special meetings of stockholders may be called by the Board
of Directors or the President. The Nevada Bylaws allow for special meetings of
stockholders to be called by the holders of at least 10% of all shares entitled
to vote, as well as by the Chairman of the Board, the Board of Directors or the
President. Accordingly, following the Merger, stockholders will not have a right
to call special meetings of stockholders.
2. TENDER OFFER AND BUSINESS COMBINATION STATUTES. Delaware Law
regulates hostile takeovers by providing that an "interested stockholder,"
defined as a stockholder owning 15% or more of the corporation's voting stock or
an affiliate or associate thereof, may not engage in a "business combination"
transaction, defined to include a merger, consolidation or a variety of
self-dealing transactions, with the corporation for a period of three years from
the date on which such stockholder became an "interested stockholder" unless (i)
prior to such date the corporation's board of directors approved either the
"business combination" transaction or the transaction in which the stockholder
became an "interested stockholder", (ii) the stockholder, in a single
transaction in which he became an "interested stockholder," acquires at least
85% of the voting stock outstanding at the time the transaction commenced
(excluding shares owned by certain employee stock plans and persons who are
directors and also officers of the corporation) or (iii) on or subsequent to
such date, the "business combination" transaction is approved by the
corporation's board of directors and authorized at an annual or special meeting
of the corporation's stockholders, by the affirmative vote of at least
two-thirds of the outstanding voting stock not owned by the "interested
stockholder." A Delaware corporation may elect not to be governed by Section 203
of the Delaware Law by an express provision to that effect in its Articles of
Incorporation, but SVI Systems has not made such election.
Accordingly, SVI Systems will be subject to Section 203.
Nevada Law regulates hostile takeovers of publicly traded
corporations by providing that an "interested stockholder," defined as a
stockholder owning 10% or more of the corporation's voting stock or an affiliate
or associate thereof, may not engage in a "business combination" with the
corporation for a period of three years from the date on which such stockholder
became an "interested stockholder" unless (i) prior to such date the
corporation's board of directors approved either the "business combination"
transaction or the transaction in which the stockholder became an "interested
stockholder" or (ii) no earlier than three years after such stockholder became
an "interested stockholder" the majority of the outstanding voting power
approves the "business combination." Nevada Law further regulates tender offers
and business combinations involving certain Nevada corporations by providing
that any acquisition by a person, either directly or indirectly, of ownership
of, or the power to direct the voting of, 20% or more ("Control Shares") of the
outstanding voting securities of a corporation is a "Control Share Acquisition."
These provisions apply only to "issuing corporations," which are (i)
corporations with at least 200 stockholders, at least 100 or more of which are
located in Nevada, and (ii) which do business in Nevada. A Control Share
Acquisition must be approved by a majority of each class of outstanding voting
securities of such corporation excluding the shares held or controlled by the
person seeking approval before the Control Shares may be voted. A special
meeting of stockholders must be held by the corporation to approve a Control
Share Acquisition within 50 days after a request for such meeting is submitted
by the person seeking to
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acquire control. If the Control Shares are accorded full voting rights and the
acquiring person has acquired Control Shares with a majority or more of the
voting power of the Corporation, all stockholders who have not voted in favor of
granting full voting rights to the Control Shares would have dissenters right.
Nevada Law provides that a corporation may elect out of the Control Share
protections by expressly specifying so in its articles or bylaws. SVI Holdings
has not elected out of these provisions, but believes that they have not applied
because SVI Holdings has not met the definition of an "issuing corporation."
3. REMOVAL OF DIRECTORS. Under Nevada Law, a vote of two-thirds of the
outstanding voting shares is required to remove a director. Under Delaware Law,
the holders of a majority of shares entitled to vote at a meeting may remove one
or more directors. In addition, the Delaware Bylaws allow the Board of Directors
to remove a director if that director was appointed by the Board of Directors to
fill a vacancy, rather than elected by the stockholders.
4. PERSONAL LIABILITY OF DIRECTORS. Under Delaware Law, directors are
jointly and severally liable to a corporation for violations of statutory
provisions relating to the purchase or redemption of a corporation's own shares
or the payment of dividends, for a period of six years from the date of such
unlawful act. A director who was either absent or dissented from the taking of
such action may exonerate himself from liability by causing his dissent to be
entered in the corporation's minutes. Under Nevada Law, directors are jointly
and severally liable to the corporation for violations of statutory provisions
relating to the purchase of a corporation's own shares, the payment of
dividends, the distribution of assets in liquidation or any loans or guarantees
made to a director, until the repayment thereof. Under Nevada Law, absent
directors are not liable as long as they did not vote for or assent to any of
the illegal acts and, unlike Delaware Law, Nevada Law allows a director who was
present at a meeting which approved an illegal act to avoid liability, even if
he did not register his dissent in the minutes of the meeting, by voting against
the illegal act and registering his dissent at a later time in a separate
writing filed with the secretary of the meeting.
5. LOANS TO OFFICERS. Under Nevada Law, there is no specific
restriction with respect to a loan or guaranty to or for the benefit of a
corporation's officers or employees and those of its subsidiaries. However, such
transactions may be void or voidable if the transaction at issue is not fair to
the corporation at the time it is authorized or approved by the board. Under
Delaware Law, a corporation may make loans to, guarantee the obligations of, or
otherwise assist, its officers or other employees and those of its subsidiaries
when such action, in the judgment of the Company's Board of Directors, may
reasonably be expected to benefit the Company.
6. INDEMNIFICATION. Delaware and Nevada have similar laws with respect
to indemnification by a corporation of its officers, directors, employees and
other agents. For example, the laws of both states permit corporations to adopt
a provision in the Certificate or Articles of Incorporation eliminating the
liability of a director (and also an officer in the case of Nevada) to the
corporation or its stockholders for monetary damages for breach of the
director's fiduciary duty of care (and the fiduciary duty of loyalty as well in
the case of Nevada). There are nonetheless certain differences between the laws
of the two states respecting indemnification and limitation of liability.
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The Delaware Charter eliminates the liability of directors to
the fullest extent permissible under Delaware Law. The Nevada Charter likewise
eliminates the liability of directors and officers to the fullest extent
permissible under Nevada Law. Under Nevada Law, such provision may not eliminate
or limit director or officer liability for: (a) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law; or (b) the payment
of unlawful dividends or distributions. Under Delaware Law, such provision may
not eliminate or limit director monetary liability for: (a) breaches of the
director's duty of loyalty to the corporation or its stockholders; (b) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law; (c) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (d) transactions in which the director received
an improper personal benefit.
The limitations of liability provisions permissible under
Delaware Law and Nevada Law may not limit a director's liability for violation
of, or otherwise relieve a corporation or its directors from the necessity of
complying with, federal or state securities laws, or affect the availability of
non-monetary remedies such as injunctive relief or rescission.
Nevada Law and Delaware Law require indemnification when the
individual has successfully defended the action on the merits or otherwise.
Nevada Law generally permits indemnification of expenses incurred in the defense
or settlement of a derivative or third-party action, provided there is a
determination by a disinterested quorum of the directors, by independent legal
counsel, or by a majority vote of a quorum of the stockholders that
indemnification is proper in the circumstances. Without court approval, however,
no indemnification may be made in respect of any derivative action in which such
person is adjudged liable for negligence or misconduct in the performance of his
or her duty to the corporation. Delaware Law generally permits indemnification
of expenses incurred in the defense or settlement of a derivative or third-party
action, provided there is a determination by a disinterested quorum of the
directors, by independent legal counsel or by a majority vote of a quorum of the
stockholders that the person seeking indemnification acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation. Without court approval, however, no indemnification may be made
in respect of any derivative action in which such person is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation.
7. INSPECTION OF STOCKHOLDERS' LIST. Nevada Law permits any person who
has been a stockholder of record for at least six months, or any person holding
at least 5% of all outstanding shares, to inspect the stockholders' list of a
corporation for a purpose reasonably related to such person's interest as a
stockholder. Delaware Law permits any stockholder to inspect a corporation's
stockholders' list for a purpose reasonably related to such person's interest as
a stockholder and, during the ten days preceding a stockholders' meeting, for
any purpose germane to that meeting.
8. PAYMENTS OF DIVIDENDS. Nevada Law permits the payment of dividends
if, after the dividends have been paid, the corporation is able to pay its debts
as they become due in the usual course of business (equity test for insolvency),
and the corporation's total assets are not less than the sum of its total
liabilities plus the amount that would be needed, if the corporation were to be
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dissolved at the time of the dividend payment, to satisfy the preferential
rights upon dissolution of stockholders whose preferential rights are superior
to those receiving the dividend (balance sheet test for insolvency). In
addition, Nevada Law generally provides that a corporation may redeem or
repurchase its shares only if the same equity and balance sheet tests for
insolvency are satisfied.
Delaware Law permits the payment of dividends out of surplus or, if
there is no surplus, out of net profits for the current and preceding fiscal
years (provided that the amount of capital of the corporation is not less than
the aggregate amount of the capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets).
Surplus is the excess, if any, of the stockholders' equity over stated capital
of a corporation. In addition, Delaware Law generally provides that a
corporation may redeem or repurchase its shares only if such redemption or
repurchase would not impair the capital of the corporation. The ability of a
Delaware corporation to pay dividends on, or to make repurchases or redemptions
of, its shares is dependent on the financial status of the corporation standing
alone and not on a consolidated basis. In determining the amount of surplus of a
Delaware corporation, the assets of the corporation, including stock of
subsidiaries owned by the corporation, must be valued at their fair market value
as determined by the Board of Directors, without regard to their historical book
value.
OTHER CHANGES IN ORGANIZATIONAL DOCUMENTS
1. STOCKHOLDER PROPOSALS. The Delaware Charter and the Delaware Bylaws
prescribe certain procedures for stockholders to follow if they wish to bring
business before an annual meeting of the stockholders, or if they wish to
nominate candidates for election as directors. These procedures are consistent
with the procedures set forth in Rule 14a-8 promulgated under the Securities Act
of 1934, but Rule 14a-8 contains additional requirements concerning stockholder
proposals which also will apply to stockholders of the Company. The Company will
not be obligated to include any stockholder proposal, or nominate any
stockholder-nominated candidate for the Board of Directors, unless the
stockholder complies with the Delaware Bylaws and Rule 14a-8.
The Delaware Bylaws require a stockholder who desires the
Company to include a proposal on the agenda for an annual meeting to give notice
to the Company on or before the calendar date which is 120 days or more before
the calendar date of the Company's proxy statement for the prior year's annual
meeting. If the date of the annual meeting has been changed by more than 30 days
from the date contemplated by the prior year's proxy statement, the stockholder
must give notice of a proposal within a reasonable time before the Company
solicits proxies for the current year's annual meeting. The notice must include
a brief description of the proposal and the reason the stockholder feels it
should be included. The notice must also include other information required by
the Delaware Bylaws and Rule 14a-8.
If a stockholder wishes to nominate a candidate for the board
of directors, the stockholder must give a notice within the time frame described
above for other stockholder proposals, and must include biographical information
and information about the nominee's holdings of
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Company securities and transactions with the Company, as well as other
information required by the Delaware Bylaws and Rule 14a-8.
2. QUORUM FOR STOCKHOLDER MEETINGS. Under the Nevada Charter, a
majority of the shares of common stock entitled to vote must be represented in
person or by proxy in order to constitute a quorum for the conduct of business
at the meeting. The Delaware Bylaws state that one-third of the common stock
entitled to vote, represented in person or by proxy, will constitute a quorum at
meetings of stockholders. This lower quorum requirement is consistent with
Delaware Law and with the rules of the American Stock Exchange. The Company
believes that reducing the required presence for a quorum will make it easier
for the Company to obtain the necessary approval for major corporate actions
which require stockholder approval without the delays and costs associated with
hiring proxy solicitors. The reduced quorum requirement could however lead to
the approval of major corporate actions by stockholders representing
significantly less than an absolute majority of the outstanding shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
For federal income tax purposes (i) the Merger will constitute a
reorganization within the meaning of 368(a) of the Code, (ii) no gain or loss
will be recognized by Company stockholders as a consequence of the Merger, (iii)
a stockholder's aggregate tax basis in SVI Systems common stock after the Merger
will be the same as such holder's aggregate tax basis in the shares of SVI
Holdings common stock immediately prior to the Merger, (iv) a stockholder's
holding period in SVI Systems common stock received in the Merger will include
the period in which the SVI Holdings common stock was held, provided the SVI
Holdings common stock was held as a capital asset at the time of the Merger, and
(v) no gain or loss will be recognized by SVI Holdings or SVI Systems as a
consequence of the Merger.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent accounts for
the fiscal year ended March 31, 1999. The Company's Audit Committee and the
Board of Directors intend to continue Deloitte & Touche LLP's engagement for the
fiscal year ending March 31, 2000.
Although not required by law, management is asking the stockholders to
ratify the engagement of Deloitte & Touche LLP. The Company does not expect a
representative of Deloitte & Touche LLP to be present at the meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a description of transactions entered into between
the Company and certain of its executive officers, directors and stockholders
holding more than 5% of the outstanding common stock during the last two years.
Certain of these transactions will continue in effect and may result
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in conflicts of interest between the Company and such individuals. Although
these persons may owe fiduciary duties to the Company and its stockholders,
there is a risk that such conflicts of interest may not be resolved in favor of
the Company.
TRANSACTIONS WITH SOFTLINE LIMITED
Softline Limited ("Softline") beneficially owns 58% of the outstanding
common stock of the Company, and is therefore a parent corporation to the
Company. Softline is a South African company listed on the Johannesburg Stock
Exchange.
Effective October 1, 1997, the Company consummated an indivisible group
of agreements with Softline and Hosken Consolidated Investments Limited ("HCI"),
which resulted in Softline acquiring a majority interest in the Company and the
Company's acquisition of IBIS Systems Pty. Ltd. ("IBIS"). HCI is also a South
African company listed on the Johannesburg Stock Exchange. The group of
agreements are as follows:
o Sales of Shares Agreement: by this agreement, the Company
acquired 100% of the equity of Anniston Ventures Ltd. and IBIS
in exchange for the issuance of 5,000,000 shares of Company
common stock to Softline.
o Share Swap Agreement: by this agreement, the Company issued
7,536,000 shares of its common stock to Softline in exchange
for certain technology assets and 22,130,000 shares of the
common stock of Softline.
o Renunciation Agreement: by this agreement, the Company
renounced its rights in favor of HCI to the Softline shares
acquired through the Share Swap Agreement in exchange for
$7,662,000 cash paid by HCI.
As part of its acquisition of IBIS, the Company assumed an earn-out
obligation payable to the management of IBIS based upon the financial
performance of IBIS in 1998 and 1999. The Company and Softline settled the
earn-out in connection with the Company's sale of IBIS as described below.
In summary, the agreements described above provided that the Company
issued 12,536,000 shares of its common stock in exchange for 100% of the equity
of Anniston and IBIS, certain technology assets and cash of $7,662,000.
Softline, through these transactions, and through separate purchases of
4,000,000 shares of SVI's common stock from certain stockholders of the Company,
acquired a total of 16,536,000 shares of the Company's common stock constituting
at that time approximately 59% of the Company's total outstanding common stock.
In February 1996, the Company acquired 48,639,000 shares of Softline,
which at that time represented a 40% interest in Softline, for $2,097,767. The
Company sold 28,763,000 of such shares in April 1997, and the remaining
19,876,000 shares in October 1997.
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During the third quarter of the fiscal year 1999, the Company loaned
$5,213,636 to Softline to facilitate the payment by Softline of an earn-out due
to an officer of the Company by Softline. The loan was paid off during the
fourth quarter of the fiscal year 1999. Interest income received under this loan
was $163,093 for the year ended March 31, 1999.
Effective April 1, 1998, the Company took assignment of Softline's
rights under an acquisition agreement to acquire certain assets of Triple-S
Computers Pty. Limited of Cape Town, South Africa. On May 27, 1998, the Company
agreed to reimburse Softline for the $546,902 in acquisition costs incurred by
Softline for Triple-S through the issuance of 119,869 shares of SVI Holdings
common stock valued at the then market price of $4.56 per share. The share
certificates for these shares were not however issued until March 31, 1999.
On December 31, 1998, the Company agreed to issue to Softline 28,125
shares of SVI Holdings common stock, valued at the then market price of $7.31
per share, to reimburse Softline for $205,594 in costs borne by it in connection
with the acquisition by the Company's SVI Training Products, Inc. subsidiary of
the "compAssess" product. The share certificates for these shares were not
however issued until March 31, 1999.
On April 14, 1999, Softline exercised options to purchase 1,994,267
shares of SVI Holdings common stock at $2.00 per share. The Company used the
$3,988,534 in proceeds from this exercise to fund a portion of the $35,000,000
purchase price for its Island Pacific Systems Corporation subsidiary.
Barry M. Schechter was at all relevant times a director of Softline.
Subsequent to Softline acquiring majority control of the Company, Ivan M.
Epstein, Gerald Rubenstein and Marcel Golding, each directors of Softline,
became directors of the Company.
OTHER TRANSACTIONS
Claudav Holdings Ltd. B.V., which owns 16.3% of the outstanding common
stock of the Company, from time to time provided unsecured loans to the Company
to cover operating expenses. These loans bore interest at rates agreed to
periodically between Claudav Holdings and the Company. The outstanding loan
balances were $0, $14,552 and $301,645 as of March 31, 1999, March 31, 1998 and
September 30, 1997.
During the first calendar quarter of 1999, Claudav Holdings loaned
$2,300,000 to the Company to fund a portion of the $35,000,000 purchase price
for Island Pacific System Corporations. Interest is payable at the prime rate of
interest, with no stated maturity date.
On May 1, 1999, the Company completed the sale of all of its stock in
IBIS Systems Pty. Ltd., previously a wholly-owned subsidiary of the Company, to
Kielduff Investments Limited, an Ireland corporation which is owned and
controlled by Peter Nagle and other former management of IBIS. The sale price
for IBIS was (a) $2,250,000 cash, (b) 141,000 shares of SVI Holdings common
stock,
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(c) the surrender by Mr. Nagle of the net shares issuable upon exercise of an
option to purchase 50,000 shares of SVI Holdings common stock at $3.00 per
share; and (d) a promissory note (the "IBIS Note") in the amount of $18,108,000,
due October 1, 1999, bearing interest from May 1, 1999 at 2% over the base prime
rate for U.S. dollar deposits quoted by HSBC Plc. The promissory note is secured
by a pledge in favor of SVI of all of the common stock of IBIS.
As part of the transaction, the Company agreed to pay to Systems for
Business Incorporated, a British Virgin Islands corporation affiliated with Mr.
Nagle, the $4,500,000 which is last payable under the IBIS Note, in settlement
of certain obligations assumed by the Company from Softline in connection with
the acquisition of IBIS.
The Company recorded the sale of IBIS with a total sale price of
$18,000,000. As described above, the Company acquired IBIS in a series of
transactions with Softline effective October 1, 1997, and the Company at that
time recorded a purchase price for IBIS of $7,500,000.
The Company also agreed with Kielduff that for a period of two years
following the sale of IBIS, the Company will not (a) solicit the customers of
IBIS or (b) compete against the business of IBIS in the United Kingdom.
Divergent leases its principal offices in Sydney, Australia from
Reefmist Pty. Limited, a company affiliated with Shaun Rosen. The current
monthly base rental is $13,596.
On December 4, 1997, Shaun Rosen exercised options for 60,000 shares at
$2.00 per share. The Company forgave the $120,000 exercise price of these
options in accordance with an earn-out agreement entered into in connection with
the Company's acquisition of Divergent.
On October 1, 1997, the Company issued options to purchase 50,000
shares at $2.00 per share to Madison Avenue Leasing, a Company affiliated with
Donald S. Radcliffe, in exchange for the forgiveness of registration rights held
by Madison Avenue Leasing on shares of common stock purchased in a private
placement. This transaction was negotiated at arm's length before Mr. Radcliffe
was a director of the Company.
Madison Avenue Leasing exercised options for 18,000 shares on February
1, 1999 and for an additional 21,000 shares on April 27, 1999. Radcliffe &
Associates exercised outstanding options (granted more than two years ago) for
40,000 shares at $0.30 per share on December 4, 1997, for 35,000 shares at $0.30
per share on April 13, 1998, and for 20,000 shares at $0.30 per share on January
4, 1999. Mr. Radcliffe exercised outstanding options (granted more than two
years ago) for 50,000 shares at $1.00 per share on December 4, 1997.
In addition to the option grants to directors described under "Director
Compensation," the Company issued the following options to executive officers
during the past two years:
24
<PAGE>
<TABLE>
<CAPTION>
Name Date Number of Shares Exercise Price
---- ---- ---------------- --------------
<S> <C> <C> <C>
Barry M. Schechter November 1, 1997 30,000 $3.03
Russell Schecter November 1, 1997 20,000 $2.75
Arthur S. Klitofsky November 1, 1997 20,000 $2.75
David L. Reese November 1, 1997 10,000 $2.75
Barry M. Schechter November 3, 1997 20,000 $2.75
Barry M. Schechter April 1, 1998 65,375 $4.54
David L. Reese April 1, 1998 30,000 $3.00
Arthur S. Klitofsky April 1, 1998 30,000 $3.00
Shaun Rosen April 1, 1998 80,000 $3.00
Peter Nagle April 1, 1998 50,000 $3.00
David L. Reese November 18, 1998 16,000 $6.13
</TABLE>
The following directors and executive officers exercised options during
the past two years
<TABLE>
<CAPTION>
Name Date of Exercise Number of Shares Exercise Price
---- ---------------- ---------------- --------------
<S> <C> <C> <C>
Arthur S. Klitofsky October 1, 1998 5,000 $0.75
Arthur S. Klitofsky October 1, 1998 200,000 $0.50
David L. Reese November 11, 1998 7,700 $2.75
David L. Reese January 4, 1999 2,300 $2.75
David L. Reese January 4, 1999 30,000 $3.00
</TABLE>
COMPLIANCE WITH SECTION 16(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires that the Company's
directors, executive officers and persons who own more than ten percent of the
Company's common stock file with the Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Commission regulations require these persons to furnish the Company
with copies of all Section 16(a) forms they file.
25
<PAGE>
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and internal records of the Company
concerning transactions in common stock, the following reporting persons filed
late reports under Section 16(a) during or with respect to the fiscal year ended
March 31, 1999: Ian Bonner (1 report, 0 transactions), Ivan Epstein (1 report, 0
transactions), Donald S. Radcliffe (3 reports, 4 transactions), Gerald
Rubenstein (1 report, 0 transactions), Arthur S. Klitofsky (2 reports, 14
transactions), and Softline Limited (2 reports, 2 transactions).
The Company believes that Peter Nagle, who is no longer an executive
officer of the Company by virtue of the sale of the Company's IBIS subsidiary,
may have failed to report certain transactions in Company common stock which are
required to be reported under Section 16(a). These transactions, if reportable,
would relate to the acquisition and disposition of a total of 141,000 shares of
SVI Holdings common stock which were ultimately used by a company affiliated
with Mr. Nagle to pay a portion of the purchase price for IBIS. The Company has
advised Mr. Nagle of his obligation to report these transactions and holdings if
he is required to do so under Section 16(a), but Mr. Nagle has not to date filed
any such reports or confirmed to the Company's satisfaction that the
transactions are not reportable under Section 16(a).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows beneficial ownership of shares of the
Company's outstanding common stock as of June 30, 1999 (i) by all persons known
by the Company to own more than 5% of such stock and (ii) by each director, each
of the executive officers, and all directors and executive officers as a group.
Except as otherwise specified, the address for each person is 7979 Ivanhoe
Avenue, Suite 500, La Jolla, California 92037. As of July 30, 1999, there were
32,722,445 shares of common stock outstanding.
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership Owned
------------------- ------------------- -------
SOFTLINE LIMITED 19,121,994(2) 57.7%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
CLAUDAV HOLDINGS LTD. B.V. 5,324,500 16.3%
9 Rue Charles Humbert
1205 Geneva
Switzerland
26
<PAGE>
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership Owned
------------------- ------------------- -------
BARRY M. SCHECHTER 5,487,175(1)(2) 16.7%
DAVID L. REESE 18,000 < 1%
ARTHUR S. KLITOFSKY 486,800(2) 1.5%
DONALD S. RADCLIFFE 673,100(2)(3) 2.0%
575 Madison Avenue
New York, NY 10022
IVAN M. EPSTEIN 5,000(2) < 1%
2 Victoria
Eastgate Extension 13
Sandton 2148
South Africa
GERALD RUBENSTEIN 5,000(2) < 1%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
IAN BONNER 60,000(2) < 1%
5527 Inverrary Court
Dallas, Texas 75287
MARCEL GOLDING 5,000(2) < 1%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
SHAUN ROSEN 80,000(2) < 1%
Level 1
35 Spring Street
Bondi Junction
Sydney, NSW 2022
Australia
All directors and executive 6,820,075(2) 20.4%
officers as a group (9 persons)
27
<PAGE>
(1) Includes all of the shares held by Claudav Holdings Ltd. B.V.,
for which Mr. Schechter holds a revocable proxy, and 2,000
shares held by minor children of Mr. Schechter.
(2) Includes shares issuable upon the exercise of options within
sixty days of the record date as follows: Softline Limited --
443,733; Barry M. Schechter - 160,675; Donald S. Radcliffe
(and an affiliate) -- 321,000; Arthur S. Klitofsky -- 112,000;
Ivan M. Epstein -- 5,000; Marcel Golding -- 5,000; Gerald
Rubenstein -- 5,000; Ian Bonner -- 60,000; and Shaun Rosen --
80,000.
(3) Includes 101,400 shares held by various entities for which Mr.
Radcliffe may be deemed the beneficial owner. Does not include
118,000 shares held by Mr. Radcliffe's wife, for which Mr.
Radcliffe disclaims beneficial ownership.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company on or before March 31,
2000 in order to be eligible for inclusion in the Company's proxy statement and
form of proxy. To be so included, a proposal must also comply with all
applicable provisions of Rule 14a-8 under the Securities Exchange Act of 1934
and with the Delaware Bylaws attached as Exhibit C to this Proxy Statement.
OTHER MATTERS TO BE PRESENTED AT MEETING
Management does not know of any other matters to be brought before the
Annual Meeting. If any other matters not mentioned in this proxy statement are
properly brought before the meeting, the individuals named in the enclosed proxy
intend to vote such proxy in accordance with their best judgment on such
matters.
By Order of the Board of Directors
DAVID L. REESE
Secretary
July ___, 1999
28
<PAGE>
SVI HOLDINGS, INC.
7979 Ivanhoe Avenue, Suite 500
La Jolla, California 92037
(858) 551-2365
-----------------------------------------------------------------
PROXY
-----------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 30, 1999
-----------------------------------------------------------------
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF
SVI HOLDINGS, INC.
---------------------------------------------------
The undersigned stockholder of SVI Holdings, Inc., a Nevada
corporation, hereby appoints Barry M. Schechter, Chief Executive Officer and
Chairman of the Board, or in his absence, David L. Reese, Chief Financial
Officer and Secretary, my proxy to attend and represent me at the annual meeting
of the stockholders of the corporation to be held on August 30, 1999 at 9:00
A.M. (PDT), and at any adjournment thereof, and to vote my shares on any matter
or resolution which may come before the meeting and to take any other action
which I could personally take if present at the meeting.
1. ELECTION OF DIRECTORS
Management has nominated the following eight persons to stand for election. You
may vote "for" or you may withhold your vote from any of those persons nominated
and vote "for" a person nominated by others or write in your own nominee. To
date, no one has been nominated by anyone other than management.
a. Barry M. Schechter For _____
Withhold _____
b. Arthur S. Klitofsky For _____
Withhold _____
c. David L. Reese For _____
Withhold _____
d. Donald S. Radcliffe For _____
Withhold _____
e. Ivan M. Epstein For _____
Withhold _____
f. Gerald Rubenstein For _____
Withhold _____
g. Ian Bonner For _____
Withhold _____
h. Marcel Golding For _____
Withhold _____
i. _______________ For _____
Other Withhold _____
2. REINCORPORATION IN DELAWARE
To approve a change in the Company's state of incorporation from Nevada
to Delaware including a change of corporate name, an increase in the authorized
capitalization and related changes to the certificate of incorporation and
bylaws, as described in the Proxy Statement.
For _______________ Against _______________ Abstain _______________
3. ENGAGEMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the continued engagement of Deloitte & Touche LLP as
the Company's independent public accountants and auditors for the fiscal year
ending March 31, 2000.
For _______________ Against _______________ Abstain _______________
Failure to check any of these boxes for each proposal will give Barry M.
Schechter or David L. Reese the authority to vote the proxy at his discretion.
This Proxy gives authority to my proxy to vote for me on such other matters as
may properly come before this meeting.
Number of Shares Owned:____________
Dated:_____________________________
-----------------------------------
Signature of Stockholder
(Sign exactly as name appears on stock certificate)
2
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF SVI SYSTEMS, INC.,
A DELAWARE CORPORATION,
AND
SVI HOLDINGS, INC.,
A NEVADA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of ___________, 1999 (the
"Agreement") is between SVI Systems, Inc., a Delaware corporation ("SVI
Delaware"), and SVI Holdings, Inc., a Nevada corporation ("SVI Nevada"). SVI
Delaware and SVI Nevada are sometimes referred to herein as the "Constituent
Corporations."
RECITALS
A. SVI Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 105,000,000
shares, $0.0001 par value, of which 100,000,000 shares are designated "Common
Stock," and 5,000,000 shares are designated "Preferred Stock." The Preferred
Stock of SVI Delaware is undesignated as to series, rights, preferences,
privileges or restrictions. As of ___________, 1999, 100 shares of Common Stock
were issued and outstanding, all of which are held by SVI Nevada, and no shares
of Preferred Stock were issued and outstanding.
B. SVI Nevada is a corporation duly organized and existing under the
laws of the State of Nevada and has an authorized capital of 55,000,000 shares,
$0.0001 par value, of which 50,000,000 are designated "Common Stock," and
5,000,000 shares are designated "Preferred Stock." The Preferred Stock of SVI
Nevada is undesignated as to series, rights, preferences, privileges or
restrictions. As of ____________, 1999, _________ shares of Common Stock were
issued and outstanding, and no shares of Preferred Stock were issued and
outstanding.
C. The Board of Directors of SVI Nevada has determined that, for the
purpose of effecting the reincorporation of SVI Nevada in the State of Delaware,
it is advisable and in the best interests of SVI Nevada and its shareholders
that SVI Nevada merge with and into SVI Delaware upon the terms and conditions
herein provided.
D. The respective Boards of Directors of SVI Delaware and SVI Nevada
have approved this Agreement and have directed that this Agreement be submitted
to a vote of their respective shareholders and executed by the undersigned
officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, SVI Delaware and SVI Nevada hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
A-1
<PAGE>
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the Nevada Corporation Law, SVI Nevada
shall be merged with and into SVI Delaware (the "Merger"), the separate
existence of SVI Nevada shall cease and SVI Delaware shall survive the Merger
and shall continue to be governed by the laws of the State of Delaware, and SVI
Delaware shall be, and is herein sometimes referred to as, the "Surviving
Corporation," and the name of the Surviving Corporation shall be SVI Systems,
Inc.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when
the following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved
by the shareholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the Nevada Corporation
Law;
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof;
(c) An executed Certificate of Merger or an executed, acknowledged and
certified counterpart of this Agreement meeting the requirements of the Delaware
General Corporation Law shall have been filed with the Secretary of State of the
State of Delaware; and
(d) An executed Certificate of Merger or an executed counterpart of
this Agreement meeting the requirements of the Nevada Corporation Law shall have
been filed with the Secretary of State of the State of Nevada.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of SVI Nevada shall cease and SVI Delaware, as the Surviving
Corporation, (i) shall continue to possess all of its assets, rights, powers and
property as constituted immediately prior to the Effective Date of the Merger,
(ii) shall be subject to all actions previously taken by its and SVI Nevada's
Boards of Directors, (iii) shall succeed, without other transfer, to all of the
assets, rights, powers and property of SVI Nevada in the manner as more fully
set forth in Section 259 of the Delaware General Corporation Law, (iv) shall
continue to be subject to all of its debts, liabilities and obligations as
constituted immediately prior to the Effective Date of the Merger, and (v) shall
succeed, without other transfer, to all of the debts, liabilities and
obligations of SVI Nevada in the same manner as if SVI Delaware had itself
incurred them, all as more fully provided under the applicable provisions of the
Delaware General Corporation Law and the Nevada General Corporation Law.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
SVI Delaware as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
A-2
<PAGE>
2.2 BYLAWS. The Bylaws of SVI Delaware as in effect immediately prior
to the Effective Date of the Merger shall continue in full force and effect as
the Bylaws of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of SVI Nevada
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their respective successors shall
have been duly elected and qualified or until as otherwise provided by law, or
the Certificate of Incorporation of the Surviving Corporation or the Bylaws of
the Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 SVI NEVADA COMMON STOCK. Upon the Effective Date of the Merger,
each share of SVI Nevada Common Stock, $0.0001 par value, issued and outstanding
immediately prior thereto shall, by virtue of the Merger and without any action
by the Constituent Corporations, the holder of such shares or any other person,
be changed and converted into and exchanged for one fully paid and nonassessable
share of Common Stock, $0.0001 par value, of the Surviving Corporation.
3.2 SVI NEVADA OPTIONS AND STOCK PURCHASE RIGHTS. Upon the Effective
Date of the Merger, the Surviving Corporation shall assume and continue the
stock option plans (including without limitation the Incentive Stock Option Plan
and the 1998 Incentive Stock Plan) and all other employee benefit plans
(including without limitation the 401(k) Plan) of SVI Nevada. Each outstanding
and unexercised option or other right to purchase or security convertible into
SVI Nevada Common Stock shall become an option or right to purchase or a
security convertible into the Surviving Corporation's Common Stock on the basis
of one share of the Surviving Corporation's Common Stock for each share of SVI
Nevada Common Stock issuable pursuant to any such option, stock purchase right
or convertible security, on the same terms and conditions and at an exercise
price per share equal to the exercise price applicable to any such SVI Nevada
option, stock purchase right or convertible security at the Effective Date of
the Merger. There are no options, purchase rights for or securities convertible
into Preferred Stock of SVI Nevada.
A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, stock purchase rights or
convertible securities equal to the number of shares of SVI Nevada Common Stock
so reserved immediately prior to the Effective Date of the Merger.
3.3 SVI DELAWARE COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, $0.0001 par value, of SVI Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by SVI Delaware, the holder of such shares or any other person, be
canceled and returned to the status of authorized but unissued shares.
3.4 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger,
each holder of an outstanding certificate representing shares of SVI Nevada
Common Stock may be asked to surrender the same for cancellation to an exchange
agent, whose name will be delivered to such holders prior to any requested
exchange (the "Exchange Agent"), and each such holder shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of the Surviving Corporation's Common Stock into which such
holders' shares of SVI Nevada Common Stock were converted as herein provided.
Unless and until so surrendered, each outstanding certificate theretofore
representing shares of SVI Nevada Common Stock shall be deemed for all purposes
to represent the number of whole shares of the Surviving Corporation's Common
Stock into which such shares of SVI Nevada Common Stock were converted in the
Merger.
A-3
<PAGE>
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any shares of stock represented by such
outstanding certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to the
Surviving Corporation or the Exchange Agent, have and be entitled to exercise
any voting and other rights with respect to and to receive dividends and other
distributions upon the shares of Common Stock of the Surviving Corporation
represented by such outstanding certificate as provided above.
Each certificate representing Common Stock of the Surviving Corporation
so issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of SVI Nevada so converted
and given in exchange therefor, unless otherwise determined by the Board of
Directors of the Surviving Corporation in compliance with applicable laws.
If any certificate for shares of SVI Delaware stock is to be issued in
a name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to SVI Delaware or the Exchange Agent any transfer or other
taxes payable by reason of the issuance of such new certificate in a name other
than that of the registered holder of the certificate surrendered or establish
to the satisfaction of SVI Delaware that such tax has been paid or is not
payable.
IV. GENERAL
4.1 COVENANTS OF SVI DELAWARE. SVI Delaware covenants and agrees that
it will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for service
of process as required under the provisions of Section 2105 of the California
General Corporation Law;
(b) File any and all documents with the California Franchise Tax Board
necessary for the assumption by SVI Delaware of all of the franchise tax
liabilities of SVI Nevada; and
(c) Take such other actions as may be required by the California
General Corporation Law or the Nevada Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by SVI
Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of SVI Nevada such deeds and other instruments, and there shall be
taken or caused to be taken by SVI Delaware and SVI Nevada such further and
other actions, as shall be appropriate or necessary in order to vest or perfect
in or conform of record or otherwise by SVI Delaware the title to and possession
of all the property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of SVI Nevada and otherwise to carry out the purposes
of this Agreement, and the officers and directors of SVI Delaware are fully
authorized in the name and on behalf of SVI Nevada or otherwise to take any and
all such action and to execute and deliver any and all such deeds and other
instruments.
A-4
<PAGE>
4.3 ABANDONMENT. At any time before the filing of this Agreement with
the Secretary of State of the State of Delaware, this Agreement may be
terminated and the Merger may be abandoned for any reason whatsoever by the
Board of Directors of either SVI Nevada or SVI Delaware, or both,
notwithstanding the approval of this Agreement by the shareholders of SVI Nevada
or by the sole stockholder of SVI Delaware, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations
may amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretaries of State of the States of
Nevada and Delaware, provided that an amendment made subsequent to the adoption
and approval of this Agreement and the Merger by the shareholders of either
Constituent Corporation shall not: (1) alter or change the amount or kind of
shares, securities, cash, property and/or rights to be received in exchange for
or on conversion of all or any of the shares of any class or series thereof of
such Constituent Corporation, (2) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation to be effected by the Merger, or (3)
alter or change any of the terms and conditions of this Agreement, if in the
case of clause (2) or (3) such alteration or change would adversely affect the
holders of any class of shares or series thereof of such Constituent
Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving
Corporation in the State of Delaware is located at Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, Delaware 19801, County of New
Castle, and The Corporation Trust Company is the registered agent of the
Surviving Corporation at such address.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 7979 Ivanhoe Avenue,
Suite 500, La Jolla, California 92037, and copies thereof will be furnished to
any shareholder of either Constituent Corporation, upon request and without
cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the Nevada
General Corporation Law.
4.8 COUNTERPARTS. In order to facilitate the filing and recording of
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement, having first been approved by
resolutions of the Boards of Directors of SVI Delaware and SVI Nevada, is hereby
executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.
A-5
<PAGE>
SVI SYSTEMS, INC.,
a Delaware corporation
By:_______________________
Name:_____________________
Title:____________________
ATTEST:
By:_______________________
Name:_____________________
Title:____________________
SVI HOLDINGS, INC.,
a Nevada corporation
By:_______________________
Name:_____________________
Title:____________________
ATTEST:
By:_______________________
Name:_____________________
Title:____________________
A-6
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
SVI SYSTEMS, INC.
The undersigned, a natural person (the "Sole Incorporator"), for the purpose of
organizing a corporation to conduct the business and promote the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware hereby certifies that:
ARTICLE I
The name of this corporation is SVI Systems, Inc. (the "Corporation").
ARTICLE II
The address of this Corporation's registered office in the State of Delaware is
1209 Orange Street, City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or activity for
which a corporation may now or hereafter be organized under the Delaware General
Corporation Law (the "Law").
ARTICLE IV
(A) CLASSES OF STOCK. This Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The
Corporation is authorized to issue One Hundred Million (100,000,000) shares of
Common Stock, par value $.0001 and Five Million (5,000,000) shares of Preferred
Stock, par value $.0001.
(B) RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The Board of
Directors ("Board") is authorized, subject to limitations prescribed by the Law,
and by the provisions of this Article, to provide for the issuance of shares of
Preferred Stock in series, to establish from time to time the number of shares
to be included in each series and to determine the designations, relative
rights, preferences and limitations of the shares of each series. The authority
of the Board with respect to each series includes determination of the
following:
(1) The number of shares in and the distinguishing designation of that
series;
(2) Whether shares of that series shall have full, special,
conditional, limited or no voting rights, except to the extent otherwise
provided by the Law;
B-1
<PAGE>
(3) Whether shares of that series shall be convertible and the terms
and conditions of the conversion, including provision for adjustment of the
conversion rate in circumstances determined by the Board;
(4) Whether shares of that series shall be redeemable and the terms
and conditions of 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 or at different redemption
dates;
(5) The dividend rate, if any, on shares of that series, the manner of
calculating any dividends and the preferences of any dividends;
(6) The rights of shares of that series in the event of voluntary or
involuntary dissolution of the Corporation and the rights of priority of that
series relative to the Common Stock and any other series of Preferred Stock on
the distribution of assets on dissolution; and
(7) Any other rights, preferences and limitations of that series that
are permitted by law.
ARTICLE V
No director of the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for conduct as a director, provided that
this Article shall not eliminate the liability of a director for any act or
omission for which such elimination of liability is not permitted under the Law.
No amendment to the Law that further limits the acts or omissions for which
elimination of liability is permitted shall affect the liability of a director
for any act or omission which occurs prior to the effective date of the
amendment. Any repeal or modification of this Article V shall be prospective and
shall not adversely affect any right or protection of a director, officer, agent
or other person existing at the time of, or increase the liability of any
director of the Corporation with respect to any acts or omissions of such
director occurring prior to, such repeal or modification.
ARTICLE VI
The Corporation shall indemnify any current or former director or officer and
may indemnify any current or former employee or agent of the Corporation to the
fullest extent not prohibited by law, who is made, or threatened to be made, a
party to an action, suit or proceeding, whether civil, criminal, administrative,
investigative or other (including an action, suit or proceeding by or in the
right of the Corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or a fiduciary within
the meaning of the Employee Retirement Income Security Act of 1974 with respect
to any employee benefit plan of the Corporation, or serves or served at the
request of the Corporation as a director, officer, employee or agent, or as a
fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust or other enterprise, if he acted in good faith and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The Corporation shall pay for or reimburse the
reasonable expenses incurred by any such current or former director or officer
and may pay for or reimburse the reasonable expenses incurred by any such
current or former employee or agent, in any such proceeding in advance of the
final disposition of the proceeding upon receipt of an undertaking by the person
to repay all amounts advanced if it should ultimately be determined that the
person is not entitled to be indemnified under this Article VI or otherwise. No
B-2
<PAGE>
amendment to this Article that limits the Corporation's obligation to indemnify
any person shall have any effect on such obligation for any act or omission that
occurs prior to the later of the effective date of the amendment or the date
notice of the amendment is given to the person. This Article shall not be deemed
exclusive of any other provisions for indemnification or advancement of expenses
of directors, officers, employees, agents and fiduciaries that may be included
in any statute, bylaw, agreement, general or specific action of the Board, vote
of shareholders or other document or arrangement.
ARTICLE VII
Elections of directors need not be by written ballot except and to the extent
provided in the Bylaws of the Corporation.
ARTICLE VIII
The Corporation is to have a perpetual existence.
ARTICLE IX
The Corporation reserves the right to repeal, alter, amend or rescind any
provision contained in this Certificate of Incorporation and/or any provision
contained in any amendment to or restatement of this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE X
No holder of shares of stock of the Corporation shall have any preemptive or
other right, except as such rights are expressly provided by contract, to
purchase or subscribe for or receive any shares of any class, or series thereof,
of stock of the Corporation, whether now or hereafter authorized, or any
warrants, options, bonds, debentures or other securities convertible into,
exchangeable for or carrying any right to purchase any share of any class, or
series thereof, of stock; but such additional shares of stock and such warrants,
options, bonds, debentures or other securities convertible into, exchangeable
for or carrying any right to purchase any shares of any class, or series
thereof, of stock may be issued or disposed of by the Board to such persons, and
on such terms and for such lawful consideration as in its discretion it shall
deem advisable or as the Corporation shall have by contract agreed.
ARTICLE XI
The Board may from time to time make, amend, supplement or repeal the Bylaws by
the requisite affirmative vote of directors as set forth in the Bylaws;
provided, however, that the stockholders may change or repeal any bylaw adopted
by the Board by the requisite affirmative vote of stockholders as set forth in
the Bylaws; and, provided further, that no amendment or supplement to the Bylaws
adopted by the Board shall vary or conflict with any amendment or supplement
thus adopted by the stockholders.
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ARTICLE XII
Advance notice of stockholder nominations for the election of directors and of
business to be brought by stockholders before any meeting of the stockholders of
the Corporation shall be given in the manner provided in the Bylaws of the
Corporation.
ARTICLE XIII
The name and the mailing address of the Sole Incorporator is Norman L. Smith,
401 B Street, Suite 1200, San Diego, California 92101.
IN WITNESS WHEREOF, this Certificate of Incorporation has been signed this
_____ day of _______________, 1999 by the undersigned who affirms that the
statements made herein are true and correct.
-------------------------------
Norman L. Smith
Sole Incorporator
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EXHIBIT C
BYLAWS
OF
SVI SYSTEMS, INC.
A DELAWARE CORPORATION
ARTICLE I
OFFICES
-------
Section 1. OFFICES. The principal office of the corporation shall be
located at 7979 Ivanhoe Avenue, Suite 500, La Jolla, California, County of San
Diego. The name of its registered agent is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware, County of New Castle. The corporation may
have such other offices, either within or outside Delaware, as the board of
directors may designate or as the business of the corporation may require from
time to time.
Section 2. REGISTERED OFFICE AND AGENT. The registered office of the
corporation required by the General Corporation Law of the State of Delaware to
be maintained in Delaware may be, but need not be, identical with the principal
office if in Delaware. The registered agent or the address of the registered
office, or both, may be changed from time to time by the board of directors.
ARTICLE II
STOCKHOLDERS
------------
Section 1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held at such place and at such time as the board of directors shall determine
in compliance with these bylaws and the Delaware General Corporation Law for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the state where the meeting is to be held, such meeting shall
be held on the next succeeding business day. If the election of directors shall
not be held on the day designated herein for any annual meeting of the
stockholders, or at any adjournment thereof, the board of directors shall cause
the election to be held at a special meeting of the stockholders as soon
thereafter as conveniently may be. At an annual meeting of the stockholders,
only such business shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting, business must be:
(A) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the board of directors, (B) otherwise properly brought
before the meeting by or at the direction of the board of directors, or (C)
otherwise properly brought before the meeting by a stockholder.
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Section 2. STOCKHOLDER PROPOSALS; NOMINATION OF DIRECTORS.
(a) For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation no later than the date specified in the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders, which date shall be not less than one hundred twenty
(120) calendar days in advance of the date of such proxy statement; provided,
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than thirty (30) days
from the date contemplated at the time of the previous year's proxy statement,
notice by the stockholder to be timely must be so received a reasonable time
before the solicitation is made. A stockholder's notice to the secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the class and number of shares
of the corporation which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934
Act"), in his or her capacity as a proponent to a stockholder proposal. In
addition to the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act to the extent such regulations
require notice that is different from the notice required above. Notwithstanding
anything in these bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
paragraph (a) of this Section 2. The chairman of the annual meeting shall, if
the facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (a), and, if he or she should so determine, he or she shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
(b) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (b) shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the corporation
may be made at a meeting of stockholders by or at the direction of the board of
directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (b). Such nominations, other than those made by or at
the direction of the board of directors, shall be made pursuant to timely notice
in writing to the secretary of the corporation in accordance with the provisions
of paragraph (a) of this Section 2. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation that are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
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director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to subitems (ii), (iii) and (iv) of
paragraph (a) of this Section 2. At the request of the board of directors, any
person nominated by a stockholder for election as a director shall furnish to
the secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (b). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these bylaws, and if he or she should so determine, he or she shall so declare
at the meeting, and the defective nomination shall be disregarded.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute, may be called by the
president, chief executive officer, or by the board of directors. Business
transacted at any special meeting shall be limited to the purposes stated in the
notice of special meeting.
Section 4. PLACE OF MEETING. The board of directors may designate any
place as the place for any annual meeting or for any special meeting called by
the board of directors. A waiver of notice signed by all stockholders entitled
to vote at a meeting may designate any place as the place for such meeting. If
no designation is made, or if a special meeting shall be called otherwise than
by the board, the place of meeting shall be the principal business office of the
corporation.
Section 5. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting, and, in case of a special meeting or as
otherwise required by the General Corporation Law of Delaware, the purposes for
which the meeting is called, shall be delivered not less than ten nor more than
sixty days before the date of the meeting, either personally or by mail, private
carrier, telegraph, teletype, electronically transmitted facsimile or other form
of wire or wireless communication, by or at the direction of the president, the
secretary or the officer or persons calling the meeting, to each stockholder of
record entitled to vote at such meeting, except to the extent that a longer
notice period is required by the General Corporation Law of Delaware. If mailed
and in comprehensible form, such notice shall be deemed to be given and
effective when deposited in the United States mail, addressed to the stockholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid. If notice is given other than by mail, and
provided that such notice is in comprehensible form, the notice is given and
effective on the date received by the stockholder. If requested by the person or
persons lawfully calling such meeting, the secretary shall give notice thereof
at corporate expense. No notice need be sent to any stockholder of record if
three successive letters mailed to the last known address of such stockholder
have been returned as undeliverable until such time as another address for such
stockholder is made known to the corporation. In order to be entitled to receive
notice of any meeting, a stockholder shall advise the corporation in writing of
any change in such stockholder's mailing address as shown on the corporation's
books and records.
Section 6. WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder of the corporation, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
The attendance of a stockholder at a meeting shall constitute a waiver of notice
of such meeting, except where a stockholder attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
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Section 7. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to (i) notice of or vote at any
meeting of stockholders or any adjournment thereof, (ii) receive distributions
or share dividends, or (iii) exercise any rights of a stockholder pursuant to
these bylaws, or to make a determination of stockholders for any other proper
purpose, the board of directors may fix a future date as the record date for any
such determination of stockholders, such date in any case to be not more than
sixty days, and, in case of a meeting of stockholders, not less than ten days,
prior to the date on which the particular action requiring such determination of
stockholders is to be taken. If no record date is fixed by the directors, the
record date shall be the date on which notice of the meeting is given to
stockholders, or the date on which the resolution of the board of directors
providing for a distribution is adopted, as the case may be. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record date.
Notwithstanding the above, the record date for determining the
stockholders entitled to take action without a meeting or entitled to be given
notice of action so taken shall be the date a writing upon which the action is
taken is first received by the corporation.
Section 8. STOCKHOLDERS' LISTS. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of stockholders, a complete list of the stockholders
entitled to be given notice of such meeting, or any adjournment thereof,
arranged by voting groups and within each voting group by class of series of
shares, in alphabetical order within each class or series, with the address of
and the number of shares of each class or series held by each stockholder. The
stockholders' list shall be available for inspection by any stockholder,
beginning the earlier of ten days before the meeting for which the list was
prepared and continuing through the meeting, and any adjournment thereof, at the
principal office of the corporation, whether within or outside Delaware, at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder or his agent or attorney during the whole time of the meeting or
any adjournment thereof. The original stock transfer books shall be prima facie
evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at any meeting of stockholders.
Section 9. CHAIRMAN OF MEETINGS. The president shall call meetings of
stockholders to order and act as chairman of such meetings. In the absence of
the president, an appropriate officer may call the meeting to order and a
chairman shall be elected. In the absence of the secretary and any assistant
secretary of the corporation, any person appointed by the chairman shall act as
secretary of such meetings.
Section 10. QUORUM AND ADJOURNMENT. One-third of the outstanding shares
of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-third of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice,
for a period not to exceed thirty days for any one adjournment. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum, unless the meeting is
adjourned and a new record date is set for the adjourned meeting.
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Section 11. MAJORITY VOTE. If a quorum exists, action on a matter is
approved if the votes cast within the voting group favoring the action exceed
the votes cast within the voting group opposing the action, unless a greater
number of affirmative votes is required by law, the Certificate of Incorporation
or these bylaws.
Section 12. PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or his duly authorized
attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
three years from the date of its execution, unless otherwise provided in the
proxy.
Section 13. VOTING OF SHARES. Unless otherwise provided in the
Certificate of Incorporation, each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Certificate of Incorporation as
permitted by the Delaware General Corporation Law. Cumulative voting shall not
be allowed.
Section 14. VOTING OF SHARES BY CERTAIN HOLDERS.
(a) Persons holding stock in a fiduciary capacity shall be entitled to
vote the shares so held. Persons whose stock is pledged shall be entitled to
vote, unless in the transfer by the pledgor on the books of the corporation he
or she has expressly empowered the pledgee to vote thereon, in which case only
the pledgee, or his or her proxy, may represent such stock and vote thereon.
(b) If shares or other securities having voting power stand of record
in the names of two or more persons, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect:
(1) If only one votes, the act of such person binds all;
(2) If more than one vote, the act of the majority so voting
binds all;
(3) If more than one vote and if the vote is evenly split on
any particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to the Court of Chancery of the State of Delaware or such other court as
may have jurisdiction to appoint an additional person to act with the person so
voting the shares, which shall then be voted as determined by a majority of such
persons and the person appointed by the court. If the instrument so filed shows
that any such tenancy is held in unequal interests, a majority or even split for
the purpose of this subsection shall be a majority or even split in interest.
Section 15. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting if a consent
(or counterparts thereof) in writing, setting forth the action so taken, shall
be signed by the holders of outstanding stock having not less than a majority of
all outstanding shares of the corporation entitled to vote thereon and shall be
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delivered to the corporation by delivery to 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. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective unless within sixty days of the earliest
dated consent delivered in the manner required by this section to the
corporation, written consents are delivered to the corporation as herein
provided. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. Prompt notice of
the taking of the corporate action without a meeting by less than a unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its board of directors, except as otherwise provided in the
Delaware General Corporation Law or the Certificate of Incorporation.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be not less than five (5) nor more than eight (8), with
the exact number of directors to be fixed by the board of directors by
resolution from time to time. Directors shall be elected at each annual meeting
of stockholders. Each director shall hold office until his successor shall have
been elected and qualified. Directors need not be residents of Delaware or
stockholders of the corporation. Directors shall be removable in the manner
provided by the statutes of Delaware.
Section 3. VACANCIES. Except as otherwise provided by law, vacancies
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors, or by a
sole remaining director. Any such directorship not so filled by the directors
shall be filled by election at the next annual meeting of stockholders or at a
special meeting of stockholders called for that purpose.
Section 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately after
and at the same place as the annual meeting of stockholders. The board of
directors may provide by resolution the time and place for the holding of
additional regular meetings without other notice than such resolution.
Section 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
Section 6. NOTICE. Notice of any special meeting shall be given at
least two days previously thereto by written notice either delivered personally
or mailed to each director at his business address, or by notice transmitted by
telegraph, telex, electronically transmitted facsimile or other form of wire or
wireless communication. If mailed, such notice shall be deemed to be delivered
three days after such notice is deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. If notice be given by telex, electronically transmitted
facsimile or similar form of wire or wireless communication, such notice shall
be deemed to be given and to be effective when sent. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
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Section 7. WAIVER OF NOTICE. Any director may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting unless at the beginning of the meeting, or promptly upon
his later arrival, the director objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice and does
not thereafter vote for or assent to action taken at the meeting.
Section 8. QUORUM. A majority of the number of directors fixed by
Section 2 of this Article II, or such lesser number of directors as shall then
be in office, shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
Section 9. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a different number is provided by law, the Certificate of
Incorporation or these bylaws.
Section 10. COMPENSATION. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at each meeting; a stated
salary as director; or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
(i) the director objects at the beginning of the meeting, or promptly upon his
arrival, to the holding of the meeting or the transaction of business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting, (ii) the director contemporaneously requests that his or her dissent or
abstention as to any specific action taken be entered in the minutes of the
meeting or (iii) the director shall cause written notice of his or her dissent
or abstention as to any specific action to be received by the presiding officer
of the meeting or by the corporation promptly after adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
Section 12. TRANSACTIONS WITH DIRECTORS.
(a) Any contract or other transaction or determination between the
corporation and one or more of its directors, or between the corporation and
another party in which one or more of its directors are interested, shall be
valid notwithstanding the relationship or interest or the presence or
participation of such director or directors in a meeting of the board of
directors or a committee thereof which acts upon or in reference to such
contract, transaction or determination, if:
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(1) The material facts as to such relationship or interest and
as to the contract or transaction are disclosed or are known to the board of
directors or committee and it authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even though the
disinterested directors are less than a quorum; or
(2) The material facts as to such relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the board of
directors, a committee thereof or the stockholders.
(b) None of the provisions of this section shall invalidate any
contract, transaction or determination which would otherwise be valid under
applicable law.
Section 13. RESIGNATION. Any director may resign at any time by giving
written notice to the president or to the secretary of the corporation. Such
resignation shall take effect at the time the notice is received by the
corporation unless the notice specifies a later effective date; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 14. REMOVAL. The stockholders may, at a meeting called for the
express purpose of removing directors, by a majority vote of the shares entitled
to vote at an election of directors, remove the entire board of directors or any
lesser number, with or without cause. Notwithstanding the foregoing, the board
of directors, by a majority vote, may remove a director, with or without cause,
provided that such director was appointed by the board of directors and not
elected or approved by the stockholders.
Section 15. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors or any committee designated
by the board may be taken without a meeting if a consent (or counterparts
thereof) in writing, setting forth the action so taken, shall be signed by all
of the directors entitled to vote with respect to the subject matter thereof.
Such consent shall have the same force and effect as a unanimous vote of the
directors and shall be filed with the minutes of the corporation. Unless the
consent specifies a different effective date, action taken under this Section is
effective at the time the last director signs a writing describing the action
taken, unless before such time any director has revoked his consent by a writing
signed by the director and received by the president or secretary of the
corporation.
Section 16. TELEPHONIC MEETINGS. Members of the board of directors or
any committee designated by the board may participate in a meeting of the board
of directors or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear one another at the same time. Such participation shall constitute presence
in person at the meeting.
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ARTICLE IV
COMMITTEES
----------
Section 1. DESIGNATION. The Board of Directors may designate from among
its members an executive committee and/or one or more other committees, each
consisting of one or more directors. The designation of a committee, and the
delegation of authority to it, shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.No member
of any committee shall continue to be a member thereof after ceasing to be a
director of the corporation. The Board of Directors shall have the power at any
time to increase or decrease the number of members of any committee, to fill
vacancies thereon, to change any member thereof and to change the functions or
terminate the existence thereof.
Section 2. POWERS. Any such committee, to the extent provided by
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation;
adopting an agreement of merger or consolidation; recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets; recommending to the stockholders a
dissolution Of the corporation or a revocation of a dissolution; or amending the
Bylaws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger with respect to the merger into the corporation of a subsidiary of which
at least 90 percent of the outstanding shares of each class are owned by the
corporation.
Section 3. PROCEDURES; MEETINGS; QUORUM.
(a) The Board of Directors shall appoint Chairman and the committee
shall appoint a secretary who may, but need not, be a member of the committee.
The chairman shall preside at all committee meetings and the secretary of the
committee shall keep a record of its acts and proceedings.
(b) Regular meetings of a committee, of which no notice shall be
necessary, shall be held on such days and at such places as shall be fixed by
resolution adopted by the committee. Special meetings of a committee shall be
called at the request of the Chairman or the President or of any member of the
committee, and shall be held upon such notice as is required by these Bylaws for
special meetings of the Board of Directors, provided that notice by word of
mouth or telephone shall be sufficient if received in the city where the meeting
is to be held not later than the day immediately preceding the day of the
meeting. A waiver of notice of a meeting, signed by the person or persons
entitled to such notice, whether before or after the event stated therein, shall
be deemed equivalent to the giving of such notice.
(c) Attendance of any member of a committee at a meeting shall
constitute a waiver of notice of the meeting. A majority of a committee, from
time to time, shall be necessary to constitute a quorum for the transaction of
any business, and the act of a majority of the members present at a meeting at
which a quorum is present shall be the act of the committee. Members of a
committee may hold a meeting of such 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 participation in such a meeting shall
constitute presence in person at the meeting.
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(d) Any action which may be taken at a meeting of a committee may be
taken without a meeting if a consent in writing setting forth the actions so
taken shall be signed by all members of the committee entitled to vote with
respect to the subject matter thereof. The consent shall have the same effect as
a unanimous vote of the committee.
(e) The Board of Directors may vote to the members of any committee a
reasonable fee as compensation for attendance at meetings of the committee.
ARTICLE V
OFFICERS AND AGENTS
-------------------
Section 1. GENERAL. The officers of the corporation shall be a
chairman, chief executive officer, president, one or more vice presidents, a
secretary and a chief financial officer. The board of directors may appoint such
other officers, assistant officers, committees and agents, including a chairman
of the board, assistant secretaries and assistant treasurers, as they may
consider necessary, who shall be chosen in such manner and hold their offices
for such terms and have such authority and duties as from time to time may be
determined by the board of directors. The salaries of all the officers of the
corporation shall be fixed by the board of directors. One person may hold two or
more offices. In all cases where the duties of any officer, agent or employee
are not prescribed by the bylaws or by the board of directors, such officer,
agent or employee shall follow the orders and instructions of the president.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected by the board of directors annually at the first meeting of the
board held after each annual meeting of the stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until the
first of the following to occur: until his successor shall have been duly
elected and shall have qualified; or until his death; or until he shall resign;
or until he shall have been removed in the manner hereinafter provided.
Section 3. REMOVAL. Any officer or agent may be removed by the board of
directors or by the executive committee whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not in itself create
contract rights.
Section 4. RESIGNATION. Any officer may resign at any time by giving
written notice thereof to the corporation. Such resignation is effective when
the notice is received by the corporation unless the notice specifies a later
effective date. Unless otherwise stated in the notice, no acceptance of the
resignation shall be necessary to render such resignation effective.
Section 5. VACANCIES. A vacancy in any office, however occurring, may
be filled by the board of directors for the unexpired portion of the term.
Section 6. CHAIRMAN. The Chairman, if any, shall preside at all
meetings of the board of directors and of the stockholders at which he or she
shall be present. He or she shall have and may exercise such powers as are, from
time to time, assigned to him or her by the board of directors and as may be
provided by law.
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Section 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
corporation shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and the officers of
the corporation. He or she shall preside at all meetings of the stockholders
and, in the absence or nonexistence of a Chairman at all meetings of the board
of directors. He or she shall have the general powers and duties of management
usually vested in the Chief Executive Officer of a corporation, including
general supervision, direction and control of the business and supervision of
other officers of the corporation, and shall have such other powers and duties
as may be prescribed by the Board of Directors or these By-laws. The Chief
Executive Officer shall, without limitation, have the authority to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
Section 8. PRESIDENT. Subject to such supervisory powers as may be
given by these By-laws or the Board of Directors to the Chairman of the Board or
the Chief Executive Officer, if there be such officers, the President shall have
general supervision, direction and control of the business and supervision of
other officers of the corporation, and shall have such other powers and duties
as may be prescribed by the Board of Directors or these By-laws. In the event a
Chief Executive Officer shall not be appointed, the President shall have the
duties of such office.
Section 9. VICE PRESIDENTS. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the board of directors. In the absence of the president, the
vice president, if any (or, if there be more than one, the vice presidents in
the order designated by the board of directors, or if the board makes no such
designation, then the vice president designated by the president, or if neither
the board nor the president makes any such designation, the senior vice
president as determined by first election to that office), shall have the powers
and perform the duties of the president.
Section 10. SECRETARY. The secretary shall: (a) keep the minutes of the
proceedings of the stockholders, executive committee and the board of directors;
(b) see that all notices are duly given in accordance with the provisions of
these bylaws or as required by law; (c) be custodian of the corporate records
and of the seal of the corporation and affix the seal to all documents when
authorized by the board of directors; (d) keep at its registered office or
principal place of business within or outside Delaware a record containing the
names and addresses of all stockholders and the number and class of shares held
by each, unless such a record shall be kept at the office of the corporation's
transfer agent or registrar; (e) sign with the president, or a vice president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (f) have general charge
of the stock transfer books of the corporation, unless the corporation has a
transfer agent; and (g) in general, perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the president or by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the secretary.
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Section 11. CHIEF FINANCIAL OFFICER. The chief financial officer shall
be the principal financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and other personal
property of the corporation and shall deposit the same in accordance with the
instructions of the board of directors. He shall receive and give receipts and
acquittances for money paid in on account of the corporation, and shall pay out
of the funds on hand all bills, payrolls and other just debts of the corporation
of whatever nature upon maturity. He shall perform all other duties incident to
the office of the chief financial officer and, upon request of the board, shall
make such reports to it as may be required at any time. He shall, if required by
the board, give the corporation a bond in such sums and with such sureties as
shall be satisfactory to the board, conditioned upon the faithful performance of
his duties and for the restoration to the corporation of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation. He shall have such other powers and
perform such other duties as may from time to time be prescribed by the board of
directors or the president. The assistant treasurers, if any, shall have the
same powers and duties, subject to the supervision of the chief financial
officer.
The chief financial officer shall also be the principal accounting
officer of the corporation. He shall prescribe and maintain the methods and
systems of accounting to be followed, keep complete books and records of
account, prepare and file all local, state and federal tax returns, prescribe
and maintain an adequate system of internal audit and prepare and furnish to the
president and the board of directors statements of account showing the financial
position of the company and the results of its operations.
Section 12. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may delegate the powers and duties of such
officer to any officer or to any director, or to any other person who it may
select.
ARTICLE VI
STOCK AND TRANSFER THEREOF
--------------------------
Section 1. CERTIFICATES.
(a) The board of directors shall be authorized to issue any of its
classes of shares with or without certificates. The fact that the shares are not
represented by certificates shall have no effect on the rights and obligations
of stockholders.
(b) If the shares are represented by certificates, such certificates
shall be consecutively numbered and signed, either manually or by facsimile, in
the name of the corporation by one or more persons designated by the board of
directors. Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any, a conspicuous notice of
restrictions upon transfer or registration of transfer, if any, a statement as
to any applicable voting trust agreement; and, if the shares be assessable, or,
if assessments are collectible by personal action, a plain statement of such
facts.
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(c) In case any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form consistent with law as shall be prescribed by the
board of directors.
(d) If shares are not represented by certificates, within a reasonable
time following the issue or transfer of such shares, the corporation shall send
the stockholder a complete written statement of all information required to be
provided to holders of uncertificated shares by the Delaware General Corporation
Law.
Section 2. CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars as shall be fixed from time to time by the
board of directors. Such consideration may consist in whole or in part of money,
other property, tangible or intangible, negotiable, recourse promissory notes
secured by collateral other than the shares being purchased, or labor or
services actually performed for the corporation. Future services shall not
constitute payment or part payment for shares. The corporation may issue the
whole or any part of its shares as partly paid and subject to call for the
remainder of the consideration to be paid therefor. Upon the face or back of
each stock certificate issued to represent any such partly paid shares, or upon
the books and records of the corporation in the case of uncertificated partly
paid shares, the total amount of the consideration to be paid therefor and the
amount paid thereon shall be stated. Upon the declaration of any dividend on
fully paid shares, the corporation shall declare a dividend upon partly paid
shares of the same class, but only upon the basis of the percentage of the
consideration actually paid thereon.
Section 3. SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware (relating to transfers of
stock, stock certificates and undercertificated stock), in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 4. LOST CERTIFICATES. Except as provided in this Section 4, no
new certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and canceled at
the same time. The board of directors may, in case any share certificate or
certificate for any other security is lost, stolen or destroyed, authorize the
issuance of replacement certificates on such terms and conditions as the board
may require; the board may require indemnification of the corporation secured by
a bond or other adequate security sufficient to protect the corporation against
any claim that may be made against it, including any expense or liability, on
account of the alleged loss, theft or destruction of the certificate or the
issuance of the replacement certificate.
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Section 5. TRANSFER OF SHARES. Upon surrender to the corporation or to
a transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law and evidence of
compliance with applicable securities laws and other restrictions, the
corporation shall issue a new certificate to the person entitled thereto and
cancel the old certificate. Every such transfer of stock shall be entered on the
stock book of the corporation which shall be kept at its principal office or by
its registrar duly appointed.
Section 6. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
Section 7. TRANSFER AGENT, REGISTRARS AND PAYING AGENTS. The board may
at its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Delaware. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VII
INDEMNIFICATION OF CERTAIN PERSONS
----------------------------------
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation
shall, to the maximum extent and in the manner permitted by the General
Corporation Law of Delaware as the same now exists or may hereafter be amended,
indemnify any person against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or proceeding
in which such person was or is a party or is threatened to be made a party by
reason of the fact that such person is or was a director or officer of the
corporation, if he acted in good faith and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. For
purposes of this Section 1, a "director" or "officer" of the corporation shall
mean any person (i) who is or was a director or officer of the corporation, (ii)
who is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
or (iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of directors of the corporation.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
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Section 2. INDEMNIFICATION OF OTHERS. The corporation shall have the
power, to the maximum extent and in the manner permitted by the General
Corporation Law of Delaware as the same now exists or may hereafter be amended,
to indemnify any person (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred in connection with any threatened, pending or
completed action, suit, or proceeding, in which such person was or is a party or
is threatened to be made a party by reason of the fact that such person is or
was an employee or agent of the corporation. For purposes of this Section 2, an
"employee" or "agent" of the corporation (other than a director or officer)
shall mean any person (i) who is or was an employee or agent of the corporation,
(ii) who is or was serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was an employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 3. PAYMENT OF EXPENSES IN ADVANCE. The corporation shall pay
the expenses (including attorney's fees) incurred by a director or officer of
the corporation entitled to indemnification hereunder in defending any action,
suit or proceeding referred to in this Article VII in advance of its final
disposition; provided, however, that payment of expenses incurred by a director
or officer of the corporation in advance of the final disposition of such
action, suit or proceeding shall be made only upon receipt of an undertaking by
the director or officer to repay all amounts advanced if it should ultimately be
determined that the director or officer is not entitled to be indemnified under
this Article VII or otherwise.
Section 4. INDEMNITY NOT EXCLUSIVE. The rights conferred on any person
by this Article shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of the corporation's
Certificate of Incorporation, these bylaws, agreement, vote of the stockholders
or disinterested directors or otherwise.
Section 5. INSURANCE INDEMNIFICATION. By action of the board of
directors, notwithstanding any interest of the directors in the action, the
corporation may purchase and maintain insurance, in such amounts as the board of
directors deems appropriate, on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the corporation or who is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article. Any such insurance may be procured from any
insurance company designated by the board of directors, whether such insurance
company is formed under the laws of Delaware or any other jurisdiction of the
United States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock ownership or
otherwise.
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ARTICLE VIII
MISCELLANEOUS
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Section 1. WAIVERS OF NOTICE. Whenever notice is required by law, by
the Articles of Certificate or by these bylaws, a waiver thereof in writing
signed by the director, stockholder or other person entitled to said notice,
whether before or after the time stated therein, or his appearance at such
meeting in person or (in the case of a stockholders' meeting) by proxy, shall be
equivalent to such notice.
Section 2. SEAL. The corporate seal of the corporation shall be
circular in form and shall contain the name of the corporation and the words
"Seal, Delaware."
Section 3. FISCAL YEAR. The fiscal year of the corporation shall be as
established by the board of directors.
Section 4. AMENDMENTS. The board of directors shall have power, to the
maximum extent permitted by the Delaware General Corporation Law, to make, amend
and repeal the bylaws of the corporation at any regular or special meeting of
the board unless the stockholders, in making, amending or repealing a particular
bylaw, expressly provide that the directors may not amend or repeal such bylaw.
The stockholders shall also have the power to make, amend or repeal the bylaws
of the corporation at any annual meeting or any special meeting called for that
purpose.
--------------------------------
David L. Reese, Secretary
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