<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SBE, INC.
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was 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:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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[SBE LOGO]
SBE, INC.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 1997
TO THE SHAREHOLDERS OF SBE, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of SBE,
Inc., a California corporation (the "Company"), will be held on October 21,
1997, at 2:00 p.m. local time, at the Company's principal offices at 4550 Norris
Canyon Road, San Ramon, California, to approve the reincorporation of the
Company in the State of Delaware in order to enable the Company to attract and
retain highly qualified officers and directors, and to take advantage of the
flexibility afforded by Delaware law to adopt measures designed to protect
shareholders in the face of hostile takeover attempts.
Shareholders of record at the close of business on August 27, 1997 are
entitled to notice of and to vote at this Special Meeting and at any adjournment
or postponement thereof.
By Order of the Board of Directors
Timothy J. Repp
CHIEF FINANCIAL OFFICER, VICE
PRESIDENT, FINANCE AND SECRETARY
San Ramon, California
September 9, 1997
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT ATTENDANCE AT THE MEETING WILL NOT BY ITSELF REVOKE A PROXY.
FURTHERMORE, IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
SBE, INC.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 21, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of SBE, Inc., a California corporation (the "Company"), for use at a
Special Meeting of Shareholders (the "Special Meeting") to be held on Tuesday,
October 21, 1997, at 2:00 p.m. local time, or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting. The Special Meeting will be held at the Company's principal
offices at 4550 Norris Canyon Road, San Ramon, California. The Company intends
to mail this proxy statement and accompanying proxy card on or about September
9, 1997 to all shareholders entitled to vote at the Special Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services. The Company has engaged D.F. King to assist in the
solicitation of proxies for the Special Meeting. The Company will pay $4,000 to
$7,000 in fees for D.F. King's services and will reimburse D.F. King for
reasonable out-of-pocket expenses.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on August
27, 1997 (the "Record Date") will be entitled to notice of and to vote at the
Special Meeting. At the close of business on the Record Date, the Company had
outstanding and entitled to vote 2,616,120 shares of Common Stock.
Each holder of record of Common Stock on the Record Date will be entitled to
one vote for each share held on all matters to be voted upon. All votes will be
tabulated by the inspector of election appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions and broker non-votes are counted towards a quorum but are
not counted for any purpose in determining whether a matter is approved. The
affirmative vote of a majority of the outstanding shares of the Company's Common
Stock is required for the approval of the proposal set forth in this Proxy
Statement (reincorporation in Delaware).
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 4550
Norris Canyon Road, San Ramon, California 94583, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy. Furthermore, if the
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shares are held of record by a broker, bank or other nominee and the shareholder
wishes to vote at the meeting, the shareholder must obtain from the record
holder a proxy issued in the shareholder's name.
SHAREHOLDER PROPOSALS
If the reincorporation into Delaware is approved, proposals of shareholders
that are intended to be presented at the Company's 1998 Annual Meeting of
Shareholders must be received by the Company after December 7, 1997 but before
January 6, 1998 in order to be included in the proxy statement and proxy
relating to that annual meeting. Otherwise, proposals of shareholders that are
intended to be presented at the Company's 1998 Annual Meeting of Shareholders
must be received by the Company not later than November 7, 1997 in order to be
included in the proxy statement and proxy relating to that meeting.
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PROPOSAL
APPROVAL OF REINCORPORATION IN THE
STATE OF DELAWARE
AND RELATED CHANGES TO THE RIGHTS OF SHAREHOLDERS
REASONS FOR REINCORPORATION IN DELAWARE
In recent years, a number of major public companies have obtained the
approval of their shareholders to reincorporate in Delaware. For the reasons
explained below, the Board believes it is beneficial and important that the
Company likewise avail itself of Delaware law.
MORE COMPREHENSIVE AND PREDICTABLE CORPORATE LAWS
For many years Delaware has followed a policy of encouraging incorporation
in that state. Consequently, Delaware has adopted comprehensive corporate laws
that are revised regularly to meet changing business circumstances. The Delaware
legislature is particularly sensitive to issues regarding corporate law and is
especially responsive to developments in modern corporate law. The Delaware
courts have developed considerable expertise in dealing with corporate issues as
well as a substantial body of case law construing Delaware's corporate law. As a
result of these factors, it is anticipated that Delaware law will provide
greater predictability in the Company's legal affairs than is presently
available under California law.
INCREASED ABILITY TO ATTRACT AND RETAIN QUALIFIED DIRECTORS
In 1986, Delaware amended its corporate law to allow corporations to limit
the personal monetary liability of directors for their conduct as directors
under certain circumstances. It should be noted that Delaware law does not
permit a Delaware corporation to limit or eliminate the liability of its
directors for intentional misconduct, bad faith conduct or any transaction from
which the director derives an improper personal benefit or for violations of
federal laws such as the federal securities laws. In 1987, California amended
its corporate law in a manner similar to Delaware to permit a California
corporation to limit the personal monetary liability of its directors for their
conduct as directors under certain circumstances. Nonetheless, the Board of
Directors believes that the protection from liability for directors is somewhat
greater under the Delaware law than under the California law and therefore that
the Company's objectives can be better achieved by reincorporation in Delaware.
The Board believes that Delaware incorporation will enhance the Company's
ability to recruit and retain directors in the future; however, the shareholders
should be aware that such a provision inures to the benefit of the directors,
and the interest of the Board in recommending the reincorporation may therefore
be in conflict with the interests of the shareholders. See "Indemnification and
Limitation of Liability" for a more complete discussion of these issues.
INCREASED ABILITY TO DETER HOSTILE TAKEOVER ATTEMPTS
A hostile takeover attempt is an attempt by a third party to acquire a
controlling interest in the Company that has not been negotiated by, or is even
opposed by, the Board. Such takeover attempts may have a negative effect on the
Company and its shareholders, depending on the circumstances surrounding a
particular takeover attempt. They can seriously disrupt the business and
management of a corporation and generally present to the shareholders the risk
of terms that may be less than favorable to all of the shareholders than would
be available in a board-approved transaction. Board-approved transactions may be
carefully planned and undertaken at an opportune time in order to obtain maximum
value for the Company and all of its shareholders with due consideration to
matters such as preservation of key customer and supplier relationships,
minimization of disruption to the
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Company's business, the recognition or postponement of gain or loss for the
shareholders' tax purposes, the management and business of the acquiring
corporation and maximum strategic deployment of corporate assets.
The Board recognizes that hostile takeover attempts do not always have the
unfavorable consequences or effects described above and may frequently be
beneficial to the shareholders, providing all of the shareholders with
considerable value for their shares. However, the Board believes that the
potential disadvantages of unapproved takeover attempts are sufficiently great
such that prudent steps to reduce the likelihood of such takeover attempts are
in the best interests of the Company and its shareholders. Accordingly, the
reincorporation plan includes certain proposals that may have the effect of
discouraging or deterring hostile takeover attempts. See "Anti-Takeover
Measures" for a more complete discussion of these issues.
Notwithstanding the belief of the Board as to the benefits to shareholders
of the changes, shareholders should recognize that one of the effects of such
changes may be to discourage a future attempt to acquire control of the Company
that is not presented to and approved by the Board, but that a substantial
number and perhaps even a majority of the Company's shareholders might believe
to be in their best interests or in which shareholders might receive a
substantial premium for their shares over the current market price. As a result,
shareholders who might desire to participate in such a transaction may not have
an opportunity to do so.
In considering the proposals, shareholders should be aware that the overall
effect of certain of the proposed provisions is to make it more difficult for
holders of a majority of the outstanding shares of Common Stock to change the
composition of the Board and to remove existing management in circumstances
where a portion of the shareholders may be dissatisfied with the performance of
the incumbent directors or otherwise desire to make changes. This strengthened
tenure and authority of the Board could enable the Board to resist change and
potentially thwart the desires of a majority of the shareholders. Because this
provision may have the effect of continuing the tenure of the current Board, the
Board has recognized that the individual directors have a personal interest in
this provision that may differ from those of the shareholders. However, the
Board believes that the primary purpose of these provisions is to ensure that
the Board will have sufficient time to consider fully any proposed takeover
attempt in light of the short and long-term benefits and other opportunities
available to the Company and, to the extent the Board determines to proceed with
the takeover, to effectively negotiate terms that would maximize the benefits to
the Company and its shareholders.
The proposal to include these anti-takeover provisions in the proposed
reincorporation does not reflect knowledge on the part of the Board or
management of any proposed takeover or other attempt to acquire control of the
Company. Management may in the future propose other measures designed to
discourage takeovers apart from those proposed in this proxy statement, if
warranted from time to time in the judgment of the Board.
MECHANICS OF REINCORPORATION
The proposed reincorporation would be accomplished by merging the Company
into a newly-formed Delaware corporation that, just before the merger, will be a
wholly-owned subsidiary of the Company (the "Delaware Company"), pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") in substantially the form
attached as Exhibit A to this proxy statement. Upon the effective date of the
merger, the Delaware Company's name will become SBE, Inc. The reincorporation
will not result in any change in the Company's business, assets or liabilities,
will not cause its corporate headquarters to be moved and will not result in any
relocation of management or other employees.
On the effective date of the proposed reincorporation, each outstanding
share of Common Stock of the Company will automatically convert into one share
of Common Stock of the Delaware Company, and shareholders of the Company will
automatically become shareholders of the Delaware Company.
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On the effective date of the reincorporation, the number of outstanding shares
of Common Stock of the Delaware Company will be equal to the number of shares of
Common Stock of the Company outstanding immediately prior to the effective date
of the reincorporation. In addition, each outstanding option or right to acquire
shares of Common Stock of the Company will be converted into an option or right
to acquire an equal number of shares of Common Stock of the Delaware Company,
under the same terms and subject to the same conditions as the original options
or rights. All of the Company's employee benefit plans, including its stock
option and stock purchase plans, will be adopted and continued by the Delaware
Company following the reincorporation. Shareholders should recognize that
approval of the proposed reincorporation will constitute approval of the
adoption and assumption of those plans by the Delaware Company.
No action need be taken by shareholders to exchange their stock certificates
now; this will be accomplished at the time of the next sale or other transfer by
the shareholder. Certificates for shares in the Company will automatically
represent an equal number of shares in the Delaware Company upon completion of
the merger. The Company will apply for the listing of the Common Stock of the
Delaware Company on the Nasdaq National Market.
If approved by the shareholders, it is anticipated that the reincorporation
would be completed as soon thereafter as practicable. The reincorporation may be
abandoned or the Merger Agreement may be amended (with certain exceptions),
either before or after shareholder approval has been obtained, if in the opinion
of the Board, circumstances arise that make such action advisable; provided that
any amendment that would effect a material change from the charter provisions
discussed in this Proxy Statement would require further approval by the holders
of a majority of the outstanding voting shares.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL
SIGNIFICANT CHANGES CAUSED BY REINCORPORATION
In general, the Company's corporate affairs are governed at present by the
corporate law of California and by its Articles of Incorporation (the
"California Articles") and bylaws (the "California Bylaws"), both which have
been adopted pursuant to California law. The California Articles and California
Bylaws are available for inspection during business hours at the principal
executive offices of the Company. In addition, copies may be obtained by writing
to the Company at 4550 Norris Canyon Road, San Ramon, California 94583-1369,
Attention: Corporate Secretary.
If the reincorporation proposal is adopted, the Company will merge into, and
its business will be continued by, the Delaware Company. Following the merger,
issues of corporate governance and control will be controlled by Delaware law
rather than California law (see, however, "Application of California Law After
Reincorporation"). The California Articles and California Bylaws will be
replaced by the Certificate of Incorporation (the "Delaware Certificate") and
Bylaws (the "Delaware Bylaws") of the Delaware Company, copies of which are
attached as Exhibits B and C to this proxy statement, respectively. Accordingly,
the differences among these documents and between Delaware law and California
law are relevant to your decision whether to approve the reincorporation
proposal.
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SUMMARY OF KEY DIFFERENCES BETWEEN DELAWARE LAW AND CALIFORNIA LAW
A number of differences between California law and Delaware law and among
the various charter documents are summarized in the chart below. Shareholders
are requested to read the following chart in conjunction with the discussion
following the chart and the Merger Agreement, the Delaware Certificate and the
Delaware Bylaws attached to this Proxy Statement.
<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
<S> <C> <C>
Limitation of Liability of Direc- Delaware law permits the limitation California law contains additional
tors (see page 9) of liability of directors to the exceptions to the liability
Company except in connection with limitations of directors.
(a) breaches of the duty of loyalty,
(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 repur-
chases or redemptions, or (d)
transactions in which a director
received an improper personal
benefit.
Indemnification of Directors and Delaware law permits somewhat California law permits indemni-
Officers (see page 10) broader indemnification than fication under certain circum-
California law and could result in stances, subject to certain limi-
indemnification of directors and tations.
officers in circumstances where
California law would not permit
indemnification.
Cumulative Voting for Directors (see Cumulative voting is not available California law permits Nasdaq
page 11) under Delaware law because it is not National Market corporations with
provided for in the Delaware over 800 equity security holders to
Certificate. eliminate cumulative voting; the
California Articles have not been
amended to eliminate cumulative
voting.
Number of Directors (see page 12) Determined solely by resolution of Determined by Board within range set
the Board. in the California Bylaws. Changes in
the authorized range must be
approved by the shareholders.
Classified Board (see page 12) Delaware law permits the adoption of California law permits the adoption
a classified board with staggered of a classified board with staggered
terms. The Delaware Certificate and terms under certain
the Delaware Bylaws provide for a circumstances.The California Bylaws
classified Board of Directors with have not been amended to provide for
three classes of directors. a classified board of directors.
</TABLE>
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<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
<S> <C> <C>
Removal of Directors by Share- Delaware law permits the removal of California law permits the removal
holders (see page 13) a director only with cause, unless of a director with or without cause
otherwise specified in the by affirmative vote of a majority of
Certificate of Incorporation.The the outstanding shares.
Delaware Certificate provides that
directors may be removed only for
cause by the holders of 66 2/3% of
the voting stock.
Filing Board Vacancies (see page 13) Delaware law provides for the California law permits (a) any
Delaware Court of Chancery to order holder of 5% or more of the cor-
an election to fill vacancies or poration's voting stock or (b) the
newly created directorships upon the superior court of the appropriate
application of the holders of 10% of county to call a special meeting of
the outstanding shares having a shareholders to elect the entire
right to vote for such directors, if board if, after filling any vacancy,
at the time of filling such vacan- the directors then in office who
cies or directorships, the direc- have been elected by the
tors then in office constitute less shareholders constitute less than a
than a majority of the entire board majority of the directors then in
as constituted immediately prior to office.
any increase.
Action by Written Consent of Actions by written consent not Actions by written consent per-
Shareholders (see page 13) permitted by Delaware Certificate. mitted by California Bylaws.
All shareholder action must take
place by a shareholder vote at a
meeting of shareholders.
Tender Offer Statute; Fair Price Restricts hostile two-step take- No comparable statute; the Cal-
Provision (see "Anti-Takeover overs; the Delaware Certificate does ifornia Articles do not contain a
Provisions" on page 14) not contain a fair price provision. fair price provision.
Amendment of Certificate/ Articles Amendments of the Delaware Amendments of the California
(see page 16) Certificate require approval by, Articles require approval by a
depending on the provisions amended, majority of the voting stock of the
a majority or 66 2/3% of the voting California Company.
stock of the Delaware Company.
Amendment of Bylaws (see page 16) Amendments to the Delaware Bylaws Amendments to the California Bylaws
may be made by the Board or the may be made by the Board or the
holders of 66 2/3% of the holders of a majority of the
outstanding voting shares. outstanding voting shares, except
that the Board may not amend the
range of authorized directors.
</TABLE>
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<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
<S> <C> <C>
Loans to Officers and Directors (see Board may authorize if expected to Loans must be approved or ratified
page 16) benefit the Company. by a majority of the outstanding
shares.
Class Vote for Reorganization (see Generally not required unless a A reorganization transaction
page 16) reorganization adversely affects a generally must be approved by a
specific class of shares. majority vote of each class of
shares outstanding.
Right of Shareholders to Inspect Permitted for any purpose rea- Permitted for any purpose rea-
Shareholder List (see page 16) sonably related to a shareholder's sonably related to a shareholder's
interest as a shareholder. interest as a shareholder. Also, an
absolute right to 5% shareholders
and certain 1% shareholders.
Appraisal Rights (see page 16) Generally available if shareholders Generally available.
receive cash in exchange for the
shares and in certain other
circumstances.
Dividends (see page 17) Paid from surplus (including paid-in Generally limited to the greater of
and earned surplus or net profits). (a) retained earnings or (b) an
amount which would leave the Company
with assets of 125% of liabilities
and current assets of 100% of
current liabilities.
Other Responsive legislature and larger
body of corporate case law in
Delaware provides more predictable
corporate legal environment in
Delaware than in California.
</TABLE>
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INDEMNIFICATION AND LIMITATION OF LIABILITY
LIMITATION OF LIABILITY OF DIRECTORS
Both California and Delaware permit a corporation to limit the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of certain duties as a director. The California and Delaware
laws adopt a self-governance approach by enabling a corporation to take
advantage of these provisions only if an amendment to the charter limiting such
liability is approved by a majority of the outstanding shares or such language
is included in the original charter.
The California Articles eliminate the liability of directors to the
corporation to the fullest extent permissible under California law. California
law does not permit the elimination of monetary liability where such liability
is based on: (a) intentional misconduct or knowing and culpable violation of
law; (b) acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders, or that involve the absence of
good faith on the part of the director; (c) receipt of an improper personal
benefit; (d) acts or omissions that show reckless disregard for the director's
duty to the corporation or its shareholders, where the director in the ordinary
course of performing a director's duties should be aware of a risk of serious
injury to the corporation or its shareholders; (e) acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation and its shareholders; (f) interested
transactions between the corporation and a director in which a director has a
material financial interest; or (g) liability for improper distributions, loans
or guarantees.
The Delaware Certificate also eliminates the liability of directors to the
fullest extent permissible under Delaware law. 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
shareholders; (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. Such limitation of liability
provision also may not limit a director's liability for violation of, or
otherwise relieve the Delaware Company 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.
Shareholders should recognize that the proposed reincorporation and
associated measures are designed to shield a director from suits by the Delaware
Company or its shareholders for monetary damages for negligence by the director
in failing to satisfy the director's duty of care. As a result, an action for
monetary damages against a director predicated on a breach of the duty of care
would be available only if the Delaware Company or its shareholders were able to
establish that the director was disloyal in his or her conduct, failed to act in
good faith, engaged in intentional misconduct, knowingly violated the law,
derived an improper personal benefit or approved an illegal dividend or stock
repurchase. Consequently, the effect of such measures may be to limit or
eliminate an effective remedy that might otherwise be available to a shareholder
who is dissatisfied with Board of Directors' decisions. Although an aggrieved
shareholder could sue to enjoin or rescind an action taken or proposed by the
Board, such remedies may not be timely or adequate to prevent or redress injury
in all cases.
The Company believes that directors are motivated to exercise due care in
managing the Company's affairs primarily by concern for the best interests of
the Company and its shareholders rather than by the fear of potential monetary
damage awards. As a result, the Company believes that the reincorporation
proposal should reinforce the Board's continued high standard of corporate
governance without any decrease in accountability by directors to the Company
and its shareholders.
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INDEMNIFICATION OF OFFICERS AND DIRECTORS
The provisions of the California Articles, California Bylaws, Delaware
Certificate and Delaware Bylaws relating to indemnification similarly require
that the Company indemnify its directors and its executive officers to the
fullest extent permitted by the respective state law; provided that the Company
may modify the extent of such indemnification by individual contracts with its
directors and executive officers and provided further that the Company will not
be required to indemnify any director or executive officer in connection with a
proceeding initiated by such person, with certain exceptions. Such charter
documents permit the Company to provide indemnification to its other officers,
employees and agents as set forth in the respective state law. Such
indemnification is intended to provide the full flexibility available under such
laws. The Delaware Bylaws contain provisions similar to the California Bylaws
with respect to advances in that the Company is required to advance expenses
related to any proceeding contingent on such persons' commitment to repay any
advances unless it is determined ultimately that such persons are entitled to be
indemnified.
California and Delaware have similar laws respecting indemnification by a
corporation of its officers, directors, employees and other agents.
Indemnification is permitted by both California law and Delaware law providing
the requisite standard of conduct is met, as determined by a majority vote of a
disinterested quorum of the directors, independent legal counsel (if a quorum of
independent directors is not obtainable), a majority vote of a quorum of the
shareholders (excluding shares owned by the indemnified party) or the court
handling the action.
There are nonetheless certain differences between the laws of the two
states. California law requires indemnification when the individual has
successfully defended the action on the merits as opposed to Delaware law, which
requires indemnification relating to a successful defense on the merits or
otherwise. California law permits indemnification of expenses incurred in
derivative actions (actions brought by a shareholder on behalf of the
corporation) or third-party actions, except that with respect to derivative
actions (a) no indemnification may be made without court approval when a person
is adjudged liable to the corporation in the performance of that person's duty
to the corporation and its shareholders, unless a court determines such person
is entitled to indemnity for expenses, and then such indemnification may be made
only to the extent that such court determines and (b) no indemnification may be
made without court approval in respect of amounts paid or expenses incurred in
settling or otherwise disposing of a threatened or pending action or amounts
incurred in defending a pending action that is settled or otherwise disposed of
without court approval. Delaware law generally permits indemnification of
expenses incurred in the defense or settlement of a derivative or third-party
action without court approval, 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 shareholders that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be in
or (in contrast to California law) 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.
California corporations may include in their articles of incorporation a
provision that extends the scope of indemnification through agreements, bylaws
or other corporate action beyond that specifically authorized by statute. The
California Articles include such a provision. In addition, the Company,
following shareholder approval, entered into indemnification agreements with its
officers and directors providing for indemnification beyond that expressly
mandated by the California Corporations Code.
A provision of Delaware law states that the indemnification provided by
statute will not be deemed exclusive of any other rights under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise. Under
Delaware law, rights to indemnification and expenses are non-
10
<PAGE>
exclusive, in that they need not be limited to those expressly provided by
statute. California law is similar in that it permits non-exclusive
indemnification if authorized in the Company's charter. The California Articles
contain such an enabling provision. Under Delaware law and the Delaware Bylaws,
the Company is permitted to indemnify its directors, officers, employees and
other agents, within the limits established by law and public policy, pursuant
to an express contract, bylaw provision, shareholder vote or otherwise, any or
all of which could provide indemnification rights broader than those currently
available under the California Bylaws or the California indemnification
statutes. As noted above, the Company has entered into indemnification
agreements with its officers and directors. The Company plans to enter into new
but similar agreements with its officers and directors upon completion of the
proposed reincorporation.
The indemnification and limitation of liability provisions of California
law, and not Delaware law, will apply to actions of the directors and officers
of the Company made prior to the proposed reincorporation. Nevertheless, the
Board has recognized in considering this reincorporation proposal that the
individual directors have a personal interest in obtaining the application of
Delaware law to such indemnity and limitation of liability issues affecting them
and the Company in the event they arise from a potential future case, and that
the application of Delaware law, to the extent that any director or officer is
actually indemnified in circumstances where indemnification would not be
available under California law, would result in expense to the Company that the
Company would not incur if the Company were not reincorporated. The Board
believes, however, that the overall effect of reincorporation is to provide a
corporate legal environment that enhances the Company's ability to attract and
retain high quality outside directors and thus benefits the interests of the
Company and its shareholders.
There is no pending or, to the Company's knowledge, threatened litigation to
which any of its directors is a party in which the rights of the Company or its
shareholders would be affected if the Company currently were subject to the
provisions of Delaware law rather than California law.
CUMULATIVE VOTING FOR DIRECTORS
Cumulative voting permits the holder of each share of stock entitled to vote
in the election of directors to cast that number of votes equal to the number of
directors to be elected. The holder may allocate all votes represented by a
share to a single candidate or may allocate those votes among as many candidates
as he chooses. Thus, a shareholder with a significant minority percentage of the
outstanding shares may be able to elect one or more directors if voting is
cumulative. In contrast, the holders of a majority of the shares entitled to
vote in an election of directors are able to elect all the directors in the
absence of cumulative voting.
Under California law, cumulative voting in the election of directors is
mandatory upon notice given by a shareholder at a shareholders' meeting at which
directors are to be elected. In order to cumulate votes a shareholder must give
notice at the meeting, prior to the voting, of the shareholder's intention to
vote cumulatively. If any one shareholder gives such a notice, all shareholders
may cumulate their votes. However, California law permits the Company, by
amending the California Articles or California Bylaws, to eliminate cumulative
voting because the Company's shares are traded on the Nasdaq National Market and
are held by at least 800 equity security holders. The Company has not made such
amendments to date.
Cumulative voting is not available under Delaware law unless so provided in
the corporation's certificate of incorporation. The Delaware Certificate does
not provide for cumulative voting. The elimination of cumulative voting could
deter investors from acquiring a minority block in the Company, with a view
toward obtaining a board seat and influencing Company policy. It is also
conceivable that the absence of cumulative voting might deter efforts to seek
control of the Company on a basis which some shareholders might deem favorable.
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<PAGE>
OTHER MATTERS RELATING TO DIRECTORS
NUMBER OF DIRECTORS
California law allows the number of persons constituting the board of
directors of a corporation to be fixed by the bylaws or the articles of
incorporation, or permits the bylaws to provide that the number of directors may
vary within a specified range. California law further provides that, in the case
of a variable board, the maximum number of directors may not exceed two times
the minimum number minus one. The California Bylaws provide for a board of
directors that may vary between five and nine members, inclusive, and the exact
number of directors has been fixed at five. California law also requires that
any change in a fixed number of directors and any change in the range of a
variable board of directors specified in the articles and bylaws must be
approved by a majority in interest of the outstanding shares entitled to vote
(or such greater proportion of the outstanding shares as may be required by the
articles of incorporation), provided that a change reducing the minimum number
of directors to less than five cannot be adopted if votes cast against its
adoption are equal to more than 16 2/3% of the outstanding shares entitled to
vote. The California Bylaws require the vote of a majority in interest of the
voting power of all of the then outstanding shares to change the range of the
Company's variable board of directors.
Delaware law permits a board of directors to change the authorized number of
directors by amendment to the bylaws unless the number of directors is fixed in
the certificate of incorporation or the manner of fixing the number of directors
is set forth in the certificate of incorporation, in which case the number of
directors may be changed only by amendment of the certificate of incorporation
or consistent with the manner specified in the certificate of incorporation, as
the case may be. The Delaware Certificate provides that the exact number of
directors will be fixed from time to time exclusively by the Board of Directors
by resolution.
CLASSIFIED BOARD OF DIRECTORS
A "classified" board of directors is one that is divided into a number of
classes (usually two or three). Members of just one of the director classes are
elected each year. The Board believes that classification of directors provides
the Board of Directors with greater continuity and experience, since normally at
least one, and in most cases two, members of the Board of Directors would be in
his or her second or third year of service.
The existence of a classified Board may deter so-called "creeping
acquisitions" in which a person or group seeks to acquire: (a) a controlling
position without paying a normal control premium to the selling shareholders;
(b) a position sufficient to exert control over the Company through a proxy
contest or otherwise; or (c) a block of stock with a view toward attempting to
promote a sale or liquidation of the Company or a repurchase by the Company of
the block at a premium, or an exchange of the block for assets of the Company.
Faced with a classified Board, such a person or group would have to assess
carefully its ability to control or influence the Company. Furthermore, the
ability of the incumbent Board to respond appropriately to a creeping
acquisition will be strengthened. If free of the necessity to act in response to
an immediately threatened change in control, the Board can act in a more careful
and deliberative manner to make and implement appropriate business judgments in
response to a creeping acquisition.
California law generally requires that directors be elected annually but
does permit a classified board of directors if (a) a corporation is listed on a
national stock exchange or (b) the corporation's shares are traded in the Nasdaq
National Market and are held by at least 800 shareholders. The Company could
implement a classified Board in California by amending the California Articles,
but has not done so thus far. Delaware law permits, but does not require, the
adoption of a classified board of directors with staggered terms. A maximum of
three classes of directors is permitted by Delaware law, with members of one
class to be elected each year for a maximum term of three years. The
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Delaware Certificate and the Delaware Bylaws contain a classified board
provision. Under the classified board provision, the Board of Directors has been
divided into three classes, designated Class I, Class II and Class III. As a
result, only one class of directors will be elected at each annual meeting of
shareholders, with the remaining class continuing its respective three-year term
until the successors are duly elected and qualified or until earlier
resignation, removal from office or death.
With the classified board provision contained in the Delaware Certificate,
unless directors are removed, it will require at least three annual meetings of
shareholders for a majority of shareholders to make a change in control of the
Board, since only a portion of the directors will be elected at each meeting.
While the purpose of the classified Board is to defer hostile takeover attempts,
a classified Board also makes it more difficult for shareholders to effect a
change in control of the Board, even if such a change in control is sought due
to dissatisfaction with the performance of the Company's directors. These
effects of a classified board provision are limited by the ability of holders of
66 2/3% of the outstanding voting stock to remove directors and to amend the
Delaware Certificate and the Delaware Bylaws.
REMOVAL OF DIRECTORS
Under California law, a director may be removed with or without cause by the
affirmative vote of a majority of the outstanding shares. Under Delaware law, a
director on a classified board of directors can be removed from office during
his term by shareholders only for cause unless the certificate of incorporation
provides otherwise. The Delaware Certificate provides that directors can only be
removed for cause by the holders of 66 2/3% of the voting stock.
FILLING BOARD VACANCIES
Under California law, if, after the filling of any vacancy by the directors
of a corporation, the directors then in office who have been elected by the
corporation's shareholders constitute less than a majority of the directors then
in office, then: (a) any holder of more than 5% of the corporation's voting
stock may call a special meeting of shareholders, or (b) the superior court of
the appropriate county may order a special meeting of the shareholders to elect
the entire board of directors of the corporation. Delaware law provides that if,
at the time of filling any vacancy or newly created directorship, the directors
then in office constitute less than a majority of the entire board of directors
as constituted immediately prior to any increase, the Delaware Court of Chancery
may, upon application of any shareholder or shareholders holding at least 10% of
the total number of shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships or to replace the directors chosen by
the directors then in office.
The proposed Delaware Certificate and Delaware Bylaws provide that
vacancies, unless the Board determines by resolution that any such vacancies be
filled by the shareholders or as otherwise provided by law, will be filled only
by the affirmative vote of a majority of directors then in office, even if such
directors comprise less than a quorum of the Board.
ACTIONS BY WRITTEN CONSENT OF SHAREHOLDERS
Under California law and Delaware law, shareholders may execute an action by
written consent in lieu of a shareholder meeting. Both California law and
Delaware law permit a corporation to eliminate such actions by written consent
in its charter. The California Articles permit shareholders to act by written
consent. The Delaware Certificate eliminates actions by written consent of
shareholders.
Elimination of such shareholders' written consents may lengthen the amount
of time required to take shareholder actions because certain actions by written
consent are not subject to the minimum notice requirement of a shareholders'
meeting. The elimination of shareholders' written consents may deter hostile
takeover attempts because of the lengthened shareholder approval process.
Without
13
<PAGE>
the ability to act by written consent, shareholders will not be able to amend
the Delaware Bylaws or remove directors pursuant to a written consent, but
instead would have to wait until a shareholders' meeting was held to take any
such action. The Board believes this provision, like the other provisions to be
included in the Delaware Certificate and Delaware Bylaws, will enhance the
Board's opportunity to fully consider and effectively negotiate in the context
of a takeover attempt.
ANTI-TAKEOVER MEASURES
Delaware law has been widely viewed to permit a corporation greater
flexibility in governing its internal affairs and its relationships with
shareholders and other parties than do the laws of many other states, including
California. In particular, Delaware law permits a corporation to adopt a number
of measures designed to reduce a corporation's vulnerability to hostile takeover
attempts. Certain of such measures are either not currently permitted or are
more narrowly drawn under California law. In addition, certain types of "poison
pill" defenses (such as shareholder rights plans) have been upheld by Delaware
courts, while California courts have yet to decide on the validity of such
defenses, thus rendering their effectiveness in California less certain. The
Company does not currently have a shareholder rights plan, but may choose to
adopt one in the future.
One such difference is the existence of a Delaware statute regulating tender
offers, which statute is intended to limit coercive takeovers of companies
incorporated in that state. California has no comparable statute. The Delaware
law provides that a corporation may not engage in any business combination with
any interested shareholder for a period of three years following the date that
such shareholder became an interested shareholder, unless (a) prior to the date
the shareholder became an interested shareholder the Board approved the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder, or (b) upon consummation of the transaction that ted in
the shareholder becoming an interested shareholder, the interested shareholder
owned at least 85% of the voting stock, or (c) the business combination is
approved by the Board and authorized by 66 2/3% of the outstanding voting stock
that is not owned by the interested shareholder. An interested shareholder
generally means any person that is the owner of 15% or more of the outstanding
voting stock. Any corporation may decide to opt out of the statute in its
original certificate of incorporation or, at any time, by action of its
shareholders. The Company has no present intention of opting out of the statute.
There can be no assurance that the Board would not adopt any further
anti-takeover measures available under Delaware law (some of which may not
require shareholder approval, such as a shareholder rights plan). Moreover, the
availability of such measures under Delaware law, whether or not implemented,
may have the effect of discouraging a future takeover attempt that a majority of
the Company's shareholders may deem to be in their best interests or in which
shareholders may receive a premium for their shares over the then current market
price. As a result, shareholders who might desire to participate in such
transactions may not have the opportunity to do so. Shareholders should
recognize that, if adopted, the effect of such measures, along with the
possibility of discouraging takeover attempts, may be to limit in certain
respects the rights of shareholders of the Company.
The Board recognizes that hostile takeover attempts do not always have the
unfavorable consequences or effects described above and may in some cases be
beneficial to the shareholders, providing all of the shareholders with
considerable value for their shares. However, the Board believes that the
potential disadvantages of unapproved takeover attempts (such as disruption of
the Company's business and the possibility of terms which may be less than
favorable to all of the shareholders than would be available in a board-approved
transaction) are sufficiently great such that prudent steps to reduce the
likelihood of such takeover attempts and to enable the Board to fully consider
the proposed takeover attempt and actively negotiate its terms are in the best
interests of the Company and its shareholders.
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<PAGE>
In addition to the various anti-takeover measures that would be available to
the Company after the reincorporation due to the application of Delaware law,
the Company would retain the rights currently available to the Company under
California law to issue shares of its authorized but unissued capital stock.
Following the effectiveness of the proposed reincorporation, shares of
authorized and unissued Common Stock and Preferred Stock of the Company could
(within the limits imposed by applicable law) be issued in one or more
transactions, or Preferred Stock could be issued with terms, provisions and
rights that would make more difficult and, therefore, less likely, a takeover of
the Company. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of existing shares of
Common Stock and Preferred Stock, and such additional shares could be used to
dilute the stock ownership of persons seeking to obtain control of the Company.
It should be noted that the voting rights to be accorded to any unissued
series of Preferred Stock of the Company remain to be fixed by the Board.
Accordingly, if the Board so authorizes, the holders of Preferred Stock may be
entitled to vote separately as a class in connection with approval of certain
extraordinary corporate transactions in circumstances where Delaware law does
not ordinarily require such a class vote, or might be given a disproportionately
large number of votes. Such Preferred Stock could also be convertible into a
large number of shares of Common Stock of the Company under certain
circumstances or have other terms that might make acquisition of a controlling
interest in the Company more difficult or more costly, including the right to
elect additional directors to the Board. Potentially, the Preferred Stock could
be used to create voting impediments or to frustrate persons seeking to effect a
merger or otherwise to gain control of the Company. Also, the Preferred Stock
could be privately placed with purchasers who might side with the management of
the Company in opposing a hostile tender offer or other attempt to obtain
control.
Future issuances of Preferred Stock as an anti-takeover device might
preclude shareholders from taking advantage of a situation that might otherwise
be favorable to their interests. In addition (subject to the considerations
referred to above as to applicable law), the Board could authorize issuance of
shares of Common Stock or Preferred Stock of the Company to a holder who might
thereby obtain sufficient voting power to ensure that any proposal to alter,
amend or repeal provisions of the Delaware Certificate unfavorable to a suitor
would not receive the necessary vote of a majority of the voting stock required
for certain of the proposed amendments (as described below).
If the reincorporation is approved, it is not the present intention of the
Board to seek shareholder approval prior to any issuance of the Preferred Stock
or Common Stock, except as required by law or regulation. Frequently,
opportunities arise that require prompt action, and it is the belief of the
Board that the delay necessary for shareholder approval of a specific issuance
would be a detriment to the Company and its shareholders. The Board does not
intend to issue any Preferred Stock except on terms that the Board deems to be
in the best interests of the Company and its then-existing shareholders.
15
<PAGE>
AMENDMENT OF CERTIFICATE
The California Articles may be amended by the approval of a majority of the
members of the Board and by a majority of the outstanding shares. The provisions
of the Delaware Certificate relating to the classified Board, the limitation of
directors' liability and the ability of shareholders to act by written consent
may be amended by the holders of 66 2/3% of the outstanding shares. The other
provisions of Delaware Certificate may be amended by the approval of a majority
of the members of the Board and the holders of a majority of the outstanding
shares.
AMENDMENT OF BYLAWS
The California Bylaws may be amended or repealed either by the Board or by
the holders of a majority in interest of the outstanding stock of the Company,
except that the Board may not change the authorized range of directors. Upon the
effectiveness of the proposed reincorporation, the Delaware Bylaws may be
adopted, amended or repealed by the Board or by the holders of 66 2/3% of the
outstanding shares.
LOANS TO OFFICERS AND DIRECTORS
California law provides that any loan or guaranty (other than loans to
permit the purchase of shares under certain stock purchase plans) for the
benefit of any officer or director, or any employee benefit plan authorizing
such loan or guaranty (except certain employee stock purchase plans), must be
approved by the shareholders of a California corporation. Under Delaware law, a
corporation may make loans to, or guarantee the obligations of, officers or
other employees when, in the judgment of the board of directors, the loan or
guaranty may reasonably be expected to benefit the corporation. Both California
law and Delaware law permit such loans or guaranties to be unsecured and without
interest.
CLASS VOTE FOR REORGANIZATION
With certain exceptions, California law requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved by
a majority vote of each class of shares outstanding. Delaware law generally does
not require class voting for such transactions, except in certain situations
involving an amendment to the certificate of incorporation that adversely
affects a specific class of shares.
California law also requires that holders of a California corporation's
Common Stock receive nonredeemable Common Stock in a merger of the corporation
with the holder (or an affiliate of the holder) of more than 50% but less than
90% of its Common Stock, unless all of the holders of its Common Stock consent
to the merger or the merger has been approved by the California Commissioner of
Corporations at a "fairness hearing." This provision of California law may have
the effect of making a cash "freezeout" merger by a majority shareholder more
difficult to accomplish. A cash freezeout merger is a transaction whereby a
minority shareholder is forced to relinquish his share ownership in a
corporation in exchange for cash, subject in certain instances to dissenters
rights. Delaware law has no comparable provision.
RIGHT OF SHAREHOLDERS TO INSPECT SHAREHOLDER LIST
California law provides for an absolute right of inspection of the
shareholder list for shareholders holding 5% or more of a corporation's
outstanding voting shares or shareholders holding 1% or more of such shares who
have filed a Schedule 14B with the Securities and Exchange Commission. Delaware
law provides no such absolute right of shareholder inspection. However, both
California and Delaware law permit any shareholder of record to inspect the
shareholder list for any purpose reasonably related to that person's interest as
a shareholder.
APPRAISAL RIGHTS
Under both California law and Delaware law, a shareholder of a corporation
participating in certain mergers and reorganizations may be entitled to receive
cash in the amount of the "fair value"
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(Delaware) or "fair market value" (California) of its shares, as determined by a
court, in lieu of the consideration it would otherwise receive in the
transaction. The limitations on such dissenters' appraisal rights are somewhat
different in California and Delaware.
Shareholders of a California corporation generally have appraisal rights in
reorganization transactions. However, in any reorganization in which one
corporation or the shareholders of one corporation own more than 5/6 of the
voting power of the surviving or acquiring corporation, shareholders are denied
dissenters' rights under California law. For this reason, appraisal rights will
not be available to shareholders in connection with the reincorporation
proposal.
Under Delaware law appraisal rights are not available to shareholders with
respect to a merger or consolidation by a corporation, the shares of which are
either listed on a national securities exchange or designated as a national
market system security or an interdealer quotation system security by the
National Association of Securities Dealers, Inc., or are held of record by more
than 2,000 holders if the shareholders receive shares of the surviving
corporation or shares of any other corporation that are similarly listed or
dispersed, and the shareholders do not receive any other property in exchange
for their shares except cash for fractional shares. Appraisal rights are also
unavailable under Delaware law to shareholders of a corporation surviving a
merger if no vote of those shareholders is required to approve the merger
because, among other things, the number of shares to be issued in the merger
does not exceed 20% of the shares of the surviving corporation outstanding
immediately before the merger and certain other conditions are met.
Delaware law does not provide shareholders with voting or appraisal rights
when a corporation acquires another business through the issuance of its stock,
whether in exchange for assets or stock or in a merger with a subsidiary.
California law treats these kinds of acquisitions in the same manner as a merger
of the corporation directly with the business to be acquired and provides
appraisal rights in the circumstances described above.
DIVIDENDS
Under California law, any dividends or other distributions to shareholders,
such as redemptions, are limited to the greater of (a) retained earnings or (b)
an amount that would leave the corporation with assets (excluding certain
intangible assets) equal to at least 125% of its liabilities (excluding certain
deferred items) and current assets equal to at least 100% (or, in certain
circumstances, 125%) of its current liabilities. Delaware law allows the payment
of dividends and redemption of stock out of surplus (including paid-in and
earned surplus) or out of net profits for the current and immediately preceding
fiscal years. The Company does not intend to declare dividends in the
foreseeable future.
ADVANCE NOTICE REQUIREMENT FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
There is no specific statutory requirement under either California or
Delaware law with regard to advance notice of director nominations and
shareholder proposals. Absent a bylaw restriction, director nominations and
shareholder proposals may be made without advance notice at the annual meeting.
However, federal securities laws generally provide that shareholder proposals
that the proponent wishes to include in the Company's proxy materials must be
received not less than 120 days in advance of the anniversary of the date of the
proxy statement released in connection with the previous year's annual meeting.
The Delaware Bylaws provide that in order for director nominations or
shareholder proposals to be properly brought before the meeting, the shareholder
must have delivered timely notice to the Secretary of the Company. To be timely,
notice must be delivered not less than 60 nor more than 90 days prior to the
date of the Company's proxy statement released to shareholders in connection
with the previous year's annual meeting. If no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
days from the date contemplated at the time of the previous year's proxy
statement, the Delaware Bylaws will provide that notice must be given not
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more than 90 days nor less than 60 days prior to the annual meeting. Proper
notice under the federal securities laws for a proposal to be included in the
Company's proxy materials will constitute proper notice under the Delaware
Bylaws. These notice requirements help ensure that shareholders are aware of all
proposals to be voted on at the meeting and have the opportunity to consider
each proposal in advance of the meeting.
APPLICATION OF CALIFORNIA LAW AFTER REINCORPORATION
California law provides that if (a) the average of certain property, payroll
and sales factors results in a finding that more than 50% of the Company's
business is conducted in California, and in a particular fiscal year more than
50% of the Company's outstanding voting securities are held of record by persons
having addresses in California, and (b) the Company's shares are held by fewer
than 800 equity security holders, as of its most recent annual meeting of
shareholders, then the Company would become subject to certain provisions of
California law regardless of its state of incorporation.
Because the Company's Common Stock is traded in the Nasdaq National Market
and the Company's shares are held by at least 800 equity security holders as of
its most recent annual meeting of shareholders, California law will not
initially apply to the Company if the reincorporation is approved. The Company
would not be subject to California law as long as it continued to meet both of
these requirements.
If the Company were to become subject to the provisions of California law
referred to above, and such provisions were enforced by California courts in a
particular case, many of the Delaware laws described in this proxy statement
would not apply to the Company. Instead, the Company could be governed by
certain California laws, including those regarding liability of directors for
breaches of the duty of care, indemnification of directors, dissenters' rights
of appraisal, removal of directors as well as certain other provisions discussed
above, to the exclusion of Delaware law. The effects of applying both Delaware
and California laws to a Delaware corporation whose principal operations are
based in California have not yet been determined.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The reincorporation provided for in the Merger Agreement is intended to be a
tax free reorganization under the Internal Revenue Code of 1986, as amended.
Assuming the reincorporation qualifies as a reorganization, no gain or loss will
be recognized to the holders of capital stock of the Company as a result of
consummation of the reincorporation, and no gain or loss will be recognized by
the Company or the Delaware Company. Each former holder of capital stock of the
Company will have the same basis in the capital stock of the Delaware Company
received by such holder pursuant to the reincorporation as such holder has in
the capital stock of the Company held by such holder at the time of consummation
of the reincorporation. Each shareholder's holding period with respect to the
Delaware Company's capital stock will include the period during which such
holder held the corresponding Company capital stock, provided the latter was
held by such holder as a capital asset at the time of consummation of the
reincorporation. The Company has not obtained a ruling from the Internal Revenue
Service or an opinion of legal or tax counsel with respect to the consequences
of the reincorporation.
The foregoing is only a summary of certain federal income tax consequences.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF THE LAWS OF
ANY STATE OR OTHER JURISDICTION.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP TABLE
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of August 27, 1997 by (a) all those
known by the Company to be beneficial owners of more than 5% of its Common
Stock; (b) each director; (c) each of the five most highly-paid executive
officers of the Company; and (d) all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP (1)
----------------------------
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF TOTAL (2)
- --------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Mr. Steven T. Newby ................................................................... 302,250 11.6%
6116 Executive Boulevard, Suite 701
Rockville, MD 20852
Mr. William B. Heye, Jr. (3) .......................................................... 145,599 5.3%
4550 Norris Canyon Road
San Ramon, CA 94583
Mr. Franklin P. Johnson ............................................................... 133,995 5.1%
2275 E. Bayshore Road, Suite 150
Palo Alto, CA 94301
Mr. Raimon L. Conlisk (3).............................................................. 8,500 *
Mr. George E. Grega (3)................................................................ 8,500 *
Mr. Ronald J. Ritchie.................................................................. -- --
Dr. Randall L-W. Caudill............................................................... -- --
Mr. Michael R. Coker (3)............................................................... 47,600 1.8%
Samuel Penny (3)....................................................................... 30,875 1.2%
Timothy J. Repp (3).................................................................... 31,075 1.2%
All executive officers and directors as a group (8 persons) (3)........................ 272,949 9.5%
</TABLE>
- ------------------------
* Less than one percent.
(1) This table is based on information supplied by officers, directors and
principal shareholders of the Company and on any Schedules 13D or 13G filed
with the Securities and Exchange Commission. Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the shareholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned.
(2) Applicable percentages are based on 2,616,120 shares of outstanding on
August 27, 1997, adjusted as required by rules promulgated by the Securities
and Exchange Commission.
(3) Includes 143,150, 8,500, 8,500, 45,000, 10,000 and 30,375 shares that
Messrs. Heye, Conlisk, Grega, Coker, Penny and Repp, respectively, have the
right to acquire within 60 days of the Record Date under the Company's
option plans.
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BOARD RECOMMENDATION
The Board recommends a vote in favor of the reincorporation proposal. A vote
in favor of the reincorporation proposal will constitute approval of the merger,
the Delaware Certificate, the Delaware Bylaws, the adoption and assumption by
the Delaware Company of each of the California Company's stock option, stock
purchase and employee benefit plans and all other aspects of this Proposal.
By Order of the Board of Directors
Timothy J. Repp
CHIEF FINANCIAL OFFICER, VICE
PRESIDENT, FINANCE AND SECRETARY
San Ramon, California
September 9, 1997
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter called the "Merger
Agreement") is made as of , 1997 by and between SBE, Inc., a
California corporation ("SBE California"), and SBE (DELAWARE), INC., a Delaware
corporation ("SBE Delaware"). SBE California and SBE Delaware are sometimes
referred to herein as the "Constituent Corporations."
The authorized capital stock of SBE California consists of ten million
(10,000,000) shares of Common Stock, no par value, and two million (2,000,000)
shares of Preferred Stock, no par value. The authorized capital stock of SBE
Delaware, upon effectuation of the transactions set forth in this Merger
Agreement, will consist of ten million (10,000,000) shares of Common Stock,
$0.001 par value per share, and two million (2,000,000) shares of Preferred
Stock, $0.001 par value per share.
The directors of the Constituent Corporations deem it advisable and to the
advantage of the Constituent Corporations that SBE California merge into SBE
Delaware upon the terms and subject to the conditions herein provided.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that SBE California
will merge into SBE Delaware on the following terms, conditions and other
provisions:
I. TERMS AND CONDITIONS.
1.1 MERGER. SBE California will be merged with and into SBE Delaware (the
"Merger"), and SBE Delaware will be the surviving corporation (the "Surviving
Corporation") effective upon the date when this Merger Agreement is filed with
the Secretary of State of Delaware (the "Effective Date").
1.2 NAME CHANGE. On the Effective Date, the name of SBE Delaware will be
SBE, Inc.
1.3 SUCCESSION. On the Effective Date, SBE Delaware will continue its
corporate existence under the laws of the State of Delaware, and the separate
existence and corporate organization of SBE California, except insofar as it may
be continued by operation of law, will be terminated and cease.
1.4 TRANSFER OF ASSETS AND LIABILITIES. On the Effective Date, the rights,
privileges, powers and franchises, both of a public as well as of a private
nature, of each of the Constituent Corporations will be vested in and possessed
by the Surviving Corporation, subject to all of the disabilities, duties and
restrictions of or upon each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, of each of the
Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the Constituent Corporations will be transferred to and vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest, will be thereafter the property of
the Surviving Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise in either of the
Constituent Corporations will not revert or be in any way impaired by reason of
the Merger; provided, however, that the liabilities of the Constituent
Corporations and of their shareholders, directors and officers will not be
affected and all rights of creditors and all liens upon any property of either
of the Constituent Corporations will be preserved unimpaired, and any claim
existing or action or proceeding pending by or against either of the Constituent
Corporations may be prosecuted to judgment as if the Merger had not taken place
except as they may be modified with the consent of such creditors and all debts,
liabilities and duties of or upon each of the Constituent Corporations will
attach to the Surviving Corporation, and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by it.
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1.5 COMMON STOCK OF SBE CALIFORNIA AND SBE DELAWARE. On the Effective
Date, by virtue of the Merger and without any further action on the part of the
Constituent Corporations or their shareholders, each share of Common Stock of
SBE California issued and outstanding immediately prior thereto will be
converted into one (1) fully paid and nonassessable share of the Common Stock of
SBE Delaware and each share of Common Stock of SBE Delaware issued and
outstanding immediately prior thereto will be canceled and returned to the
status of authorized but unissued shares.
1.6 STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of the
Common Stock or of the Preferred Stock of SBE California will be deemed for all
purposes to evidence ownership of and to represent the shares of SBE Delaware
into which the shares of SBE California represented by such certificates have
been converted as herein provided and will be so registered on the books and
records of the Surviving Corporation or its transfer agents. The registered
owner of any such outstanding stock certificate will, until such certificate
have been surrendered for transfer or conversion or otherwise accounted for to
the Surviving Corporation or its transfer agent, have and be entitled to
exercise any voting and other rights with respect to and to receive any dividend
and other distributions upon the shares of SBE Delaware evidenced by such
outstanding certificate as above provided.
1.7 OPTIONS. On the Effective Date, the Surviving Corporation will assume
and continue SBE California's 1987 Stock Option Plan, 1992 Employee Stock
Purchase Plan and Non-Employee Directors' Stock Option Plan and any and all
other stock option plans of SBE California and the outstanding and unexercised
portions of all options to purchase Common Stock of SBE California, including
without limitation all options outstanding under such stock plans and any other
outstanding options, will be converted into options of SBE Delaware, such that
an option for one (1) share of SBE California will be converted into an option
for one (1) share of SBE Delaware, with no change in the exercise price of the
SBE Delaware option. No other changes in the terms and conditions of such
options will occur. Effective on the Effective Date, SBE Delaware hereby assumes
the outstanding and unexercised portions of such options and the obligations of
SBE California with respect thereto.
1.8 EMPLOYEE BENEFIT PLANS. On the Effective Date, the Surviving
Corporation will assume all obligations of SBE California under any and all of
SBE California's employee benefit plans in effect as of such date. On the
Effective Date, the Surviving Corporation will adopt and continue in effect all
such employee benefit plans upon the same terms and conditions as were in effect
immediately prior to the Merger and will reserve that number of shares of SBE
Delaware Common Stock with respect to each such employee benefit plan as is
proportional to the number of shares of SBE California Common Stock (if any) so
reserved on the Effective Date.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS.
2.1 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and Bylaws of SBE Delaware in effect on the Effective Date will
continue to be the Certificate of Incorporation and Bylaws of the Surviving
Corporation, except that Article I of the Certificate of Incorporation of the
Surviving Corporation will, effective upon the filing of this Merger Agreement
with the Secretary of State of the State of Delaware, be amended to read in its
entirety as follows: "The name of this corporation is SBE, Inc."
2.2 DIRECTORS. The directors of SBE California immediately preceding the
Effective Date will become the directors of the Surviving Corporation on and
after the Effective Date to serve until the expiration of their terms and until
their successors are elected and qualified.
2.3 OFFICERS. The officers of SBE California immediately preceding the
Effective Date will become the officers of the Surviving Corporation on and
after the Effective Date to serve at the pleasure of its Board of Directors.
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III. MISCELLANEOUS.
3.1 FURTHER ASSURANCES. From time to time, and when required by the
Surviving Corporation or by its successors and assigns, there will be executed
and delivered on behalf of SBE California such deeds and other instruments, and
there will be taken or caused to be taken by it such further and other action,
as will be appropriate or necessary in order to vest or perfect in or to conform
of record or otherwise, in the Surviving Corporation the title to and possession
of all the property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of SBE California and otherwise to carry out the
purposes of this Merger Agreement, and the officers and directors of the
Surviving Corporation are fully authorized in the name and on behalf of SBE
California or otherwise to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
3.2 AMENDMENT. At any time before or after approval by the shareholders of
SBE California, this Merger Agreement may be amended in any manner (except that,
after the approval of the Merger Agreement by the shareholders of SBE
California, the principal terms may not be amended without the further approval
of the shareholders of SBE California) as may be determined in the judgment of
the respective Board of Directors of SBE Delaware and SBE California to be
necessary, desirable, or expedient in order to clarify the intention of the
parties hereto or to effect or facilitate the purpose and intent of this Merger
Agreement.
3.3 CONDITIONS TO MERGER. The obligations of the Constituent Corporations
to effect the transactions contemplated hereby is subject to satisfaction of the
following conditions (any or all of which may be waived by either of the
Constituent Corporations in its sole discretion to the extent permitted by law):
(a) the Merger has been approved by the shareholders of SBE California
in accordance with applicable provisions of the General Corporation Law of
the State of California; and
(b) SBE California, as sole stockholder of SBE Delaware, has approved
the Merger in accordance with the General Corporation Law of the State of
Delaware; and
(c) any and all consents, permits, authorizations, approvals, and orders
deemed in the sole discretion of SBE California to be material to
consummation of the Merger have been obtained.
3.4 ABANDONMENT OR DEFERRAL. At any time before the Effective Date, this
Merger Agreement may be terminated and the Merger may be abandoned by the Board
of Directors of either SBE California or SBE Delaware or both, notwithstanding
the approval of this Merger Agreement by the shareholders of SBE California or
SBE Delaware, or the consummation of the Merger may be deferred for a reasonable
period of time if, in the opinion of the Boards of Directors of SBE California
and SBE Delaware, such action would be in the best interest of such
corporations. In the event of termination of this Merger Agreement, this Merger
Agreement will become void and of no effect and there will be no liability on
the part of either Constituent Corporation or its Board of Directors or
shareholders with respect thereto, except that SBE California will pay all
expenses incurred in connection with the Merger or in respect of this Merger
Agreement or relating thereto.
3.5 COUNTERPARTS. In order to facilitate the filing and recording of this
Merger Agreement, the same may be executed in any number of counterparts, each
of which will be deemed to be an original.
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IN WITNESS WHEREOF, this Merger Agreement, having first been duly approved
by the Boards of Directors of SBE California and SBE Delaware, is hereby
executed on behalf of each said corporation and attested by their respective
officers thereunto duly authorized.
<TABLE>
<S> <C> <C>
SBE, INC.
A California corporation
By
------------------------------------------
William B. Heye, Jr.
President and Chief Executive Officer
</TABLE>
ATTEST:
- -------------------------------------------
Timothy J. Repp
Chief Financial Officer,
Vice President, Finance and Secretary
<TABLE>
<S> <C> <C>
SBE (DELAWARE), INC.
A Delaware corporation
By
------------------------------------------
William B. Heye, Jr.
President
</TABLE>
ATTEST:
- -------------------------------------------
Timothy J. Repp
Treasurer and Secretary
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<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
SBE (DELAWARE), 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:
I.
The name of this corporation is SBE (Delaware), Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is , City of , County of , and the name of the
registered agent of the corporation in the State of Delaware at such address is
the .
III.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Twelve Million
(12,000,000) shares. Ten Million (10,000,000) shares will be Common Stock, par
value $0.001 per share, and Two Million (2,000,000) shares will be Preferred
Stock, par value $0.001 per share.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series is
decreased in accordance with the foregoing sentence, the shares constituting
such decrease will resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
V.
For the management of the business and for the conduct of the affairs of the
corporation, and in further definition, limitation and regulation of the powers
of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. (1) The management of the business and the conduct of the affairs of the
corporation will be vested in its Board of Directors. The number of directors
that will constitute the whole Board of Directors will be fixed exclusively by
one or more resolutions adopted by the Board of Directors.
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(2) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, the directors
will be divided into three classes designated as Class I, Class II and Class
III, respectively. Directors will be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the adoption and filing of this Certificate of
Incorporation, the term of office of the Class I directors will expire and Class
I directors will be elected for a full term of three years. At the second annual
meeting of stockholders following the adoption and filing of this Certificate of
Incorporation, the term of office of the Class II directors will expire and
Class II directors will be elected for a full term of three years. At the third
annual meeting of stockholders following the adoption and filing of this
Certificate of Incorporation, the term of office of the Class III directors will
expire and Class III directors will be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors will be elected for
a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting. Notwithstanding the foregoing provisions of this
Article, each director will serve until his or her successor is duly elected and
qualified or until his or her death, resignation or removal. No decrease in the
number of directors constituting the Board of Directors will shorten the term of
any incumbent director.
(3) Subject to the rights of the holders of any series of Preferred
Stock, no director will be removed without cause. Subject to any limitations
imposed by law, the Board of Directors or any individual director may be removed
from office at any time with cause by the affirmative vote of the holders of
sixty-six and two thirds percent (66 2/3%) of the voting power of all the
then-outstanding shares of voting stock of the corporation entitled to vote at
an election of directors (the "Voting Stock").
(4) Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors will,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships will be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence will hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor has been elected and qualified.
(5) In the event that Section 2115(a) of the California Corporations
Code is applicable to this corporation, then the following will apply:
(A) Every stockholder entitled to vote in any election of directors of
this corporation may cumulate such stockholder's votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which the stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit;
(B) No stockholder, however, may cumulate such stockholder's votes for
one or more candidates unless (A) the names of such candidates have been
properly placed in nomination, in accordance with the Bylaws of the corporation,
prior to the voting, (B) the stockholder has given advance notice to the
corporation of the intention to cumulative votes pursuant to the Bylaws, and (C)
the stockholder has given proper notice to the other stockholders at the
meeting, prior to voting, of such stockholder's intention to cumulate such
stockholder's votes; and
(6) If any stockholder has given proper notice, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. The candidates receiving the highest number of votes of the shares
entitled to be voted for them up to the number of directors to be elected by
such shares shall be declared elected.
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<PAGE>
B. (1) Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of sixty-six
and two thirds percent (66 2/3%) of the then outstanding shares of the Voting
Stock. The Board of Directors will also have the power to adopt, amend, or
repeal Bylaws.
(2) The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
(3) Following the filing with the Secretary of State of the State of
Delaware of the Agreement and Plan of Merger effecting the merger between the
corporation and SBE, Inc., a California corporation, no action will be taken by
the stockholders of the corporation except at an annual or special meeting of
stockholders called in accordance with the Bylaws.
(4) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (A) the Chairman of the Board of
Directors, (B) the Chief Executive Officer, or (C) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (D) by the holders of the shares entitled to cast not
less than sixty-six and two thirds percent (66 2/3%) of the votes at the
meeting, and will be held at such place, on such date, and at such time as the
Board of Directors fix therefor.
(5) 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 must be given in the manner provided in the
Bylaws of the corporation.
VI.
A. A director of the corporation will not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (2) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law (3) under Section 174 of the Delaware General Corporation Law,
or (4) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended after approval by
the stockholders of this Article to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director will be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law as so amended.
B. Any repeal or modification of this Article VI will be prospective and
will not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of Incorporation
or any provision of law that might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the Voting Stock required by law, this Certificate of Incorporation
or any Preferred Stock Designation, the affirmative vote of the holders of
sixty-six and two thirds percent (66 2/3%) of the then outstanding shares of the
Voting Stock, voting together as a single class, will be required to alter,
amend or repeal Articles V, VI, and VII.
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<PAGE>
VIII.
The name and the mailing address of the Sole Incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
<S> <C> <C>
JODIE M. BOURDET Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
</TABLE>
IN WITNESS WHEREOF, this Certificate has been subscribed this day of
, 1997 by the undersigned, who affirms that the statements made herein
are true and correct.
<TABLE>
<S> <C>
------------------------------------------
JODIE M. BOURDET
Sole Incorporator
</TABLE>
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<PAGE>
EXHIBIT C
BYLAWS
OF
SBE (DELAWARE), INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation in
the State of Delaware will be in the City of , County of
.
SECTION 2. OTHER OFFICES. The corporation will also have and maintain an
office or principal place of business at such place as may be fixed by the Board
of Directors, and may also have offices at such other places, both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal will consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal --
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation will be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETING.
(A) The annual meeting of the stockholders of the corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, will be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(B) At an annual meeting of the stockholders, only such business will be
conducted as will have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (1) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (2) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (3) otherwise properly brought before
the meeting by a stockholder. 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 not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; 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
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the time of the previous year's proxy statement, notice by the stockholder to be
timely must be so received not earlier than the close of business on the
ninetieth (90th) day prior to such annual meeting and not later than the close
of business on the later of the sixtieth (60th) day prior to such annual meeting
or, in the event public announcement of the date of such annual meeting is first
made by the corporation fewer than seventy (70) days prior to the date of such
annual meeting, the close of business on the tenth (10th) day following the day
on which public announcement of the date of such meeting is first made by the
corporation.
A stockholder's notice to the Secretary will set forth as to each matter the
stockholder proposes to bring before the annual meeting: (1) 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, (2) the name and address, as
they appear on the corporation's books, of the stockholder proposing such
business, (3) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (4) any material interest of the
stockholder in such business and (5) 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 capacity as a
proponent to a stockholder proposal. Notwithstanding 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.
Notwithstanding anything in these Bylaws to the contrary, no business will be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting will, 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 (b), and, if he should so determine, he will so declare at the
meeting that any such business not properly brought before the meeting will not
be transacted.
(C) Only persons who are nominated in accordance with the procedures set
forth in this paragraph (c) will 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 (c). Such nominations, other than those made by or at
the direction of the Board of Directors, will be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice will set forth (1)
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 which 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
director if elected); and (2) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section 5.
At the request of the Board of Directors, any person nominated by a stockholder
for election as a director will 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 will be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth in this paragraph (c). The chairman of the meeting will, 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 should so
determine, he will so declare at the meeting, and the defective nomination will
be disregarded.
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(D) For purposes of this Section 5, "public announcement" will mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(A) Special meetings of the stockholders of the corporation may be called,
for any purpose or purposes, by (1) the Chairman of the Board of Directors, (2)
the Chief Executive Officer, (3) the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized directorships at the time
any such resolution is presented to the Board of Directors for adoption) or (4)
by the holders of shares entitled to cast not less than a majority of the votes
at the meeting, and will be held at such place, on such date, and at such time
as the Board of Directors, will fix.
(B) If a special meeting is called by any person or persons other than the
Board of Directors, the request will be in writing, specifying the general
nature of the business proposed to be transacted, and will be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors will determine the time and place of such special meeting, which will
be held not less than thirty-five (35) nor more than one hundred twenty (120)
days after the date of the receipt of the request. Upon determination of the
time and place of the meeting, the officer receiving the request will cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within sixty
(60) days after the receipt of the request, the person or persons requesting the
meeting may set the time and place of the meeting and give the notice. Nothing
contained in this paragraph (b) will be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the Board
of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
will be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting will be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote will constitute a
quorum for the transaction of business. In the absence of a quorum, any meeting
of stockholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business will be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present will be valid and
binding upon the
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corporation; provided, however, that directors will be elected by a plurality of
the votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Where a separate vote by a
class or classes or series is required, except where otherwise provided by the
statute or by the Certificate of Incorporation or these Bylaws, a majority of
the outstanding shares of such class or classes or series, present in person or
represented by proxy, will constitute a quorum entitled to take action with
respect to that vote on that matter and, except where otherwise provided by the
statute or by the Certificate of Incorporation or these Bylaws, the affirmative
vote of the majority (plurality, in the case of the election of directors) of
the votes cast, including abstentions, by the holders of shares of such class or
classes or series will be the act of such class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting will be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, will be entitled to vote at any meeting of stockholders. Every
person entitled to vote will have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy will be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) 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 will have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of subsection (c)
will be a majority or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary will prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place will be
specified in the notice of the meeting, or, if not specified, at the place where
the meeting is to be held. The list will be produced and kept at the time and
place of meeting during the whole time thereof and may be inspected by any
stockholder who is present.
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SECTION 13. ACTION WITHOUT MEETING. No action will be taken by the
stockholders except at an annual or special meeting of stockholders called in
accordance with these Bylaws, and no action will be taken by the stockholders by
written consent.
SECTION 14. ORGANIZATION.
(A) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
will act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, will act as secretary of the meeting.
(B) The Board of Directors of the corporation will be entitled to make such
rules or regulations for the conduct of meetings of stockholders as it will deem
necessary, appropriate or convenient. Subject to such rules and regulations of
the Board of Directors, if any, the chairman of the meeting will have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are necessary, appropriate or
convenient for the proper conduct of the meeting, including, without limitation,
establishing an agenda or order of business for the meeting, rules and
procedures for maintaining order at the meeting and the safety of those present,
limitations on participation in such meeting to stockholders of record of the
corporation and their duly authorized and constituted proxies and such other
persons as the chairman will permit, restrictions on entry to the meeting after
the time fixed for the commencement thereof, limitations on the time allotted to
questions or comments by participants and regulation of the opening and closing
of the polls for balloting on matters which are to be voted on by ballot. Unless
and to the extent determined by the Board of Directors or the chairman of the
meeting, meetings of stockholders will not be required to be held in accordance
with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of directors
of the corporation will be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors will not have been
elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation will be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.
SECTION 17. CLASSES OF DIRECTORS. Subject to the rights of the holders of
any series of Preferred Stock to elect additional directors under specified
circumstances, the directors will be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors will be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the adoption
and filing of this Certificate of Incorporation, the term of office of the Class
I directors will expire and Class I directors will be elected for a full term of
three years. At the second annual meeting of stockholders following the adoption
and filing of this Certificate of Incorporation, the term of office of the Class
II directors will expire and Class II directors will be elected for a full term
of three years. At the third annual meeting of stockholders following the
adoption and filing of this Certificate of Incorporation, the term of office of
the Class III directors will expire and Class III directors will be elected for
a full term of three years. At each succeeding annual meeting of stockholders,
directors will be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting.
Notwithstanding the
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foregoing provisions of this Article, each director will serve until his or her
successor is duly elected and qualified or until his or her death, resignation
or removal. No decrease in the number of directors constituting the Board of
Directors will shorten the term of any incumbent director.
SECTION 18. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, will
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships will be filled by stockholders, be filled only by
the affirmative vote of a majority of the directors then in office, even though
less than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence will hold office for the remainder of the full term
of the director for which the vacancy was created or occurred and until such
director's successor will have been elected and qualified. A vacancy in the
Board of Directors will be deemed to exist under this Bylaw in the case of the
death, removal or resignation of any director.
SECTION 19. RESIGNATION. Any director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it will be
deemed effective at the pleasure of the Board of Directors. When one or more
directors will resign from the Board of Directors, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
will have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations will become effective, and each
Director so chosen will hold office for the unexpired portion of the term of the
Director whose place will be vacated and until his successor will have been duly
elected and qualified.
SECTION 20. REMOVAL. Subject to the rights of the holders of any series of
Preferred Stock, no director will be removed without cause. Subject to any
limitations imposed by law, the Board of Directors or any individual director
may be removed from office at any time with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares of
voting stock of the corporation, entitled to vote at an election of directors
(the "Voting Stock").
SECTION 21. MEETINGS.
(A) ANNUAL MEETINGS. The annual meeting of the Board of Directors will be
held immediately before or after the annual meeting of stockholders and at the
place where such meeting is held. No notice of an annual meeting of the Board of
Directors will be necessary and such meeting will be held for the purpose of
electing officers and transacting such other business as may lawfully come
before it.
(B) REGULAR MEETINGS. Except as hereinafter otherwise provided, regular
meetings of the Board of Directors will be held in the office of the corporation
required to be maintained pursuant to Section 2 hereof. Unless otherwise
restricted by the Certificate of Incorporation, regular meetings of the Board of
Directors may also be held at any place within or without the State of Delaware
which has been designated by resolution of the Board of Directors or the written
consent of all directors.
(C) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any two of the directors.
(D) TELEPHONE MEETINGS. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting 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 a meeting by such means
will constitute presence in person at such meeting.
(E) NOTICE OF MEETINGS. Notice of the time and place of all special meetings
of the Board of Directors will be orally or in writing, by telephone, including
a voice messaging system or other system
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or technology designed to record and communicate messages, facsimile, telegraph
or telex, or by electronic mail or other electronic means, during normal
business hours, at least twenty-four (24) hours before the date and time of the
meeting, or sent in writing to each director by first class mail, charges
prepaid, at least three (3) days before the date of the meeting. Notice of any
meeting may be waived in writing at any time before or after the meeting and
will be waived by any director by attendance thereat, except when the director
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
(F) WAIVER OF NOTICE. The transaction of all business at any meeting of the
Board of Directors, or any committee thereof, however called or noticed, or
wherever held, will be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present will sign a written waiver of
notice. All such waivers will be filed with the corporate records or made a part
of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(A) Unless the Certificate of Incorporation requires a greater number and
except with respect to indemnification questions arising under Section 43
hereof, for which a quorum will be one-third of the exact number of directors
fixed from time to time in accordance with the Certificate of Incorporation, a
quorum of the Board of Directors will consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Certificate of Incorporation; PROVIDED, HOWEVER, at any meeting whether
a quorum be present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.
(B) At each meeting of the Board of Directors at which a quorum is present,
all questions and business will be determined by the affirmative vote of a
majority of the directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 24. FEES AND COMPENSATION. Directors will be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained will be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 25. COMMITTEES.
(A) EXECUTIVE COMMITTEE. The Board of Directors may by resolution passed by
a majority of the whole Board of Directors appoint an Executive Committee to
consist of one (1) or more members of the Board of Directors. The Executive
Committee, to the extent permitted by law and provided in the resolution of the
Board of Directors will 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, including without limitation the power or authority to declare a
dividend, to authorize the issuance of stock and to adopt a certificate of
ownership and merger, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee will have the
power or authority in reference to amending the Certificate of Incorporation
(except that a committee may, to the extent
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authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), 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.
(B) OTHER COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board of Directors, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors will consist of one (1) or more members of the Board of
Directors and will have such powers and perform such duties as may be prescribed
by the resolution or resolutions creating such committees, but in no event will
such committee have the powers denied to the Executive Committee in these
Bylaws.
(C) TERM. Each member of a committee of the Board of Directors will serve a
term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Bylaw may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee. The membership of a
committee member will terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(D) MEETINGS. Unless the Board of Directors will otherwise provide, regular
meetings of the Executive Committee or any other committee appointed pursuant to
this Section 25 will be held at such times and places as are determined by the
Board of Directors, or by any such committee, and when notice thereof has been
given to each member of such committee, no further notice of such regular
meetings need be given thereafter. Special meetings of any such committee may be
held at any place which has been determined from time to time by such committee,
and may be called by any director who is a member of such committee, upon
written notice to the members of such committee of the time and place of such
special meeting given in the manner provided for the giving of written notice to
members of the Board of Directors of the time and place of special meetings of
the Board of Directors. Notice of any special meeting of any committee may be
waived in writing at any time before or after the meeting and will be waived by
any director by attendance thereat, except when the director attends such
special meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. A majority of the authorized number of members of any such
committee will constitute a quorum for the transaction of business, and the act
of a majority of those present at any meeting at which a quorum is present will
be the act of such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, will preside over the meeting.
The Secretary, or in his absence, an assistant secretary directed to do so by
the President, will act as secretary of the meeting.
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ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation will
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the President, one or more Vice Presidents, the Secretary,
the Chief Financial Officer, all of whom will be elected at the annual
organizational meeting of the Board of Directors. The Board of Directors may
also appoint other officers and agents with such powers and duties as it will
deem necessary. The Board of Directors may assign such additional titles to one
or more of the officers as it will deem appropriate. The Board of Directors may
empower the chief executive officer of the corporation to appoint such officers,
other than the Chairman of the Board, President, Secretary or Chief Financial
Officer, as the business of the corporation may require. Any one person may hold
any number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation will be fixed by or in the manner designated by the Board of
Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(A) GENERAL. All officers will hold office at the pleasure of the Board
of Directors and until their successors will have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
(B) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, when present, will preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of
Directors will perform other duties commonly incident to his office and will
also perform such other duties and have such other powers as the Board of
Directors will designate from time to time. If there is no President, then
the Chairman of the Board of Directors will also serve as the general
manager and chief executive officer of the corporation and will have the
powers and duties prescribed in paragraph (c) of this Section 28.
(C) DUTIES OF PRESIDENT. The President will preside at all meetings of
the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. The
President will be general manager and chief executive officer of the
corporation and will, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of
the corporation. The President will have discretion to prescribe the duties
of other officers and employees of the corporation in a manner not
inconsistent with the provisions of these bylaws and the directions of the
Board of Directors. The President will perform other duties commonly
incident to his office and will also perform such other duties and have such
other powers as the Board of Directors will designate from time to time.
(D) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in order of their
rank as fixed by the Board of Directors, or if not ranked, the Vice
President designated by the Board of Directors, may assume and perform the
duties of the President in the absence or disability of the President or
whenever the office of President is vacant. The Vice Presidents will perform
other duties commonly incident to their office and will also perform such
other duties and have such other powers as the Board of Directors or the
President will designate from time to time.
(E) DUTIES OF SECRETARY. The Secretary will attend all meetings of the
stockholders and of the Board of Directors and will record all acts and
proceedings thereof in the minute book of the corporation. The Secretary
will give notice in conformity with these Bylaws of all meetings of the
stockholders and of all meetings of the Board of Directors and any committee
thereof requiring
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notice. The Secretary will perform all other duties given him in these
Bylaws and other duties commonly incident to his office and will also
perform such other duties and have such other powers as the Board of
Directors will designate from time to time. If any assistant secretaries are
appointed, the President may direct the assistant secretary or one of the
assistant secretaries in the order of their rank as fixed by the Board of
Directors or, if they are not so ranked, the assistant secretary designated
by the Board of Directors, to assume and perform the duties of the Secretary
in the absence or disability of the Secretary, and each Assistant Secretary
will perform other duties commonly incident to his office and will also
perform such other duties and have such other powers as the Board of
Directors or the President will designate from time to time.
(F) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial Officer will
be responsible for all functions and duties of the treasurer of the
corporation. The Chief Financial Officer will keep or cause to be kept the
books of account of the corporation in a thorough and proper manner and will
render statements of the financial affairs of the corporation in such form
and as often as required by the Board of Directors or the President. The
Chief Financial Officer, subject to the order of the Board of Directors,
will have the custody of all funds and securities of the corporation. The
Chief Financial Officer will perform other duties commonly incident to his
office and will also perform such other duties and have such other powers as
the Board of Directors or the President will designate from time to time. If
any assistant financial officers are appointed, the President may direct the
assistant financial officer, or one of the assistant financial officers, if
there are more than one, in the order of their rank as fixed by the Board of
Directors or if they are not so ranked, the assistant financial officer
designated by the Board of Directors, to assume and perform the duties of
the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each assistant financial officer will perform other
duties commonly incident to his office and will also perform such other
duties and have such other powers as the Board of Directors or the President
will designate from time to time.
SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation will be effective when received by the person or
persons to whom such notice is given, unless a later time is specified therein,
in which event the resignation will become effective at such later time. Unless
otherwise specified in such notice, the acceptance of any such resignation will
not be necessary to make it effec-tive. Any resignation will be without
prejudice to the rights, if any, of the corporation under any contract with the
resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any time
with cause by the affirmative vote of a majority of the directors in office at
the time, or by the unanimous written consent of the directors in office at the
time, or by any committee or superior officers upon whom such power of removal
may have been conferred by the Board of Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature will be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, will be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer. All other instruments and documents
requiring the corporate signature, but not requiring the corporate seal, may be
executed as aforesaid or in such other manner as may be directed by the Board of
Directors.
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation will be
signed by such person or persons as the Board of Directors will authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the agency
power of an officer, no officer, agent or employee will have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, will be voted, and all proxies
with respect thereto will be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation will be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation will be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Chief Financial Officer or assistant financial
officer or the Secretary or assistant secretary, certifying the number of shares
owned by him in the corporation. Any or all of the signatures on the certificate
may be facsimiles. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate will have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate will state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or will, except as otherwise required by law,
set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the
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qualifications, limitations or restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated stock,
the corporation will send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to this section or otherwise required by law or with respect to this
section a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Except as otherwise expressly provided by law, the rights and
obligations of the holders of certificates representing stock of the same class
and series will be identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates will be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it will require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 36. TRANSFERS.
(A) Transfers of record of shares of stock of the corporation will be
made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate
or certificates for a like number of shares.
(B) The corporation will have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Delaware.
SECTION 37. FIXING RECORD DATES.
(A) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date will not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which
record date will not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders will be at the close of business
on the day next preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders will apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors
may fix a new record date for the adjourned meeting.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation will 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 will 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 will have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates (covered
in Section 34), may be signed by the Chairman of the Board of Directors, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an assistant secretary, or the Chief Financial Officer or assistant financial
officer; PROVIDED, HOWEVER, that where any such bond, debenture or other
corporate security will be authenticated by the manual signature, or where
permissible facsimile signature, of a trustee under an indenture pursuant to
which such bond, debenture or other corporate security will be issued, the
signatures of the persons signing and attesting the corporate seal on such bond,
debenture or other corporate security may be the imprinted facsimile of the
signatures of such persons. Interest coupons appertaining to any such bond,
debenture or other corporate security, authenticated by a trustee as aforesaid,
will be signed by the Chief Financial Officer or assistant financial officer of
the corporation or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person. In
case any officer who will have signed or attested any bond, debenture or other
corporate security, or whose facsimile signature will appear thereon or on any
such interest coupon, will have ceased to be such officer before the bond,
debenture or other corporate security so signed or attested will have been
delivered, such bond, debenture or other corporate security nevertheless may be
adopted by the corporation and issued and delivered as though the person who
signed the same or whose facsimile signature will have been used thereon had not
ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors pursuant to law at any regular
or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors will think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
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ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation will be fixed
by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(A) DIRECTORS AND EXECUTIVE OFFICERS. The corporation will indemnify its
directors and executive officers (for the purposes of this Article XI,
"executive officers will have the meaning defined in Rule 3b-7 promulgated under
the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law; PROVIDED, HOWEVER, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and executive
officers; and, PROVIDED, FURTHER, that the corporation will not be required to
indemnify any director or executive officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(B) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation will have
power to indemnify its other officers, employees and other agents as set forth
in the Delaware General Corporation Law.
(C) EXPENSES. The corporation will advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance will be made by the corporation to an
executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph will not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (2) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.
(D) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and executive
officers under this Bylaw will be deemed to be
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contractual rights and be effective to the same extent and as if provided for in
a contract between the corporation and the director or executive officer. Any
right to indemnification or advances granted by this Bylaw to a director or
executive officer will be enforceable by or on behalf of the person holding such
right in any court of competent jurisdiction if (1) the claim for
indemnification or advances is denied, in whole or in part, or (2) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part, will
be entitled to be paid also the expense of prosecuting his claim. In connection
with any claim for indemnification, the corporation will be entitled to raise as
a defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. In connection
with any claim by an executive officer of the corporation (except in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such executive officer is or was a director of the
corporation) for advances, the corporation will be entitled to raise a defense
as to any such action clear and convincing evidence that such person acted in
bad faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the corporation, or with respect to any
criminal action or proceeding that such person acted without reasonable cause to
believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
will be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct. In any suit brought by a director or
executive officer to enforce a right to indemnification or to an advancement of
expenses hereunder, the burden of proving that the director or executive officer
is not entitled to be indemnified, or to such advancement of expenses, under
this Article XI or otherwise will be on the corporation.
(E) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
Bylaw will not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(F) SURVIVAL OF RIGHTS. The rights conferred on any person by this Bylaw
will continue as to a person who has ceased to be a director, officer, employee
or other agent and will inure to the benefit of the heirs, executors and
administrators of such a person.
(G) INSURANCE. To the fullest extent permitted by the Delaware General
Corporation Law, the corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(H) AMENDMENTS. Any repeal or modification of this Bylaw will only be
prospective and will not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(I) SAVING CLAUSE. If this Bylaw or any portion hereof will be invalidated
on any ground by any court of competent jurisdiction, then the corporation will
nevertheless indemnify each director and executive officer to the full extent
not prohibited by any applicable portion of this Bylaw that will not have been
invalidated, or by any other applicable law.
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(J) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the following
definitions will apply:
(1) The term "proceeding" will be broadly construed and will include,
without limitation, the investigation, preparation, prosecution, defense,
settlement, arbitration and appeal of, and the giving of testimony in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
(2) The term "expenses" will be broadly construed and will include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of
any nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" will include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, will
stand in the same position under the provisions of this Bylaw with respect
to the resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had continued.
(4) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation will include, without limitation,
situations where such person is serving at the request of the corporation
as, respectively, a director, executive officer, officer, employee, trustee
or agent of another corporation, partnership, joint venture, trust or other
enterprise.
(5) References to "other enterprises" will include employee benefit
plans; references to "fines" will include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the corporation" will include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries; and
a person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee
benefit plan will be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(A) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these Bylaws,
notice is required to be given to any stockholder, it will be given in writing,
timely and duly deposited in the United States mail, postage prepaid, and
addressed to his last known post office address as shown by the stock record of
the corporation or its transfer agent.
(B) NOTICE TO DIRECTORS. Any notice required to be given to any director
may be given by the method stated in subsection (a), or by facsimile, telex or
telegram, except that such notice other than one which is delivered personally
will be sent to such address as such director will have filed in writing with
the Secretary, or, in the absence of such filing, to the last known post office
address of such director.
(C) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a duly
authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock
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affected, specifying the name and address or the names and addresses of the
stockholder or stockholders, or director or directors, to whom any such notice
or notices was or were given, and the time and method of giving the same, will
in the absence of fraud, be prima facie evidence of the facts therein contained.
(D) TIME NOTICES DEEMED GIVEN. All notices given by mail, as above
provided, will be deemed to have been given as at the time of mailing, and all
notices given by facsimile, telex or telegram will be deemed to have been given
as of the sending time recorded at time of transmission.
(E) METHODS OF NOTICE. It will not be necessary that the same method of
giving notice be employed in respect of all directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.
(F) FAILURE TO RECEIVE NOTICE. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, will not be affected or extended in any manner by the
failure of such stockholder or such director to receive such notice.
(G) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever notice
is required to be given, under any provision of law or of the Certificate of
Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person will not be
required and there will be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which will be taken or held without notice to any such person with whom
communication is unlawful will have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate will state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
(H) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person will not be
required. Any action or meeting which will be taken or held without notice to
such person will have the same force and effect as if such notice had been duly
given. If any such person will deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person will be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
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ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS.
Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be
altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock. The Board of Directors will also
have the power to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsid-iaries, including any officer or employee
who is a Director of the corporation or its subsidiaries, whenever, in the
judgment of the Board of Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the corporation. The loan, guarantee or other
assistance may be with or without interest and may be unsecured, or secured in
such manner as the Board of Directors will approve, including, without
limitation, a pledge of shares of stock of the corporation. Nothing in these
Bylaws will be deemed to deny, limit or restrict the powers of guaranty or
warranty of the corporation at common law or under any statute.
1570-Spec-97
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SBE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 21, 1997
The undersigned hereby appoints WILLIAM B. HEYE, JR. and TIMOTHY J. REPP,
and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, to vote all of the shares of stock of SBE, Inc. (the
"Company") that the undersigned may be entitled to vote at the Company's
Special Meeting of Shareholders to be held at the Company's principal
executive offices at 4550 Norris Canyon Road, San Ramon, California on
Tuesday, October 21, 1997 at 2:00 p.m., local time, and at any and all
postponements, continuations and adjournments thereof, with all powers that
the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly
come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL BELOW, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT.
IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN
ACCORDANCE THEREWITH.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL BELOW.
PROPOSAL: To approve the reincorporation of the Company in Delaware in order
to enable the Company to attract and retain highly qualified
officers and directors, and to take advantage of the flexibility
afforded by Delaware law to adopt measures designed to protect
shareholders in the face of hostile takeover attempts.
/ / FOR / / AGAINST / / ABSTAIN
DATED , 1997
--------------- ----------------------------------
----------------------------------
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR
MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS AND ATTORNEYS-IN-FACT
SHOULD ADD THEIR TITLES. IF SIGNER
IS A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY
AUTHORIZED OFFICER SIGN, STATING
TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
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