<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ]
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
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Planet Polymer Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
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:
------------------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE> 2
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 12, 1999
DEAR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of Planet
Polymer Technologies, Inc., a California corporation (the "Company"), will be
held on Monday, April 12, 1999, at 3:00 p.m. local time, at the offices of the
Company located at 9985 Businesspark Avenue, Suite A, San Diego, California
92131 for the following purpose:
1. To approve an amendment to the Company's Bylaws to provide that the
authorized number of directors shall not be less than five (5) nor more
than nine (9), with the exact number to be initially set at six (6)
directors.
2. To elect directors to serve for the ensuing year and until their
successors are elected.
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31, 1999.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on February 25, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
Sincerely,
/s/ ROBERT J. PETCAVICH
ROBERT J. PETCAVICH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
San Diego, California
March 10, 1999
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 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> 3
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 12, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Planet Polymer Technologies, Inc., a California corporation (the "Company"), for
use at the Annual Meeting of Shareholders to be held on Monday, April 12, 1999
at 3:00 p.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the offices of the
Company located at 9985 Businesspark Avenue, Suite A, San Diego, California
92131. The Company intends to mail this proxy statement and accompanying proxy
card on or about March 10, 1999 to all shareholders entitled to vote at the
Annual 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.
VOTING RIGHTS AND OUTSTANDING SHARES
Holders of record of the Company's Common Stock and Series A Preferred
Stock (the "Preferred Stock") at the close of business on February 25, 1999 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on February 25, 1999, the Company had outstanding and
entitled to vote 6,341,062 shares of Common Stock and 500,000 shares of
Preferred Stock.
Except as provided below, on all matters to be voted upon at the Annual
Meeting, each holder of record of Common Stock on the Record Date will be
entitled to one vote for each share held, and each holder of record of Preferred
Stock on the Record Date will be entitled to one vote for each share of Common
Stock issuable upon conversion of such Preferred Stock as of the Record Date.
With respect to the election of directors, shareholders may exercise cumulative
voting rights, i.e., each shareholder entitled to vote for the election of
directors may cast a total number of votes equal to the number of directors to
be elected multiplied by the number of such shareholder shares (on an as
converted basis), and may cast such total of votes for one or more candidates in
such proportions as such shareholder chooses. Unless the proxy holders are
otherwise instructed, shareholders, by means of the accompanying proxy, will
grant proxy holders discretionary authority to cumulate votes.
1
<PAGE> 4
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 will be counted towards the
tabulation of votes cast on proposals presented to the shareholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
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, 9985
Businesspark Avenue, Suite A, San Diego, California 92131, 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.
SHAREHOLDER PROPOSALS
The deadline for submitting a shareholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 Annual
Meeting of Shareholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is November 11, 1999. The deadline for submitting a shareholder
proposal or a nomination for director that is not to be included in such proxy
statement and proxy is January 25, 2000. Shareholders are also advised to review
the Company's Bylaws, which contain additional requirements with respect to
advance notice of shareholder proposals and director nominations.
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<PAGE> 5
PROPOSAL 1
AMENDMENT TO THE BYLAWS
In February 1999, the Board of Directors unanimously approved, subject to
shareholder approval, an amendment to the Company's Bylaws to provide that the
authorized number of directors of the Company shall not be less than a minimum
of five (5) nor more than a maximum of nine (9), with the exact number to be
initially set at six (6). The Bylaws of the Company currently provide that the
authorized number of directors shall be no less than a minimum of three (3) nor
more than a maximum of five (5), with the exact number currently set at five
(5). The Board is currently composed of five members. The proposed amendment to
the Bylaws would increase the authorized number of directors to a range of five
(5) to nine (9) directors, with the exact number to be initially set at six (6).
A copy of the proposed Restated Bylaws is attached hereto as Annex A. The Board
of Directors believes the changes to be in the best interest of the Company and
its shareholders. Shareholders are requested in this Proposal 1 to approve the
amendment to the Bylaws of the Company as described above.
The affirmative vote of the holders of a majority of the outstanding shares
of the Company voting together as a class, is necessary to approve Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1.
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<PAGE> 6
PROPOSAL 2
ELECTION OF DIRECTORS
In the event that the shareholders approve Proposal 1, there will be six
Board positions authorized by the Company's Bylaws. In the event that the
shareholders do not approve Proposal 1, there will be five Board positions
authorized by the Company's Bylaws. Each director to be elected will hold office
until the next Annual Meeting of Shareholders and until his successor is elected
and has qualified, or until such director's earlier death, resignation or
removal. Except for Mr. LaHood, all of the nominees listed below are currently
directors of the Company and were elected by the shareholders.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the nominees named below, subject to the
discretionary power to cumulate votes. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
In the event that the shareholders approve Proposal 1, the six candidates
receiving the highest number of affirmative votes cast at the meeting will be
elected directors of the Company. In the event that the shareholders do not
approve Proposal 1, the five candidates receiving the highest number of
affirmative votes cast at the meeting will be elected directors of the Company.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- --------------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Robert J. Petcavich, Ph.D. 44 Chairman of the Board of Directors, President and
Chief Executive Officer of the Company
Michael M. Coleman, Ph.D.(1) 61 Professor of Polymer Science
Thomas M. Connelly(2) 68 Partner, Ten Square Research
H.M. Busby(2) 60 President and CEO of A-Life Medical, Inc.
Dennis J. LaHood 53 President of Agway Inc.'s Country Products Group
Thomas A. Landshof(1) 60 Consultant and Investor
</TABLE>
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
Dr. Petcavich is the founder of the Company and has been Chairman since
August 1991. He currently is Chairman of the Board, President and Chief
Executive Officer of the Company. Mr. Petcavich is also Chairman of the Board of
A-Life Medical, Inc., a San Diego based company. In 1988, Dr. Petcavich founded
AlphaScribe Express Inc., an electronic medical records company, where he served
as Chief Executive Officer until September 1995. He also served as Vice
President Corporate Staff at Deposition Technologies Inc., a high technology
polymer materials manufacturer (now a subsidiary of Material Sciences
Corporation), from 1986 until 1988. Dr. Petcavich is the inventor of fifteen
issued United States patents. Dr. Petcavich has a Ph.D. in Polymer Science, a
Master of Science degree in Solid State Science, and a Bachelor of Science
degree in Chemistry from Pennsylvania State University, and has completed an
executive management program (PMD) at the Harvard University Graduate School of
Business.
Dr. Coleman has been a director of the Company since April 1996. He has
been a Professor of Polymer Science at Pennsylvania State University since 1982.
From 1983 to 1991, Dr. Coleman was the head of the Department of Materials
Science and Engineering at Pennsylvania State University. Dr. Coleman received a
Ph.D. and a Master of Science degree in Macromolecular Science from Case Western
Reserve University, Cleveland, Ohio, in 1973 and 1971, respectively. He also
holds a B.S. degree in Polymer Science from Borough Polytechnic, London.
4
<PAGE> 7
Thomas M. Connelly has been a director of the Company since August 1997
when he was elected by the members of the Board of Directors to fill a vacancy
on the Board. Mr. Connelly has also been a financial advisor to the Company
since May 1997. He is currently a director of A-Life Medical, Inc., a San Diego
based company. Since 1994 Mr. Connelly has been the proprietor of Ten Square
Research, a financial consulting and investment advisory firm. From 1989 to
1994, Mr. Connelly was president of Croteau Investment Management, an investment
advisory firm in Stamford, Connecticut. He received an MBA from Harvard
University Graduate School of Business Administration and a B.A. degree from
Yale University.
H.M. "Mac" Busby has been a director of the Company since August 1997 when
he was elected by the members of the Board of Directors to fill a vacancy on the
Board. He is currently the President and Chief Executive Officer of A-Life
Medical, Inc., a San Diego based company. He is also the Chairman of the Board
of Sun-Gard USA, Inc. and Sun-Protective International Corporation, both
privately held companies. Mr. Busby began his career in 1966 at Wisconsin
Centrifugal, Inc. which included the position of Manager of Industrial and
Public Relations. Mr. Busby has also served as Vice President of Human Relations
and Administration for MCA Financial, Inc. a subsidiary of MCA, Inc. Mr. Busby
earned his B.S. in Business Administration from Indiana University.
Dennis J. LaHood has been the President of Agway Inc.'s Country Products
Group since February 1995. Mr. LaHood joined Agway in 1969 and has held various
management positions. From 1987 to November 1992, he was President of Agway Data
Services following his position as Agway's Chief Information Officer. From
November 1992 to February 1995, Mr. LaHood was Agway's Director of Country Foods
and President of Country Foods, Inc. In connection with Agway's investment in
the Company in January 1999, the Company agreed that Mr. LaHood would be
nominated as a representative of Agway for election to the Board of Directors at
the Annual Meeting. Mr. LaHood is named as a nominee for director of the Company
for the first time.
Thomas A. Landshof has been a director of the Company since March 1998 when
he was nominated to serve as a director pursuant to a Securities Purchase
Agreement, dated September 19, 1997, between the Company and purchasers of the
Company's Preferred Stock, Special Situations Private Equity Fund, L.P. (the
"Investor"). Pursuant to that agreement, the Investor may appoint one reasonably
acceptable person as a director on the Board of Directors of the Company. Such
right will continue so long as the Investor holds at least 200,000 Preferred
Stock or at least 10% of the outstanding Common Stock. Mr. Landshof was the
President, Chief Executive Officer and a director of Hitox Corporation of
America, a publicly held manufacturer of prime pigments and extenders for the
plastics, coatings and other markets from August 1994 until November 1997. Mr.
Landshof served as President of Consultants Group from April 1992 to August 1994
and Corporate Vice President of Lilly Industries, Inc. prior to April 1992. Mr.
Landshof earned his B.S. in Chemistry from Tufts University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During 1998, the Board of Directors held ten (10) meetings. The Board of
Directors has an Audit Committee and a Compensation Committee. The Company does
not currently have a nominating committee.
The Audit Committee is responsible for the engagement of the Company's
independent auditors, consulting with independent auditors concerning the audit
plan and reviewing the comments and recommendations resulting from the auditor's
report. The Audit Committee is composed of two non-employee directors including
Messrs. Thomas M. Connelly and H.M. Busby and met two (2) times during 1998.
The Compensation Committee is responsible for reviewing the compensation
and benefits of the Company's executive officers, making recommendations to the
Board of Directors concerning the compensation and benefits of the Company's
executive officers and administering the Company's 1995 Stock Option Plan. The
Compensation Committee is composed of two non-employee directors including Dr.
Michael M. Coleman and Mr. Thomas A. Landshof and met four (4) times during
1998.
5
<PAGE> 8
During 1998, each Board member attended 75% or more of the aggregate of the
meetings of the Board and of the committees on which he served held during the
period for which he was a director or committee member, respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with except for Special
Situations Private Equity Fund, L.P. which filed its Form 4s late during 1998.
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<PAGE> 9
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999, and
has further directed that management submit the selection of independent
auditors for ratification by the shareholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
its inception in 1991. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Shareholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of
good corporate practice. If the shareholders fail to ratify the selection, the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Board in its discretion may direct the appointment of different
independent auditors at any time during the year if they determine that such a
change would be in the best interests of the Company and its shareholders.
The affirmative vote of the holders of a majority of the shares presented
in person or represented by proxy and voting at the Annual Meeting will be
required to ratify the selection of PricewaterhouseCoopers LLP. For purposes of
this vote, abstentions and broker non-votes will not be counted for any purpose
in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
7
<PAGE> 10
ADDITIONAL INFORMATION
MANAGEMENT
Set forth below is information regarding executive officers and key
employees of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Executive Officer
Robert J. Petcavich, Ph.D.* 44 Chairman of the Board, Chief Executive
Officer, President, Corporate Secretary and
Acting Chief Financial Officer
Key Employee
Xiaoming Yang, Ph.D. 38 Chief Scientist
</TABLE>
* Biographical information about Dr. Petcavich is set forth under Proposal
2 above.
Xiaoming Yang has been Chief Scientist for the Company since January 1995.
Prior to joining the Company, Dr. Yang acted as a consultant in the polymer
industry from October until December 1994. Dr. Yang was a visiting scientist at
Pennsylvania State University from May 1990 to December 1992. Dr. Yang served as
an engineer at Chengdu National Biochemical Products Manufactory from January
1989 to April 1990. Dr. Yang has a Ph.D. in Materials Science and Engineering
from Pennsylvania State University, and a Master of Science degree in Polymer
Engineering and a Bachelor of Science degree in Chemistry from Chengdu
University of Science and Technology, China.
8
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Stock as of January 29, 1999 by: (i) each director and nominee
for director; (ii) each of the Executive Officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company as
a group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of any class of the Company's Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------
NUMBER OF PERCENTAGE OF CLASS
TITLE OF CLASS BENEFICIAL OWNER SHARES(1) OWNED(2)
- ------------------ ---------------- --------- -------------------
<C> <S> <C> <C>
Common Agway Holdings Inc.(3) 3,000,000 35.97%
P.O. Box 4933
Syracuse, NY 13221
Common Special Situations Private Equity Fund, L.P.(4) 1,120,934 15.16%
153 East 53rd Street, 51st Floor
New York, NY 10022
Common Robert J. Petcavich, Ph.D.(5) 693,206 10.77%
9985 Businesspark Avenue, Suite A
San Diego, CA 92131
Common Brian To(6) 646,111 9.98%
Tarrenz, Inc.
201 Harrison St., #607
San Francisco, CA 94105
Common Rebecca A. Petcavich(7) 568,993 8.94%
6832 Town View Lane
San Diego, CA 92120
Common H.M. Busby(8) 242,592 3.82%
Common Thomas M. Connelly(9) 28,700 *
Common Michael M. Coleman, Ph.D.(10) 16,200 *
Common Thomas A. Landshof(11) 9,000 *
All executive officers and directors as a
Common group(12) 989,698 15.25%
Series A Preferred Special Situations Private Equity Fund, L.P. 500,000 100.00%
153 East 53rd Street, 51st Floor
New York, NY 10022
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). 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) Percentage ownership is based upon 6,341,062 shares outstanding on January
29, 1999, and any shares issuable pursuant to securities convertible into
or exercisable for shares of Common Stock by the person or group in
question on January 29, 1999 or within 60 days thereafter. Percentage of
Series A Convertible Preferred Stock is based upon 500,000 shares of Series
A Convertible Preferred Stock outstanding as of January 29, 1999.
(3) Includes 2,000,000 shares of Common Stock issuable upon exercise of a
warrant within 60 days of January 29, 1999. Agway Holdings Inc. is an
indirect wholly owned subsidiary of Agway, Inc. ("Agway").
(4) Includes 588,235 shares of Common Stock issuable upon conversion of the
500,000 shares of Series A Convertible Preferred Stock and 462,444 shares
issuable upon exercise of a warrant within 60 days of January 29, 1999.
Also includes 11,500 shares of Common Stock held by Special Situations
Cayman Fund, L.P. Both the Special Situations Private Equity Fund, L.P. and
the Special Situations Cayman Fund, L.P. are managed by the same advisors.
9
<PAGE> 12
(5) Includes 93,607 shares issuable upon exercise of options that are
exercisable within 60 days of January 29, 1999.
(6) Includes 66,137 shares issuable upon exercise of options that are
exercisable within 60 days of January 29, 1999. Also included are 66,120
shares issuable upon exercise of options that are exercisable by Tarrenz,
Inc. within 60 days of January 29, 1999 and 72,124 shares held in the name
of Tarrenz, Inc. Mr. To is the Managing Director and a principal
shareholder of Tarrenz, Inc.
(7) Includes 21,694 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of January 29, 1999.
(8) Includes 12,200 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of January 29, 1999.
(9) Includes 2,000 shares held by Mr. Connelly's wife and 22,200 shares of
Common Stock issuable upon exercise of options that are exercisable within
60 days of January 29, 1999.
(10) Includes 12,200 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of January 29, 1999.
(11) Includes 9,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of January 29, 1999.
(12) Includes 149,207 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of January 29, 1999.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors may be granted options to purchase Common Stock under the
Company's 1995 Stock Option Plan (the "Option Plan"). In May 1998, the Board of
Directors of the Company approved stock option grants to each non-employee
director to purchase 9,000 shares of the Company's Common Stock at an exercise
price of $2.00 per share, vesting fully at the date of grant. During 1998,
including options granted to the Chief Executive Officer of the Company, options
to purchase an aggregate of 161,000 shares of the Company's Common Stock were
granted to the Company's directors. In fiscal year 1999, each non-employee
director will receive stock options as deemed appropriate by the Board of
Directors.
Directors are reimbursed for reasonable travel expenses incurred in
connection with attendance at Board meetings, or any committee meetings, or
otherwise in connection with their service as a director.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the fiscal years ended December 31,
1998, 1997, and 1996 certain compensation awarded or paid to, or earned by the
Company's Chief Executive Officer. No other executive officer's total annual
salary and bonus for services to the Company exceeded $100,000 in the fiscal
year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SHARES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)
--------------------------- ---- -------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Petcavich 1998 $201,000 $ -- $ -- 125,000(2) $ 955(3)
Chairman of the Board, President 1997 $176,114 $ -- $ 9,000 57,851(4) $ 1,357(5)
and Chief Executive Officer 1996 $186,999 $15,584 $73,157 121,000(6) $79,995(7)
</TABLE>
(1) Includes (i) $12,000 and $9,000 paid as director fees during each of 1996
and 1997, respectively (ii) $11,157 paid as reimbursement for automobile
expenses during 1996, and (iii) $50,000 paid as consulting fee during 1996.
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<PAGE> 13
(2) Represents an option granted on November 18, 1998 with an exercise price of
$1.65 (which is equal to 110% of the fair market value on the date of
grant). Of the 125,000 shares, 25,000 vest immediately, 35,000 shall vest on
the first anniversary, 35,000 on the second anniversary, and 30,000 on the
third anniversary.
(3) Represents insurance premiums paid by the Company under a term life
insurance policy insuring Dr. Petcavich.
(4) Represents an option granted on October 30, 1997 vesting 50% annually for
two years with an exercise price of $3.025.
(5) Represents insurance premiums paid by the Company under a term life
insurance policy insuring Dr. Petcavich.
(6) Represents an option granted on January 31, 1996. This option was fully
vested at the time of grant and has an exercise price of $8.125 per share.
This option was cancelled and reissued as (4) above.
(7) Includes (i) $50,000 in past-due royalties paid during 1996, (ii) $1,226 in
insurance premiums paid by the Company under a term life insurance policy
insuring Dr. Petcavich and (iii) $28,769 in back vacation pay paid during
1996.
STOCK OPTION GRANTS AND EXERCISES
On November 18, 1998, the Company's Board of Directors granted incentive
stock options to purchase 125,000 shares of Common Stock at an exercise price of
$1.65 per share to Dr. Petcavich under the 1995 Stock Option Plan. These options
are granted in connection with the employment agreement effective as of January
1, 1999 between the Company and Dr. Petcavich as discussed below. The terms of
these options include vesting of 25,000 options as of the date of grant and
vesting of the remaining options over the next three years. All options expire
on November 17, 2003. At the time of such grant, Dr. Petcavich was a director
and executive officer of the Company and a beneficial owner of more than 10% of
the Company's Common Stock.
The Company's executive officers are eligible for grants of options under
the Company's 1995 Stock Option Plan (the "Option Plan"). As of January 29,
1999, options to purchase a total of 414,959 shares were outstanding under the
Option Plan and options to purchase 85,041 shares remained available for grant
thereunder.
The purposes of the Option Plan are to attract and retain qualified
personnel, to provide additional incentives to employees, officers, directors
and consultants of the Company and to promote the success of the Company's
business. Pursuant to the Option Plan, the Company may grant or issue incentive
stock options and non-statutory stock options to eligible participants (provided
that incentive stock options may only be granted to employees of the Company).
Option grants under the Option Plan are discretionary. Options granted under the
Option Plan are subject to vesting as determined by the Board, provided that the
option vests as to at least twenty percent (20%) of the shares subject to the
option per year. The maximum term of a stock option under the Option Plan is ten
years, but if the optionee at the time of grant has voting power over more than
10% of the Company's outstanding capital stock, the maximum term is five years.
If an optionee terminates his or her service to the Company, such optionee may
exercise only those option shares vested as of the date of termination, and must
effect such exercise within the period of time after termination set forth in
the optionee's option. The exercise price of incentive stock options granted
under the Option Plan must be at least equal to the fair market value of the
Common Stock of the Company on the date of grant. The exercise price of
non-statutory stock options granted under the Option Plan may not be less than
85% of the fair market value of the Common Stock of the Company on the date of
the grant. The exercise price of options granted to an optionee who owns stock
possessing more than 10% of the voting power of the Company's outstanding
capital stock must equal at least 110% of the fair market value of the Common
Stock on the date of grant. Payment of the exercise price may be made in cash,
by delivery of other shares of the Company's Common Stock or by any other form
of legal consideration that may be acceptable to the Board.
11
<PAGE> 14
The following table sets forth certain information regarding options
granted by the Company during fiscal year ended December 31, 1998 to the
Company's Chief Executive Officer:
OPTIONS GRANTED IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) DATE
---- --------------- --------------- -------------- ----------
<S> <C> <C> <C> <C>
Robert J. Petcavich 125,000 88% $1.65 11/17/2003
</TABLE>
The following table sets forth information with respect to the number of
securities underlying unexercised options held by the Chief Executive Officer as
of December 31, 1998 and the value of unexercised in-the-money options (i.e.,
options for which the current fair market value of the Common Stock underlying
such options exceeds the exercise price):
AGGREGATED OPTION EXERCISES LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Petcavich -0- -0- 93,607 128,926 $11,875 $47,500
</TABLE>
- ---------------
(1) Calculated based on the estimated fair market value of the Company's Common
Stock as of December 31, 1998, less the exercise price payable upon the
exercise of such options. Such estimated fair market value as of December
31, 1998 was $2.125, the last price posted at the close of trading on
December 31, 1998.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
In January 1996, the Company entered into a three-year employment agreement
with Dr. Petcavich. The agreement provides, among other things, for the payment
to Dr. Petcavich of an annual salary of $189,000 and the reimbursement of
certain business expenses. During the term of the agreement, if Dr. Petcavich's
employment is terminated (i) by the Company without cause or as a result of a
Change in Control (as defined in the agreement), or (ii) by Dr. Petcavich within
three (3) months following a Constructive Termination (also as defined in the
agreement), Dr. Petcavich will be entitled to receive a severance payment equal
to twice his then effective annual salary. If, during the term of the agreement,
Dr. Petcavich's employment is terminated as a result of death or disability, Dr.
Petcavich's estate or personal representative will be entitled to receive an
amount equal to Dr. Petcavich's then effective annual salary. In October 1997,
this agreement was amended to increase Dr. Petcavich's salary to $201,000.
On November 18, 1998, the Company entered into a five-year employment
agreement, effective January 1, 1999, with Dr. Petcavich. This agreement
increases Dr. Petcavich's salary to $210,000 and provides that if Dr. Petcavich
is terminated for any reason other than for cause during the term of employment,
then he shall be engaged to perform services to the Company pursuant to a
consulting agreement. The Board of Directors also granted Dr. Petcavich
incentive stock options to purchase 125,000 shares of Common Stock at an
exercise price of $1.65 per share in connection with this employment agreement.
COMPENSATION COMMITTEE INTERLOCKS
As noted above, the Company's Compensation Committee consists of Dr.
Coleman and Mr. Landshof. Dr. Petcavich has been an executive officer and
Chairman of the Board of the Company since 1991. Dr. Petcavich also serves as
Chairman of the Board of A-Life Medical, Inc., a San Diego based company in
which he is also a major shareholder. As noted above, Mr. Busby is the President
and Chief Executive Officer of A-Life Medical, Inc. and also serves as a
director of the Company; however, Mr. Busby does not serve on the Compensation
Committee of the Company.
12
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the period October 1998 to December 1998, the Company recorded
research and development revenue of $61,635 from Agway under a feasibility
agreement. Agway Holdings Inc., an indirect wholly owned subsidiary of Agway, is
a beneficial owner of more than 10% of the Company's Common Stock since January
11, 1999.
During 1998, Dr. Coleman, a director of the Company provided consulting
services to the Company and received $1,725.
The Company leases primarily all of Deltco's operating facilities from the
brother of Deltco's former president and from a partnership owned 50% by
Deltco's former president. Rents of $56,886 and $113,772 were paid in 1998 and
1997, respectively, prior to the former President's resignation in June 1998.
During 1997, the Company, through Deltco, also sold materials of $11,072 to a
customer in which the former President of Deltco is a shareholder.
Beginning in September 1997, non-employee directors have been granted with
stock options as compensation in lieu of cash payments. On May 21, 1998, the
Company's Board of Directors granted non-statutory stock options to purchase
9,000 shares of Common Stock at an exercise price of $2.00 per share to each
non-employee director of the Company, Messrs. Connelly, Coleman, Busby and
Landshof, under the 1995 Stock Option Plan. These options vest fully as of the
date of grant and expire on May 20, 2008. In September 1997, the Board of
Directors of the Company approved stock option grants to Messrs. Connelly,
Coleman and Busby to each purchase 3,200 shares of the Company's Common Stock at
an exercise price of $4.125 per share, vesting monthly through May 1998. During
1997, each director of the Company was paid a monthly fee of $1,000 from January
to September 1997. This resulted in an aggregate compensation of $32,000.
In May 1997, the Company and Mr. Connelly, a director, prior to his
appointment to the Company's Board, entered into a one-year general business
consulting agreement whereby he received an option to purchase 10,000 shares of
the Company's Common Stock in exchange for consulting services to be rendered to
the Company.
During 1993, the Company retained the services of Tarrenz Management
Consultants, Inc. ("Tarrenz"), an entity owned by Mr. Brian To, a consultant who
is now a significant shareholder and was a member of the Board of Directors
until April 1997. In January 1996, the Company formalized this consulting
relationship and entered into a three year consulting agreement. The services
furnished under the terms of this agreement included organizational development,
strategic marketing, and general management of the Company. This agreement
provided that the Company would reimburse Tarrenz and Mr. Brian To for certain
business expenses, inclusive of travel and entertainment costs. In addition to
the consulting fees of $46,750, reimbursable expenses of $24,746 were paid
during 1997 in connection with this consulting agreement. As allowed by its
provisions, the consultant terminated the agreement in April 1997. In 1997,
consulting fees and reimbursable expenses of $20,255 were paid in connection
with services provided by Othos Design Limited, Inc. ("Othos") and Mr. Alan To.
Mr. Alan To, the brother of Mr. Brian To, is a principal shareholder of Othos.
13
<PAGE> 16
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By order of the Board of Directors
/s/ Robert J. Petcavich
--------------------------------------
Robert J. Petcavich, Chairman and
Chief Executive Officer
March 10, 1999
14
<PAGE> 17
ANNEX A
RESTATED BYLAWS
OF
PLANET POLYMER TECHNOLOGIES, INC.
(A CALIFORNIA CORPORATION)
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I OFFICES........................................... A-1
Section 1. Principal Office.............................. A-1
Section 2. Other Offices................................. A-1
ARTICLE II CORPORATE SEAL................................... A-1
Section 3. Corporate Seal................................ A-1
ARTICLE III SHAREHOLDERS' MEETINGS AND VOTING RIGHTS........ A-1
Section 4. Place of Meetings............................. A-1
Section 5. Annual Meetings............................... A-1
Section 6. Postponement of Annual Meeting................ A-3
Section 7. Special Meetings.............................. A-3
Section 8. Notice of Meetings............................ A-3
Section 9. Manner of Giving Notice....................... A-4
Section 10. Quorum and Transaction of Business............ A-4
Section 11. Adjournment and Notice of Adjourned
Meetings............................................... A-4
Section 12. Waiver of Notice, Consent to Meeting or
Approval of Minutes.................................... A-5
Section 13. Action by Written Consent Without a Meeting... A-5
Section 14. Voting........................................ A-5
Section 15. Persons Entitled to Vote or Consent........... A-6
Section 16. Proxies....................................... A-7
Section 17. Inspectors of Election........................ A-7
ARTICLE IV BOARD OF DIRECTORS............................... A-7
Section 18. Powers........................................ A-7
Section 19. Number of Directors........................... A-7
Section 20. Election of Directors, Term, Qualifications... A-8
Section 21. Resignations.................................. A-8
Section 22. Removal....................................... A-8
Section 23. Vacancies..................................... A-8
Section 24. Regular Meetings.............................. A-8
Section 25. Participation by Telephone.................... A-9
Section 26. Special Meetings.............................. A-9
Section 27. Notice of Meetings............................ A-9
Section 28. Place of Meetings............................. A-9
Section 29. Action by Written Consent Without a Meeting... A-9
Section 30. Quorum and Transaction of Business............ A-9
Section 31. Adjournment................................... A-9
Section 32. Organization.................................. A-9
Section 33. Compensation.................................. A-9
Section 34. Committees.................................... A-10
ARTICLE V OFFICERS.......................................... A-10
Section 35. Officers...................................... A-10
</TABLE>
i
<PAGE> 19
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 36. Appointment................................... A-10
Section 37. Inability to Act.............................. A-10
Section 38. Resignations.................................. A-10
Section 39. Removal....................................... A-11
Section 40. Vacancies..................................... A-11
Section 41. Chairman of the Board......................... A-11
Section 42. President..................................... A-11
Section 43. Vice Presidents............................... A-11
Section 44. Secretary..................................... A-11
Section 45. Chief Financial Officer....................... A-12
Section 46. Compensation.................................. A-12
ARTICLE VI CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND
DRAFTS.................................................... A-12
Section 47. Execution of Contracts and Other
Instruments............................................ A-12
Section 48. Loans......................................... A-12
Section 49. Bank Accounts................................. A-13
Section 50. Checks, Drafts, Etc........................... A-13
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER...... A-13
Section 51. Certificate for Shares........................ A-13
Section 52. Transfer on the Books......................... A-13
Section 53. Lost, Destroyed and Stolen Certificates....... A-13
Section 54. Issuance, Transfer and Registration of
Shares................................................. A-14
ARTICLE VIII INSPECTION OF CORPORATE RECORDS................ A-14
Section 55. Inspection by Directors....................... A-14
Section 56. Inspection by Shareholders.................... A-14
Section 57. Written Form.................................. A-15
ARTICLE IX MISCELLANEOUS.................................... A-15
Section 58. Fiscal Year................................... A-15
Section 59. Annual Report................................. A-15
Section 60. Record Date................................... A-15
Section 61. Bylaw Amendments.............................. A-16
Section 62. Construction and Definition................... A-16
ARTICLE X INDEMNIFICATION................................... A-16
Section 63. Indemnification of Directors, Officers,
Employees and Other Agents............................. A-16
ARTICLE XI LOANS OF OFFICERS AND OTHERS..................... A-19
Section 64. Certain Corporate Loans and Guaranties........ A-19
</TABLE>
ii
<PAGE> 20
BYLAWS
OF
PLANET POLYMER TECHNOLOGIES, INC.
(A CALIFORNIA CORPORATION)
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal executive office of the
corporation shall be located at such place as the Board of Directors may from
time to time authorize. If the principal executive office is located outside
this state, and the corporation has one or more business offices in this state,
the Board of Directors shall fix and designate a principal business office in
the State of California.
SECTION 2. Other Offices. Additional offices of the corporation shall be
located at such place or places, within or outside the State of California, as
the Board of Directors may from time to time authorize.
ARTICLE II
CORPORATE SEAL
SECTION 3. Corporate Seal. If the Board of Directors adopts a corporate
seal such seal shall have inscribed thereon the name of the corporation and the
state and date of its incorporation. If and when a seal is adopted by the Board
of Directors, such seal may be engraved, lithographed, printed, stamped,
impressed upon, or affixed to any contract, conveyance, certificate for shares,
or other instrument executed by the corporation.
ARTICLE III
SHAREHOLDERS' MEETINGS AND VOTING RIGHTS
SECTION 4. Place of Meetings. Meetings of shareholders shall be held at the
principal executive office of the corporation, or at any other place, within or
outside the State of California, which may be fixed either by the Board of
Directors or by the written consent of all persons entitled to vote at such
meeting, given either before or after the meeting and filed with the Secretary
of the Corporation.
SECTION 5. Annual Meetings.
(a) The annual meeting of the shareholders of the corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors. Nominations of persons for election
to the Board of Directors of the corporation and the proposal of business to be
considered by the shareholders may be made at an annual meeting of shareholders:
(i) pursuant to the corporation's notice of meeting of shareholders; (ii) by or
at the direction of the Board of Directors; or (iii) by any shareholder of the
corporation who was a shareholder of record at the time of giving of notice
provided for in the following paragraph, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in this Section 5.
(b) At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a shareholder pursuant to clause (iii) of Section 5(a) of these Bylaws, (i) the
shareholder must have given timely notice thereof in writing to the Secretary of
the corporation, (ii) such other business must be a proper matter for
shareholder action under the California Corporations Code, (iii) if the
shareholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice (as
defined in this Section 5(b)), such shareholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the corporation's voting shares required
under applicable law to carry any such proposal, or,
A-1
<PAGE> 21
in the case of a nomination or nominations, have delivered a proxy statement and
form of proxy to holders of a percentage of the corporation's voting shares
reasonably believed by such shareholder or beneficial owner to be sufficient to
elect the nominee or nominees proposed to be nominated by such shareholder, and
must, in either case, have included in such materials the Solicitation Notice,
and (iv) if no Solicitation Notice relating thereto has been timely provided
pursuant to this section, the shareholder or beneficial owner proposing such
business or nomination must not have solicited a number of proxies sufficient to
have required the delivery of such a Solicitation Notice under this Section 5.
To be timely, a shareholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the forty-fifth (45th) day nor earlier than the close of business on
the one hundred twentieth (120th) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced more than thirty (30) days prior to or
delayed by more than thirty (30) days after the anniversary of the preceding
year's annual meeting, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the forty-fifth (45th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving of
a shareholder's notice as described above. Such shareholder's notice shall set
forth: (A) as to each person whom the shareholder proposed to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the shareholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the corporation which are owned
beneficially and of record by such shareholder and such beneficial owner, and
(iii) whether either such shareholder or beneficial owner intends to deliver a
proxy statement and form of proxy to holders of, in the case of the proposal, at
least the percentage of the corporation's voting shares required under
applicable law to carry the proposal or, in the case of a nomination or
nominations, a sufficient number of holders of the corporation's voting shares
to elect such nominee or nominees (an affirmative statement of such intent, a
"Solicitation Notice").
(c) Only such persons who are nominated in accordance with the procedures
set forth in this Section 5 shall be eligible to serve as directors and only
such business shall be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 5. Except as otherwise provided by law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made, or proposed, as the case may
be, in accordance with the procedures set forth in these Bylaws and, if any
proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
shareholder action at the meeting and shall be disregarded.
(d) Notwithstanding the foregoing provisions of this Section 5, in order to
include information with respect to a shareholder proposal in the proxy
statement and form of proxy for a shareholder's meeting, shareholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of shareholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(e) For purposes of this Section 5, "public announcement" shall 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 1934 Act.
A-2
<PAGE> 22
SECTION 6. Postponement of Annual Meeting. The Board of Directors and the
President shall each have authority to hold at an earlier date and/or time, or
to postpone to a later date and/or time, the annual meeting of shareholders.
SECTION 7. Special Meetings.
(a) Special meetings of the shareholders, for any purpose or purposes, may
be called by the Board of Directors, the Chairman of the Board of Directors, the
President, or the holders of shares entitled to cast not less than ten percent
(10%) of the votes at the meeting.
(b) Upon written request to the Chairman of the Board of Directors, the
President, any vice president or the Secretary of the corporation by any person
or persons (other than the Board of Directors) entitled to call a special
meeting of the shareholders, such officer forthwith shall cause notice to be
given to the shareholders entitled to vote, that a meeting will be held at a
time requested by the person or persons calling the meeting, such time to be not
less than thirty-five (35) nor more than sixty (60) days after receipt of such
request. If such notice is not given within twenty (20) days after receipt of
such request, the person or persons calling the meeting may give notice thereof
in the manner provided by law or in these bylaws. Nothing contained in this
Section 7 shall be construed as limiting, fixing or affecting the time or date
when a meeting of shareholders called by action of the Board of Directors may be
held.
SECTION 8. Notice of Meetings. Except as otherwise may be required by law
and subject to subsection 7(b) above, written notice of each meeting of
shareholders shall be given to each shareholder entitled to vote at that meeting
(see Section 15 below), by the Secretary, assistant secretary or other person
charged with that duty, not less than ten (10) (or, if sent by third class mail,
thirty (30)) nor more than sixty (60) days before such meeting.
Notice of any meeting of shareholders shall state the date, place and hour
of the meeting and,
(a) in the case of a special meeting, the general nature of the business to
be transacted, and no other business may be transacted at such meeting;
(b) in the case of an annual meeting, the general nature of matters which
the Board of Directors, at the time the notice is given, intends to present for
action by the shareholders;
(c) in the case of any meeting at which directors are to be elected, the
names of the nominees intended at the time of the notice to be presented by
management for election; and
(d) in the case of any meeting, if action is to be taken on any of the
following proposals, the general nature of such proposal:
(1) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 310 (relating to certain transactions
in which a director has a direct or indirect financial interest);
(2) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 902 (relating to amending the
Articles of Incorporation of the corporation);
(3) a proposal to approve a transaction within the provisions of
California Corporations Code, Sections 181 and 1201 (relating to
reorganization);
(4) a proposal to approve a transaction within the provisions of
California Corporations Code, Section 1900 (winding up and dissolution);
(5) a proposal to approve a plan of distribution within the provisions
of California Corporations Code, Section 2007 (relating to certain plans
providing for distribution not in accordance with the liquidation rights of
preferred shares, if any).
At a special meeting, notice of which has been given in accordance with
this Section, action may not be taken with respect to business, the general
nature of which has not been stated in such notice. At an annual meeting, action
may be taken with respect to business stated in the notice of such meeting,
given in
A-3
<PAGE> 23
accordance with this Section, and, subject to subsection 8(d) above, with
respect to any other business as may properly come before the meeting.
SECTION 9. Manner of Giving Notice. Notice of any meeting of shareholders
shall be given either personally or by first-class mail, or, if the corporation
has outstanding shares held of record by 500 or more persons (determined as
provided in California Corporations Code Section 605) on the record date for
such meeting, third-class mail, or telegraphic or other written communication,
addressed to the shareholder at the address of that shareholder appearing on the
books of the corporation or given by the shareholder to the corporation for the
purpose of notice. If no such address appears on the corporation's books or is
given, notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the
corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices shall be deemed to have been duly given without further mailing
if these shall be available to the shareholder on written demand by the
shareholder at the principal executive office of the corporation for a period of
one year from the date of the giving of the notice.
An affidavit of mailing of any notice or report in accordance with the
provisions of this Section 9, executed by the Secretary, Assistant Secretary or
any transfer agent, shall be prima facie evidence of the giving of the notice.
SECTION 10. Quorum and Transaction of Business.
(a) At any meeting of the shareholders, a majority of the shares entitled
to vote, represented in person or by proxy, shall constitute a quorum. If a
quorum is present, the affirmative vote of the majority of shares represented at
the meeting and entitled to vote on any matter shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by law or by the Articles of Incorporation, and except as provided in
subsection (b) below.
(b) The shareholders present at a duly called or held meeting of the
shareholders at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
(c) In the absence of a quorum, no business other than adjournment may be
transacted, except as described in subsection (b) above.
SECTION 11. Adjournment and Notice of Adjourned Meetings. Any meeting of
shareholders may be adjourned from time to time, whether or not a quorum is
present, by the affirmative vote of a majority of shares represented at such
meeting either in person or by proxy and entitled to vote at such meeting.
In the event any meeting is adjourned, it shall not be necessary to give
notice of the time and place of such adjourned meeting pursuant to Sections 8
and 9 of these bylaws; provided that if any of the following three events occur,
such notice must be given:
(1) announcement of the adjourned meeting's time and place is not made
at the original meeting which it continues or
(2) such meeting is adjourned for more than forty-five (45) days from
the date set for the original meeting or
(3) a new record date is fixed for the adjourned meeting.
A-4
<PAGE> 24
At the adjourned meeting, the corporation may transact any business which
might have been transacted at the original meeting.
SECTION 12. Waiver of Notice, Consent to Meeting or Approval of Minutes.
(a) Subject to subsection (b) of this Section, the transactions of any
meeting of shareholders, however called and noticed, and wherever held, shall be
as valid as though made at a meeting duly held after regular call and notice, if
a quorum is present either in person or by proxy, and if, either before or after
the meeting, each of the persons entitled to vote but not present in person or
by proxy signs a written waiver of notice or a consent to holding of the meeting
or an approval of the minutes thereof.
(b) A waiver of notice, consent to the holding of a meeting or approval of
the minutes thereof need not specify the business to be transacted or transacted
at nor the purpose of the meeting; provided that in the case of proposals
described in subsection (d) of Section 8 of these bylaws, the general nature of
such proposals must be described in any such waiver of notice and such proposals
can only be approved by waiver of notice, not by consent to holding of the
meeting or approval of the minutes.
(c) All waivers, consents and approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
(d) A person's attendance at a meeting shall constitute waiver of notice of
and presence at such meeting, except when such person objects at the beginning
of the meeting to transaction of any business because the meeting is not
lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters which are required
by law or these bylaws to be in such notice (including those matters described
in subsection (d) of Section 8 of these bylaws), but are not so included if such
person expressly objects to consideration of such matter or matters at any time
during the meeting.
SECTION 13. Action by Written Consent Without a Meeting. Any action which
may be taken at any meeting of shareholders may be taken without a meeting and
without prior notice if written consents setting forth the action so taken are
signed by the holders of the outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Directors may not be elected by written consent except by unanimous written
consent of all shares entitled to vote for the election of directors; provided
that any vacancy on the Board of Directors (other than a vacancy created by
removal) which has not been filled by the board of directors may be filled by
the written consent of a majority of outstanding shares entitled to vote for the
election of directors.
Any written consent may be revoked pursuant to California Corporations Code
Section 603(c) prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary.
Such revocation must be in writing and will be effective upon its receipt by the
Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of any corporate action approved by the shareholders without a meeting to
those shareholders entitled to vote on such matters who have not consented
thereto in writing. This notice shall be given in the manner specified in
Section 9 of these bylaws. In the case of approval of (i) a transaction within
the provisions of California Corporations Code, Section 3 10 (relating to
certain transactions in which a director has an interest), (ii) a transaction
within the provisions of California Corporations Code, Section 317 (relating to
indemnification of agents of the corporation), (iii) a transaction within the
provisions of California Corporations Code, Sections 181 and 1201 (relating to
reorganization), and (iv) a plan of distribution within the provisions of
California Corporations Code, Section 2007 (relating to certain plans providing
for distribution not in accordance with the liquidation rights of preferred
shares, if any), the notice shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
SECTION 14. Voting. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 15
of these bylaws, subject to the provisions of
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Sections 702 through 704 of the California Corporations Code (relating to voting
shares held by a fiduciary, in the name of a corporation, or in joint
ownership). Voting at any meeting of shareholders need not be by ballot,
provided, however, that elections for directors must be by ballot if balloting
is demanded by a shareholder at the meeting and before the voting begins.
Every person entitled to vote at an election for directors may cumulate the
votes to which such person is entitled, i.e., such person may cast a total
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which such person's shares are entitled, and may cast said
total number of votes for one or more candidates in such proportions as such
person thinks fit; provided, however, no shareholder shall be entitled to so
cumulate such shareholder's votes unless the candidates for which such
shareholder is voting have been placed in nomination prior to the voting and a
shareholder has given notice at the meeting, prior to the vote, of an intention
to cumulate votes. In any election of directors, the candidates receiving the
highest number of votes, up to the number of directors to be elected, are
elected.
Candidate's names shall be placed in nomination pursuant to the procedures
set forth in Section 5 of these bylaws.
Except as may be otherwise provided in the Articles of Incorporation or by
law, and subject to the foregoing provisions regarding the cumulation of votes,
each shareholder shall be entitled to one vote for each share held.
Any shareholder may vote part of such shareholder's shares in favor of a
proposal and refrain from voting the remaining shares or vote them against the
proposal, other than elections to office, but, if the shareholder fails to
specify the number of shares such shareholder is voting affirmatively, it will
be conclusively presumed that the shareholder's approving vote is with respect
to all shares such shareholder is entitled to vote.
No shareholder approval, other than unanimous approval of those entitled to
vote, will be valid as to proposals described in subsection 8(d) of these bylaws
unless the general nature of such business was stated in the notice of meeting
or in any written waiver of notice.
SECTION 15. Persons Entitled to Vote or Consent. The Board of Directors may
fix a record date pursuant to Section 60 of these bylaws to determine which
shareholders are entitled to notice of and to vote at a meeting or consent to
corporate actions, as provided in Sections 13 and 14 of these bylaws. Only
persons in whose name shares otherwise entitled to vote stand on the stock
records of the corporation on such date shall be entitled to vote or consent.
If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business
on the business day next preceding the day notice is given or, if notice is
waived, at the close of business on the business day next preceding the day
on which the meeting is held;
(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors has been taken, shall be the day on which
the first written consent is given;
(3) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th)
day prior to the date of such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting;
provided, however, that the Board of Directors shall fix a new record date if
the meeting is adjourned for more than forty-five (45) days from the date set
for the original meeting.
Shares of the corporation held by its subsidiary or subsidiaries (as
defined in California Corporations Code, Section 189(b)) are not entitled to
vote in any matter.
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SECTION 16. Proxies. Every person entitled to vote or execute consents may
do so either in person or by one or more agents authorized to act by a written
proxy executed by the person or such person's duly authorized agent and filed
with the Secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution
unless otherwise provided in the proxy. The manner of execution, suspension,
revocation, exercise and effect of proxies is governed by law.
SECTION 17. Inspectors of Election. Before any meeting of shareholders, the
Board of Directors may appoint any persons, other than nominees for office, to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the majority of shares represented in
person or proxy shall determine whether one (1) or three (3) inspectors are to
be appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum, and
the authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 18. Powers. Subject to the provisions of law or any limitations in
the Articles of Incorporation or these bylaws, as to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised, by or under the direction of the Board of Directors. The Board of
Directors may delegate the management of the day-to-day operation of the
business of the corporation to a management company or other person, provided
that the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the Board of
Directors.
SECTION 19. Number of Directors. The authorized number of directors of the
corporation shall be not less than a minimum of five (5) nor more than a maximum
of nine (9) (which maximum number in no case shall be greater than two times
said minimum, minus one) and the number of directors presently authorized is six
(6). The exact number of directors shall be set within these limits from time to
time (a) by approval of the Board of Directors, or (b) by the affirmative vote
of a majority of the shares represented and voting at a duly held meeting at
which a quorum is present (which shares voting affirmatively also constitute at
least a majority of the required quorum) or by the written consent of
shareholders pursuant to Section 13 herein above.
Any amendment of these bylaws changing the maximum or minimum number of
directors may be adopted only by the affirmative vote of a majority of the
outstanding shares entitled to vote; provided, an amendment reducing the minimum
number of directors to less than five (5), cannot be adopted if votes cast
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against its adoption at a meeting or the shares not consenting to it in the case
of action by written consent are equal to more than 16 2/3 percent of the
outstanding shares entitled to vote.
No reduction of the authorized number of directors shall remove any
director prior to the expiration of such director's term of office.
SECTION 20. Election Of Directors, Term, Qualifications. The directors
shall be elected at each annual meeting of shareholders to hold office until the
next annual meeting. Each director, including a director elected or appointed to
fill a vacancy, shall hold office either until the expiration of the term for
which elected or appointed and until a successor has been elected and qualified,
or until his death, resignation or removal. Directors need not be shareholders
of the corporation.
SECTION 21. Resignations. Any director of the corporation may resign
effective upon giving written notice to the Chairman of the Board, the
President, the Secretary or the Board of Directors of the corporation, unless
the notice specifies a later time for the effectiveness of such resignation. If
the resignation specifies effectiveness at a future time, a successor may be
elected pursuant to Section 23 of these bylaws to take office on the date that
the resignation becomes effective.
SECTION 22. Removal. The Board of Directors may declare vacant the office
of a director who has been declared of unsound mind by an order of court or who
has been convicted of a felony.
The entire Board of Directors or any individual director may be removed
from office without cause by the affirmative vote of a majority of the
outstanding shares entitled to vote on such removal; provided, however, that
unless the entire Board is removed, no individual director may be removed when
the votes cast against such director's removal, or not consenting in writing to
such removal, would be sufficient to elect that director if voted cumulatively
at an election at which the same total number of votes cast were cast (or, if
such action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of such director's
most recent election were then being elected.
SECTION 23. Vacancies. A vacancy or vacancies on the Board of Directors
shall be deemed to existing case of the death, resignation or removal of any
director, or upon increase in the authorized number of directors or if
shareholders fail to elect the full authorized number of directors at an annual
meeting of shareholders or if, for whatever reason, there are fewer directors on
the Board of Directors, than the full number authorized. Such vacancy or
vacancies, other than a vacancy created by the removal of a director, may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director. A vacancy created by the removal of a director may
be filled only by the affirmative vote of a majority of the shares represented
and voting at a duly held meeting at which a quorum is present (which shares
Voting affirmatively also constitute at least a majority of the required quorum)
or by the written consent of shareholders pursuant to Section 13 herein above.
The shareholders may elect a director at any time to fill any vacancy not filled
by the directors. Any such election by written consent, other than to fill a
vacancy created by removal, requires the consent of a majority of the
outstanding shares entitled to vote. Any such election by written consent to
fill a vacancy created by removal requires the consent of all of the outstanding
shares entitled to vote.
If, after the filling of any vacancy by the directors, the directors then
in office who have been elected by the shareholders constitute less than a
majority of the directors then in office, any holder or holders of an aggregate
of five percent (5%) or more of the shares outstanding at that time and having
the right to vote for such directors may call a special meeting of shareholders
to be held to elect the entire Board of Directors. The term of office of any
director shall terminate upon such election of a successor.
SECTION 24. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times, places and dates as fixed in these bylaws or by the
Board of Directors; provided, however, that if the date for such a meeting falls
on a legal holiday, then the meeting shall be held at the same time on the next
succeeding full business day. Regular meetings of the Board of Directors held
pursuant to this Section 24 may be held without notice.
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SECTION 25. Participation by Telephone. Members of the Board of Directors
may participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Such participation constitutes presence in person at such
meeting.
SECTION 26. Special Meetings. Special meetings of the Board of Directors
for any purpose may be called by the Chairman of the Board or the President or
any vice president or the Secretary of the corporation or any two (2) directors.
SECTION 27. Notice of Meetings. Notice of the date, time and place of all
meetings of the Board of Directors, other than regular meetings held pursuant to
Section 24 above shall be delivered personally, orally or in writing, or by
telephone or telegraph to each director, at least forty-eight (48) hours before
the meeting, or sent in writing to each director by first-class mail, charges
prepaid, at least four (4) days before the meeting. Such notice may be given by
the Secretary of the corporation or by the person or persons who called a
meeting. Such notice need not specify the purpose of the meeting. Notice of any
meeting of the Board of Directors need not be given to any director who signs a
waiver of notice of such meeting, or a consent to holding the meeting or an
approval of the minutes thereof, either before or after the meeting, or who
attends the meeting without protesting prior thereto or at its commencement such
director's lack of notice. All such waivers, consents and approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
SECTION 28. Place of Meetings. Meetings of the Board of Directors may be
held at any place within or without the state which has been designated in the
notice of the meeting or, if not stated in the notice or there is no notice,
designated in the bylaws or by resolution of the Board of Directors.
SECTION 29. Action by Written Consent Without a Meeting. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting, if all members of the Board of Directors individually or collectively
consent in writing to such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board of Directors. Such action
by written consent shall have the same force and effect as a unanimous vote of
such directors.
SECTION 30. Quorum and Transaction of Business. A majority of the
authorized number of directors shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the authorized
number of directors present at a meeting duly held at which a quorum is present
shall be the act of the Board of Directors, unless the law, the Articles of
Incorporation or these bylaws specifically require a greater number. A meeting
at which a quorum is initially present may continue to transact business,
notwithstanding withdrawal of directors, if any action taken is approved by at
least a majority of the number of directors constituting a quorum for such
meeting. In the absence of a quorum at any meeting of the Board of Directors, a
majority of the directors present may adjourn the meeting, as provided in
Section 31 of these bylaws.
SECTION 31. Adjournment. Any meeting of the Board of Directors, whether or
not a quorum is present, may be adjourned to another time and place by the
affirmative vote of a majority of the directors present. If the meeting is
adjourned for more than twenty-four (24) hours, notice of such adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of the adjournment.
SECTION 32. Organization. The Chairman of the Board shall preside at every
meeting of the Board of Directors, if present. If there is no Chairman of the
Board or if the Chairman is not present, a Chairman chosen by a majority of the
directors present shall act as chairman. The Secretary of the corporation or, in
the absence of the Secretary, any person appointed by the Chairman shall act as
secretary of the meeting.
SECTION 33. Compensation. Directors and members of committees may receive
such compensation, if any, for their services, and such reimbursement for
expenses, as may be fixed or determined by the Board of Directors.
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SECTION 34. Committees. The Board of Directors may, by resolution adopted
by a majority of the authorized number of directors, designate one or more
committees, each consisting of two (2) or more directors, to serve at the
pleasure of the Board of Directors. The Board of Directors, by a vote of the
majority of authorized directors, may designate one or more directors as
alternate members of any committee, to replace any absent member at any meeting
of such committee. Any such committee shall have authority to act in the manner
and to the extent provided in the resolution of the Board of Directors, and may
have all the authority of the Board of Directors in the management of the
business and affairs of the corporation, except with respect to:
(a) the approval of any action for which shareholders' approval or approval
of the outstanding shares also is required by the California Corporations Code;
(b) the filling of vacancies on the Board of Directors or any of its
committees;
(c) the fixing of compensation of directors for serving on the Board of
Directors or any of its committees;
(d) the adoption, amendment or repeal of these bylaws;
(e) the amendment or repeal of any resolution of the Board of Directors
which by its express terms is not so amendable or repealable;
(f) a distribution to shareholders, except at a rate or in a periodic
amount or within a price range determined by the Board of Directors; or
(g) the appointment of other committees of the Board of Directors or the
members thereof.
Any committee may from time to time provide by resolution for regular
meetings at specified times and places. If the date of such a meeting falls on a
legal holiday, then the meeting shall be held at the same time on the next
succeeding full business day. No notice of such a meeting need be given. Such
regular meetings need not be held if the committee shall so determine at any
time before or after the time when such meeting would otherwise have taken
place. Special meetings may be called at any time in the same manner and by the
same persons as stated in Sections 26 and 27 of these bylaws for meetings of the
Board of Directors. The provisions of Sections 25, 28, 29, 30, 31 and 32 of
these bylaws shall apply to committees, committee members and committee meetings
as if the words "committee" and "committee member" were substituted for the word
"Board of Directors", and "director", respectively, throughout such sections.
ARTICLE V
OFFICERS
SECTION 35. Officers. The corporation shall have a Chairman of the Board or
a President or both, a Secretary, a Chief Financial Officer and such other
officers with such titles and duties as the Board of Directors may determine.
Any two or more offices may be held by the same person.
SECTION 36. Appointment. All officers shall be chosen and appointed by the
Board of Directors; provided, however, the Board of Directors may empower the
chief executive officer of the corporation to appoint such officers, other than
Chairman of the Board, President, Secretary or Chief Financial Officer, as the
business of the corporation may require. All officers shall serve at the
pleasure of the Board of Directors, subject to the rights, if any, of an officer
under a contract of employment.
SECTION 37. Inability to Act. In the case of absence or inability to act of
any officer of the corporation or of any person authorized by these bylaws to
act in such officer's place, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other officer, or any
director or other person whom it may select, for such period of time as the
Board of Directors deems necessary.
SECTION 38. Resignations. Any officer may resign at any time upon written
notice to the corporation, without prejudice to the rights, if any, of the
corporation under any contract to which such officer is a party. Such
resignation shall be effective upon its receipt by the Chairman of the Board,
the President, the Secretary or the Board of Directors, unless a different time
is specified in the notice for effectiveness of such resignation.
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The acceptance of any such resignation shall not be necessary to make it
effective unless otherwise specified in such notice.
SECTION 39. Removal. Any officer may be removed from office at any time,
with or without cause, but subject to the rights, if any, of such officer under
any contract of employment, by the Board of Directors or by any committee to
whom such power of removal has been duly delegated, or, with regard to any
officer who has been appointed by the chief executive officer pursuant to
Section 36 above, by the chief executive officer or any other officer upon whom
such power of removal may be conferred by the Board of Directors.
SECTION 40. Vacancies. A vacancy occurring in any office for any cause may
be filled by the Board of Directors, in the manner prescribed by this Article of
the bylaws for initial appointment to such office.
SECTION 41. Chairman of the Board. The Chairman of the Board, if there be
such an officer, shall, if present, preside at all meetings of the Board of
Directors and shall exercise and perform such other powers and duties as may be
assigned from time to time by the Board of Directors or prescribed by these
bylaws. If no President is appointed, the Chairman of the Board is the general
manager and chief executive officer of the corporation, and shall exercise all
powers of the President described in Section 42 below.
SECTION 42. President. Subject to such powers, if any, as may be given by
the Board of Directors to the Chairman of the Board, if there be such an
officer, the President shall be the general manager and chief executive officer
of the corporation and shall have general supervision, direction, and control
over the business and affairs of the corporation, subject to the control of the
Board of Directors. The President may sign and execute, in the name of the
corporation, any instrument authorized by the Board of Directors, except when
the signing and execution thereof shall have been expressly delegated by the
Board of Directors or by these bylaws to some other officer or agent of the
corporation. The President shall have all the general powers and duties of
management usually vested in the president of a corporation, and shall have such
other powers and duties as may be prescribed from time to time by the Board of
Directors or these bylaws. The President shall 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.
SECTION 43. Vice Presidents. In the absence or disability of the President,
in the event of a vacancy in the office of President, or in the event such
officer refuses to act, the Vice President shall perform all the duties of the
President and, when so acting, shall have all the powers of, and be subject to
all the restrictions on, the President. If at any such time the corporation has
more than one vice president, the duties and powers of the President shall pass
to each vice president in order of such vice president's rank as fixed by the
Board of Directors or, if the vice presidents are not so ranked, to the vice
president designated by the Board of Directors. The vice presidents shall have
such other powers and perform such other duties as may be prescribed for them
from time to time by the Board of Directors or pursuant to Sections 35 and 36 of
these bylaws or otherwise pursuant to these bylaws.
SECTION 44. Secretary. The Secretary shall:
(a) Keep, or cause to be kept, minutes of all meetings of the corporation's
shareholders, Board of Directors, and committees of the Board of Directors, if
any. Such minutes shall be kept in written form.
(b) Keep, or cause to be kept, at the principal executive office of the
corporation, or at the office of its transfer agent or registrar, if any, a
record of the corporation's shareholders, showing the names and addresses of all
shareholders, and the number and classes of shares held by each. Such records
shall be kept in written form or any other form capable of being converted into
written form.
(c) Keep, or cause to be kept, at the principal executive office of the
corporation, or if the principal executive office is not in California, at its
principal business office in California, an original or copy of these bylaws, as
amended.
(d) Give, or cause to be given, notice of all meetings of shareholders,
directors and committee of the Board of Directors, as required by law or by
these bylaws.
(e) Keep the seal of the corporation, if any, in safe custody.
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(f) Exercise such powers and perform such duties as are usually vested in
the office of secretary of a corporation, and exercise such other powers and
perform such other duties as may be prescribed from time to time by the Board of
Directors or these bylaws.
If any assistant secretaries are appointed, 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, in the absence or disability of the Secretary or in the
event of such officer's refusal to act or if a vacancy exists in the office of
Secretary, shall perform the duties and exercise the powers of the Secretary and
discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.
SECTION 45. Chief Financial Officer. The Chief Financial Officer shall:
(a) Be responsible for all functions and duties of the treasurer of the
corporation.
(b) Keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of account for the corporation.
(c) Receive or be responsible for receipt of all monies due and payable to
the corporation from any source whatsoever; have charge and custody of, and be
responsible for, all monies and other valuables of the corporation and be
responsible for deposit of all such monies in the name and to the credit of the
corporation with such depositaries as may be designated by the Board of
Directors or a duty appointed and authorized committee of the Board of
Directors.
(d) Disburse or be responsible for the disbursement of the funds of the
corporation as may be ordered by the Board of Directors or a duly appointed and
authorized committee of the Board of Directors.
(e) Render to the chief executive officer and the Board of Directors a
statement of the financial condition of the corporation if called upon to do so.
(f) Exercise such powers and perform such duties as are usually vested in
the office of chief financial officer of a corporation, and exercise such other
powers and perform such other duties as may be prescribed by the Board of
Directors or these bylaws.
If any assistant financial officer is appointed, 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, shall, in the absence or disability of the Chief Financial Officer or
in the event of such officer's refusal to act, perform the duties and exercise
the powers of the Chief Financial Officer, and shall have such powers and
discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.
SECTION 46. Compensation. The compensation of the officers shall be fixed
from time to time by the Board of Directors, and no officer shall be prevented
from receiving such compensation by reason of the fact that such officer is also
a director of the corporation.
ARTICLE VI
CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS
SECTION 47. Execution of Contracts and Other Instruments. Except as these
bylaws may otherwise provide, the Board of Directors or its duly appointed and
authorized committee may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authorization may be general or confined
to specific instances. Except as so authorized or otherwise expressly provided
in these bylaws, no officer, agent, or employee shall 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 in any amount.
SECTION 48. Loans. No loans shall be contracted on behalf of the
corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors or its duly appointed and
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authorized committee. When so authorized by the Board of Directors or such
committee, any officer or agent of the corporation may effect loans and advances
at any time for the corporation from any bank, trust company, or other
institution, or from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes, bonds or other
evidences of indebtedness of the corporation and, when authorized as aforesaid,
may mortgage, pledge, hypothecate or transfer any and all stocks, securities and
other property, real or personal, at any time held by the corporation, and to
that end endorse, assign and deliver the same as security for the payment of any
and all loans, advances, indebtedness, and liabilities of the corporation. Such
authorization may be general or confined to specific instances.
SECTION 49. Bank Accounts. The Board of Directors or its duly appointed and
authorized committee from time to time may authorize the opening and keeping of
general and/or special bank accounts with such banks, trust companies, or other
depositaries as may be selected by the Board of Directors, its duly appointed
and authorized committee or by any officer or officers, agent or agents, of the
corporation to whom such power may be delegated from time to time by the Board
of Directors. The Board of Directors or its duly appointed and authorized
committee may make such rules and regulations with respect to said bank
accounts, not inconsistent with the provisions of these bylaws, as are deemed
advisable.
SECTION 50. Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, acceptances or other evidences of indebtedness issued
in the name of the corporation shall be signed by such officer or officers,
agent or agents, of the corporation, and in such manner, as shall be determined
from time to time by resolution of the Board of Directors or its duly appointed
and authorized committee. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositaries may be made, without
counter-signature, by the President or any vice president or the Chief Financial
Officer or any assistant financial officer or by any other officer or agent of
the corporation to whom the Board of Directors or its duly appointed and
authorized committee, by resolution, shall have delegated such power or by
hand-stamped impression in the name of the corporation.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 51. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman or Vice Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer or an assistant financial
officer or by the Secretary or an assistant secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer, transfer
agent or registrar at the date of issue.
In the event that the corporation shall issue any shares as only partly
paid, the certificate issued to represent such partly paid shares shall have
stated thereon the total consideration to be paid for such shares and the amount
paid thereon.
SECTION 52. Transfer on the Books. Upon surrender to the Secretary or
transfer agent (if any) of the corporation of a certificate for shares of the
corporation duly endorsed, with reasonable assurance that the endorsement is
genuine and effective, or accompanied by proper evidence of succession,
assignment or authority to transfer and upon compliance with applicable federal
and state securities laws and if the corporation has no statutory duty to
inquire into adverse claims or has discharged any such duty and if any
applicable law relating to the collection of taxes has been complied with, it
shall be the duty of the corporation, by its Secretary or transfer agent, to
cancel the old certificate, to issue a new certificate to the person entitled
thereto and to record the transaction on the books of the corporation.
SECTION 53. Lost, Destroyed and Stolen Certificates. The holder of any
certificate for shares of the corporation alleged to have been lost, destroyed
or stolen shall notify the corporation by making a written
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affidavit or affirmation of such fact. Upon receipt of said affidavit or
affirmation the Board of Directors, or its duly appointed and authorized
committee or any officer or officers authorized by the Board so to do, may order
the issuance of a new certificate for shares in the place of any certificate
previously issued by the corporation and which is alleged to have been lost,
destroyed or stolen. However, the Board of Directors or such authorized
committee, officer or officers may require the owner of the allegedly lost,
destroyed or stolen certificate, or such owner's legal representative, to give
the corporation a bond or other adequate security sufficient to indemnify the
corporation and its transfer agent and/or registrar, if any, against any claim
that may be made against it or them on account of such allegedly lost, destroyed
or stolen certificate or the replacement thereof. Said bond or other security
shall be in such amount, on such terms and conditions and, in the case of a
bond, with such surety or sureties as may be acceptable to the Board of
Directors or to its duly appointed and authorized committee or any officer or
officers authorized by the Board of Directors to determine the sufficiency
thereof. The requirement of a bond or other security may be waived in particular
cases at the discretion of the Board of Directors or its duly appointed and
authorized committee or any officer or officers authorized by the Board of
Directors so to do.
SECTION 54. Issuance, Transfer and Registration of Shares. The Board of
Directors may make such rules and regulations, not inconsistent with law or with
these bylaws, as it may deem advisable concerning the issuance, transfer and
registration of certificates for shares of the capital stock of the corporation.
The Board of Directors may appoint a transfer agent or registrar of transfers,
or both, and may require all certificates for shares of the corporation to bear
the signature of either or both.
ARTICLE VIII
INSPECTION OF CORPORATE RECORDS
SECTION 55. Inspection by Directors. Every director shall have the absolute
right at any reasonable time to inspect and copy all books, records, and
documents of every kind of the corporation and any of its subsidiaries and to
inspect the physical properties of the corporation and any of its subsidiaries.
Such inspection may be made by the director in person or by agent or attorney,
and the right of inspection includes the right to copy and make extracts.
SECTION 56. Inspection by Shareholders.
(a) Inspection of Corporate Records.
(i) A shareholder or shareholders holding at least five percent (5%)
in the aggregate of the outstanding voting shares of the corporation or who
hold at least one percent of such voting shares and have filed a Schedule
14B with the United States Securities and Exchange Commission relating to
the election of directors of the corporation shall have an absolute right
to do either or both of the following:
(A) Inspect and copy the record of shareholders' names and
addresses and shareholdings during usual business hours upon five (5)
business days' prior written demand upon the corporation; or
(B) Obtain from the transfer agent, if any, for the corporation,
upon five business days' prior written demand and upon the tender of its
usual charges for such a list (the amount of which charges shall be
stated to the shareholder by the transfer agent upon request), a list of
the shareholders' names and addresses who are entitled to vote for the
election of directors and their shareholdings, as of the most recent
record date for which it has been compiled or as of a date specified by
the shareholder subsequent to the date of demand.
(ii) The record of shareholders shall also be open to inspection and
copying by any shareholder or holder of a voting trust certificate at any
time during usual business hours upon written demand on the corporation,
for a purpose reasonably related to such holder's interest as a shareholder
or holder of a voting trust certificate.
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(iii) The accounting books and records and minutes of proceedings of
the shareholders and the Board of Directors and of any committees of the
Board of Directors of the corporation and of each of its subsidiaries shall
be open to inspection, copying and making extracts upon written demand on
the corporation of any shareholder or holder of a voting trust certificate
at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as a
holder of such voting trust certificate.
(iv) Any inspection, copying, and making of extracts under this
subsection (a) may be done in person or by agent or attorney.
(b) Inspection of Bylaws. The original or a copy of these bylaws shall be
kept as provided in Section 44 of these bylaws and shall be open to inspection
by the shareholders at all reasonable times during office hours. If the
principal executive office of the corporation is not in California, and the
corporation has no principal business office in the state of California, a
current copy of these bylaws shall be furnished to any shareholder upon written
request.
SECTION 57. Written Form. If any record subject to inspection pursuant to
Section 56 above is not maintained in written form, a request' for inspection is
not complied with unless and until the corporation at its expense makes such
record available in written form.
ARTICLE IX
MISCELLANEOUS
SECTION 58. Fiscal Year. Unless otherwise fixed by resolution of the Board
of Directors, the fiscal year of the corporation shall end on the 31st day of
December in each calendar year.
SECTION 59. Annual Report.
(a) Subject to the provisions of Section 59(b) below, the Board of
Directors shall cause an annual report to be sent to each shareholder of the
corporation in the manner provided in Section 9 of these bylaws not later than
one hundred twenty (120) days after the close of the corporation's fiscal year.
Such report shall include a balance sheet as of the end of such fiscal year and
an income statement and statement of changes in financial position for such
fiscal year, accompanied by any report thereon of independent accountants or, if
there is no such report, the certificate of an authorized officer of the
corporation that such statements were prepared without audit from the books and
records of the corporation. When there are more than 100 shareholders of record
of the corporation's shares, as determined by Section 605 of the California
Corporations Code, additional information as required by Section 1501(b) of the
California Corporations Code shall also be contained in such report, provided
that if the corporation has a class of securities registered under Section 12 of
the United States Securities Exchange Act of 1934, that Act shall take
precedence. Such report shall be sent to shareholders at least fifteen (15) (or,
if sent by third-class mail, thirty-five (35)) days prior to the next annual
meeting of shareholders after the end of the fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of record of the
corporation's shares, the requirement of sending of an annual report to the
shareholders of the corporation is hereby expressly waived.
SECTION 60. Record Date. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of or to vote at any meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or entitled to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days nor less than ten
(10) days prior to the date of the meeting nor more than sixty (60) days prior
to any other action or event for the purpose of which it is fixed. If no record
date is fixed, the provisions of Section 15 of these bylaws shall apply with
respect to notice of meetings, votes, and consents and the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolutions relating
thereto, or the sixtieth (60th) day prior to the date of such other action or
event, whichever is later.
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Only shareholders of record at the close of business on the record date
shall be entitled to notice and to vote or to receive the dividend, distribution
or allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Articles of Incorporation,
by agreement or by law.
SECTION 61. Bylaw Amendments. Except as otherwise provided by law or
Section 19 of these bylaws, these bylaws may be amended or repealed by the Board
of Directors or by the affirmative vote of a majority of the outstanding shares
entitled to vote, including, if applicable, the affirmative vote of a majority
of the outstanding shares of each class or series entitled by law or the
Articles of Incorporation to vote as a class or series on the amendment or
repeal or adoption of any bylaw or bylaws; provided, however, after issuance of
shares, a bylaw specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable board or vice
versa may only be adopted by approval of the outstanding shares as provided
herein.
SECTION 62. Construction and Definition. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions
contained in the California Corporations Code shall govern the construction of
these bylaws.
Without limiting the foregoing, "shall" is mandatory and "may" is
permissive.
ARTICLE X
INDEMNIFICATION
SECTION 63. Indemnification of Directors, Officers, Employees and Other
Agents.
(a) Directors and Executive Officers. The corporation shall indemnify its
directors and executive officers to the fullest extent not prohibited by the
California General Corporation Law; provided, however, that the corporation may
limit the extent of such indemnification by individual contracts with its
directors and executive officers; and, provided, further, that the corporation
shall not be required to indemnify any director or executive officer in
connection with any proceeding (or part thereof) initiated by such person or any
proceeding by such person against the corporation or its directors, officers,
employees or other agents 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 or (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under
the California General Corporation Law.
(b) Other Officers, Employees and Other Agents. The corporation shall have
the power to indemnify its other officers, employees and other agents as set
forth in the California General Corporation Law.
(c) Determination by the Corporation. Promptly after receipt of a request
for indemnification hereunder (and in any event within 90 days thereof) a
reasonable, good faith determination as to whether indemnification of the
director or executive officer is proper under the circumstances because such
director or executive officer has met the applicable standard of care shall be
made by:
(1) a majority vote of a quorum consisting of directors who are not
parties to such proceeding;
(2) if such quorum is not obtainable, by independent legal counsel in
a written opinion; or
(3) approval or ratification by the affirmative vote of a majority of
the shares of this corporation represented and voting at a duly held
meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum) or by written
consent of a majority of the outstanding shares entitled to vote; where in
each case the shares owned by the person to be indemnified shall not be
considered entitled to vote thereon.
(d) Good Faith.
(1) For purposes of any determination under this bylaw, a director or
executive officer shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in the best interests of the
corporation and its shareholders, and, with respect to any criminal action
or proceeding, to have had
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no reasonable cause to believe that his conduct was unlawful, if his action
is based on information, opinions, reports and statements, including
financial statements and other financial data, in each case prepared or
presented by:
(i) one or more officers or employees of the corporation whom the
director or executive officer believed to be reliable and competent in
the matters presented;
(ii) counsel, independent accountants or other persons as to
matters which the director or executive officer believed to be within
such person's professional competence; and
(iii) with respect to a director, a committee of the Board upon
which such director does not serve, as to matters within such
committee's designated authority, which committee the director believes
to merit confidence; so long as, in each case, the director or executive
officer acts without knowledge that would cause such reliance to be
unwarranted.
(2) The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not,
of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in the best interests of
the corporation and its shareholders or that he had reasonable cause to
believe that his conduct was unlawful.
(3) The provisions of this paragraph (d) shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the
California General Corporation Law.
(e) Expenses. The corporation shall advance, prior to the final disposition
of any 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 shall 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 (0 of this bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
proceeding (or, if no such quorum exists, 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 the
best interests of the corporation and its shareholders.
(f) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and executive
officers under this bylaw shall be deemed to be 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 shall be
enforceable by or on behalf of the person holding such right in the forum in
which the proceeding is or was pending or, if such forum is not available or a
determination is made that such forum is not convenient, in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) 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, shall be entitled to be paid also the expense
of prosecuting his claim. The corporation shall 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 California General Corporation Law
for the corporation to indemnify the claimant for the amount claimed. Neither
the failure of the corporation (including its board of directors, independent
legal counsel or its shareholders) 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 California General Corporation Law, nor an actual determination by
the corporation (including its board of directors, independent legal counsel or
its shareholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
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(g) Non-Exclusivity of Rights. To the fullest extent permitted by the
corporation's Articles of Incorporation and the California General Corporation
Law, the rights conferred on any person by this bylaw shall not be exclusive of
any other right which such person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, bylaws, agreement, vote of
shareholders 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 permitted by the California
General Corporation Law and the corporation's Articles of Incorporation.
(h) Survival of Rights. The rights conferred on any person by this bylaw
shall continue as to a person who has ceased to be a director or executive
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(i) Insurance. 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.
(j) Amendments. Any repeal or modification of this bylaw shall only be
prospective and shall 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.
(k) Employee Benefit Plans. The corporation shall indemnify the directors
and officers of the corporation who serve at the request of the corporation as
trustees, investment managers or other fiduciaries of employee benefit plans to
the fullest extent permitted by the California General Corporation Law.
(l) Saving Clause. If this bylaw or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each director and executive officer to the fullest extent
permitted by any applicable portion of this bylaw that shall not have been
invalidated, or by any other applicable law.
(m) Certain Definitions. For the purposes of this bylaw, the following
definitions shall apply:
(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement and appeal of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative.
(2) The term "expenses" shall be broadly construed and shall 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, including
expenses of establishing a right to indemnification under this bylaw or any
applicable law.
(3) The term the "corporation" shall 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,
shall 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," "officer," "employee," or "agent" of
the corporation shall include, without limitation, situations where such
person is or was serving at the request of the corporation as a director,
officer, employee, trustee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
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<PAGE> 38
ARTICLE XI
LOANS OF OFFICERS AND OTHERS
SECTION 64. Certain Corporate Loans and Guaranties. If the corporation has
outstanding shares held of record by 100 or more persons on the date of approval
by the Board of Directors, the corporation may make loans of money or property
to, or guarantee the obligations of, any officer of the corporation or its
parent or any subsidiary, whether or not a director of the corporation or its
parent or any subsidiary, or adopt an employee benefit plan or plans authorizing
such loans or guaranties, upon the approval of the Board of Directors alone, by
a vote sufficient without counting the vote of any interested director or
directors, if the Board of Directors determines that such a loan or guaranty or
plan may reasonably be expected to benefit the corporation. Notwithstanding the
foregoing, the corporation shall have the power to make loans permitted by the
California Corporations Code.
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<PAGE> 39
ANNEX B
PROXY
<PAGE> 40
PROXY PLANET POLYMER TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 12, 1999
The undersigned shareholder of Planet Polymer Technologies, Inc., a
California corporation, hereby acknowledges the receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement with respect to the Annual Meeting
of Shareholders of Planet Polymer Technologies, Inc. to be held at the offices
of the Company located at 9985 Businesspark Avenue, Suite A, San Diego,
California 92131, on April 12, 1999 at 3:00 p.m., local time, and hereby
appoints ROBERT J. PETCAVICH and THOMAS M. CONNELLY, and each of them, as
attorneys and proxies of the undersigned, each with full power of substitution,
to vote all of the shares of stock of PLANET POLYMER TECHNOLOGIES, INC. which
the undersigned may be entitled to vote at such meeting, 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 PROPOSAL
1, FOR ALL NOMINEES LISTED IN PROPOSAL 2 AND FOR PROPOSAL 3, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 1
PROPOSAL 1:To approve an amendment to the Company's Bylaws to provide that the
authorized number of directors shall not be less than five (5) nor
more than nine (9) with the exact number of directors to be initially
set at six (6).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on other side)
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<PAGE> 41
(Continued from other side)
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW
PROPOSAL 2:To elect directors to hold office until next Annual Meeting of
Shareholders and until their successors are elected.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as marked to the [ ] WITHHOLD AUTHORITY to vote all nominees listed below.
contrary below).
</TABLE>
NOMINEES:Robert J. Petcavich, Ph.D., Michael M. Coleman, Ph.D., Thomas M.
Connelly, H.M. Busby, Dennis J. LaHood, Thomas A. Landshof.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
- --------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 3
PROPOSAL 3:To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY HAS BEEN SOLICITED BY OR FOR THE BENEFIT OF THE BOARD OF DIRECTORS OF
THE COMPANY. I UNDERSTAND THAT I MAY REVOKE THIS PROXY ONLY BY WRITTEN
INSTRUCTIONS TO THAT EFFECT, SIGNED AND DATED BY ME, WHICH MUST BE ACTUALLY
RECEIVED BY THE COMPANY PRIOR TO THE COMMENCEMENT OF THE ANNUAL MEETING.
DATED:________________________________ , 1999
_____________________________________________
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.
B-2
