<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e) (2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MONTEREY PASTA COMPANY
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(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / 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):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
MONTEREY PASTA COMPANY
June 28, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Monterey Pasta Company (the "Company") on Thursday, August 1, 1996,
commencing at 9:00 a.m. local time, at the Holiday Inn Financial District,
Coit Room, 750 Kearny Street, San Francisco, California.
At the meeting, you will be asked to approve the reincorporation of the
Company in Delaware, to increase the number of authorized shares of the
Company's common stock, and to increase the number of shares reserved for
issuance under the Company's First Amended and Restated 1993 Stock Option Plan
(the "Option Plan").
The Board of Directors has recommended the reincorporation of the
Company in Delaware (it is now incorporated in California) to enable the
Company to take advantage of the greater flexibility of Delaware corporate
law, the substantial body of judicial case law interpreting that law, and the
increased ability of the Company to attract and retain qualified directors.
As part of the reincorporation proposal, it is recommended that the number of
shares of common stock authorized for issuance be increased from 20,000,000
to 70,000,000 shares so that sufficient shares are available in the event
that the Board of Directors determines that it is necessary to implement the
Company's shareholder rights plan, to effect stock dividends, to raise
additional capital through the sale of securities, to grant options to the
Company's employees, or to utilize stock in the acquisition of other
companies, businesses or assets. You are also being asked to approve this
increase in the number of authorized shares for the current (California)
company, in the event that, for any reason, the reincorporation in Delaware
is not pursued. There are no commitments or agreements for the utilization
of the increased number of shares other than the reservation of 1,740,000 of
those shares for issuance under the Company's Option Plan upon the approval
of the amendment described below.
Finally, we are recommending that the Option Plan be amended to increase
the number of shares reserved for issuance under the Plan to 1,740,000 shares,
an increase of 540,000 shares. Increasing the number of shares available
under this option plan will enable the Company to continue its policy of
encouraging employee equity ownership and enhances the long-term retention of
key management. We have set challenging goals for the Company over the coming
years, and we believe that the availability of incentive stock options will help
achieve those goals.
We hope you will be able to join us for this important meeting. If you are
unable to attend, we strongly urge you to complete and return your enclosed
proxy. Your vote is very important.
Sincerely,
NORMAN E. DEAN
President and Chief Executive Officer
<PAGE>
MONTEREY PASTA COMPANY
353 SACRAMENTO STREET, SUITE 500
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 1, 1996
To the Shareholders of Monterey Pasta Company:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of MONTEREY
PASTA COMPANY (the "Company"), a California corporation, will be held on
Thursday, August 1, 1996, at 9:00 a.m. local time, at the Holiday Inn, Financial
District, Coit Room, 750 Kearny Street, San Francisco, California 94108, for the
following purposes:
1. To authorize the Company to change the Company's state of
incorporation from California to Delaware.
2. To approve an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock from
20,000,000 to 70,000,000, an increase of 50,000,000 shares.
3. To approve an amendment to the Company's First Amended and Restated
1993 Stock Option Plan to increase the number of shares of the Company's Common
Stock reserved for issuance thereunder from 1,200,000 to 1,740,000, an increase
of 540,000 shares.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. NO OTHER BUSINESS WILL BE CONDUCTED AT THE
MEETING.
Only shareholders of record at the close of business on June 11, 1996 are
entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed Proxy as promptly as possible in the return envelope
enclosed for that purpose. Any shareholder attending the meeting may vote in
person even if he or she has returned a Proxy.
By Order of the Board of Directors
Carolyn Mar, Secretary
San Francisco, California
June 28, 1996
<PAGE>
MONTEREY PASTA COMPANY
353 SACRAMENTO STREET, SUITE 500
SAN FRANCISCO, CALIFORNIA 94111
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of MONTEREY PASTA COMPANY (the
"Company") for use at the Special Meeting of Shareholders to be held on
Thursday, August 1, 1996, at 9:00 a.m., local time, or at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting of Shareholders. The Special Meeting will be held at the
Holiday Inn, Financial District, Coit Room, 750 Kearny Street, San Francisco,
California.
These proxy solicitation materials will be mailed on or about June 28,
1996, to all shareholders entitled to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shareholders of record at the close of business on June 11, 1996 are
entitled to notice of and to vote at the meeting. At the record date,
8,708,588 shares of the Company's Common Stock were issued and outstanding.
As of June 11, 1996, the following persons were known by management to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock:
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
Gruber and McBaine Capital 593,300 6.81281%
Management(1)
50 Osgood Place
San Francisco, CA 94133
Wellington Management Company(2) 585,100 6.71865%
75 State Street
Boston, MA 02109
Lance H. Mortensen 980,349(3) 11.25726%
170-F Alamo Plaza, #504
Alamo, CA 94507
1.
<PAGE>
(1) According to a Schedule 13D filed with the Securities and Exchange
Commission on August 24, 1995, Jon D. Gruber and J. Patterson McBaine are
the only directors of, and hold all executive offices of, Gruber & McBaine
Capital Management ("GMCM"), an investment advisor. Pursuant to a
memorandum dated April 4, 1996 from GMCM to the Company, GMCM reported that
GMCM, together with Messrs. Gruber, McBaine and Thomas O. Lloyd-Butler, are
the general partners of Lagunitas Partners, L.P., a California limited
partnership ("Lagunitas"), which is an investment limited partnership.
Messrs. Gruber and McBaine and GMCM are also the general partners of GMJ
Investments, L.P., a California limited partnership ("GMJ"). As of April 3,
1996, GMCM has shared voting and investment power over 456,200 shares; Mr.
Gruber has sole voting and investment power over 78,000 shares and shared
voting and investment power over 456,200 shares; Mr. McBaine has sole
voting and investment power over 59,100 shares and shared voting and
investment power over 456,200 shares; Lagunitas has sole voting and
investment power over 246,100 shares; and GMJ has sole voting and
investment power over 6,500 shares.
(2) According to Amendment No. 1 to a Schedule 13G filed with the Securities
and Exchange Commission on February 13, 1996, Wellington Management
Company, in its capacity as an investment adviser, may be deemed to be the
beneficial owner of all 585,100 shares of Common Stock that are owned by
its investment advisory clients. Wellington Management Company has shared
voting power over 295,100 of those shares and shared investment power over
all 585,100 shares.
(3) Includes presently exercisable options for 105,800 shares. Mr. Mortensen
is a director and former Chief Executive Officer and President of the
Company.
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of June 11, 1996, by (i) each current director,
(ii) each executive officer of the Company included in the Summary Compensation
Table under "EXECUTIVE COMPENSATION" below; and (iii) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL AMOUNT AND NATURE OF
OWNER RELATIONSHIP WITH COMPANY BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
----- ------------------------- ------------------------ ----------------
<S> <C> <C> <C>
Lance H. Mortensen Director 980,349 (2) 11.25726%
Charles B. Bonner Director 73,077 (3) *
Norman E. Dean Director; President and Chief 40,000 (4) *
Executive Officer
Daniel J. Gallery Director; Consultant 35,500 (5) *
Christopher Gillam Director 10,000 *
Floyd R. Hill Director 282,527 3.24423%
E. Michael Moone Director 25,000 (6) *
Timothy J. Ryan Director 49,000 (7) *
Robert J. Otto Executive Vice President 2,000 (8) *
2.
<PAGE>
Anthony W. Giannini Senior Vice President 51,500 (9) *
of Sales
David J. Massara Former Chief Financial Officer 14,333 (10) *
All directors and officers as a 1,563,286 17.9511%
group (11)
</TABLE>
- -----
Less than 1%
(1) This table is based upon information supplied by directors and executive
officers. Unless otherwise indicated in the footnotes to this table and
subject to community property laws where applicable, each of the
shareholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned.
(2) Includes presently exercisable options for 105,800 shares.
(3) Includes presently exercisable options for 10,000 shares. Mr. Bonner
shares voting and investment power with his wife, over 43,727 shares, and
20,000 options granted under the 1993 Stock Option Plan, which are held at
community property. Of the 73,077 shares, Mr. Bonner has sole voting and
investment power over 5,000 shares, and holds, as trustee, for his three
children 1,450 shares each in three separate trusts. Mr. Bonner disclaims
beneficial ownership of these shares.
(4) Of the 40,000 shares, Mr. Dean holds 10,000 shares as trustee of The 1990
Dean Family Revocable Trust UA 5-1-90. Includes presently exercisable
options for 20,000 shares.
(5) Includes presently exercisable options for 22,500 shares, and 13,000 shares
over which Mr. Gallery shares voting and investment power with his wife.
(6) Of the 25,000 shares, Mr. Moone holds 10,000 shares as trustee of the Moone
Family Trust Established 1986. Includes presently exercisable options for
5,000 shares.
(7) Includes presently exercisable options for 49,000 shares.
(8) Mr. Otto holds 2,000 shares as trustee of the Robert J. Otto and Lynn Ann
Otto 1985 Trust dated 12-23-85.
(9) Includes presently exercisable options for 50,000 shares.
(10) Includes presently exercisable options for 13,333 shares. Mr. Massara
resigned as Chief Financial Officer of the Company in May 1996; it is
anticipated that a new Chief Financial Officer will be designated on or
about July 1, 1996.
3.
<PAGE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at its principal offices a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
VOTING AND SOLICITATION
On all matters to be voted on at the special meeting, each share has one
vote.
The cost of soliciting proxies will be borne by the Company. The
Company has retained the services of Corporate Investor Communications, Inc.,
a proxy solicitation firm, to aid in the solicitation of proxies from
brokers, bank nominees and other institutional owners, on terms customary for
such services at a cost of $4,000. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners for their
expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and employees, without additional compensation, personally or by telephone or
other means of communication.
PROPOSAL NO. 1 -- REINCORPORATION IN DELAWARE
INTRODUCTION
The Board of Directors believes that the best interests of the Company and
its shareholders will be served by changing the state of incorporation of the
Company from California to Delaware (the "Reincorporation Proposal" or the
"Proposed Reincorporation"). As discussed below, the principal reasons for
reincorporation are the greater flexibility of Delaware corporate law, the
substantial body of case law interpreting that law and the increased ability of
the Company to attract and retain qualified directors. Shareholders are urged
to read the following sections of this Proxy Statement carefully, including the
related exhibits, before voting on the Reincorporation Proposal. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSED
REINCORPORATION.
The Reincorporation Proposal will be effected by merging the Company into a
wholly-owned subsidiary of the Company, which was incorporated for this purpose.
Throughout the Proxy Statement, the term "MPC California" refers to the existing
California corporation, and the term "MPC Delaware" refers to the new Delaware
corporation, which is the proposed successor to MPC California. Upon completion
of the merger, MPC California will cease to exist, and MPC Delaware will
continue to operate the business of the Company under the name Monterey Pasta
Company.
Pursuant to the Agreement and Plan of Merger, which will be substantially
in the form attached hereto as Exhibit A (the "Merger Agreement"), each
outstanding share of MPC California Common Stock will automatically be converted
into one share of MPC Delaware Common Stock, $0.001 par value, upon the
effective date of the merger. Each stock certificate representing issued and
outstanding shares of MPC California Common Stock will continue to represent the
same number of shares of Common Stock of MPC Delaware. IT WILL NOT BE NECESSARY
FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF MPC DELAWARE. However, shareholders may exchange their
certificates if they so choose. The Common Stock of MPC California is listed
for trading on the NASDAQ National Market System, and after the merger MPC
Delaware's Common Stock will continue to be traded on the NASDAQ National Market
System without interruption under the
4.
<PAGE>
same symbol ("PSTA") as the shares of MPC California Common Stock were traded on
such system prior to the merger.
Under California law, the affirmative vote of a majority of the outstanding
shares of Common Stock of MPC California is required for approval of the Merger
Agreement and the other terms of the Proposed Reincorporation. See "Vote
Required for the Reincorporation Proposal." The Proposed Reincorporation has
been approved by MPC California's Board of Directors, which unanimously
recommends a vote in favor of the proposal. If approved by the shareholders, it
is anticipated that the merger will become effective as soon as practicable
following the Special Meeting of Shareholders (the "Effective Date"). However,
pursuant to the Merger Agreement, the merger may be abandoned or the Merger
Agreement may be amended by the Board of Directors (except that the principal
terms may not be amended without shareholder approval) either before or after
shareholder approval has been obtained and prior to the Effective Date of the
Proposed Reincorporation if, in the opinion of the Board of Directors of either
company circumstances arise which make either action advisable.
Shareholders of MPC California will have no dissenters' rights of appraisal
with respect to the Reincorporation Proposal. See "Significant Differences
Between the Corporation Laws of California and Delaware--Appraisal Rights".
The discussion set forth below is qualified in its entirety by reference to
the Merger Agreement, the Certificate of Incorporation of MPC Delaware (the
"Certificate of Incorporation") and the Bylaws of MPC Delaware, which will be
substantially in the forms attached hereto as Exhibits B and C, respectively.
APPROVAL BY SHAREHOLDERS OF THE PROPOSED REINCORPORATION WILL CONSTITUTE
APPROVAL OF THE MERGER AGREEMENT, THE CERTIFICATE OF INCORPORATION AND THE
BYLAWS OF MPC DELAWARE, WHICH WILL BE SUBSTANTIALLY IN THE FORMS SET FORTH AS
EXHIBITS A, B AND C TO THIS PROXY STATEMENT.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
FLEXIBILITY OF DELAWARE LAW. For many years Delaware has followed a policy
of encouraging incorporation in that state and, in furtherance of that policy,
has been a leader in adopting, construing and implementing comprehensive,
flexible corporate laws responsive to the legal and business needs of
corporations organized under its laws. Many corporations have initially chosen
Delaware for their state of incorporation or have subsequently changed their
corporate domicile to Delaware in a manner similar to that proposed by the
Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues, and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
ATTRACTION AND RETENTION OF QUALIFIED DIRECTORS. Both California and
Delaware law permit a corporation to include a provision in its certificate
of incorporation which reduces, limits or eliminates the monetary liability
of directors for breaches of fiduciary duty in certain circumstances. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and
money required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce such risks to its
directors and officers and to limit situations in which monetary damages can
be recovered against directors so that the Company may continue to attract
and retain qualified directors who might otherwise be unwilling to serve
because of the increased risks involved.
5.
<PAGE>
In accordance with current California law, MPC California's Articles of
Incorporation include a provision which limits director liability in certain
circumstances. In general, however, the ability to limit liability may be
somewhat broader under Delaware law, and Delaware case law is also more
developed to provide guidance in this regard. It should be noted, however,
that neither California nor Delaware law permits a corporation to limit or
eliminate the liability of its directors for intentional misconduct, bad
faith conduct or any transaction from which the director derives an improper
personal benefit. In addition, liability for violations of federal laws such
as the federal securities laws may not be subject to any such limitations.
See "Significant Differences Between the Corporation Laws of California and
Delaware--Indemnification and Limitation of Liability".
In addition, Delaware law permits a corporation to adopt a number of
measures through amendment of the corporate charter or bylaws or otherwise,
designed to reduce a corporation's vulnerability to unsolicited takeover
attempts. The Board of Directors has no present intention following the
Proposed Reincorporation to amend the Certificate of Incorporation or Bylaws
to include provisions which might deter an unsolicited takeover attempt.
However, in the discharge of its fiduciary obligations to its shareholders,
the Board of Directors of the Company has evaluated the Company's
vulnerability to potential unsolicited bids to acquire the Company on
unfavorable terms. As a result, the Board of Directors has adopted a
shareholders rights plan as of May 7, 1996. A summary of such rights plan was
mailed to shareholders on May 31, 1996.
POSSIBLE DISADVANTAGES
Despite the unanimous belief of the Board of Directors that the
Reincorporation Proposal is in the best interests of MPC California and its
shareholders, it should be noted that Delaware law has been criticized by some
commentators on the grounds that it does not afford minority shareholders the
same substantive rights and protections as are available in a number of other
states. For a comparison of shareholders' rights and the powers of management
under Delaware and California law, see "Significant Differences Between the
Corporation Laws of California and Delaware". The Reincorporation Proposal,
however, does not include certain changes to the Company's Articles of
Incorporation and Bylaws permitted by Delaware law which may reduce shareholder
participation in important corporate decisions. See "The Charters and Bylaws of
MPC California and MPC Delaware".
NO CHANGE IN THE NAME, BOARD MEMBERS, BUSINESS, MANAGEMENT, LOCATION OF
PRINCIPAL FACILITIES OR EMPLOYEE PLANS OF THE COMPANY
The Reincorporation Proposal will effect only a change in the legal
domicile of the Company and other changes of a legal nature, certain of which
are described in this Proxy Statement. The Proposed Reincorporation will NOT
result in any change in the name, business, management, fiscal year or
location of the principal facilities of the Company. The eight directors who
were elected at the Annual Meeting of Shareholders earlier this year will
become the directors of MPC Delaware. All employee benefit, stock option and
stock purchase plans of MPC California will be continued by MPC Delaware, and
each option or right issued pursuant to any such plan will automatically be
converted into an option or right to purchase the same number of shares of
MPC Delaware Common Stock, at the same price per share, upon the same terms,
and subject to the same conditions, as set forth in such plan. Shareholders
should note that approval of the Reincorporation Proposal will also
constitute approval of the assumption of these plans by MPC Delaware. MPC
California's other officer and employee benefit arrangements will also be
continued by MPC Delaware upon the terms, and subject to the conditions,
currently in effect. As noted above, after the merger, the shares of Common
Stock of MPC Delaware will continue to be traded, without interruption, on
the NASDAQ National Market System under the same symbol ("PSTA") as the
shares of Common Stock of MPC California were traded prior to the merger.
6.
<PAGE>
THE CHARTERS AND BYLAWS OF MPC CALIFORNIA AND MPC DELAWARE
The provisions of the MPC Delaware Certificate of Incorporation and Bylaws
are similar to those of the MPC California Articles of Incorporation and Bylaws
in most respects. Delaware law does permit the implementation of certain
provisions in a corporation's certificate of incorporation or bylaws which would
alter some of the rights of shareholders and the powers of management of a
California company. Although the Board of Directors of MPC California has no
current plan to implement these changes, certain changes could be implemented in
the future by amendment of the Certificate of Incorporation of MPC Delaware
following stockholder approval, and certain changes could be implemented by
amendment of the Bylaws of MPC Delaware without stockholder approval. For a
discussion of such changes, see "Significant Differences Between the Corporation
Laws of California and Delaware". This discussion of the Certificate of
Incorporation and Bylaws of MPC Delaware is qualified by reference to Exhibits B
and C hereto, respectively.
AUTHORIZED STOCK. The Articles of Incorporation of MPC California
authorize twenty million (20,000,000) shares of Common Stock and five million
(5,000,000) shares of undesignated Preferred Stock. At the Special Meeting,
the shareholders are being asked to approve (i) an increase in the number of
shares of Common Stock which the Company is authorized to issue from twenty
million (20,000,000) to seventy million (70,000,000) shares of Common Stock,
and (ii) a decrease in the number of undesignated shares of Preferred Stock
which the Company is authorized to issue from five million (5,000,000) shares
to one million (1,000,000) shares. See "Proposal 2-Amendment and Restatement
of Articles of Incorporation to Increase the Number of Authorized Shares of
Common Stock." Consistent with such proposal, the proposed Certificate of
Incorporation of MPC Delaware authorizes MPC Delaware to issue seventy
million (70,000,000) shares of Common Stock, $0.001 par value, as well as 1
million (1,000,000) shares of undesignated Preferred Stock, $0.001 par value.
NUMBER OF DIRECTORS. The Bylaws of MPC California authorize the
directors to fix the number of directors within a range from five to nine,
with the number of directors currently set at eight. The Bylaws of MPC
Delaware will also authorize the directors to fix the number of directors
within a range from five to nine, with the number of directors set at eight.
In contrast to the Bylaws of MPC California, however, the Bylaws of MPC
Delaware provide that the range of the number of directors may be changed by
the Board of Directors without further shareholder approval. See
"Significant Differences Between the Corporation Laws of California and
Delaware-Size of the Board of Directors".
MONETARY LIABILITY OF DIRECTORS. The Articles of Incorporation of MPC
California and the Certificate of Incorporation of MPC Delaware both provide for
the elimination of personal monetary liability of directors to the fullest
extent permissible under the laws of each corporation's respective state of
incorporation. The provision eliminating monetary liability of directors set
forth in the Certificate of Incorporation is potentially more expansive in that
it incorporates future amendments to Delaware law with respect to the
elimination of such liability.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The General Corporation Laws of California and Delaware differ in many
respects. While not all of such differences are summarized in this Proxy
Statement, a number of the principal differences which could materially affect
the rights of shareholders are discussed below.
SIZE OF THE BOARD OF DIRECTORS. Under California law, although changes in
the number of directors must in general be approved by a majority of the
outstanding shares, the Board of Directors may fix the exact number of directors
within a stated range set forth in the articles of incorporation or bylaws, if
that stated range has been approved by the shareholders. Delaware law permits
the Board of Directors alone to change the authorized number, or the range,
7.
<PAGE>
of directors by amendment to the bylaws, unless the directors are not
authorized to amend the bylaws or the number of directors is fixed in the
certificate of incorporation (in which case a change in the number of
directors may be made only by amendment to the certificate of incorporation
approved by the stockholders). The Certificate of Incorporation of MPC
Delaware provides that the number of directors shall be as specified in the
Bylaws and authorizes the Board of Directors to make, alter, amend or repeal
the Bylaws. The Board of Directors of MPC Delaware may therefore change the
authorized range, as well as the exact number, of directors. If the
Reincorporation Proposal is approved, the eight directors of MPC California
who were elected at the Annual Meeting of Shareholders will continue as
directors of MPC Delaware after the Proposed Reincorporation is consummated.
CUMULATIVE VOTING. Under California law, if any shareholder gives notice
of his or her intention to cumulate votes for the election of directors, any
other shareholder of the corporation is also entitled to cumulate his or her
votes at such election. Under Delaware law, cumulative voting in the election
of directors is not mandatory. THE CERTIFICATE OF INCORPORATION OF MPC DELAWARE
DOES NOT PROVIDE FOR CUMULATIVE VOTING, SO THAT UNLESS THE CERTIFICATE OF
INCORPORATION OF MPC DELAWARE IS AMENDED FOLLOWING THE PROPOSED REINCORPORATION
TO SPECIFY CUMULATIVE VOTING (WHICH MAY BE DONE ONLY WITH STOCKHOLDER APPROVAL),
STOCKHOLDERS OF MPC DELAWARE WILL HAVE NO CUMULATIVE VOTING RIGHTS. The
elimination of cumulative voting would limit the ability of minority
stockholders to obtain representation on the Board of Directors.
CLASSIFIED BOARD OF DIRECTORS. A classified board is one on which a
certain number of the directors, but not all, are elected on a rotating basis
each year. Under California law, directors must be elected annually, and,
therefore, a classified board is not permitted. Delaware law permits, but
does not require, a classified board of directors, with staggered terms under
which one-half or one-third of the directors are elected for terms of two or
three years, respectively. This method of electing directors makes changes
in the composition of the board of directors, and thus a change in control of
a corporation, a more difficult process. The MPC Delaware Certificate of
Incorporation and Bylaws do not provide for a classified board of directors.
The establishment of a classified board following the Proposed
Reincorporation would require the approval of the stockholders of MPC
Delaware.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS. Under California law, a
special meeting of shareholders may be called by the board of directors, the
chairman of the board, the president, the holders of shares entitled to cast
not less than ten percent of the votes at such meeting and such additional
persons as are authorized by the articles of incorporation or the bylaws.
Under Delaware law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the
certificate of incorporation or the bylaws. The Bylaws of MPC Delaware
provide that special meetings of stockholders may be called only by the board
of directors or the chairman of the board pursuant to a resolution adopted by
a majority of the total number of directors.
ACTION BY WRITTEN CONSENT. Both the Delware and California law permit
stockholders, unless specifically prohibited by the certificate or articles
of incorporation, to take action without a meeting by the written consent of
the holders of at least the number of shares necessary to authorize or take
such action at a meeting at which all shares entitled to vote therein were
present and voted. Action by written consent may, in some circumstances,
permit the taking of stockholder action opposed by the Board of Directors
more rapidly than would be possible if a meeting of stockholders were
required. The Bylaws of MPC California currently provide for such stockholder
action by written consent. However, in connection with its evaluation of the
Proposed Reincorporation, the Board of Directors has determined that it is
important that it be able to give advance notice of and consideration to any
such stockholder action, and that stockholders be able to discuss at a
meeting matters which may affect their rights. Accordingly, the Certificate
of Incorporation of MPC Delaware includes a prohibition on stockholder action
by written consent without a meeting.
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS. In the last several
years, a number of states (but not California) have adopted special laws
designed to make certain kinds of "unfriendly" corporate takeovers, or other
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transactions involving a corporation and one or more of its significant
shareholders, more difficult. Under Section 203 of the Delaware General
Corporation Law ("Section 203"), certain "business combinations" with
"interested stockholders" of Delaware corporations are subject to a three-year
moratorium unless specified conditions are met.
Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for three years following the time
that such person becomes an interested stockholder. With certain exceptions, an
interested stockholder is a person or group who or which owns 15% or more of the
corporation's outstanding voting stock (including any rights to acquire stock
pursuant to an option, warrant, agreement, arrangement or understanding, or upon
the exercise of conversion or exchange rights, and stock with respect to which
the person has voting rights only), or is an affiliated associate of the
corporation and was the owner of 15% or more of such voting stock at any time
within the previous three years.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder; sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation or a
subsidiary equal to ten percent or more of the aggregate market value of the
corporation's consolidated assets or its outstanding stock; the issuance or
transfer by the corporation or a subsidiary of stock of the corporation or such
subsidiary to the interested stockholder (except for transfers in a conversion
or exchange or a pro rata distribution or certain other transactions, none of
which increase the interested stockholder's proportionate ownership of any class
or series of the corporation's or such subsidiary's stock); or any receipt by
the interested stockholder (except proportionately as a stockholder), directly
or indirectly, of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section
203 does not apply if (i) prior to the date on which such stockholder becomes
an interested stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested stockholder; (ii) the interested stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction which made
him or her an interested stockholder (excluding from the 85% calculation
shares owned by directors who are also officers of the target corporation and
shares held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or (iii) on or
after the time when such person becomes an interested stockholder, the board
approves the business combination and it is also approved at a stockholder
meeting by sixty-six and two-thirds percent (66-2/3%) of the voting stock not
owned by the interested stockholder.
Section 203 applies only to Delaware corporations which have a class of
voting stock that is listed on a national securities exchange, are quoted on
an interdealer quotation system such as NASDAQ (as is MPC California, and as
MPC Delaware would be) or are held of record by more than 2,000 stockholders.
However, a Delaware corporation may elect not to be governed by Section 203
by a provision in its original certificate of incorporation or an amendment
thereto or to the bylaws, which amendment must be approved by a majority of
the shares entitled to vote and, in the case of a bylaw amendment, may not be
further amended by the board of directors. MPC Delaware does not intend to
elect not to be governed by Section 203, therefore, Section 203 will apply to
MPC Delaware.
The Company believes that Section 203 will have the effect of
encouraging any potential acquiror to negotiate with the Company's Board of
Directors. Section 203 should also discourage certain potential acquirors
unwilling to comply with its provisions. Article IX of the Certificate of
Incorporation of MPC Delaware also limits the ability of a potential acquiror
to acquire the Company. See Exhibit C hereto.
REMOVAL OF DIRECTORS. Under California law, any director or the entire
board of directors may be removed, with or without cause, with the approval of a
majority of the outstanding shares entitled to vote; however, no individual
director may be removed (unless the entire board is removed) if the number of
votes cast against such removal would
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be sufficient to elect the director under cumulative voting. Under Delaware
law, a director of a corporation that does not have a classified board of
directors or cumulative voting may be removed with or without cause with the
approval of a majority of the outstanding shares entitled to vote. The
Certificate of Incorporation of MPC Delaware provides that any director may
be removed from office at any time with or without cause but only on the
affirmative vote of the holders of at least 66 2/3 percent of the voting
power of the then outstanding voting stock.
FILLING VACANCIES ON THE BOARD OF DIRECTORS. Under California law, any
vacancy on the board of directors, other than one created by removal of a
director, may be filled by the board. If the number of directors is less than
a quorum, a vacancy may be filled by the unanimous written consent of the
remaining directors in office, or the affirmative vote of a majority of the
remaining directors at a meeting. A vacancy created by removal of a director
may be filled by the board only if so authorized by a corporation's articles of
incorporation or by a bylaw approved by the corporation's shareholders. MPC
California's Bylaws do not permit directors to fill vacancies created by
removal of a director. Under Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors then in office (even
though less than a quorum) unless otherwise provided in the certificate of
incorporation or bylaws. The Bylaws of MPC Delaware provide, that any vacancy
resulting from the death, resignation, retirement, disqualification, removal
from office, or other cause and newly created directorships, may only be filled
by the affirmative vote of a majority of the remaining directors. Following
the Proposed Reincorporation, the Board of Directors of MPC Delaware could
(although it has no current intention to do so) amend the Bylaws to provide
that directors may fill any vacancy created by the removal of a director by the
stockholders.
LOANS TO OFFICERS AND EMPLOYEES. Pursuant to California law and the Bylaws
of MPC California, the Board of Directors of the Company is currently authorized
to approve loans or guaranties to or on behalf of officers (whether or not such
officers are directors) if the board determines that such loans or guaranties
may reasonably be expected to benefit the corporation. Under Delaware law, a
corporation, its officers or other employees may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees of those of
its subsidiaries (including directors who are also officers or employees) when
such action, in the judgment of the directors, may reasonably, be expected to
benefit the corporation.
INDEMNIFICATION AND LIMITATION OF LIABILITY. California and Delaware have
similar laws respecting indemnification by a corporation of its officers,
directors, employees and other agents. The laws of both states also permit a
corporation to adopt a provision in its articles of incorporation or certificate
of incorporation eliminating the liability of a director to the corporation or
its shareholders for monetary damages for breach of the director's fiduciary
duty of care. There are nonetheless certain differences between the laws of the
two states respecting indemnification and limitation of liability.
The Articles of Incorporation of MPC California eliminate the liability of
directors to the corporation to the fullest extent permissible under California
law.
California law does not permit the elimination of monetary liability where
such liability is based on: (i) intentional misconduct or knowing and culpable
violation of law; (ii) acts or omissions that a director believes contrary to
the best interests of the corporation or its shareholders, or that involve the
absence of good faith on the part of the director; (iii) receipt of an improper
personal benefit; (iv) acts or omissions that show reckless disregard for the
director's duty to the corporation or its shareholders, where the director in
the ordinary course of performing a director's duties should be aware of a risk
of serious injury to the corporation or its shareholders; (v) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation and its shareholders; (vi)
interested transactions between the corporation and a director in which a
director has a material financial interest; or (vii) liability for improper
distributions, loans or guarantees.
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The Certificate of Incorporation of MPC Delaware also eliminates the
liability of directors to the fullest extent permissible under Delaware law, as
such law exists currently or as it may be amended in the future. Under Delaware
law, such a provision may not eliminate or limit director monetary liability for
(i) breaches of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (iii) the payment of unlawful dividends
or unlawful stock repurchases or redemptions; or (iv) transactions in which the
director received an improper personal benefit. Such a limitation of liability
provision also may not limit a director's liability for violation of, or
otherwise relieve MPC Delaware or its directors from the necessity of complying
with federal or state securities laws or affect the availability of nonmonetary
remedies such as injunctive relief or rescission.
California law permits indemnification of expenses incurred in derivative
or third-party actions, except that with respect to derivative actions (i) no
indemnification may be made without court approval when a person is adjudged
liable to the corporation in the performance of that person's duty to the
corporation and its shareholders, unless a court determines that person is
entitled to indemnity for expenses, and then such indemnification may be made
only to the extent that the court so determines, and (ii) no indemnification may
be made without court approval in respect of amounts paid or expenses incurred
in settling or otherwise disposing of a threatened or pending action or in
respect of amounts incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
Indemnification is permitted by California law only for acts taken in good
faith and believed to be in the best interests of the corporation and its
shareholders, as determined by a majority vote of a disinterested quorum of the
directors, independent legal counsel (if a quorum of independent directors is
not obtainable), a majority vote of a quorum of the shareholders (excluding
shares owned by the indemnified party), or the court handling the action.
California law requires indemnification when the individual has successfully
defended the action on the merits (as opposed to Delaware law which requires
indemnification relating to any successful defense, whether on the merits or
otherwise).
Delaware law generally permits indemnification of expenses (including
attorneys' fees) incurred in the defense or settlement of a derivative or
third-party action, provided there is a determination by a majority vote of the
disinterested directors even though less than a quorum, by independent legal
counsel or by stockholders that the person seeking indemnification acted in
good faith and in a manner reasonably believed to be in or (in contrast to
California law) not opposed to the best interests of the corporation. Without
court approval, however, no indemnification may be made in respect of any
derivative action in which such person is adjudged liable for negligence or
misconduct in the performance of his or her duty to the corporation. Delaware
law also requires indemnification of expenses when the individual being
indemnified has successfully defended the action on the merits or otherwise.
California corporations may include in their articles of incorporation a
provision which extends the scope of indemnification through agreements, bylaws
or other corporate action beyond that specifically authorized by statute. The
Articles of Incorporation of MPC California include such a provision.
A provision of Delaware law states that the indemnification provided by
statute shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise. As a
result, Delaware law permits the indemnification agreements such as those
entered into by MPC California with its officers and directors, and such
agreements will be assumed by MPC Delaware upon completion of the Proposed
Reincorporation.
The indemnification and limitations of liability provisions of California
law, and not Delaware law, will apply to actions of the directors and officers
of MPC California taken prior to the Proposed Reincorporation.
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INSPECTION OF SHAREHOLDERS' LIST. Both California and Delaware law allow
any shareholder to inspect a corporation's shareholders' list for a purpose
reasonably related to such person's interest as a shareholder. California law
provides, in addition, an absolute right to inspect and copy the corporation's
shareholders' list to persons holding an aggregate of 5% or more of a
corporation's voting shares, or shareholders holding an aggregate of 1% or more
of such shares who have filed a Schedule 14B with the Securities and Exchange
Commission relating to the election of directors. Delaware law does not provide
for any such absolute right of inspection, and no such right is granted under
the Certificate of Incorporation or Bylaws of MPC Delaware.
DIVIDENDS AND REPURCHASES OF SHARES. California law dispenses with the
concepts of par value of shares as well as statutory definitions of capital,
surplus and the like. The concepts of par value, capital and surplus are
retained under Delaware law.
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of its
shares) unless either the corporation's retained earnings immediately prior to
the proposed distribution equal or exceed the amount of the proposed
distribution or, immediately after giving effect to such distribution, the
corporation's assets (exclusive of goodwill, capitalized research and
development expenses and deferred charges) would be at least equal to 1-1/4
times its liabilities (not including deferred taxes, deferred income and other
deferred credits), and the corporation's current assets would be at least equal
to its current liabilities (or 1-1/4 times its current liabilities if the
average pre-tax and pre-interest expense earnings for the preceding two fiscal
years were less than the average interest expense for such years). Under
California law, there are exceptions to the foregoing rules for repurchases of
shares in connection with certain rescission actions or pursuant to certain
employee stock plans.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if such redemption or
repurchase would not impair the capital of the corporation.
To date, the Company has not paid cash dividends on its capital stock. It
is the current policy of the Board of Directors to retain earnings for use in
the Company's business, and therefore, the Company does not anticipate paying
cash dividends on its Common Stock in the foreseeable future.
SHAREHOLDER VOTING. Both California and Delaware law generally require
that the holders of a majority in voting power of the outstanding shares of
stock of both acquiring and target corporations entitled to vote approve
statutory mergers. Delaware law does not require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its certificate of incorporation) if (i) the merger agreement does not amend
the existing certificate of incorporation, (ii) each share of the surviving
corporation outstanding before the merger is an identical outstanding or
treasury share after the merger, and (iii) the number of shares to be issued by
the surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to the merger. California law contains a similar
exception to its voting requirements for reorganizations where shareholders or
the corporation itself, or both, immediately prior to the reorganization will
own immediately after the reorganization equity securities constituting more
than five-sixths of the voting power of the surviving or acquiring corporation
or its parent entity.
Both California and Delaware law also require that a sale of all of the
assets of a corporation be approved by a majority of the outstanding voting
shares of the corporation transferring such assets.
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With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved by
a majority vote of each class of shares outstanding. By contrast, Delaware law
generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation which adversely
affects a specific class of shares.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than 50% but less than 90% of such common stock or its affiliate
unless all of the holders of such common stock consent to the transaction. This
provision of California law may have the effect of making a "cash-out" merger by
a majority shareholder more difficult to accomplish. Delaware law has no
comparable provision.
California law also provides that except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally, a controlling or managing party of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation which does not
have shares held of record by at least 100 persons, or to a transaction which
has been qualified under California state securities laws. Furthermore, if a
tender of shares or vote is sought pursuant to an interested party's proposal
and a later proposal is made by another party at least ten days prior to the
date of acceptance of the interested party proposal, the shareholders must be
informed of the later offer and be afforded a reasonable opportunity to withdraw
any vote, consent or proxy, or to withdraw any tendered shares. Again, Delaware
law has no comparable provision.
INTERESTED DIRECTOR TRANSACTIONS. Under both California and Delaware law,
certain contracts or transactions in which one or more of a corporation's
directors has an interest are not void or voidable because of such interest
provided that certain conditions, such as obtaining the required approval and
fulfilling the requirements of good faith and full disclosure, are met. With
certain exceptions, the conditions are similar under California and Delaware
law. Under California and Delaware law, either the shareholders or the board
of directors must approve any such contract or transaction after full
disclosure of the material facts, and in the case of board approval the
contract or transaction must also be "just and reasonable" (in California) to
the corporation, or (ii) the contract or transaction must have been just and
reasonable or fair (in Delaware), as applicable, to the corporation at the time
it was approved. In the latter case, California law explicitly places the
burden of proof on the interested director. Under California law, if
shareholder approval is sought, the interested director is not entitled to vote
his shares at a shareholder meeting with respect to any action regarding such
contract or transaction. If board approval is sought, the contract or
transaction must be approved by a majority vote of a quorum of the directors,
without counting the vote of any interested directors (except that interested
directors may be counted for purposes of establishing a quorum). Under
Delaware law, if board approval is sought, the contract or transaction must be
approved by a majority of the disinterested directors (even though less than a
majority of a quorum). Therefore, certain transactions that the Board of
Directors of MPC California might not be able to approve because of the number
of interested directors, or the exclusion of interested director shares, could
be approved by a majority of the disinterested directors of MPC Delaware,
although less than a majority of a quorum, or by a majority of all voting
shares, which might not include a majority of the disinterested shares. The
Company is not aware of any plans to propose any transaction involving
directors of the Company which could not be so approved under California law
but could be so approved under Delaware law.
VOTING BY BALLOT. California law provides that the election of directors
may proceed in the manner described in a corporation's bylaws. MPC California's
Bylaws provide that the election of directors at a shareholders' meeting may be
by voice vote or ballot, unless prior to such vote a shareholder demands vote by
ballot, in which case such vote must be by ballot. Under Delaware law, the
right to vote by written ballot may be restricted if so provided in the
certificate of incorporation. The Certificate of Incorporation of MPC Delaware
provides that unless and except to the
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extent that bylaws shall so require, the election of directors need not be by
written ballot. The Bylaws of MPC Delaware provide that election shall be by
written ballot.
SHAREHOLDER DERIVATIVE SUITS. California law provides that a shareholder
bringing a derivative action on behalf of a corporation need not have been a
shareholder at the time of the transaction in question, provided that certain
tests are met. Under Delaware law, a stockholder may only bring a derivative
action on behalf of the corporation if the stockholder was a stockholder of the
corporation at the time of the transaction in question or his or her stock
thereafter devolved upon him or her by operation of law. California law also
provides that the corporation or the defendant in a derivative suit may make a
motion to the court for an order requiring the plaintiff shareholder to furnish
a security bond. Delaware does not have a similar bonding requirement.
APPRAISAL RIGHTS. Under both California and Delaware law, a shareholder
of a corporation participating in certain major corporate transactions may,
under varying circumstances, be entitled to appraisal rights pursuant to which
such shareholder may receive cash in the amount of the fair market value of his
or her shares in lieu of the consideration he or she would otherwise receive in
the transaction. Under Delaware law, unless the certificate of incorporation
otherwise provides, such appraisal rights are not available (i) with respect to
the sale, lease or exchange of all or substantially all of the assets of a
corporation, (ii) with respect to a merger or consolidation by a corporation
the shares of which are either listed on a national securities exchange or are
held of record by more than 2,000 holders if such stockholders receive only
shares of the surviving corporation or shares of any other corporation which
are either listed on a national securities exchange or held of record by more
than 2,000 holders, plus cash in lieu of fractional shares, or any combination
thereof, or (iii) to stockholders of a corporation surviving a merger if no
vote of the stockholders of the surviving corporation is required to approve
the merger because the merger agreement does not amend the existing certificate
of incorporation, each share of the surviving corporation outstanding prior to
the merger is an identical outstanding or treasury share after the merger, and
the number of shares to be issued in the merger does not exceed 20% of the
shares of the surviving corporation outstanding immediately prior to the merger
and if certain other conditions are met.
The limitations on the availability of appraisal rights under California
law are different from those under Delaware law. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System (as are the shares of MPC California) generally do not
have such appraisal rights unless the holders of at least 5% of the class of
outstanding shares claim the right or unless the corporation or any law
restricts the transfer of such shares. Appraisal rights are unavailable,
however, if the shareholders of a corporation or the corporation itself, or
both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than five-sixths of the
voting power of the surviving or acquiring corporation or its parent entity. In
general, California law affords appraisal rights in sale of assets
reorganizations.
AS A CONSEQUENCE OF THE FOREGOING, APPRAISAL OR DISSENTERS' RIGHTS ARE NOT
AVAILABLE TO SHAREHOLDERS OF MPC CALIFORNIA WITH RESPECT TO THE REINCORPORATION
PROPOSAL.
DISSOLUTION. Under California law, shareholders holding 50% or more of the
total voting power may authorize a corporation's dissolution, with or without
the approval of the corporation's board of directors, and this right may not be
modified by the articles of incorporation. Under Delaware law, unless the board
of directors approves the proposal to dissolve, the dissolution must be approved
by stockholders holding 100% of the total voting power of the corporation. Only
if the dissolution is initiated by the board of directors may it be approved by
a simple majority of the corporation's stockholders. In the event of such a
board-initiated dissolution, Delaware law allows a Delaware corporation to
include in its certificate of incorporation a supermajority voting requirement
in connection with dissolutions. MPC Delaware's Certificate of Incorporation
contains no such supermajority voting requirement,
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however, and a majority of shares voting at a meeting at which a quorum is
present would be sufficient to approve a dissolution of MPC Delaware which had
previously been approved by its Board of Directors.
APPLICATION OF THE GENERAL CORPORATION LAW OF CALIFORNIA TO DELAWARE
CORPORATIONS
Under Section 2115 of the California General Corporation Law, certain
foreign corporations (i.e. corporations not organized under California law) are
placed in a special category if they have characteristics of ownership and
operation which indicate that they have significant contacts with California.
So long as a Delaware or other foreign corporation is in this special category,
and it does not qualify for one of the statutory exemptions, it is subject to a
number of key provisions of the California General Corporation Law applicable to
corporations incorporated in California. Among the more important provisions
are those relating to the election and removal of directors, cumulative voting,
prohibition of classified boards of directors, standards of liability and
indemnification of directors, distributions, dividends and repurchases of
shares, shareholder meetings, approval of certain corporate transactions,
dissenters' and appraisal rights and inspection of corporate records. See
"Significant Differences Between the Corporation Laws of California and
Delaware" above.
Exemptions from Section 2115 are provided for corporations whose shares
are listed on a major national securities exchange or are traded in the NASDAQ
National Market System and which have 800 or more shareholders of record.
Following the Proposed Reincorporation, the Common Stock of MPC Delaware will
continue to be traded on the NASDAQ National Market System, and held
beneficially by more than 800 stockholders as of the record date of its most
recent annual meeting and, accordingly, MPC Delaware will be exempt from
Section 2115.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax consequences to
holders of MPC California Common Stock who receive MPC Delaware Common Stock in
exchange for their MPC California Common Stock as a result of the Proposed
Reincorporation. The discussion does not address all the tax consequences of
the Proposed Reincorporation that may be relevant to particular MPC California
shareholders, such as dealers in securities, holders of stock options or those
MPC California shareholders who acquired their shares upon the exercise of stock
options. In view of the varying nature of such tax consequences, each
shareholder is urged to consult its own tax advisor as to the specific tax
consequences to it of the Proposed Reincorporation, including the applicability
of federal, state, local or foreign tax laws.
The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") with respect to the federal income tax consequences of the Proposed
Reincorporation under the Internal Revenue Code of 1986, as amended (the
"Code"). The Company will, however, receive an opinion from its legal counsel,
Graham & James, substantially, to the effect that: (i) the Proposed
Reincorporation will constitute a tax-free reorganization under Section 368(a)
of the Code; (ii) no gain or loss will be recognized by holders of Common Stock
of MPC California upon receipt of Common Stock of MPC Delaware pursuant to the
Proposed Reincorporation; (iii) the aggregate tax basis of the Common Stock of
MPC Delaware received by each shareholder will be the same as the aggregate tax
basis of the Common Stock of MPC California held by such shareholder at the
time of the Proposed Reincorporation; and (iv) the holding period of the Common
Stock of MPC Delaware received by each shareholder of MPC California will
include the period for which such shareholder held the Common Stock of MPC
California surrendered in exchange therefor, provided that such MPC California
stock was held by such shareholder as a capital asset at the time of the
Proposed Reincorporation. Counsel's opinion will be subject to certain
assumptions and qualifications and will be based upon certain representations
made by the management of MPC California. Counsel's opinion is not binding
upon the IRS nor does it preclude the IRS from taking a contrary position.
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A successful IRS challenge to the tax-free status of the Proposed
Reincorporation would result in a shareholder recognizing gain or loss with
respect to each share of MPC California Common Stock surrendered equal to the
difference between that shareholder's basis in such share and the fair market
value, as of the time of the Proposed Reincorporation, of the MPC Delaware
Common Stock received in exchange therefor. In such event, a shareholder's
aggregate basis in the shares of MPC Delaware Common Stock received in the
exchange would equal such fair market value, and his or her holding period for
such shares would not include the period during which he or she held MPC
California Common Stock.
State, local or foreign income tax consequences to shareholders may vary
from the federal tax consequences described above. SHAREHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE EFFECT OF THE REINCORPORATION PROPOSAL UNDER
APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
The Company should not recognize gain or loss for federal income tax
purposes as a result of the Proposed Reincorporation, and MPC Delaware will
succeed without adjustment to the federal income tax attributes of MPC
California.
VOTE REQUIRED FOR THE REINCORPORATION PROPOSAL
Approval of the Reincorporation Proposal, which includes approval of the
Merger Agreement, MPC Delaware's Certificate of Incorporation and Bylaws, and
approval of the assumption of MPC California's stock option plan and stock
purchase plan by MPC Delaware, requires the affirmative vote of a majority of
the shares of MPC California Common Stock outstanding on the Record Date.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED REINCORPORATION IN DELAWARE.
THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST THE
REINCORPORATION PROPOSAL.
PROPOSAL NO. 2 -- AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The capital structure of MPC Delaware includes an authorization of
70,000,000 shares of Common Stock, a level which the Board of Directors believes
should be adequate for the present and for the reasonably foreseeable future.
In the event that, for any reason, the Company's reincorporation in Delaware is
not implemented, the Board believes that it is desirable for MPC California to
have a capital structure which is similar to the one proposed for MPC Delaware.
Therefore, the Board of Directors has unanimously approved the Amendment and
Restatement of MPC California's Articles of Incorporation to amend Article THREE
of the Company's Restated Articles of Incorporation to increase the number of
shares of presently authorized Common Stock from 20,000,000 to 70,000,000, and
recommends such amendment to the Company's shareholders for adoption. At
June 11, 1996, 8,708,588 shares of Common Stock were outstanding.
The principal purpose of this proposed amendment is to make additional
shares of Common Stock available in the event the Board of Directors
determines that it is necessary to implement the Company's shareholder rights
plan, to raise additional capital through the sale of securities, to grant
options to the Company's employees or to utilize stock in the acquisition of
other companies, businesses or assets. Management of the Company has no
agreements or commitments at the present time for the issuance or use of
shares of Common Stock, except for the reservation of
16.
<PAGE>
1,740,000 shares under the Company's First Amended and Restated 1993 Stock
Option Plan (the "Option Plan") and potential implementation of the Company's
shareholder rights plan.
The proposed increase in the authorized number of shares of Common Stock
could have a number of effects on the Company's shareholders, depending upon the
exact nature and circumstances of any actual issuances of such additional
authorized but unissued shares. The increase could have an antitakeover effect,
in that additional shares could be issued (within the limits imposed by
applicable law) in one or more transactions which could make a change in control
or takeover of the Company more difficult. For example, additional shares could
be issued by the Company so as to dilute the stock ownership or voting rights of
persons seeking to obtain control of the Company. Similarly, the issuance of
additional shares to certain persons allied with the Company's management could
have the effect of making it more difficult to remove the Company's current
management by diluting the stock ownership or voting rights of persons seeking
to cause such removal.
In addition, an issuance of additional shares by the Company could have an
effect on the potential realizable value of a shareholder's investment. In the
absence of a proportionate increase in the Company's earnings and book value, an
increase in the aggregate number of outstanding shares of the Company caused by
the issuance of the additional shares could dilute the earnings per share and
book value per share of all outstanding shares of the Company's stock. If such
factors were reflected in the price per share of Common Stock, the potential
realizable value of a shareholder's investment could be affected.
The amendment and restatement of the Articles of Incorporation requires the
affirmative vote of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE ARTICLES OF INCORPORATION.
PROPOSAL NO. 3 -- AMENDMENT OF FIRST AMENDED AND RESTATED 1993 STOCK OPTION PLAN
A total of 315,000 shares of Common Stock originally was reserved for
issuance under the Option Plan which was originally adopted on August 31, 1993
by the Company. By subsequent amendments adopted by the Board of Directors and
the shareholders, the number of shares originally reserved for issuance under
the Option Plan was increased from 315,000 to 915,000 on January 12, 1994,
to 1,200,000 shares on October 19, 1994, and approved by the shareholders. In
May 1996, the Board of Directors approved, and the shareholders are being asked
to ratify, an amendment reserving an additional 540,000 shares for the Option
Plan, bringing the total shares reserved under the Option Plan to 1,740,000
shares of Common Stock. Options granted under the Option Plan may be either
"incentive stock options", as defined in Section 422A of the Internal Revenue
Code of 1986 (the "Code"), or nonstatutory stock options. The tax treatment of
incentive stock options and nonstatutory options is described below under "Tax
Information". THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK PRESENT AND ENTITLED TO VOTE
AT THE MEETING IS REQUIRED TO APPROVE THE AMENDMENT. As of June 11, 1996, the
aggregate market value of the Company's common stock subject to the Option Plan
was $7,500,000. The principal features of the Option Plan are as follows:
17.
<PAGE>
PURPOSE
The purposes of the Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to the employees and consultants of the Company and to
promote the growth and success of the Company's business. The Option Plan is
also meant to attract and retain, as its Board of Directors, knowledgeable
persons of broad business or professional experience who have no employment
relationship with the Company by providing automatic grants of nonstatutory
stock options to the Company's non-employee directors ("Outside Directors
Options").
ADMINISTRATION
The Option Plan is administered by the Board of Directors or a committee
of the Board of Directors called the Compensation Committee which meets the
requirements of Section 162(m)(4)(C)(i) of the Code. Options granted under the
Option Plan may be either incentive stock options or nonstatutory stock
options. The Board of Directors or the committee determines the criteria upon
which employee options are granted. The Board of Directors or a duly appointed
committee has the power to terminate or amend the Option Plan at any time,
subject to the terms of the Plan and any applicable limitations imposed by law.
The Option Plan is administered by the Board in compliance with the
"disinterested administration" requirement of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended. The Board has no authority, discretion or
power to select the outside directors of the Company who will receive Outside
Director Options under the Plan, nor to set the terms and conditions, or alter
the terms or conditions specified in the Plan with respect to Outside Directors
Options.
ELIGIBILITY
The Option Plan provides that options may be granted to employees,
including officers and directors who are also employees, and consultants of the
Company, directors or any of its subsidiaries. The Company had 200 employees
as of June 11, 1996, all of whom are eligible to participate in the Option
Plan. The Board of Directors or the Compensation Committee, as the case may
be, selects the optionees and determines the number of shares to be subject to
each option. No employee may be granted options to purchase in excess of 60,000
shares during any fiscal year; provided, however, that new hires may be granted
employee options for up to 90,000 shares during the first fiscal year of such
person's employment with the Company, subject to adjustment in the event of
stock dividends, stock splits, reverse stock splits and combinations,
reclassifications or like changes in the capital structure of the Company.
TYPES OF OPTIONS
The Option Plan consists of (i) employee stock options which provide for
the grant of both incentive stock options which meet the requirements of Section
422 of the Code and which may be granted only to employees, including officers
and directors who are also employees, and nonstatutory stock options that do not
meet such requirements and which may be granted to prospective employees,
consultants and independent contractors of the Company, and (ii) Outside
Directors Options, which are nonstatutory stock options that may be granted to
non-employee directors of the Company.
TERMS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company
and the employee, consultant or director to whom such option is granted in such
form as the Board or the Compensation Committee, as the case may be, shall from
time to time establish and is subject to the following additional terms and
conditions:
18.
<PAGE>
EXERCISE OF THE OPTION: The Board of Directors or the Compensation
Committee, as the case may be, determines when options granted under the Option
Plan may be exercised. An option is exercised by giving written notice of
exercise to the Company, specifying the number of whole shares of Common Stock
to be purchased and tendering payment to the Company of the purchase price.
Payment for shares issued upon exercise of an option may consist of cash,
promissory note, exchange of shares of the Company's Common Stock or such other
consideration as determined by the Board of Directors or the Compensation
Committee and as permitted by the California Corporations Code.
OPTION PRICE: The option price under the Option Plan is determined by the
Board of Directors or the Compensation Committee and may not be less than the
fair market value of the Company's Common Stock on the date the option is
granted. In the case of an option granted to a person who, at the time of grant
of such option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any parent or subsidiary
corporation, the option price may not be less than 110% of the fair market value
of the Company's Common Stock on the date the option is granted. The Board of
Directors of the Company or the Compensation Committee determines such fair
market value based upon the closing sales price of the Common Stock on the
NASDAQ National Market System on the date the option is granted.
TERMINATION OF EMPLOYMENT: The option agreements provide that if the
optionee's employment or consulting relationship with the Company is terminated
for any reason, other than death or disability or termination for cause, options
may be exercised within three months after the date on which the optionee ceased
to be an employee and may be exercised only to the extent the options were
exercisable on the date of termination.
DEATH: If an optionee should die while employed by or consulting for the
Company, options may be exercised at any time within 12 months after the date
the optionee's service with the Company terminated, but only to the extent that
the options would have been exercisable at the date of death, if an optionee
should die within three months after termination of employment or a consulting
relationship with the Company, the option may be exercised within 12 months
after death to the extent the option was exercisable on the date of such
termination.
DISABILITY: If an optionee is unable to continue his employment or
consulting relationship with the Company as a result of his total and permanent
disability, options may be exercised at any time within 12 months after the date
the optionee's service with the Company terminated, but only to the extent the
option was exercisable on the date of such termination.
TERMINATION OF OPTIONS: All options granted under the Option Plan expire
ten (10) years from the date of grant.
NONTRANSFERABILITY OF OPTIONS: An option is not transferable by the
optionee, other than by will or the laws of descent and distribution, and is
exercisable only by the optionee during his or her lifetime or, in the event of
death, by a person who acquires the right to exercise the option by bequest or
inheritance or by reason of the death of the optionee.
ACCELERATION OF OPTIONS: In the event of a merger or consolidation in
which the Company is not the surviving entity, all outstanding options under the
Option Plan shall become immediately exercisable as of the date 30 days prior to
the date of transfer of control, if such options would otherwise terminate upon
consummation of the transaction, unless the acquiring corporation either assumes
the options granted under the Option Plan or else substitutes its own options
for the Option Plan options. Any options which are neither assumed or
substituted for by the acquiring corporation nor exercised as of the date of the
transfer of control, will terminate effective as of the date of transfer of the
control.
19.
<PAGE>
OTHER PROVISIONS: The option agreement may contain such other terms,
provisions and conditions not inconsistent with the Option Plan as may be
determined by the Board of Directors or the Compensation Committee.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
As discussed above, the Option Plan provides that upon, among other things,
the dissolution, liquidation, reorganization, merger or consolidation of the
Company or the sale of all or substantially all of the assets of the Company, or
transfer of control (as such term is defined under Section 7.1 of the Option
Plan), all outstanding options under the Option Plan shall become immediately
exercisable as of the date 30 days prior to the date of transfer of control if
such options would otherwise terminate upon consummation of the transaction or
if the surviving or successor corporation as the case may be, does not assume
the Company's obligations under the Option Plan or substitute for such
outstanding options.
AMENDMENT AND TERMINATION
The Board of Directors, including any duly appointed committee of the
Board, may terminate or amend the Option Plan or the option granted under the
Plan at any time without approval of the Company's shareholders; provided,
however, that shareholder approval is required for any amendment which would
increase the total number of shares which may be issued under the Option Plan
(except by operation of the provisions of Section 4.2 of the Option Plan
relating to changes in the capital structure of the Company), change the class
of persons eligible to receive incentive stock options under the Option Plan, or
expand the class of persons eligible to receive nonstatutory stock options.
Further, the provisions of the plan addressing eligibility for Outside Directors
options, and the amount, price and timing of grants of those options shall not
be amended more than every six (6) months, other than to conform to changes in
the Code, or the rules thereunder. The Board will also seek shareholder
approval for any amendment to the Option Plan or an option which the Board deems
shareholder approval is necessary in order to comply with Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, relating to the pooling of shares
available under the Option Plan.
In any event, all options shall be granted, if at all, under the Option
Plan within ten years of August 31, 1993.
TAX INFORMATION
If an option granted under the Option Plan is an incentive stock option,
the optionee will recognize no income upon grant of the incentive stock option
and incur no tax liability due to the exercise unless the optionee is subject
to the alternative minimum tax. The Company will not be allowed a deduction
for federal income tax purposes as a result of the exercise of an incentive
stock option regardless of the applicability of the alternative minimum tax.
Upon the sale of the shares at least two years after grant of the option and
one year after receipt of the shares by the optionee after exercise, any gain
will be treated as long-term capital gain. If these holding periods are not
satisfied, the optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value of the stock
at the date of the option exercise or the sale price of the stock. The Company
will be entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Any gain recognized on such a premature sale of
the shares in excess of the amount treated as ordinary income will be
characterized as capital gain. Under current federal law, capital gain is
fully included in gross income and is taxed at a rate of 28%. Under current
law, capital losses are allowed in full against capital gains plus $3,000 of
other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon
its exercise, the optionee will recognize ordinary income for tax purposes
measured by the excess of the then fair market value of the shares over the
option price. The income recognized by the optionee will be subject to tax
20.
<PAGE>
withholding by the Company by payment in cash or out of the current earnings
paid to the optionee. Upon resale of such shares by the optionee, any
difference between the sales price and the exercise price, to the extent not
recognized as ordinary income as provided above, will be treated as capital
gain or loss. Under current federal law, capital gain is fully included in
gross income and is taxed at a rate of 28%. Under current federal law, capital
losses are allowed in full against capital gains plus $3,000 of other income.
The Company will be entitled to a tax deduction in the amount and at the time
that the optionee recognizes ordinary income with respect to shares acquired
upon exercise of a nonstatutory option.
The foregoing is only a summary of the effects of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options and purchase of shares under the Option Plan. Reference should be made
to the applicable provisions of the Code. In addition, this summary does not
discuss the income tax laws of any state or foreign country in which an
optionee may reside.
VOTE REQUIRED
APPROVAL OF THIS AMENDMENT TO THE OPTION PLAN REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE INCREASE IN THE NUMBER
OF SHARES RESERVED UNDER THE OPTION PLAN.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The executive officers and significant employees of the Company as of June
11, 1996, are listed below:
Name Age Since Position
- ---- --- ----- --------
Robert J. Otto 55 1996 Executive Vice President
William H. Bender 41 1993 Business Manager of Food Service Sales
Karen Borie 42 1996 Director of Special Sales
Anthony W. Giannini 36 1993 Senior Vice President of Sales
Carolyn Mar 42 1996 Vice President of Legal Affairs; Secretary
Donald L. Milan 47 1993 Business Manager of Canadian and
Military Sales
Marshall Stevens 55 1995 Senior Vice President of Manufacturing
The principal occupations of certain other officers and significant
employees of the Company, for the past five years, are as follows:
ROBERT J. OTTO, EXECUTIVE VICE PRESIDENT. Mr. Otto joined the Company as
its Executive Vice President in April 1996. Mr. Otto was the Executive Vice
President of Koala Springs, a beverage company, from July 1994 to October 1995,
and the Senior Vice President - Sales of Nestle Beverage Company from January
1976 to April 1994. Mr. Otto also served as a Director of Koala Springs
International/Koala Springs Group.
WILLIAM H. BENDER, BUSINESS MANAGER OF FOOD SALES. Mr. Bender joined the
Company as Vice President of Training in July 1993. From 1988 to 1993, Mr.
Bender was a food service consultant for a sole proprietorship operating under
the name Results in Management and specializing in operational control methods
to help food service operators maintain and increase profitability. From 1974
to 1987, Mr. Bender was employed by
21.
<PAGE>
Oceans 8 restaurants, as General Manager of its steak and seafood restaurant
located in San Diego, California and later as its Vice President of Operations
responsible for opening new restaurants and supervising multiple locations in
the San Diego market.
KAREN L. BORIE, DIRECTOR OF SPECIAL SALES. Ms. Borie joined the Company in
April 1996 as Director of Special Sales and is responsible for the management of
and sales to wholesale clubs and mass merchandisers, and assisting in the
expansion of the food service business. From 1991 to 1996, Ms. Borie was
President and owner of a national sales broker, KB Marketing and Associates,
where she was responsible for calls and sales to clubs, mass merchandisers, and
retail chain stores. In that capacity, she represented several national
companies including, Nestle Beverage, Koala Springs International, Inc., and
Vigo Importing Company. From 1981 to 1991, Ms. Borie was with Nestle/Hills
Bros. Coffee Company, starting as a sales representative, and for the last five
years of that period, served as National Sales Manager of Special Sales.
ANTHONY W. GIANNINI, SENIOR VICE PRESIDENT OF SALES. Mr. Genion joined the
Company in February 1993 as Vice President of Sales/Marketing and is responsible
for management of the sales of the Company. From 1991 until he joined the
Company, Mr. Genion was Director of Sales and Marketing for Carriage House Foods
which sells condiments and sauces. From 1987 to 1991, Mr. Genion was with
Nestle's Hills Bros. Coffee first as the National Sales Manager for Private
Label/Chase & Sanborn Division and then in 1989, he was promoted to General
Manager of Gourmet Coffees overseeing a subsidiary company, Sarks Supreme
Gourmet Coffee ("Sarks"). He was directly responsible for sales, marketing,
distribution and production at Sarks. Mr. Giannini expanded Sarks' markets
from Southern California to Northern California, Phoenix, Ohio and Florida,
utilizing company-employed route drivers and trucks. From 1982 to 1987, Mr.
Giannini was the Western Zone Sales Manager for Bonner Packing Company.
CAROLYN MAR, VICE PRESIDENT - LEGAL AFFAIRS; SECRETARY. Ms. Mar joined the
Company in January 1996. From August 1976 to September 1985, Ms. Mar served s
Corporate/Securities Specialist at the law firm of Pettit & Martin. From
October 1985 to December 1995, Ms. Mar served as a Senior Legal Assistant
specializing in major real estate and corporate transactions with the law firm
of Heller, Ehrman, White & McAuliffe. Ms. Mar is a member of San Francisco
Association of Legal Assistants and the American Society of Corporate
Secretaries.
DONALD L. MILAN, BUSINESS MANAGER OF CANADIAN AND MILITARY SALES. Mr.
Milan joined the Company as Vice President of Construction in January 1995 and
in May 1996 became Business Manager of Canadian and Military Sales. From April
1981 to December 1994, Mr. Milan served as President of D.L. Milan Co., Inc., a
construction company, which performed consulting services for Upscale Food
Outlets, Inc., formerly a wholly-owned restaurant subsidiary of the Company.
From June 1991 to March 1993, he served as Vice President of Morweg Development
Company, a privately-owned, California based residential construction company.
MARSHALL E. STEVENS, SENIOR VICE PRESIDENT OF MANUFACTURING. Mr. Stevens
joined the Company in October 1995 as Senior Vice President of Manufacturing.
From July 1964 to September 1995, Mr. Stevens served as Vice President of
Manufacturing with Del Monte Corporation, a food manufacturing company, where he
assumed overall responsibility for operations of that company's fourteen
manufacturing facilities located in the United States.
No director or executive officer of the Company has any family relationship
with any other director or executive officer of the Company.
David J. Massara resigned as Chief Financial Officer of the Company in May
1996; it is anticipated that a new Chief Financial Officer will be designated on
or about July 1, 1996.
22.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for each of the last three fiscal years,
the compensation of the Chief Executive Officer and the most highly compensated
executive officers of the Company at June 11, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
<S> <C> <C> <C> <C> <C> <C>
Norman E. Dean 1-96- $115,385(1) -0- $2,900(2) -0- -0-
6-96
President and 1995 $58,000(1) -0- $1,200(2) 600,000 -0-
Chief
Executive Officer 1994 -0- -0- -0- -0-
1993 -0- -0- -0- -0-
Lance H. 1-96- -0- -0- -0- -0- -0-
Mortensen 6-96
Former President 1995 $83,365(3) -0- $4,400(4) -0- -0-
and Chief
Executive Officer; 1994 $1(5) -0- $4,800(4) -0- -0-
Former Chairman
of the Board; 1993 $1(5) -0- -0- 105,800 -0-
Director(3) (6)
Robert J. Otto 1-96- $49,038(7) -0- $2,500(8) (9) -0-
Executive Vice 6-96
President
1995 -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0-
Anthony W. 1-96- $43,385 $12,760 $3,500(10) (11) -0-
Giannini 6-96
Senior Vice 1995 $107,520 $36,950 $6,600(10) -0- -0-
President of
Sales 1994 $101,124 $15,676 -0- -0- -0-
1993 $72,497 -0- -0- 55,000 -0-
David J. Massara 1-96- $56,635 -0- $2,250(13) -0- $12,673(14)
6-96
Chief Financial 1995 $125,000(12) $10,069 $4,800(13) -0- -0-
Officer(12)
1994 $16,827(12) -0- $800(13) 40,000 -0-
1993 -0- -0- -0- -0- -0-
</TABLE>
23.
<PAGE>
(1) Mr. Dean was appointed Chief Executive Officer and President of the Company,
effective October 2, 1995, upon the resignation of Lance H. Mortensen from those
same positions. (See "Employment Contracts", below). Prior to that date, Mr.
Dean served as a Director of the Company and received no salary.
(2) Mr. Dean received an auto allowance of $400 per month during the fiscal year
ended 1995. Such auto allowance was increased to $650 per month commencing May
1, 1996.
(3) Mr. Mortensen was appointed Chief Executive Officer on August 31, 1993,
pursuant to a five year employment agreement, dated September 1, 1993, which
provided for an annual salary of $85,000 and year end bonuses, at the Board of
Directors discretion, based on the Company's pre-tax earnings. In the event of
termination without cause, Mr. Mortensen is entitled to receive full amount of
compensation payable under the original terms of the employment agreement for
the remaining term of such agreement. Mr. Mortensen resigned as President and
Chief Executive Officer of the Company effective October 2, 1995, upon the
appointment of Norman E. Dean as President and Chief Executive Officer,
effective that same date.
(4) During fiscal years ended 1994 and 1995, Mr. Mortensen received an auto
allowance of $400 per month.
(5) Mr. Mortensen waived all salary over $1.00 during fiscal years ended 1993
and 1994, and the Board of Directors declared no bonuses during fiscal years
ended 1993 and 1994.
(6) The Board granted to Mr. Mortensen options to purchase 95,800 shares and
10,000 at $6.00 per share, on August 31, 1993, which options became fully vested
on August 31, 1994, one year from the date of grant. The Company did not grant
any options to Mr. Mortensen during the fiscal years ended 1994 or 1995, or the
six months ended June 1996.
(7) Mr. Otto was appointed Executive Vice President effective February 12, 1996.
(8) Upon commencement of employment, Mr. Otto received an auto allowance of $400
per month. Effective May 1, 1996, such auto allowance was increased to $650 per
month.
(9) The Board granted to Mr. Otto options to purchase 100,000 shares at $6.00
per share, on April 23, 1996, of which options to purchase 50,000 shares become
fully vested on February 12, 1999, three years from the date of employment. The
remaining options to purchase 50,000 shares at an exercise price of $6.00 per
share become exercisable on February 12, 2001, or earlier based upon achievement
of certain performance-based criteria. See "Option Grants in Last Fiscal Year"
below. Mr. Otto holds 2,000 shares as trustee of the Robert J. Otto and Lynn
Ann Otto 1985 Trust dated December 23, 1985.
(10) During fiscal year ended 1995, Mr. Giannini received an auto allowance of
$550 per month. Effective May 1, 1996, such auto allowance was increased to
$650 per month.
(11) The Company is considering a grant of options in an amount and at an
exercise price not less than fair market value on the date of grant, subject to
the approval of the Company's Compensation Committee, to Mr. Giannini based on
the achievement of certain performance-based goals.
(12) Mr. Massara was appointed Chief Financial Officer of the Company effective
November 7, 1994, and resigned from that position on May 26, 1996. It is
anticipated that a new Chief Financial Officer will be designated on or about
July 1, 1996.
(13) During fiscal years ended 1994 and 1995, Mr. Massara received an auto
allowance of $400 per month. Effective May 1, 1996, such auto allowance was
increased to $650 per month.
(14) Upon his resignation from the Company in May 1996, Mr. Massara received
accrued vacation for the first and second years of his employment.
24.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth for the fiscal year ended December 31,
1995, and through June 11, 1996, the options granted to the executive officers
named below. During the fiscal year ended December 31, 1995, and June 11, 1996,
there were no exercises of stock options by the executive officers named in the
table below.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Individual Grants Stock Price Appreciation for
Option Term(1)
Number of
Securities % of Total Options Granted to
Underlying Employees in Fiscal Year
Options Granted ------------------------ Exercise or
(#)(2) Base Price Expiration
Name ($/Sh) Date 5%($) 10%($)
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Norman E. 10,000(3) 1.35% $6.50 1-6-2005 $ 40,878 $ 103,593
Dean
10,000(4) 1.35% $6.50 4-19-2005 $ 40,878 $ 103,593
90,000(5) 12.13% $7.00 9-7-2005 $ 396,204 $1,004,058
210,000(6) 28.31% $7.00 9-7-2005 $ 924,475 $2,342,801
300,000(7) 40.44% $7.00 9-7-2005 $1,320,679 $3,346,859
Robert J. (8) -0- -0- -- -- --
Otto
Anthony (9) -0- -0- -- -- --
W. Giannini
David J. -0- -0- -0- -- -- --
Massara(10)
</TABLE>
(1) The assumed annual rates of appreciation in the table are shown for
illustrative purposes only pursuant to applicable Securities and Exchange
Commission requirements. Actual values realized on stock options are dependent
on actual future performance of the Company's stock, among other factors.
Accordingly, the amounts shown may not necessarily be realized.
(2) The 1993 Stock Option Plan provides that upon, among other things, the
dissolution, liquidation, reorganization, merger or consolidation of the Company
or the sale of all or substantially all of the assets of the Company, or
transfer of control (as such term is defined under Section 7.1 of the Plan), all
outstanding options under the 1993 Stock Option Plan shall become immediately
exercisable as of the date 30 days prior to the date of transfer of control if
such options would otherwise terminate upon consummation of the transaction or
if the surviving or successor corporation
25.
<PAGE>
as the case may be, does not assume the Company's obligations under the 1993
Stock Option Plan or substitute for such outstanding options.
(3) Mr. Dean was granted non-employee director options to purchase 10,000 shares
of the Company's Common Stock at an exercise price of $8.3125 per share, which
exercise price was adjusted by resolution adopted by the Board of Directors on
April 4, 1995 to $6.50 per share.
(4) Mr. Dean was granted additional non-employee director options to purchase
10,000 shares of the Company's Common Stock at an exercise price of $6.50 per
share.
(5) On September 7, 1995, Mr. Dean was granted options to purchase 90,000 shares
of the Company's Common Stock at an exercise price of $7.00 per share, all of
which become fully exercisable on January 1, 1997.
(6) On September 7, 1995, Mr. Dean was granted options to purchase 210,000
shares of the Company's Common Stock at an exercise price of $7.00 per share,
which become exercisable 52% on January 1, 1997, and 100% on January 1, 1998.
(7) On September 7, 1995, Mr. Dean was granted options to purchase 300,000
shares of the Company's Common Stock at an exercise price of $7.00 per share,
which become exercisable on September 7, 2000, or earlier based upon
achievement of certain performance-based criteria. Such performance-based
criteria allows for accelerated vesting of the options utilizing specified
financial performance ratios of the Company's Common Stock. (See "Report of
the Compensation Committee").
(8) On April 23, 1996, Mr. Otto was granted options to purchase 100,000 shares
of the Company's Common Stock at an exercise price of $6.00 per share, of which
options for 50,000 shares vest ratably over a three year period and become
fully exercisable on February 12, 1999. The remaining 50,000 shares become
exercisable on February 12, 2001, or earlier based upon achievement of certain
performance-based criteria. Such performance-based criteria allows for
accelerated vesting of the options utilizing specified financial performance
ratios of the Company's Common Stock. (See "Report of the Compensation
Committee" below).
(9) The Company is considering a grant of options to Mr. Giannini based on the
achievement of certain performance goals.
(10) Mr. Massara resigned as Chief Financial Officer of the Company effective
May 26, 1996. It is anticipated that a new Chief Financial Officer will be
designated on or about July 1, 1996.
EMPLOYMENT CONTRACTS
On September 5, 1995, the Company entered into an employment agreement with
Norman E. Dean to serve as President and Chief Executive Officer, effective
October 2, 1995. The contract does not provide for a specific term of
employment. The contract provides a base annual salary of $250,000, and a
guaranteed bonus of $50,000 payable on January 1, 1997, provided that Mr. Dean
has not voluntarily terminated his employment at that date. The contract also
provides for payment of an incentive bonus payable at the Board of Directors'
discretion. In connection with his employment, the Company's Compensation
Committee authorized the grant to Mr. Dean of 90,000 shares of the Company's
Common Stock at an exercise price of $7.00 per share under the 1993 Stock
Option Plan, and 510,000 shares of the Company's Common Stock at an exercise
price of $7.00 per share outside the 1993 Stock Option Plan, which option terms
each expire ten years from the date of grant. Similar to the Company's form of
stock option agreements offered to other employees and outside directors, Mr.
Dean's stock option agreements with the Company
26.
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contain provisions regarding ownership change and transfer of control, as more
particularly described therein. The contract provides Mr. Dean with the
employment benefits accorded to other members of the senior management of the
Company.
The Company entered into an employment agreement with Robert J. Otto to
serve as Executive Vice President, effective February 12, 1996. The contract
does not provide for a specific term of employment. The contract provides a
base annual salary of $150,000, with a bonus plan to be formulated. In
connection with his employment, the Company's Compensation Committee authorized
the grant to Mr. Otto of 50,000 shares of the Company's Common Stock at an
exercise price of $6.00 per share under the 1993 Stock Option Plan, and an
additional 50,000 shares of the Company's Common Stock (of which 40,000 are
under the 1993 Stock Option Plan) at an exercise price of $6.00 per share, which
option terms each expire ten years from the date of grant. Similar to the
Company's form of stock option agreements offered to other employees and outside
directors, Mr. Otto's stock option agreements with the Company contain
provisions regarding ownership change and transfer of control, as more
particularly described therein. The contract provides Mr. Otto with the
employment benefits accorded to other members of the senior management of the
Company.
On June 30, 1993, the Company entered into a two-year employment agreement
with Anthony W. Giannini as Vice President of Sales, which contract is renewed
automatically for succeeding terms of one year unless terminated in writing by
either party in accordance with the agreement. The contract provided for a base
annual salary of $84,000 and a cash bonus based upon a percentage of applicable
monthly sales (as defined in the agreement to mean the Company's gross product
sales to grocery and club stores less returns for each calendar month in excess
of a percentage of the Company's gross product sales and all promotional cash
allowances as reflected in the Company's monthly financial statements prepared
by the Company's accountants, as more particularly described in Mr. Giannini's
agreement). In January 1996, Mr. Giannini's annual base salary increased to
$140,000. The contract provides that Mr. Giannini is also entitled to receive
the employment benefits accorded to other members of the senior management of
the Company. In connection with his employment, Mr. Giannini was granted
options in August 1993 to purchase 55,000 shares of the Company's Common Stock
at an exercise price of $6.00/share under the 1993 Stock Option Plan, which
option term expires six years from the date of grant. In December 1994, Mr.
Giannini exercised his option for 5,000 of those 55,000 shares, and sold them
pursuant to Rule 701 of the Securities Act of 1993, as amended.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers, and any person who owns
more than ten percent (10%) of the Company's Common Stock, to file initial
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Directors, executive officers and greater than ten-percent
holders of the Company's Common Stock, if any, are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's directors, executive
officers, directors and greater than ten percent holders of the Company's Common
Stock for the fiscal year ended December 31, 1995, were complied with, except
that F. John Abrams, the Company's former Executive Vice President, General
Counsel, Secretary and a former Director, failed to file a Form 4 covering
disposition of shares held indirectly by him in January 1996 in a timely manner.
The Company has been advised by Mr. Abrams that a Form 4 covering that
respective period was filed by Mr. Abrams' wife, Lynda Davis, in February 1996.
27.
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BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Company has two standing committees: an
Audit Committee and a Compensation Committee. The Audit Committee was formed in
the first quarter of fiscal 1994 in connection with the Company's initial public
offering. Members of the Audit Committee include Mr. Bonner, as Chairman, and
Messrs. Hill and Ryan. The Audit Committee held one meeting during the fiscal
year ended December 31, 1995. The Audit Committee recommends to the Board the
independent auditors to be retained by the Company; meets with the Company's
independent auditors to review the purpose, scope and general extent of such
auditors' services, proposed fee arrangements and the results of the Company's
annual audit; reviews the adequacy of, compliance and implementation of, the
Company's accounting and financial reporting, policies and internal controls;
reviews the independence of the Company's independent auditors; reviews with the
Company's Chief Financial Officer the foregoing and, whenever deemed
appropriate, reviews and undertakes special assignments.
Prior to January 1994, the full Board of Directors of the Company performed
the functions of the Compensation Committee. Since that date, a Compensation
Committee has been created, comprised of three non-employee directors of the
Company. Members of the Compensation Committee are Mr. Moone, as Chairman, and
Messrs. Gillam and Gallery. The Compensation Committee held one meeting during
the fiscal year ended December 31, 1995, and one meeting on April 23, 1996.
Its functions include setting and administering the policies that govern the
compensation of the executive officers of the Company. The Compensation
Committee also reviews and recommends salaries, bonuses and perquisites, as
well as incentive compensation programs and stock option grants. See "Report
on Compensation Committee" below and "Executive Compensation" above.
During the fiscal year ended December 31, 1995, the Board of Directors of
the Company held seven (7) meetings and adopted actions by unanimous written
consents in lieu of three meetings. During the first six months of 1996, the
Board of Directors of the Company held three (3) meetings and adopted actions by
written consents in lieu of three meetings. No director attended fewer than 75%
of the total number of meetings of the Board and all of the committees of the
Board on which such director was serving held during those periods. The
Company's Board of Directors has no standing nominating committee.
COMPENSATION OF DIRECTORS
At the Company's Annual Meeting of Shareholders held on January 6, 1995,
the Company's shareholders approved an amendment to the Company's First Amended
and Restated 1993 Stock Option Plan (the "1993 Stock Option Plan") to provide
for the grant of nonstatutory stock options for 10,000 shares each to
non-employee directors of the Company on October 19, 1994, the effective date
of the 1993 Stock Option Plan, if such non-employee director was serving at
such time or upon appointment or election as a director of the Company at an
exercise price per share equal to the fair market value of a share of the
Company's Common Stock on the date of grant.
Each non-employee director will thereafter receive automatic grants of
nonstatutory stock options to purchase 10,000 shares of the Company's Common
Stock on each anniversary of his or her anniversary date (defined to mean (i)
October 19, 1994 for an outside director who was granted an outside director
option on such date, or (ii) the date upon which any other outside director was
first granted an outside director option under the 1993 Stock Option Plan).
During the fiscal year ended December 31, 1995, the Company granted options to
purchase 10,000 shares of the Company's Common Stock to each of Messrs. Bonner,
Dean, Gallery, Moone and Ryan. During the first six months of 1996, Messrs.
Gallery and Moone each received an automatic grant of 10,000 shares each. In
January 1996, Mr. Gillam was granted an option, as a non-employee director, to
purchase 10,000 shares of the Company's common stock at an exercise price of
$5.375 per share. The option vests in two approximately equal annual
installments commencing
28.
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one year after the date of grant of the option, provided that the director has
continuously served as a director from the date of grant.
Options granted to a director who is also an employee of the Company (or to
any other employee eligible under the 1993 Stock Option Plan) are subject to
different terms under the 1993 Stock Option Plan than those of the non-employee
director options. A director who becomes an employee of the Company is no
longer eligible for non-employee director options. Under the 1993 Stock Option
Plan, the Board determines for each employee option, among other things, the
number of shares of stock underlying the option, the timing and terms of
exercisability and vesting of the option and the expiration of the option. The
exercise price for each employee option is determined by the Board, in its sole
discretion, but which shall not be less than the fair market value of a share of
Common Stock on the date of grant. The option vests in two approximately equal
annual installments commencing one year after the date of grant of the option,
provided that the director has continuously served as a director from the date
of grant.
Certain directors are also reimbursed for out-of pocket travel expenses
related to Board meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, the Company leased space for executive offices and training
facilities in Danville, California from a partnership in which Mr. Lance H.
Mortensen, a director of the Company, is a limited partner. The Company moved
out of such space in February 1996 and is currently negotiating the termination
of those leases. In February 1996, the Company relocated its executive offices
to 353 Sacramento Street, Suite 500, in San Francisco, California.
Subsequent to the year ended December 31, 1995, the Company decided to
discontinue the business of its restaurant and franchise subsidiaries. On
April 1, 1996, the Company entered into a definitive agreement to sell its
wholly-owned restaurant subsidiary, Upscale Food Outlets, Inc. ("UFO"), to an
affiliate of Mr. Mortensen. As a part of such sale, UFO will continue to have
responsibility for the operations and obligations of all of the leases for those
restaurants currently operated by UFO.
During fiscal year 1993, the Company purchased several mobile carts and
kiosks from Carts of Colorado, Inc., a company in which Daniel J. Gallery, a
director, is a co-founder and Executive Vice President. The Company did not
purchase any such carts or kiosks in 1994. During the fiscal year ended
December 31, 1995, the Company purchased carts and kiosks from Carts of
Colorado, Inc. for a total purchase price of approximately $210,806.
On May 25, 1995, the Company entered into a consulting agreement with Mr.
Gallery, pursuant to which Mr. Gallery provides services relating to the sale of
the Company's products through nontraditional venues, such as sports coliseums,
airports, universities, office buildings and schools. The Company is able to
serve its pasta products in such venues using the specially designed
carts/kiosks that Carts of Colorado, Inc. manufactures. Mr. Gallery's
consulting agreement provides for the grant of 50,000 options, to be vested upon
attainment of certain specified performance criteria, and attainment of license
agreements with certain contract feeders/national food service distributors.
The agreement also provides that the Company reimburse Mr. Gallery for certain
business related expenses.
On May 7, 1996, the Board of Directors of the Company (without
participation by Mr. Mortensen) authorized the purchase of certain furniture and
equipment by the Company from an affiliate of Mr. Mortensen for $100,000, which
was deemed to be the fair value of such furniture and equipment.
Management of the Company believes that all of the transactions described
above are or were fair, reasonable and consistent with terms of transactions
which the Company might otherwise have entered into with third party
29.
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nonaffiliated entities. A majority of the disinterested members of the
Company's Board of Directors approved the related party transactions entered
into in 1995 and in the first half of 1996.
REPORT OF THE COMPENSATION COMMITTEE
Prior to January 12, 1994, the full Board of Directors performed the
functions of the Compensation Committee. As mentioned above, the Compensation
Committee is currently comprised of three non-employee directors of the Company.
See "Board Committees and Meetings Above". The Compensation Committee is
responsible for setting and administering the policies governing compensation,
including such compensation and stock ownership programs. The goals of the
Company's compensation policy are to attract and retain executive officers who
contribute to the overall success of the Company by offering compensation which
is competitive in the food processing industry for companies of the Company's
size and to motivate executives to achieve the Company's business objectives and
reward them for their achievements. The Company uses salary, incentive
compensation and stock options to meet these goals. Meetings of the Committee
are scheduled as necessary.
The Company believes that employee equity ownership, through stock options,
provides significant additional motivation to executive officers to maximize
value for the Company's shareholders. Because the stock options will be granted
at the prevailing market price, the stock options will only have value if the
Company's stock price increases over the exercise price. Therefore, the
Compensation Committee believes that stock options will serve to align the
interest of executive officers closely with other shareholders because of the
direct benefit executive officers receive through improved stock performance.
The Committee reviews the 1993 Stock Option Plan and the grant of stock options
with the foregoing philosophy. Levels of compensation, particularly bonuses and
incentive compensation, are tied to both the overall performance of the Company
as well as the effectiveness of each individual executive in adding to that
performance.
In connection with the appointment of Norman E. Dean as the Company's Chief
Executive Officer and President in October 1995, the Compensation Committee
approved at its September 1995 meeting, the grant of stock options to Mr. Dean
in recognition of his outstanding experience and performance in the food
industry. As discussed previously, recognizing the need for the Company to
grow, the Committee structured the grant of options to Mr. Dean as follows:
90,000 options under the Company's 1993 Stock Option Plan will fully vest in
January 1997; an additional 210,000 options granted outside of the Company's
1993 Stock Option Plan will vest and become exercisable in two installments: 52%
on January 1, 1997, and 100% on January 1, 1998; and an additional 300,000
options granted outside the Company's 1993 Stock Option Plan, with vesting tied
to the Company's attainment of certain earnings per share, as reported in its
Annual Report on Form 10-K, or on the market price of the Company's Common Stock
for a designated time period.
In connection with the appointment of Robert J. Otto as the Company's
Executive Vice President in April 1996, effective as of February 12, 1996,
the Compensation Committee approved at its April 1996 meeting, the grant of
stock options to Mr. Otto in recognition of his outstanding experience and
contributions in the food industry. As discussed previously, recognizing the
need for the Company to grow, the Committee structured the grant of options to
Mr. Otto as follows: 50,000 options under the Company's 1993 Stock Option Plan
will fully vest in February 1999; an additional 40,000 options under that Plan
and an additional 10,000 options granted outside of the Company's 1993 Stock
Option Plan will vest and become exercisable on the earlier to occur of
achievement of the Company's attainment of certain earnings per share, as
reported in its Annual Report on Form 10-K, or on the market price of the
Company's Common Stock for a designated time period.
The Board of Directors did not modify or reject in any material way any
action or recommendation made by the Committee during fiscal year 1995 and the
first six months of fiscal year 1996.
30.
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Compensation Committee For Fiscal Year Ended December 31, 1995 and the First Six
Months of Fiscal Year 1996
E. Michael Moone, Chairperson
Christopher Gillam
Daniel J. Gallery
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Next year's Annual Meeting of Shareholders will be held on May 7, 1997. Any
shareholder who wishes to submit a proposal for inclusion in the proxy
statement and form of proxy for the 1997 Annual Meeting of Shareholders must
submit such proposal by December 31, 1996. All proposals should be submitted
by certified mail-return receipt requested, to Carolyn Mar, Secretary, 353
Sacramento Street, Suite 500, San Francisco, California 94111.
OTHER MATTERS
No other matters will be submitted to the meeting.
Dated: June 28, 1996
By Order of the Board of Directors
Carolyn Mar, Secretary
31.
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EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF MERGER
OF MONTEREY PASTA COMPANY
A DELAWARE CORPORATION,
AND
MONTEREY PASTA COMPANY
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of , 1996 (the
"Agreement") is between Monterey Pasta Company, a Delaware corporation ("MPC
Delaware") and Monterey Pasta Company, a California corporation ("MPC
California"). MPC Delaware and MPC California are sometimes referred to herein
as the "Constituent Corporations".
RECITALS
A. MPC Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 70 million shares
of "Common Stock," $0.001 par value and 1 million shares of "Preferred Stock,"
$0.001 par value. As of , 1996, 100 shares of Common Stock were
issued and outstanding, all of which are held by MPC California.
B. MPC California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital of 20 million
shares of "Common Stock," no par value, and 5 million shares of "Preferred
Stock," no par value. As of , 1996, ___ shares of Common Stock
and no shares of Preferred Stock were issued and outstanding.
C. The Board of Directors of MPC California has determined that, for the
purpose of effecting the reincorporation of MPC California in the State of
Delaware, it is advisable and in the best interests of MPC California that MPC
California merge with and into MPC Delaware upon the terms and conditions herein
provided.
D. The respective Boards of Directors of MPC Delaware and MPC California
have approved this Agreement and have directed that this Agreement be submitted
to a vote of their respective stockholders and executed by the undersigned
officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, MPC Delaware and MPC California hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
I
MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law, MPC
California shall be merged with and into MPC Delaware (the "Merger"), the
separate existence of MPC California shall cease and MPC Delaware shall be, and
is herein sometimes referred to as, the "Surviving Corporation," and the name of
the Surviving Corporation shall be Monterey Pasta Company.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and
approved by the stockholders of each Constituent Corporation in accordance
with the requirements of the Delaware General Corporation Law and the
California General Corporation Law;
<PAGE>
(b) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly waived
by the party entitled to satisfaction thereof;
(c) An executed Certificate of Merger or an executed counterpart
of this Agreement meeting the requirements of the Delaware General
Corporation Law shall have been filed with the Secretary of State of the
State of Delaware; and
(d) An executed Certificate of Merger or an executed counterpart
of this Agreement meeting the requirements of the California General
Corporation Law shall have been filed with the Secretary of State of the
State of California.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of MPC California shall cease and MPC Delaware, as the
Surviving Corporation, (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (ii) shall be subject to all actions previously taken by its and MPC
California's Board of Directors, (iii) shall succeed, without other transfer, to
all of the assets, rights, powers and property of MPC California in the manner
as more fully set forth in Section 259 of the Delaware General Corporation Law,
(iv) shall continue to be subject to all of its debts, liabilities and
obligations as constituted immediately prior to the Effective Date of the
Merger, and (v) shall succeed, without other transfer, to all of the debts,
liabilities and obligations of MPC California in the same manner as if MPC
Delaware had itself incurred them, all as more fully provided under the
applicable provisions of the Delaware General Corporation Law and the California
General Corporation Law.
II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of MPC
Delaware as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 BYLAWS. The Bylaws of MPC Delaware as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of MPC Delaware
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III
MANNER OF CONVERSION OF STOCK
3.1 MPC CALIFORNIA COMMON STOCK. Upon the Effective Date of the Merger,
each share of MPC California Common Stock, no par value, issued and outstanding
immediately prior thereto shall, by virtue of the Merger and without any action
by the Constituent Corporations, the holder of such shares or any other person,
be converted into and exchanged for one fully paid and nonassessable share of
Common Stock, $.001 par value, of the Surviving Corporation.
2.
<PAGE>
3.2 MPC CALIFORNIA OPTIONS. Upon the Effective Date of the Merger, the
Surviving Corporation shall assume and continue, on the terms provided
therein, the Monterey Pasta Company 401(k) Plan, the stock option and stock
purchase plans (including the First Amended and Restated 1993 Stock Option
Plan, as amended and the 1995 Employee Stock Purchase Plan) and all other
employee benefit plans of MPC California. Each outstanding and unexercised
option to purchase MPC California Common Stock shall become an option to
purchase the Surviving Corporation's Common Stock on the basis of one share
of the Surviving Corporation's Common Stock for each share of MPC California
Common Stock issuable pursuant to any such option to purchase on the same
terms and conditions and at an exercise price per share equal to the exercise
price applicable to any such MPC California option at the Effective Date of
the Merger.
A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the conversion or exercise of options equal to the
number of shares of MPC California Common Stock so reserved immediately prior to
the Effective Date of the Merger.
3.3 MPC DELAWARE COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, $.001 par value, of MPC Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by MPC Delaware, the holder of such shares or any other person, be
cancelled and returned to the status of authorized but unissued shares.
3.4 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger,
each holder of an outstanding certificate representing shares of MPC California
Common Stock may, at such stockholder's option, surrender the same for
cancellation to Corporate Stock Transfer, as exchange agent (the "Exchange
Agent"), and each such holder shall be entitled to receive in exchange therefor
a certificate or certificates representing the number of shares of the Surviving
Corporation's Common Stock into which the surrendered shares were converted as
herein provided. Until so surrendered, each outstanding certificate theretofore
representing shares of MPC California Common Stock shall be deemed for all
purposes to represent the number of shares of the Surviving Corporation's Common
Stock into which such shares of MPC California Common Stock were converted in
the Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of Common Stock of the
Surviving Corporation represented by such outstanding certificate as provided
above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of MPC California so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws.
If any certificate for shares of MPC Delaware stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of the issuance of such new certificate in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of MPC Delaware that such tax has been paid or is not payable.
3.
<PAGE>
IV
GENERAL
4.1 COVENANTS OF MPC DELAWARE. MPC Delaware covenants and agrees that it
will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California General Corporation Law.
(b) File any and all documents with the California Franchise Tax
Board necessary for the assumption by MPC Delaware of all of the franchise
tax liabilities of MPC California.
(c) Take such other actions as may be required by the California
General Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by MPC
Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of MPC California such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other actions, as shall be
appropriate or necessary in order to vest or perfect in or conform of record or
otherwise by MPC Delaware the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of MPC California and otherwise to carry out the purposes of this
Agreement, and the officers and directors of MPC Delaware are fully authorized
in the name and on behalf of MPC California or otherwise to take any and all
such action and to execute and deliver any and all such deeds and other
instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger,
this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either MPC California or of MPC
Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of MPC California or by the sole stockholder of MPC Delaware, or by
both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations
may amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the State of
Delaware, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholders of either Constituent Corporation shall not: (1)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (2) alter
or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series thereof of such Constituent
Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving Corporation
in the State of Delaware is located at 1013 Center Road, in the City of
Wilmington, Delaware 19805, County of New Castle, and Corporation Service
Company is the registered agent of the Surviving Corporation at such address.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 353 Sacramento
Street, Suite 500, San Francisco, California 94111 and copies thereof will be
furnished to any stockholder of either Constituent Corporation, upon request and
without cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
4.8 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
4.
<PAGE>
IN WITNESS WHEREOF, this Agreement, having first been approved by
resolutions of the Boards of Directors of MPC Delaware and MPC California, is
hereby executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.
ATTEST: MONTEREY PASTA COMPANY
a Delaware corporation
By:
- -------------------------------- -------------------------------------
Carolyn Mar, SECRETARY Norman E. Dean
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: MONTEREY PASTA COMPANY
a California corporation
By:
- -------------------------------- -------------------------------------
Carolyn Mar, SECRETARY Norman E. Dean
PRESIDENT AND CHIEF EXECUTIVE OFFICER
5.
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EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
MONTEREY PASTA COMPANY
The undersigned, for purposes of organizing a corporation under the General
Corporation Law of the State of Delaware, does hereby certify as follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is
Monterey Pasta Company
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1013 Center Road, in the City of Wilmington, County of New Castle, 19805.
The name of its registered agent at such address is Corporation Service Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware (the "GCL").
ARTICLE IV
The total number of shares of Stock which the Corporation shall have
authority to issue is Seventy-One Million (71,000,000), consisting of One
Million (1,000,000) shares of Preferred Stock, par value $.001 per share
(hereinafter referred to as "Preferred Stock"), and Seventy Million (70,000,000)
shares of Common Stock, par value $.001 per share (hereinafter referred to as
"Common Stock").
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized to provide for the issuance of
shares of Preferred Stock in one or more series and, by filing a certificate
pursuant to the applicable law of the State of Delaware (hereinafter referred to
as "Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, determination
of the following:
(a) The designation of the series, which may be by distinguishing number,
letter or title.
(b) The number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding).
(c) The amounts payable on, and the preferences, if any, of shares of the
series in respect of dividends, and whether such dividends, if any, shall be
cumulative or noncumulative.
(d) Dates at which dividends, if any, shall be payable.
<PAGE>
(e) The redemption rights and price or prices, if any, for shares of the
series.
(f) The terms and amount of any sinking fund provided for the purchase or
redemption of shares of the series.
(g) The amounts payable on, and the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation.
(h) Whether the shares of the series shall be convertible into or
exchangeable for shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion or exchange price
or prices or rate or rates, any adjustments thereof, the date or dates at which
such shares shall be convertible or exchangeable and all other terms and
conditions upon which such conversion or exchange may be made.
(i) Restrictions on the issuance of shares of the same series or of any
other class or series.
(j) The voting rights, if any, of the holders of shares of the series.
The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof. Except as may otherwise be provided by applicable
law, in this Certificate of Incorporation or in a Preferred Stock Designation,
the holders of shares of Common Stock shall be entitled to one vote for each
such share upon all questions presented to the stockholders, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes, and holders of Preferred Stock shall not be entitled to vote at
or receive notice of any meeting of stockholders.
The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the Corporation shall have
notice thereof, except as otherwise expressly provided by applicable law.
ARTICLE V
The name and mailing address of the incorporator of the Corporation is
Carolyn Mar, whose mailing address is c/o Monterey Pasta Company, 353 Sacramento
Street, Suite 500, San Francisco, California 94111.
ARTICLE VI
In furtherance of, and not in limitation of, the powers conferred by law,
the Board of Directors is expressly authorized and empowered:
(a) to adopt, amend or repeal the Bylaws of the Corporation;
PROVIDED, HOWEVER, that the Bylaws adopted by the Board of Directors under the
powers hereby conferred may be amended or repealed by the Board of Directors or
by the stockholders having voting power with respect thereto, PROVIDED, FURTHER
that, notwithstanding any other provision of this Certificate of Incorporation
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the stock required by law or this Certificate of Incorporation, the
affirmative vote of the holders of at least 66 2/3 percent of the voting power
of the then outstanding Voting Stock (as defined below), voting together as a
single class, shall be required in order for the stockholders to adopt, alter,
amend or repeal any bylaw; and
(b) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the accounts
and books of the Corporation, or any of them, shall be open to inspection of
stockholders; and, except as so determined or as expressly provided in this
Certificate of Incorporation or
2.
<PAGE>
in any Preferred Stock Designation, no stockholder shall have any right to
inspect any account, book or document of the Corporation other than such rights
as may be conferred by applicable law.
The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable
law. Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 66 2/3
percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with paragraph (a) of this Article VI. For the
purposes of this Certificate of Incorporation, "Voting Stock" shall mean the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock
any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing in lieu of a meeting of such stockholders. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of at least 66 2/3 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be
required to amend, repeal or adopt any provision inconsistent with this
Article VII.
ARTICLE VIII
Subject to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, the number of
directors of the Corporation shall be fixed by the Bylaws of the Corporation and
may be increased or decreased from time to time in such a manner as may be
prescribed by the Bylaws.
Unless and except to the extent that the Bylaws of the Corporation shall so
require, the election of directors of the Corporation need not be by written
ballot.
Subject to the rights of the holders of any series of Preferred Stock,
or any other series or class of stock as set forth in this Certificate of
Incorporation to elect additional directors under specified circumstances,
any director may be removed from office at any time with or without cause,
but only by the affirmative vote of the holders of at least 66 2/3 percent of
the voting power of the then outstanding Voting Stock, voting together as a
single class.
Subject to the rights of the holders of any series of Preferred Stock, or
any other series or class of stock as set forth in this Certificate of
Incorporation, to elect additional directors under specified circumstances, and
unless the Board of Directors otherwise determines, vacancies resulting from
death, resignation, retirement, disqualification, removal from office or other
cause, and newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by the affirmative vote of a
majority of the remaining directors, though less than a quorum of the Board of
Directors, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office expires and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of authorized directors constituting the whole Board of
Directors shall shorten the term of any incumbent director.
Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 66 2/3
percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with this Article VIII.
3.
<PAGE>
ARTICLE IX
Section 1. Vote Required for Certain Business Combinations.
(A) Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law or this Certificate of Incorporation, and
except as otherwise expressly provided in Section 2 of this Article IX:
(i) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (a) any Interested Stockholder (as hereinafter
defined), or (b) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder, including all Affiliates of the Interested
Stockholder, of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of $5,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder, including all
Affiliates of the Interested Stockholder, in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market Value
of $5,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliates of an Interested Stockholder, or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not an Interested Stockholder is a party thereto) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which are directly or indirectly owned by any
Interested Stockholder or one or more Affiliates of the Interested Stockholder;
shall, except as otherwise prohibited by applicable law, require the affirmative
vote of the holders of at least 66-2/3% of the voting power of the then
outstanding Voting Stock, voting together as a single class, including the
affirmative vote of the holders of at least 66-2/3% of the voting power of the
then outstanding Voting Stock not owned directly or indirectly by any Interested
Stockholder or any Affiliate of any Interested Stockholder. Such affirmative
vote shall be required notwithstanding the fact that no vote may be required, or
that a lesser percentage may be permitted, by law or in any agreement with any
national securities exchange or otherwise.
(B) Definition of "Business Combination." The term "Business Combination"
as used in this Article IX shall mean any transaction described in any one or
more of clauses (i) through (v) of paragraph A of this Section 1.
Section 2. When Higher Vote is Not Required. The provisions of Section 1
of this Article IX shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law or any other provision of this Certificate of
Incorporation, if the conditions specified in either of the following paragraphs
(A) or (B) are met:
(A) Approval by Continuing Directors. The Business Combination shall have
been approved by a majority of the Continuing Directors (as hereinafter
defined).
(B) Price and Procedure Requirements. All of the following conditions
(i)-(vi) shall have been met:
4.
<PAGE>
(i) The aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash, to be received per share by
holders of Common Stock in such Business Combination, shall be at least equal to
the highest of the following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Stockholder for any shares of Common Stock acquired by it ( 1) within
the two-year period immediately prior to the first public announcement of the
proposal of such Business Combination (the "Announcement Date"), or (2) in the
transaction in which it became an Interested Stockholder, whichever is higher;
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"), whichever is higher; and
(c) (if applicable) the price per share equal to the Fair Market
Value per share of Common Stock determined pursuant to paragraph (B)(i)(b)
above, multiplied by the ratio of (l) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Stockholder for any shares of Common Stock acquired by it within the
two-year period immediately prior to the Announcement Date to (2) the Fair
Market Value per share of Common Stock on the first day in such two-year period
upon which the Interested Stockholder acquired any shares of Common Stock.
(ii) The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of consideration other
than cash to be received per share by holders of shares of any other class,
other than Common Stock or Excluded Preferred Stock, of outstanding Voting Stock
shall be at least equal to the highest of the following (it being intended that
the requirements of this paragraph (B)(ii) shall be required to be met with
respect to every such class of outstanding Voting Stock, whether or not the
Interested Stockholder has previously acquired any shares of a particular class
of Voting Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Stockholder for any shares of such class of Voting Stock acquired by
it (1) within the two-year period immediately prior to the Announcement Date, or
(2) in the transaction in which it became an Interested Stockholder, whichever
is higher;
(b) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are entitled in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation;
(c) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date, whichever is
higher, and
(d) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Stock determined pursuant to paragraph
(B)(ii)(c) above, multiplied by the ratio of (l) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of such class of Voting
Stock acquired by it within the two-year period immediately prior to the
Announcement Date to (2) the Fair Market Value per share of such class of Voting
Stock on the first day in such two-year period upon which the Interested
Stockholder acquired any shares of such class of Voting Stock.
(iii) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock and other than
Excluded Preferred Stock) shall be in cash or in the same form as the Interested
Stockholder has previously paid for shares of such class of Voting Stock. If
the Interested Stockholder has paid for shares of any class of Voting Stock with
varying forms of consideration, the form of consideration for such class
5.
<PAGE>
of Voting Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired by it.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination: (a)
there shall have been no failure to declare and pay at the regular date therefor
any full quarterly dividends (whether or not cumulative) on any outstanding
Preferred Stock, except as approved by a majority of the Continuing Directors;
(b) there shall have been no reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the Continuing Directors; (c) there
shall have been an increase in the annual rate of dividends as necessary fully
to reflect any recapitalization (including any reverse stock split),
reorganization or any similar reorganization which has the effect of reducing
the number of outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the Continuing Directors;
and (d) such Interested Stockholder shall not have become the Beneficial Owner
of any additional Voting Stock except as part of the transaction which results
in such Interested Stockholder becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (or any subsequent
provisions replacing such act, rules or regulations) shall be mailed to
shareholders of the Corporation at least thirty (30) days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such act or
subsequent provisions).
Section 3. Certain Definitions For purposes of this Article IX:
(A) "Person" shall mean any individual, firm, corporation or other entity.
(B) "Interested Stockholder" shall mean any Person (other than the
Corporation or any Subsidiary and other than any profit-sharing, employee stock
ownership or other employee benefit plan of the Corporation or any Subsidiary or
any trustee or fiduciary with respect to any such plan or holding Voting Stock
for the purpose of funding any such plan or funding other employee benefits for
employees of the corporation or on Subsidiary when acting in such capacity) who
or which:
(i) itself, or along with its Affiliates, is the Beneficial Owner,
directly or indirectly, of more than 10% of the then outstanding Voting Stock;
or
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was itself, or
along with its Affiliates, the Beneficial Owner, directly or indirectly, of 10%
or more of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any Voting
Stock which was at any time within the two-year period immediately prior to the
date in question beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the meaning of the
Securities Act of 1933, as amended.
6.
<PAGE>
(C) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations of the Securities Exchange Act
of 1934, as amended. In addition, a Person shall be the "Beneficial Owner" of
any Voting Stock which such Person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding (but neither such Person nor any such
Affiliate or Associate shall be deemed to be the Beneficial Owner of any shares
of Voting Stock solely by reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public solicitation of proxies for such
meeting, and with respect to which shares neither such Person nor any such
Affiliate or Associate is otherwise deemed the Beneficial Owner).
Notwithstanding the foregoing, a Person shall not be a "Beneficial Owner" of any
Voting Stock for purposes of this Article IX which such person may have the
right to acquire pursuant to the Rights Agreement, dated May 15, 1996, between
the Corporation and Corporate Stock Transfer, as Rights Agent, and the rights
issued thereunder.
(D) For the purpose of determining whether a Person is an Interested
Stockholder pursuant to paragraph (B) of this Section 3, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned through
application of paragraph C of this Section 3 but shall not include any other
shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options or otherwise.
(E) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
(F) "Subsidiary" shall mean any corporation of which a majority of any
share of equity security is owned, directly or indirectly, by the Corporation,
PROVIDED, HOWEVER, that for the purposes of the definition of Interested
Stockholder set forth in paragraph (B) of this Section 3, the term "Subsidiary"
shall mean only a corporation of which a majority of each share of equity
security is owned, directly or indirectly, by the Corporation.
(G) "Continuing Director" shall mean any member of the Board of Directors
of the Corporation (the "Board") who is unaffiliated with the Interested
Stockholder and was a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder, and any director who is thereafter
chosen to fill any vacancy on the Board or who is elected and who, in either
event, is unaffiliated with the Interested Stockholder and in connection with
his or her initial assumption of office is recommended for appointment or
election by a majority of Continuing Directors then on the Board.
(H) "Fair Market Value" shall mean (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange listed stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on such
exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934, as amended, on which such stock is listed,
or, if such stock is not listed on any such exchange, the highest closing sale
price during the 30-day period immediately preceding the date in question of a
share of such stock on The NASDAQ Stock Market operated by The NASDAQ Stock
Market, Inc. or any system then in use in its stead, or if no such price is
available, the fair market value on the date in question of a share of such
stock as determined by the Board in accordance with Section 4 of this Article
IX; and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by the Board in
accordance with Section 4 of this Article IX.
(I) In the event of any Business Combination in which the Corporation
survives, the phrase "other consideration to be received" as used in paragraphs
(B)(i) and (ii) and Section 2 of this Article IX shall include the shares of
Common Stock and/or the shares of any other class of outstanding Voting Stock
retained by the holders of such shares.
7.
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(J) "Excluded Preferred Stock" means any series of Preferred Stock with
respect to which a majority of the Continuing Directors have approved a
Preferred Stock Designation creating such series that expressly provides that
the provisions of this Article IX shall not apply.
Section 4. The Continuing Directors of the Corporation shall have the
power and duty to determine for the purposes of this Article IX, on the basis of
information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article IX, including, without limitation (i)
whether a Person is an Interested Stockholder, (ii) the number of shares of
Voting Stock beneficially owned by any Person, (iii) whether a Person is an
Affiliate or Associate of another, (iv) whether the applicable conditions set
forth in paragraph (B) of Section 2 of this Article IX have been met with
respect to any Business Combination, (v) the Fair Market Value of stock or other
property in accordance with paragraph (H) of Section 3 of this Article IX, and
(vi) whether the assets which are the subject of any Business Combination have,
or the consideration to be received for the issuance or transfer of securities
by the Corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $5,000,000 or more.
Section 5. No Effect on Fiduciary of Interested Stockholders. Nothing
contained in this Article IX shall be construed to relieve any Interested
Stockholder from any fiduciary obligation imposed by law.
Section 6. Amendment, Repeal, etc. Notwithstanding any other provisions
of this Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that a lesser percentage may be permitted by law, this
Certificate of Incorporation or the Bylaws of the Corporation), but in addition
to any affirmative vote of the holders of any particular class of the Voting
Stock required by law or this Certificate of Incorporation, the affirmative vote
of the holders of 66-2/3% of the voting power of the shares of the then
outstanding Voting Stock voting together as a single class, including the
affirmative vote of the holders of 66-2/3% of the voting power of the then
outstanding Voting Stock not owned directly or indirectly by any Interested
Stockholder or any Affiliate of any Interested Stockholder, shall be required to
amend or repeal, or adopt any provisions inconsistent with, this Article IX of
this Certificate of Incorporation.
ARTICLE X
A director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the GCL as the same exists or may hereafter be amended. Any
amendment, modification or repeal of the foregoing sentence shall not adversely
affect any right or protection of a director of the corporation hereunder in
respect of any act or omission occurring prior to the time of such amendment,
modification or repeal.
ARTICLE XI
Subject to the Certificate of Incorporation and applicable law, the
Corporation reserves the right at any time and from time to time to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation or a Preferred Stock Designation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed herein or by
applicable law, and all rights, preferences and privileges of whatsoever nature
conferred upon stockholders, directors or any other persons whomsoever by and
pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article XI,
PROVIDED, HOWEVER, that any amendment or repeal of Article X of this Certificate
of Incorporation shall not adversely affect any right or protection existing
hereunder in respect of any act or omission occurring prior to such amendment or
repeal; and PROVIDED, FURTHER that no Preferred Stock Designation shall be
amended after the issuance of any shares of the series of Preferred Stock
created thereby, except in accordance with the terms of such Preferred Stock
Designation and the requirements of applicable law.
8.
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ARTICLE XII
The powers of the incorporator are to terminate upon the filing of this
Certificate of Incorporation with the Secretary of State of the State of
Delaware. The name and mailing address of the person who is to serve as the
initial director of the corporation until the first annual meeting of
stockholders of the corporation, or until his or her successor is elected and
qualified is:
Carolyn Mar
c/o Monterey Pasta Company
353 Sacramento Street, Suite 500
San Francisco, California 94111
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation this ______ day of ________________, 1996.
MONTEREY PASTA COMPANY
By:________________________________
9.
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EXHIBIT C
BYLAWS
OF
MONTEREY PASTA COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1. DELAWARE OFFICE. The principal office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, and the name and address of its registered agent is Corporation Service
Company, 1013 Center Road, Wilmington, Delaware 19805.
SECTION 1.2. OTHER OFFICES. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3. BOOKS AND RECORDS. The books and records of the Corporation
may be kept at the Corporation's headquarters currently in San Francisco,
California or at such other locations outside the State of Delaware as may from
time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders of
the Corporation shall be held at such date, place and/or time as may be fixed by
resolution of the Board of Directors.
SECTION 2.2. SPECIAL MEETING. Subject to the rights of the holders of any
series of preferred Stock, par value $.001 per share, of the Corporation (the
"Preferred Stock") or any other series or class of Stock as set forth in the
Certificate of Incorporation to elect additional directors under specified
circumstances, special meetings of the stockholders may be called only by the
Chairman of the Board or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors which the Corporation
would have if there were no vacancies (the "Whole Board").
SECTION 2.3. PLACE OF MEETING. The Board of Directors may designate the
place of meeting for any meeting of the stockholders. If no designation is made
by the Board of Directors, the place of meeting shall be the principal office of
the Corporation.
SECTION 2.4. NOTICE OF MEETING. Written or printed notice, stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be prepared and delivered by the Corporation not less
than ten days nor more than sixty days before the date of the meeting, either
personally, or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law.
Meetings may be held without notice if all stockholders entitled to vote are
present (except as otherwise provided by law), or if notice is waived by those
not present. Any previously scheduled meeting of the stockholders may be
postponed and (unless the
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Certificate of Incorporation otherwise provides) any special meeting of
shareholders may be cancelled by resolution of the Board of Directors upon
public notice given prior to the time previously scheduled for such meeting of
stockholders.
SECTION 2.5. QUORUM AND ADJOURNMENT. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the voting
power of the outstanding shares of the Corporation entitled to vote generally in
the election of directors (the "Voting Stock"), represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except that when
specified business is to be voted on by a class or series voting separately as a
class or series, the holders of a majority of the voting power of the shares of
such class or series shall constitute a quorum for the transaction of such
business. The chairman of the meeting or a majority of the shares of Voting
Stock so represented may adjourn the meeting from time to time, whether or not
there is such a quorum (or, in the case of specified business to be voted on by
a class or series, the chairman or a majority of the shares of such class or
series so represented may adjourn the meeting with respect to such specified
business). No notice of the time and place of adjourned meetings need be given
except as required by law. The stockholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 2.6. PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or as may be permitted by
law, or by his duly authorized attorney-in-fact. Such proxy must be filed with
the Secretary of the Corporation or her representative at or before the time of
the meeting.
SECTION 2.7. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) Special Meetings of Stockholders. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.4 of these Bylaws, (b) by or at the direction of the
Chairman or the Board of Directors or (c) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the notice procedures
set forth in clauses (2) and (3) of this paragraph (A) of this Bylaw and who was
a stockholder of record at the time such notice is delivered to the Secretary of
the Corporation.
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Bylaw, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not less than seventy days nor more than ninety days 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 by more than
twenty days, or delayed by more than seventy days, from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of such
meeting is first made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes 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 "Exchange 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 stockholder 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 stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder 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 stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner. In no event
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shall the public announcement of an adjournment of an annual meeting commence a
new time period for the giving of a stockholder's notice described above.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of
this Bylaw to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least eighty
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth day following the
day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting pursuant to Section
2.4 of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Bylaw and who is a stockholder of record at the
time such notice is delivered to the Secretary of the Corporation. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as are specified in the Corporation's Notice of Meeting, if the
stockholder's notice as required by paragraph (A)(2) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the ninetieth day prior to such special meeting and not later
than the close of business on the later of the seventieth day prior to such
special meeting or the tenth day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall the
public announcement of an adjournment of a special meeting commence a new time
period for the giving of a stockholders notice as described above.
(C) General. (1) Only persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as director and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, 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 in accordance with the procedures set forth
in this Bylaw and, if any proposed nomination or business is not in compliance
with this Bylaw, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Bylaw, "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 Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
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SECTION 2.8. PROCEDURE FOR ELECTION OF DIRECTORS. Election of directors
at all meetings of the stockholders at which directors are to be elected shall
be by written ballot, and, except as otherwise set forth in the Certificate of
Incorporation with respect to the right of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, a
plurality of the votes cast thereat shall elect directors. Except as otherwise
provided by law, the Certificate of Incorporation or these Bylaws, all matters
other than the election of directors submitted to the stockholders at any
meeting shall be decided by the affirmative vote of a majority of the voting
power of the outstanding Voting Stock present in person or represented by proxy
at the meeting and entitled to vote thereon.
SECTION 2.9. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
(A) The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act, or if all inspectors or alternates who
have been appointed are unable to act, at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the General Corporation Law of the State of
Delaware.
(B) The chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these Bylaws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these Bylaws required to be exercised or done by the
stockholders.
SECTION 3.2. NUMBER, TENURE AND QUALIFICATIONS. Subject to the rights of
the holders of any series of Preferred Stock, or any other series or class of
Stock as set forth in the Certificate of Incorporation, to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Whole
Board, but shall consist of not less than five nor more than nine directors.
SECTION 3.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without notice other than this Bylaw immediately after,
and at the same place as, each annual meeting of stockholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without notice other than such resolution.
SECTION 3.4. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be called at the request of the Chairman of the Board, the President or a
majority of the Board of Directors. The person or persons authorized to call
special meetings of the Board of Directors may fix the place and time of the
meetings.
SECTION 3.5. NOTICE. Notice of any special meeting shall be given to each
director at his business or residence in writing or by telegram or by telephone
communication. If mailed, such notice shall be deemed adequately delivered when
deposited in the United States mails so addressed, with postage thereon prepaid,
at least five days before such meeting. If by telegram, such notice shall be
deemed adequately delivered when the telegram is delivered to the telegraph
company at least twenty-four hours before such meeting. If by facsimile
transmission, such notice shall be
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transmitted at least twenty-four hours before such meeting. If by telephone,
the notice shall be given at least twelve hours prior to the time set for the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice of such meeting, except for amendments to these Bylaws as provided under
Section 8.1 of Article VIII hereof. A meeting may be held at any time without
notice if all the directors are present (except as otherwise provided by law) or
if those not present waive notice of the meeting in writing, either before or
after such meeting.
SECTION 3.6. QUORUM. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors. The directors present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough directors to leave less than a quorum.
SECTION 3.7. VACANCIES. Subject to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth in
the Certificate of Incorporation, to elect additional directors under specified
circumstances, and unless the Board of Directors otherwise determines, vacancies
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, and newly created directorships resulting from any
increase in the authorized number of directors, may be filled only by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors, and directors so chosen shall hold office for
a term expiring at the annual meeting of stockholders at which the term of
office expires and until such director's successor shall have been duly elected
and qualified. No decrease in the number of authorized directors constituting
the Whole Board shall shorten the term of any incumbent director.
SECTION 3.8. COMMITTEES. The Board of Directors, immediately following
each annual meeting of stockholders or a special meeting of the same held in
lieu of the annual meeting for the election of directors, shall meet and shall
appoint from its number such committee(s), each consisting of such number of
members as from time to time may be selected by the Board, to serve until the
next annual or special meeting at which a majority of directors is elected or
until the respective successor of each is duly appointed. Such committee(s)
shall possess and may exercise all the powers and authority of the Board of
Directors in the management and direction of the business and affairs of the
Corporation, except as limited by law and except for the power to change the
membership or to fill vacancies in the Board or said Committee. The Board shall
have the power at any time to change the membership of such committee(s), to
fill vacancies in it or to make rules for the conduct of its business. The
Board of Directors may designate one or more Directors as alternate members of
any such committee(s), who may replace any absent member at any meeting of such
committee(s). Except as otherwise prohibited by applicable law, any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have all the authority of the Board of Directors.
SECTION 3.9. REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, any director, or the entire Board of Directors, may be removed
from office at any time, with or without cause, but only by the affirmative
vote of the holders of at least 66 2/3 percent of the voting power of the
then outstanding Voting Stock, voting together as a single class.
5.
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ARTICLE IV
OFFICERS
SECTION 4.1. ELECTED OFFICERS. The elected officers of the Corporation
shall be a President and Chief Executive Officer, a Secretary, a Chief Financial
Officer, and such other officers as the Board of Directors from time to time may
deem proper. The Corporation may also have, at the discretion of the Board of
Directors, a Chairman of the Board who shall be chosen from the directors, one
or more Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Chief Financial Officers and such other officers as may be appointed
in accordance with Section 4.7 of this Article IV. Any number of offices may be
held by the same person. All officers chosen by the Board of Directors shall
each have such powers and duties as generally pertain to their respective
offices, subject to the specific provisions of this Article IV. Such officers
shall also have powers and duties as from time to time may be conferred by the
Board of Directors or by any committee thereof.
SECTION 4.2. ELECTION AND TERM OF OFFICE. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to
Section 4.7 of these Bylaws, each officer shall hold office until his or her
successor shall have been duly elected and shall have qualified or until his or
her death or until he or she shall resign.
SECTION 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board or the
President if there is no Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors. The Chairman of the Board or
the President, as the case may be, shall be responsible for the general
management of the affairs of the Corporation and shall perform all duties
incidental to his office which may be required by law and all such other duties
as are properly required of him by the Board of Directors. Except where by law
the signature of the President is required, the Chairman of the Board shall
possess the same power as the President to sign all certificates, contracts, and
other instruments of the Corporation which may be authorized by the Board of
Directors. The Chairman or the President, as the case may be, shall make
reports to the Board of Directors and the stockholders, and shall perform all
such other duties as are properly required of him by the Board of Directors.
The Chairman or the President shall see that all orders and resolutions of the
Board of Directors and of any committee thereof are carried into effect.
SECTION 4.4. PRESIDENT. The President shall act in a general executive
capacity and oversee the administration and operation of the Corporation's
business and general supervision of its policies and affairs. The President
shall, in the absence of or because of the inability to act of the Chairman of
the Board, perform all duties of the Chairman of the Board and preside at all
meetings of stockholders and of the Board of Directors. The President may sign,
alone or with the Secretary, or an Assistant Secretary, or any other proper
officer of the Corporation authorized by the Board of Directors, certificates,
contracts, and other instruments of the Corporation as authorized by the Board
of Directors.
SECTION 4.5. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and Directors and all other notices
required by law or by these Bylaws, and in case of his or her absence or refusal
or neglect so to do, any such notice may be given by any person thereunto
directed by the Chairman of the Board or the President, as the case may be, or
by the Board of Directors, upon whose request the meeting is called as provided
in these Bylaws. The Secretary shall record all the proceedings of the meetings
of the Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President, as the case may be. The Secretary shall have the
custody of the seal of the Corporation and shall affix the same to all
instruments requiring it, when authorized by the Board of Directors, the
Chairman of the Board or the President, as the case may be, and attest to the
same.
SECTION 4.6. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody of the corporate funds and securities and shall keep full and
accurate receipts and disbursements in books belonging to the Corporation. The
Chief Financial Officer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation
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in such depositaries as may be designated by the Board of Directors. The Chief
Financial Officer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, the Chairman of the Board, or the President, as the
case may be taking proper vouchers for such disbursements. The Chief Financial
Officer shall render to the Board of Directors, the Chairman of the Board or the
President, as the case may be, whenever requested, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation. The Chief Financial Officer shall monitor the financial
affairs of the Corporation and shall cause the financial statements of the
Corporation to be prepared periodically in accordance with applicable laws,
rules, regulations and accounting principles. If required by the Board of
Directors, the Chief Financial Officer shall give the Corporation a bond for the
faithful discharge of his or her duties in such amount and with such surety as
the Board of Directors shall prescribe. The Chief Financial Officer shall have
the duties of the Treasurer.
SECTION 4.7. ADDITIONAL OFFICERS. The Board of Directors may appoint,
and may authorize the Chairman of the Board or the President or another officer
to appoint, any other officers that the business of the Corporation may require,
each of whom shall have the title, hold office for the period, have the
authority, and perform the duties specified in these Bylaws or determined from
time to time by the Board of Directors.
SECTION 4.8. REMOVAL. Any officer elected by the Board of Directors may
be removed by the Board of Directors whenever, in their judgment, the best
interests of the Corporation would be served thereby. No elected officer shall
have any contractual rights against the Corporation for compensation by virtue
of such election beyond the date of the election of his or her successor, his or
her death, his or her resignation or his or her removal, whichever event shall
first occur, except as otherwise provided in an employment contract or an
employee plan.
SECTION 4.9. VACANCIES. A newly created office and a vacancy in any
office because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1. STOCK CERTIFICATES AND TRANSFERS.
(A) The interest of each stockholder of the Corporation shall be evidenced
by certificates for shares of stock in such form as the Board of Directors of
the Corporation may from time to time prescribe. The shares of the stock of the
Corporation shall be transferred on the books of the Corporation by the holder
thereof in person or by his or her attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require.
(B) The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificates to
be in facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
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 he or
she were such officer, transfer agent or registrar at the date of issue.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify
and hold harmless, to the fullest permitted by applicable law as it presently
exists or may hereafter be amended, any person (an "Indemnitee") who was
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or is made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he or she, or a
person for whom he or she is the legal representative, is or was a director or
officer of the Corporation or, while a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such Indemnitee.
Notwithstanding the preceding sentence, except as otherwise provided in Section
6.3, the Corporation shall be required to indemnify an Indemnitee in connection
with a proceeding (or part thereof) commenced by such Indemnitee only if the
commencement of such proceeding (or part thereof) by the Indemnitee was
authorized by the Board of Directors of the Corporation.
SECTION 6.2. PREPAYMENT OF EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees) incurred by an Indemnitee in defending any
proceeding in advance of its final disposition, PROVIDED, HOWEVER, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Indemnitee to repay all amounts advanced if it should be ultimately
determined that the Indemnitee is not entitled to be indemnified under this
Article VI or otherwise.
SECTION 6.3. CLAIMS. If a claim for indemnification or payment of
expenses under this Article VI is not paid in full within sixty days after a
written claim therefor by the Indemnitee has been received by the Corporation,
the Indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the Indemnitee is not entitled to the requested
indemnification or payment of expenses under applicable law.
SECTION 6.4. NONEXCLUSIVITY OF RIGHTS. The rights conferred on any
Indemnitee by this Article VI shall not be exclusive of any other rights which
such Indemnitee may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders
or disinterested directors or otherwise.
SECTION 6.5. OTHER SOURCES. The Corporation's obligation, if any, to
indemnify or to advance expenses to any Indemnitee who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such Indemnitee may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint venture,
trust, enterprise or nonprofit enterprise.
SECTION 6.6. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any Indemnitee in respect of any act or omission
occurring prior to the time of such repeal or modification.
SECTION 6.7. OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES. This
Article VI shall not limit the right of the Corporation, to the extent and in
the manner permitted by law, to indemnify and to advance expenses to persons
other than Indemnitees when and as authorized by appropriate corporate action.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall end on
the last Sunday of each calendar year with the effect being a 52/53 week fiscal
year.
SECTION 7.2. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its Certificate of
Incorporation.
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SECTION 7.3. SEAL. The corporate seal shall have inscribed the name of
the Corporation thereon and shall be in such form as may be approved from time
to time by the Board of Directors.
SECTION 7.4. WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at, nor the purpose of, any
annual or special meeting of the stockholders of the Board of Directors need be
specified in any waiver of notice of such meeting.
SECTION 7.5. AUDITS. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be made annually.
SECTION 7.6. RESIGNATIONS. Any director or any officer, whether elected
or appointed, may resign at any time by serving written notice of such
resignation on the Chairman of the Board, the President or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President, or
the Secretary or at such later date as is stated therein. No formal action
shall be required of the Board of Directors or the stockholders to make any such
resignation effective unless otherwise provided therein.
SECTION 7.7. CONTRACTS. Except as otherwise required by law, the
Certificate of Incorporation or these Bylaws, any contracts or other instruments
may be executed and delivered in the name and on the behalf of the Corporation
by such officer or officers of the Corporation as the Board of Directors may
from time to time direct. Such authority may be general or confined to specific
instances as the Board may determine. The Chairman of the Board, the President,
the Chief Financial Officer or any Vice President may execute bonds, contracts,
deeds, leases and other instruments to be made or executed for or on behalf of
the Corporation. Subject to any restrictions imposed by the Board of Directors
or the Chairman of the Board, the President or any Vice President of the
Corporation may delegate contractual powers to others under his or her
jurisdiction, it being understood, however, that any such delegation of power
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.
SECTION 7.8. PROXIES. Unless otherwise provided by resolution adopted by
the Board of Directors, the Chairman of the Board, the President or any Vice
President may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to cast
the votes which the Corporation may be entitled to cast as the holder of stock
or other securities in any other corporation or other entity, any of whose stock
or other securities may be held by the Corporation, at meetings of the holders
of the stock or other securities of such other corporation or other entity, or
to consent in writing, in the name of the Corporation as such holder, to any
action by such other corporation or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he or she may deem necessary or proper in the
premises.
9.
<PAGE>
ARTICLE VIII
AMENDMENTS
SECTION 8.1. AMENDMENTS. These Bylaws may be amended, altered, added to,
rescinded or repealed at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was given in the notice of
the meeting and, in the case of a meeting of the Board of Directors, in a notice
given no less than twenty-four hours prior to the meeting; PROVIDED, HOWEVER,
that, notwithstanding any other provisions of these Bylaws or any provision of
law which might otherwise permit a lesser vote or no vote, but in addition to
any affirmative vote of the holders of any particular class or series of the
stock required by law, the Certificate of Incorporation or these Bylaws, the
affirmative vote of the holders of at least 66 2/3 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class, shall
be required in order for stockholders to adopt, alter, amend or repeal any
bylaws.
10.
<PAGE>
MONTEREY PASTA COMPANY
353 SACRAMENTO STREET, SUITE 500
SAN FRANCISCO, CA 94111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock acknowledges receipt of the Notice of
Special Meeting of Shareholders of Monterey Pasta Company, and the accompanying
Proxy Statement dated June 28, 1996, and revoking any proxy heretofore given,
hereby constitutes and appoints Marshall Stevens and Carolyn Mar and each of
them, with full power of substitution, as proxies to appear and vote all of the
shares of Common Stock of Monterey Pasta Company, a California corporation,
standing in the name of the undersigned which the undersigned could vote if
personally present and acting at the Special Meeting of Shareholders of Monterey
Pasta Company, to be held at the Holiday Inn Financial District, Coit Room, 750
Kearny Street, San Francisco, California, on Thursday, August 1, 1996, at 9:00
a.m. or at any adjournment or postponement thereof, upon the following items as
set forth in the Notice of Special Meeting and Proxy Statement and to vote
according to their discretion on all other matters which may be properly
presented for action at the meeting or at any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 and 3 LISTED
BELOW. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2
and 3 LISTED BELOW. NOTE: THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF A
VOTE AGAINST PROPOSALS 1, 2 and 3. NO OTHER BUSINESS WILL BE TRANSACTED AT THIS
MEETING.
1. TO AUTHORIZE THE COMPANY TO CHANGE THE COMPANY'S STATE OF INCORPORATION FROM
CALIFORNIA TO DELAWARE.
/ / FOR / / AGAINST / / ABSTAIN
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK FROM
20,000,000 to 70,000,000 SHARES, AN INCREASE OF 50,000,000 SHARES.
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S FIRST AMENDED AND RESTATED 1993
STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK RESERVED FOR ISSUANCE THEREUNDER FROM 1,200,000 TO 1,740,000 SHARES,
AN INCREASE OF 540,000 SHARES.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
ADDRESS CHANGE: PLEASE MARK ADDRESS BOX ON REVERSE SIDE.
<PAGE>
Please sign exactly as name appears to the
left. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as
such. If a corporation, please sign in
full corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
/ / Address Change (Please mark this box
if you have an address change.)
Dated:
---------------------------------------------------,
1996
-------------------------------------------------------------------------------
Signature
-------------------------------------------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HERETO BY
THE ABOVE-REFERENCED SHAREHOLDER. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
