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MONTEREY PASTA COMPANY
June 14, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Monterey Pasta Company (the "Company") on Thursday, July 11, 1996, commencing at
10:00 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
to implement the Company's shareholder rights plan, so that those shares are
available in the event that the Board of Directors determines that it is
necessary 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 2,941,518 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 2,941,518 shares,
an increase of 1,741,518 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
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MONTEREY PASTA COMPANY
353 SACRAMENTO STREET, SUITE 500
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 11, 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, July 11, 1996, at 10:00 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 2,941,518, an increase
of 1,741,518 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 14, 1996
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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, July 11, 1996, at 10:00 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 14,
1996, to all shareholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
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,
______________ shares of the Company's Common Stock were issued and outstanding.
As of June __, 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 6.81672%
Management(1)
50 Osgood Place
San Francisco, CA 94133
Wellington Management Company(2) 585,100 6.72251%
75 State Street
Boston, MA 02109
Lance H. Mortensen 877,549(3) 10.083%
117 Warwick Court
Alamo, CA 94507
(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
1.
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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.
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
may retain the services of 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. 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 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.
2.
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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 or limits 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.
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. In the process of
this evaluation, the Board of Directors has considered, or may consider in the
future, certain anti-takeover strategies which may enhance the Board's ability
to negotiate with an unsolicited bidder.
3.
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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, location of
the principal facilities, assets or liabilities 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.
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 (20) million (20,000,000) shares of Common Stock and five (5)
million shares of undesignated Preferred Stock. At the Special Meeting, the
shareholders are being asked to approve 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, as more
fully discussed below. 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. If the shareholders were to
approve the Reincorporation Proposal but not approve Proposal 2, and if the
Company were to go forward with the Proposed Reincorporation, the Certificate of
Incorporation of MPC Delaware would be changed prior to the merger to authorize
the issuance of only 20 million shares of Common Stock. Disapproval of Proposal
No. 3 will not affect the authorization of 1 million (1,000,000) shares of
undesignated Preferred Stock.
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 so that the Company may, if
it so chooses, have greater flexibility in increasing the size of the Board of
Directors. In contrast to the Bylaws of MPC California, however, the Bylaws of
MPC Delaware provide
4.
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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, 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 by a majority vote of the entire Board 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 lengthier and 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. Although permitted to do so, the Bylaws of MPC
Delaware do not eliminate the right of stockholders to call a special meeting of
stockholders; instead, the Bylaws authorize the board of directors, the chairman
of the board, the president, the chief executive officer or the holders of
shares entitled to cast not less than ten percent of the votes at such meeting
to call a special meeting of stockholders. 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 limit or eliminate the right
of stockholders to call a special meeting of stockholders. Any such limitation
could make it more difficult for stockholders to initiate action that is opposed
by the Board of Directors.
5.
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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
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 date
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 date 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 majority shareholder vote
and 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.
Section 203 is currently under challenge in lawsuits arising out of ongoing
takeover disputes, and it is not yet clear whether and to what extent its
constitutionality will be upheld by the courts. The United States District
Court for the District of Delaware has consistently upheld the constitutionality
of Section 203, but the Delaware Supreme Court has not yet considered the issue.
The Company, believes that so long as the constitutionality of Section 203 is
upheld, 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.
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 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. In the case of a Delaware corporation having cumulative
voting, if less than the entire board is to be removed, a director may not be
removed without cause unless the shares voted against such removal would not be
sufficient to elect the director under cumulative voting.
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A director of a corporation with a classified board of directors may be removed
only for cause, unless the certificate of incorporation otherwise provides.
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, consistent with the Bylaws of MPC
California, that any vacancy created by the removal of a director by the
stockholders of MPC Delaware may only by filled by the stockholders. 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 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.
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
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
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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 disinterested quorum of the
directors, by independent legal counsel or by a majority vote of a quorum of the
stockholders that the person seeking indemnification acted in good faith and in
a manner reasonably believed to be in or (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.
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 6-1/4
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 6-1/4 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
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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 a majority of the shareholders of both acquiring and target corporations
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 or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.
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) or "fair" (in
Delaware) to the corporation, or (ii) the contract or transaction must have been
just and reasonable or fair, 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
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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 Bylaws of MPC Delaware provide that election
need not be by ballot, but the Certificate of Incorporation of MPC Delaware,
consistent with MPC California's Bylaws, provides that if a stockholder
specifically demands election of directors by ballot (or if the Bylaws provide
that elections shall be by ballot) then elections shall be held by ballot.
Stockholders of MPC Delaware may therefore continue to demand election by
ballot, unless and until the Certificate of Incorporation is amended, which
would require a majority stockholder vote. It may be more difficult for a
stockholder to contest the outcome of a vote which has not been conducted 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, 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
(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.
California law does in general afford 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 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
substantially, to the effect that: (i) the Proposed Reincorporation will
constitute a tax-free reorganization under Section 366(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 as a
capital asset 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.
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.
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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, _______________ 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 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 2,941,518 shares under the
Company's First Amended and Restated 1993 Stock Option Plan (the "Option 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.
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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. By subsequent amendments adopted by the Board
of Directors and the shareholders, the number of shares originally reserved for
issuance under the Option Plan has been increased from 315,000 to 915,000 on
January 12, 1994, to 1,200,000 shares on October 19, 1994, subject to
shareholder approval. In May 1996, the Board of Directors approved, and the
shareholders are being asked to ratify, an amendment reserving an additional
1,741,518 shares for the Option Plan, bringing the total shares reserved under
the Option Plan to 2,941,518 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. The
principal features of the Option Plan are as follows:
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. 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 and 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 Board of Directors 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.
13.
<PAGE>
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 shall from time to time establish and is subject to the
following additional terms and conditions:
EXERCISE OF THE OPTION: The Board of Directors or the Compensation
Committee 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: Incentive stock options granted under the Option
Plan expire ten (10) years from the date of grant. All other 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.
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.
14.
<PAGE>
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 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. A different rule for measuring
income upon such a premature disposition may apply if the optionee is also an
officer, director or 100% shareholder of the Company. 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 law, capital gain is fully included in gross income and is
taxed at the same rates as ordinary income. 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. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired or where the optionee is an
officer, director or 10% shareholder of the Company the date of taxation may be
deferred unless the optionee files an election with the Internal Revenue Service
under Section 83(b) of the Code. The income recognized by the optionee will be
subject to tax 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 law, capital gain is fully included in
gross income and is taxed at the same rates as ordinary, income. Under current
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
15.
<PAGE>
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 the 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.
OTHER MATTERS
No other matters will be submitted to the meeting.
Dated: June 14, 1996
By Order Of The Board of Directors
Carolyn Mar, Secretary
16.
<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 14, 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, July 11, 1996, at 10:00
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
ON THE REVERSE HEREOF. 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 ON THE REVERSE HEREOF. 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 2,941,518 SHARES,
AN INCREASE OF 1,741,518 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 UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
<PAGE>
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 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 stock option plans (including the First Amended and Restated 1993 Stock
Option Plan, as amended) 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 _________________________, 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 whole 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 Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, Delaware 19801, County of New Castle, and The
Corporation Trust Company is the registered agent of the Surviving Corporation
at such address.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 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.
<PAGE>
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
"Corporations") is
Monterey Pasta Company
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is One Rodney Square, 10th Floor, Tenth and King Streets, in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
such address is RL&F Service Corp.
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).
<PAGE>
(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.
(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 of 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 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 receive notice
of any meeting of stockholders at which they are not entitled to vote.
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 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:
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(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 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required in order for the stockholders to alter, amend or repeal any provision
of the Bylaws or to adopt additional bylaws; 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 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 80 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 or
any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specific circumstances, 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
80 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 or
any other series or class of stock as set forth of Incorporation 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.
3.
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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, 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 80 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 of the class to which
they have been elected 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 80 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.
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
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 $10,000,000 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 $10,000,000 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
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(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 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 paragraph
(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
shall have been met:
(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
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ratio of (1) 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 (1) 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 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
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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) 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.
(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
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meeting, and with respect to which shares neither such Person nor any such
Affiliate or Associate is otherwise deemed the Beneficial Owner).
(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 teens in Rule 1 2b-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 bid
quotation with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use in its
stead, or if no such quotations are 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.
(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.
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Section 4. The Continuing Directors of the Corporation shall have the
power and dug 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 $10,000,000 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
Except as may be expressly provided in this Certificate of Incorporation,
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
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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.
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 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:
--------------------------------
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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, ant the name and address of its registered agent is RL&F Service Corp.,
Tenth Floor, One Rodney Square, Tenth and King Streets, Wilmington, Delaware.
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 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.
<PAGE>
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 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 as a class, 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 ant 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.
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(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. 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, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of l934, as amended (the "Exchange Act"), 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 (u) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(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
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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. Nominations by stockholders of persons for election to the
Board of Directors may be made at such a special meeting of stockholders 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.
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 or any other series or class of 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.
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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 more than five nor less 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
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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 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 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 of the class to which they have been elected 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. EXECUTIVE COMMITTEE. 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 an Executive Committee 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. The
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Executive Committee 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 said
Committee, to fill vacancies in it or to make rules for the conduct of its
business.
SECTION 3.9. REMOVAL. 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, 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 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class.
ARTICLE IV
OFFICERS
SECTION 4.1. ELECTED OFFICERS. The elected officers of the Corporation
shall be a Chairman of the Board, a President, a Secretary, a Treasurer, and
such other officers as the Board of Directors from time to time may deem proper.
The Chairman of the Board shall be chosen from the directors. 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 Section shall be held as soon thereafter as convenient. Subject to Section
4.7 of these Bylaws, each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign.
SECTION 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board 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. He 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. He
shall see that all orders and resolutions of the Board of Directors and of any
committee thereof are carried into elect.
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SECTION 4.4. PRESIDENT. The President shall act in a general executive
capacity and shall assist the Chairman of the Board in 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 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, or by the Board of Directors,
upon whose request the meeting is called as provided in these Bylaws. He 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
by the Board of Directors, the Chairman of the Board or the President. He 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, and attest to the same.
SECTION 4.6. TREASURER. The Treasurer 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 Treasurer shall
deposit and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. The Treasurer shall render to the Chairman of the
Board, the President and the Board of Directors, whenever requested, an account
of all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond for the faithful discharge of his duties in such amount
and with such surety as the Board of Directors shall prescribe.
SECTION 4.7. 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 successor, his death,
his resignation or his removal, whichever event shall first occur, except as
otherwise provided in an employment contract or an employee plan.
SECTION 4.8. 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.
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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 appropriate officers 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 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
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 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 a person for whom he 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
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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 begin
on the first day of January and end on the thirty-first day of December of each
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
she 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.
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
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 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
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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 may deem necessary or proper in the premises.
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 80 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 alter, amend or repeal any provision of
these Bylaws or to adopt any additional bylaw.
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