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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 15, 2000
ADVANCED NUTRACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Texas
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(State or other jurisdiction of incorporation)
0-26362 Applied For
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(Commission File Number) (IRS Employer Identification Number)
9101 Jameel, Suite 180, Houston, TX 77040
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (713) 460-1976
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Nutrition For Life International, Inc. (Former name, if changed since last
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report)
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ADVANCED NUTRACEUTICALS, INC.
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
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Effective at 3:00 P.M. (Central Standard Time) on March 15, 2000, Nutrition
For Life International, Inc., a Texas corporation ("NFLI") reorganized into a
holding company structure (the "Reorganization") in which Advanced
Nutraceuticals, Inc., a Texas corporation ("ANI") became the holding company.
As a result of the Reorganization, ANI will become the Registrant.
The Reorganization was effected through the formation by NFLI of the
Registrant as a wholly-owned subsidiary and the formation by the Registrant of a
wholly-owned subsidiary, NFLI Merger Sub, Inc., a Texas corporation ("Merger
Sub"). An Agreement and Plan of Merger dated March 13, 2000 was entered into by
and among NFLI, Registrant and Merger Sub (the "Merger Agreement"), and pursuant
to the Merger Agreement, Merger Sub merged with and into NFLI (the "Merger"),
with NFLI as the surviving corporation. NFLI became a wholly-owned subsidiary
of the Registrant as a result of the Merger. The Reorganization was effected in
accordance with the provisions of Article 5.03(H) of the Texas Business
Corporation Act. In accordance with those provisions, approval of the
shareholders of NFLI was not required.
Pursuant to the Merger Agreement, each outstanding share of common stock of
NFLI issued and outstanding immediately prior to the Merger was converted into
one share of the Registrant's common stock. As a result, the NFLI shareholders
now hold common stock in the Registrant (instead of NFLI) which is deemed to
have been registered under Section 12(g) of the Securities Exchange Act of 1934
because the Reorganization constitutes a "succession" and the Registrant
constitutes a "successor issuer" of NFLI for securities law purposes.
In addition, pursuant to the terms of the Merger Agreement, each
outstanding share of Series A Preferred Stock of NFLI issued and outstanding
immediately prior to the Merger was converted into one share of Series A
Preferred Stock of the Registrant. Also, each outstanding option, and each
outstanding warrant, to purchase shares of NFLI's common stock has been
converted into an option or warrant, as the case may be, to purchase, on the
same terms and conditions, an identical number of shares of the Registrant's
common stock.
The Registrant's common stock will trade on The Nasdaq Stock Market under
the trading symbol, ANII, and the warrants will trade under the symbol, ANIIW.
Item 7. Financial Statements and Exhibits
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2. Agreement and Plan of Merger dated March 13, 2000 among Nutrition
For Life International, Inc., Advanced Nutraceuticals, Inc. and NFLI Merger Sub,
Inc.
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3.1 Articles of Incorporation of Advanced Nutraceuticals, Inc.
3.2 Bylaws of Advanced Nutraceuticals, Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED NUTRACEUTICALS, INC.
Dated: March 16, 2000 By: /s/ David P. Bertrand
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David P. Bertrand, President
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Agreement and Plan of Merger
Dated as of March 13, 2000
among
Nutrition For Life International, Inc.,
Advanced Nutraceuticals, Inc.
and
NFLI Merger Sub, Inc.
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement" or the "Merger") is made
this 13/th/ day of March, 2000, among Nutrition For Life International, Inc., a
Texas corporation ("NFLI"), Advanced Nutraceuticals, Inc., a Texas corporation
("ANI"), and NFLI Merger Sub, Inc., a Texas corporation ("Merger Sub").
Recitals
A. The purpose of this Merger is to reorganize NFLI so that NFLI becomes
a subsidiary of a holding company, ANI. The holding company structure will
facilitate future third party acquisitions.
B. ANI was formed as a wholly-owned subsidiary of NFLI pursuant to a
proposal for the reorganization of NFLI approved by the Board of Directors of
NFLI.
C. Merger Sub was formed as a wholly-owned subsidiary of ANI pursuant to
a proposal for the reorganization of NFLI approved by the Board of Directors of
NFLI.
D. The reorganization of NFLI is to effected by merging Merger Sub with
and into NFLI (the "Merger") and causing the shareholders of NFLI to become the
shareholders of ANI.
E. The Texas Business Corporation Act (the "TBCA") permits the Merger of
NFLI and Merger Sub provided that NFLI and Merger Sub adopt a plan of merger
which sets forth: (1) the terms and conditions of the Merger; (2) the manner and
basis of converting the shares of each corporation into shares or securities or
obligations of the surviving corporation; and (3) other applicable provisions.
F. Unless the context otherwise requires, capitalized terms used in this
Agreement shall have the following meanings for all purposes of this Agreement:
1. "Articles of Merger" shall mean those Articles or Certificates
or Agreement of Merger with respect to the Merger as may be required by the
TBCA.
2. "Effective Time of the Merger" shall mean the time the Merger
becomes effective as set forth in Section 1.2.
3. "Merger Sub Stock" means the common stock, par value $.01 per
share, of Merger Sub.
4. "NFLI Common Stock" means the common stock, $.01 par value, of
NFLI.
5. "NFLI Preferred Stock" means the preferred stock, $.001 par
value, of NFLI.
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6. "NFLI Series A Preferred Stock" means the Series A Preferred
Stock, $.001 par value, of NFLI.
7. "Parties" means NFLI, Merger Sub and ANI.
8. "Surviving Corporation" shall mean NFLI as the surviving party in
the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the Parties hereto hereby agree as follows:
1. THE MERGER.
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, Merger Sub shall be merged with and into NFLI at the Effective
Time of the Merger. Following the Effective Time of the Merger, the separate
corporate existence of Merger Sub shall cease and NFLI shall continue as the
Surviving Corporation. The name of Nutrition For Life International, Inc. will
not be amended as a result of the Merger.
1.2 Effective Time Of The Merger. At the Closing, Merger Sub and NFLI
shall file Articles of Merger in such form as is required by and executed in
accordance with the relevant provisions of the TBCA. The Merger shall become
effective at such time as the Articles of Merger are duly filed with the Texas
Secretary of State or at such subsequent time as Merger Sub and NFLI shall agree
and as shall be specified in the Articles of Merger.
1.3 Articles Of Incorporation, Bylaws, Board Of Directors And Officers Of
The Surviving Corporation.
(i) The Articles of Incorporation of NFLI as in effect immediately
prior to the Effective Time of the Merger shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law, except that the Articles of Incorporation of NFLI
as the Surviving Corporation are amended to including the following provision as
Article EIGHTEENTH:
EIGHTEENTH: Any act or transaction by or involving this Corporation
that requires for its approval under the Texas Business Corporation
Act or this Corporation's Articles of Incorporation the approval of
this Corporation's shareholders, shall, pursuant to Article
5.03(H)(6)(a) of the Texas Business Corporation Act, require the
approval of the shareholders of Advanced Nutraceuticals, Inc. (or its
successor by merger) by the same vote as is required by the Texas
Business Corporation Act and the Articles of Incorporation of this
Corporation.
(ii) At the effective time of the Merger, the Bylaws of NFLI as in
effect immediately prior the Effective Time of the Merger shall be the Bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
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(iii) Directors and officers of NFLI in office immediately prior to
the Effective Time of the Merger, shall be the directors and officers,
respectively, of the Surviving Corporation, and each shall hold his or her
respective office or offices from and after the Effective Time of the Merger
until his or her successor shall have been elected and shall have qualified or
as otherwise provided in the Bylaws of the Surviving Corporation.
1.4 Federal Tax Consequences Of The Merger. As determined by the NFLI
Board of Directors, NFLI shareholders will not recognize gain or loss for United
States federal income tax purposes as a result of the Merger.
1.5 Certain Information With Respect To The Capital Stock Of Merger Sub
And NFLI. The respective designations and numbers of outstanding shares and
voting rights of each class of outstanding capital stock of Merger Sub and NFLI
as of the date of this Agreement are as follows:
(i) As of the date of this Agreement, the authorized and
outstanding capital stock of NFLI consists of 20,000,000 shares of common stock,
$.01 par value, of which 5,808,595 shares are issued and outstanding and
1,000,000 shares of preferred stock, $.001 par value, of which 221,127 shares of
Series A Preferred Stock are issued and outstanding.
(ii) As of the date of this Agreement, the authorized capital stock
of Merger Sub consists of 100 shares of common stock, $.01 par value, of which
100 shares are issued and outstanding.
1.6 Effect Of Merger. At the Effective Time of the Merger, the effect of
the Merger shall be as provided in the applicable provisions of the TBCA.
Except as herein specifically set forth, the identity, existence, purposes,
powers, objects, franchises, privileges, rights and immunities of NFLI shall
continue unaffected and unimpaired by the Merger and the corporate franchises,
existence and rights of Merger Sub shall be merged with and into NFLI and NFLI,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time of the Merger, the separate existence of Merger Sub shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
and every other interest of or belonging to or due to NFLI and Merger Sub shall
be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed. The name of the Surviving Corporation
from and after the Effective Time of the Merger shall be Nutrition For Life
International, Inc.
2. CONVERSION OF STOCK.
2.1 Conversion Of NFLI Common Stock. At the Effective Time of the Merger
and without any action on the part of the holders of NFLI Common Stock, each
outstanding share of NFLI Common Stock shall automatically be converted into and
become the right to receive one share of common stock of ANI. At the Effective
Time of the Merger shares held by the holders of NFLI Common Stock prior to the
Effective Time of the Merger shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such NFLI Common Stock shall cease to have any
rights with respect thereto, except the right to receive the shares of common
stock of ANI upon surrender of such certificate.
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2.2 Conversion Of NFLI Series A Preferred Stock. At the Effective Time
of the Merger and without any action on the part of the holders of NFLI Series A
Preferred Stock, each outstanding share of NFLI Series A Preferred Stock shall
be automatically converted into and become the right to receive one share of the
Series A Preferred Stock of ANI. At the Effective Time of the Merger shares
held by the holders of NFLI Series A Preferred Stock prior to the Effective Time
of the Merger shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
representing any such NFLI Series A Preferred Stock shall cease to have any
rights with respect thereto, except the right to receive shares of the Series A
Preferred Stock of ANI upon surrender of such certificate.
2.3 Exchange Of Certificates. At the Effective Time of the Merger, each
holder of an outstanding certificate or certificates which immediately prior to
the Effective Time of the Merger represented shares of NFLI Common Stock (the
"Common Certificates") shall receive, upon surrender to ANI of one or more
Common Certificates for cancellation, a certificate representing that number of
shares of common stock of ANI which such holder has the right to receive
pursuant to the provisions of Section 2.1. At the Effective Time of the Merger,
each holder of an outstanding certificate or certificates which immediately
prior to the Effective Time of the Merger represented shares of NFLI Series A
Preferred Stock (the "Preferred Certificates") shall receive, upon surrender to
ANI of one or more Preferred Certificates for cancellation, a certificate
representing that number of shares of the Series A Preferred Stock of ANI which
such holder has the right to receive pursuant to the provisions of Section 2.2.
2.4 Cancellation Of NFLI's Shares Of ANI Stock. At the Effective Time of
the Merger, the 100 shares of common stock of ANI owned by NFLI immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger and
without any action on the part of NFLI, cease to be outstanding, be cancelled
and retired without payment of any consideration therefor and shall cease to
exist.
2.5 Merger Sub. At the Effective Time of the Merger, the 100 shares of
common stock of Merger Sub, $.01 par value, issued and outstanding prior to the
Effective Time of the Merger shall be converted into 100 shares of common stock
of the Surviving Corporation.
2.6 Options And Warrants. At the Effective Time of the Merger, each
option or warrant to purchase NFLI Common Stock shall become an option or
warrant to purchase the common stock of ANI on the same terms and conditions and
the same exercise price per share as the option or warrant to purchase NFLI
Common Stock immediately prior to the Effective Time of the Merger.
3. OBLIGATIONS OF THE CONSTITUENT CORPORATIONS.
Each of the Parties shall take or cause to be taken all actions and do or
cause to be done all things necessary, proper or advisable under the laws of the
State of Texas to consummate and affect the Merger.
4. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of Texas.
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5. CAPTIONS; CONSTRUCTION.
The headings of this Agreement are inserted for convenience only, and shall
not constitute a part of this Agreement or be used to construe or interpret any
provision hereof.
6. AMENDMENT.
This Agreement may be amended by the parties hereto, by action taken or
unauthorized by their respective Boards of Directors. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties hereto.
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been executed and
attested to by the persons indicated below.
NUTRITION FOR LIFE INTERNATIONAL, INC.
By: /s/ David P. Bertrand Date: March 13, 2000
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David P. Bertrand
President and CEO
ADVANCED NUTRACEUTICALS, INC.
By: /s/ David P. Bertrand Date: March 13, 2000
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David P. Bertrand
President and CEO
NFLI MERGER SUB, INC.
By: /s/ David P. Bertrand Date: March 13, 2000
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David P. Bertrand
President and CEO
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<PAGE>
Articles Of Incorporation
Of
Advanced Nutraceuticals, Inc.
The undersigned natural person of the age of eighteen years or more, acting
as an incorporator of the Corporation under the Texas Business Corporation Act,
adopts the following Articles of Incorporation for such Corporation.
FIRST: The name of the Corporation is ADVANCED NUTRACEUTICALS, INC.
SECOND: The period of its duration is perpetual.
THIRD: The purposes for which this Corporation is organized are to
engage in and do any lawful act concerning any and all lawful business which
corporations may be organized under the laws of Texas, now or hereafter in
effect.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 20,000,000 shares of common stock, par value of $.01 and
1,000,000 shares of preferred stock, par value of $.001. All shares shall be
fully paid and non-assessable for any purpose.
The Board of Directors is hereby expressly authorized, by resolution or
resolutions, to provide, out of the unissued shares of preferred stock, for the
issuance of one or more series of preferred stock, with such voting powers, if
any, and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be expressed in the resolution or resolutions
providing for the issuance thereof adopted by the Board of Directors, including,
without limiting the generality of the foregoing, the following:
(a) The designation of such series, the number of shares to constitute
such series and the stated value thereof if different from the par value
thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption by
the Corporation, and, if so, the times, prices and other terms and conditions of
such redemption;
(e) the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;
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(f) whether the shares of such series shall be subject to the operation of
a retirement or sinking fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or other corporate purposes and the
terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or classes or of any other
series of this class or any other class or classes of capital stock and, if so,
the price or prices or the rate or rates of conversion or exchange and the
method, if any, of adjusting the same, and any other terms and conditions of
such conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of, the common stock or shares of stock of any
other class or any other series of this class; and
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other series of this class or of any other class or classes.
The powers, preferences and relative participating, optional and other
special rights of each series of preferred stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
preferred stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be cumulative.
The following is the Statement of Designation of Series A Preferred Stock:
A. 500,000 authorized shares of the Corporation's $.001 par value
preferred stock (the "Preferred Stock") are established as a series of Preferred
Stock designated as the "Series A Preferred Stock," which have the following
powers, preferences, limitations and rights:
1. Liquidation Preference.
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a. In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, subject to the rights of
holders of Series A Preferred Stock and any other series of Preferred Stock that
may from time to time come into existence, the holders of the Series A Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership thereof, $28.40 (as adjusted for any
stock dividends, combinations or splits with respect to such shares) for each
share of Series A Preferred Stock then held by them. If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series A Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then the entire assets and
funds of the Corporation
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legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock in proportion to the preferential amount
each such holder is otherwise entitled to receive.
b. After payment (if any) to the holders of the Series A
Preferred Stock of the amounts set forth in Section A.1(a) above, the entire
remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the Common Stock
in proportion to the shares of Common Stock then held by them.
c. Whenever the distribution provided for in this Section A.1
shall be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.
2. Voting. Except as may be specifically required by the provisions
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of the Texas Business Corporation Act, the holders of shares of the Series A
Preferred Stock shall have no right to vote on any matter.
3. Conversion. The holders of the Series A Preferred Stock shall
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have conversion rights as follows (the "Conversion Rights"):
a. Automatic Conversion. No share of Series A Preferred Stock
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may be converted into common stock without the approval of such conversion by a
majority of the total votes cast on a proposal to convert by shareholders of the
Corporation in person or by Proxy at a meeting duly held by the Corporation's
shareholders (the "Shareholder Approval"). Upon the attainment of Shareholder
Approval, each share of Series A Preferred Stock shall automatically be
converted into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $28.40 by the Series A Conversion Price
applicable to such share, determined as hereinafter provided, in effect on the
date of "Shareholder Approval." The price at which shares of Common Stock shall
be deliverable upon conversion of shares of the Series A Preferred Stock (the
"Series A Conversion Price") shall initially be $2.84 per share of Common Stock.
Such initial Series A Conversion Price shall be adjusted as hereinafter
provided.
b. Mechanics of Conversion. Upon attainment of Shareholder
-----------------------
Approval, all shares of Series A Preferred Stock shall no longer be outstanding
and shall automatically be cancelled and cease to exist and each certificate
previously representing shares of Series A Preferred Stock shall thereafter
represent only the right to receive a certificate representing the number of
shares of Common Stock into which the shares of Series A Preferred Stock have
been converted pursuant to this Section A.3. Upon attainment of Shareholder
Approval, each holder of Series A Preferred Stock shall surrender the
certificate or certificates of Series A Preferred Stock, duly endorsed, at the
office of the Corporation or of any transfer agent for such stock designated by
the Corporation, and the Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such person, a certificate for the number of
shares of Common Stock to which he shall be entitled as aforesaid.
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c. Adjustments to Conversion Prices for Stock Dividends and
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for Combinations or Subdivisions of Common Stock. In the event that this
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Corporation at any time or from time to time after the date on which shares of
Series A Preferred Stock were first issued shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common Stock or in
any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Series A Conversion Price in effect immediately prior
to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that this
Corporation shall declare or pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common Stock for no consideration
then the Corporation shall be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares issuable upon
exercise of such rights to acquire Common Stock.
d. Adjustments for Reclassification and Reorganization. If the
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Common Stock issuable upon conversion of the Series A Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for in
Section A.3(c) above), the Series A Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Series A Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series A Preferred Stock immediately before that change.
e. No Impairment. The Corporation will not, by amendment of
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its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section A.3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
f. Certificates as to Adjustments. Upon the occurrence of each
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adjustment or readjustment of the Series A Conversion Price pursuant to this
Section A.3, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred Stock a certificate executed by
the Corporation's President or Chief Financial Officer setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A Conversion Price for such
shares of
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Series A Preferred Stock at the time in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of the Series A Preferred Stock.
g. Notices of Record Date. In the event that the Corporation
----------------------
shall propose at any time: (i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; (ii) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or (iv) to
merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up;
Then, in connection with each such event, the Corporation shall send
to the holders of Series A Preferred Stock: (1) at least ten days prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote, if any, in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and (iv) above, at least ten
days prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event).
h. Reservation of Stock Issuable Upon Conversion. The
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Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose, including, without limitation, engaging in best efforts to
obtain the requisite stockholder approval of any necessary amendment to these
Articles.
i. Fractional Shares. No fractional share shall be issued upon
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the conversion of any share or shares of Series A Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of conversion (as determined in good
faith by the Board of Directors).
-5-
<PAGE>
j. Notices. Any notice required by the provisions of this
-------
Section A.3 to be given to the holders of shares of Series A Preferred Stock
shall be deemed given if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
the Corporation.
4. No Reissuance of Series A Preferred Stock. No share or shares of
------------------------------------------
Series A Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
FIFTH: The Corporation will not commence business until it has received
for the issuance of shares consideration of the value of a minimum of $1,000,
consisting of money, labor done, or property actually received.
SIXTH: Cumulative voting of shares of stock is not permitted.
SEVENTH: Shareholders shall not have preemptive rights to acquire
additional unissued or treasury shares of the Corporation.
EIGHTH: All lawful restrictions on the sale or other disposition of
shares may be placed upon all or a portion or portions of the certificates
evidencing the Corporation's shares.
NINTH: The address of the initial registered office is 9101 Jameel,
Houston, Texas 77040, and the name of the initial registered agent at such
address is David P. Bertrand.
TENTH: Meetings of shareholders may be held at such time and place as
the Bylaws shall provide. One-third of the shares entitled to vote represented
in person or by proxy shall constitute a quorum at any meeting of the
shareholders.
ELEVENTH: The number of directors constituting the initial Board of
Directors of the Corporation is five, and the names and addresses of the persons
who are to serve as Directors until the first annual meeting of shareholders or
until their successors are elected and shall qualify are:
Name Address
---- -------
David P. Bertrand 9101 Jameel
Houston, Texas 77040
Jana Mitcham 10618 Great Plains
Houston, Texas 77064
F. Wayne Ballenger 3134 Meadway Drive
Houston, Texas 77082
M. F. Florence 150 Signet Drive
Weston, Ontario, Canada 9ML 1T9
-6-
<PAGE>
Gregory Pusey 1722 Buffehr Creek Road
Vail, Colorado 81657
The number of directors to be elected at the annual meeting of shareholders
or at a special meeting called for the election of directors shall not be less
than three, as may be fixed by the Bylaws.
TWELFTH: The name and address of the incorporator is David P. Bertrand,
9101 Jameel, Houston, Texas 77040.
THIRTEENTH: The officers, directors and other members of management of
this Corporation shall be subject to the doctrine of corporate opportunities
only insofar as it applies to business opportunities in which this Corporation
has expressed an interest as determined from time to time by the Corporation's
Board of Directors as evidenced by resolutions appearing in the Corporation's
Minutes. When such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention of the
officers, directors and other members of management of this Corporation shall be
disclosed promptly to this Corporation and made available to it. The Board of
Directors may reject any business opportunity presented to it and thereafter any
officer, director or other member of management may avail himself of such
opportunity. Until such time as this Corporation, through its Board of
Directors, has designated an areas of interest, the officers, directors and
other members of management of this Corporation shall be free to engage in
business opportunities in such areas of interest on their own and this doctrine
shall not limit the rights of any officer, director or other member of
management of this Corporation to continue a business existing prior to the time
that such area of interest is designated by this Corporation. This provision
shall not be construed to release any employee of the Corporation (other than an
officer, director or member of management) from any duties which he may have to
the Corporation.
FOURTEENTH: Subject to repeal by action of the shareholders, the Board of
Directors of this Corporation is authorized to adopt, confirm, ratify, alter,
amend, rescind and repeal Bylaws or any portion thereof from time to time.
FIFTEENTH: The Corporation shall indemnify any and all of its directors or
officers or former directors or officers or any person who may have served at
its request as a director or officer of any other corporation in which it owns
shares of capital stock or of which it is a creditor, against expenses actually
and necessarily incurred by them, in connection with the defense of any action,
suit or proceeding in which they, or any of them, are made parties, or a party,
by reason of being or having been directors or officers of the Corporation, or
for such other corporation, except in relation to matters to which any such
director or officer or former director or person shall be adjudged in such
action, suit or proceeding to be liable for gross negligence or willful
misconduct in the performance of duty. Such indemnification shall not be deemed
exclusive of any other rights to which those indemnified may be entitled, under
any bylaw, agreement, vote of shareholders, or otherwise.
-7-
<PAGE>
SIXTEENTH: No director of the Corporation shall be liable to the
Corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, to the fullest extent that such liability
may be limited by Article 1302-7.06 of the Texas Miscellaneous Corporation Act,
as it may be amended from time to time (or any provision of succeeding law that
corresponds to Article 1302-7.06).
SEVENTEENTH: Any action of the Corporation which is required to or may be
taken at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted.
Dated: February 25, 2000
-----------------
/s/ David P. Bertrand
-----------------------------------
David P. Bertrand
-8-
<PAGE>
BYLAWS
OF
ADVANCED NUTRACEUTICALS, INC.,
a Texas corporation
<PAGE>
ADVANCED NUTRACEUTICALS, INC.
BYLAWS
Table of Contents
-----------------
<TABLE>
<S> <C>
ARTICLE ONE - Capital Stock.............................................. 1
Section 1 Certificates Representing Shares........................ 1
Section 2 Shareholders of Record.................................. 1
Section 3 Transfer of Shares...................................... 1
ARTICLE TWO - Meetings of Shareholders................................... 2
Section 1 Place of Meetings....................................... 2
Section 2 Annual Meetings......................................... 2
Section 3 Special Meetings........................................ 2
Section 4 Notice of Meeting....................................... 2
Section 5 Conduct of Meetings..................................... 3
Section 6 Closing of Share Transfer Records and Record Date....... 3
Section 7 Voting List............................................. 3
Section 8 Quorum.................................................. 3
Section 9 Adjournments............................................ 3
Section 10 Proxies................................................. 4
Section 11 Voting of Shares........................................ 4
Section 12 Voting of Shares by Certain Holders..................... 4
Section 13 Inspectors of Election.................................. 5
ARTICLE THREE - Directors................................................ 5
Section 1 Number, Tenure, and Qualifications...................... 5
Section 2 Vacancies............................................... 5
Section 3 Place of Meeting........................................ 6
Section 4 Annual and Regular Meetings............................. 6
Section 5 Special Meetings........................................ 6
Section 6 Quorum.................................................. 6
Section 7 Compensation............................................ 6
Section 8 Removal................................................. 6
Section 9 Conduct of Meetings..................................... 7
ARTICLE FOUR - Officers.................................................. 7
Section 1 Officers................................................ 7
Section 2 Vacancies............................................... 7
Section 3 Removal................................................. 7
Section 4 Powers and Duties of Officers........................... 7
Section 5 Chairman of the Board................................... 8
Section 6 President............................................... 8
Section 7 Vice President.......................................... 8
</TABLE>
-i-
<PAGE>
ADVANCED NUTRACEUTICALS, INC.
BYLAWS
Table of Contents (Continued)
-----------------------------
<TABLE>
<S> <C>
Section 8 Secretary............................................... 8
Section 9 Treasurer............................................... 8
Section 10 Additional Officers and Titles.......................... 8
Section 11 Securities of Other Corporations........................ 9
Section 12 Delegation of Authority................................. 9
ARTICLE FIVE - Committees................................................ 9
Section 1 Committees of Directors................................. 9
Section 2 Other Committees........................................ 9
Section 3 Term of Office.......................................... 10
Section 4 Chairman................................................ 10
Section 5 Vacancies............................................... 10
Section 6 Quorum.................................................. 10
Section 7 Rules................................................... 10
ARTICLE SIX - Miscellaneous Provisions................................... 10
Section 1 Amendments.............................................. 10
Section 2 Waiver.................................................. 10
Section 3 Resignations............................................ 10
Section 4 Seal.................................................... 10
Section 5 Fiscal Year............................................. 11
</TABLE>
<PAGE>
BYLAWS
OF
ADVANCED NUTRACEUTICALS, INC.
(herein referred to as the "Corporation")
ARTICLE ONE
-----------
Capital Stock
-------------
Section 1. Certificates Representing Shares. The Corporation shall
--------- --------------------------------
deliver certificates representing shares to which shareholders are entitled in
such form as shall be approved by the Board of Directors, or the Corporation may
issue uncertificated shares in accordance with the requirements of the Texas
Business Corporation Act. Each certificate shall bear on its face the statement
that the Corporation is organized in Texas, the name of the shareholder to whom
the certificate is being issued, the name of the Corporation, the number, class,
and series of shares issued, and the par value or a statement that the shares
are without par value. Certificates for shares of the Corporation shall be
issued only when consideration for the shares has been fully paid. Such
certificates shall be signed by the President or a Vice President and the
Secretary or any Assistant Secretary, or such other officer or officers as may
be determined by the Board of Directors, and may be sealed with the seal of the
Corporation of a facsimile thereof. Where any such certificate is countersigned
by a transfer agent or registered by a registrar, either of which is other than
the Corporation itself or an employee of the Corporation, the signature of the
authorized officer or officers may be facsimiles, engraved, or printed. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer at the date of its issuance. The certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued.
Section 2. Shareholders of Record. The Board of Directors of the
--------- ----------------------
Corporation may appoint one or more transfer agents or registrars of any class
of stock of the Corporation. Unless and until such appointment is made, the
Secretary shall maintain, among other records, a stock transfer book, the stubs
in which shall set forth the names and addresses of the holders of all issued
shares of the Corporation, the number of shares held by each, the certificate
numbers representing such shares, the date of issue of the certificates
representing such shares, and whether or not such shares originate from original
issues or from transfer. The names and addresses of shareholders as they appear
on the stock transfer book shall be the official list of shareholders of record
of the Corporation for all purposes. The Corporation shall be entitled to treat
the holder of record of any shares of the Corporation as the owner thereof for
all purposes, and shall not be bound to recognize any equitable or other claim
to, or interest in, such shares or any rights deriving from such shares, on the
part of any other person, including, without limitation, a purchaser, assignee,
or transferee, unless and until such other person becomes the holder of record
of such shares, whether or not the Corporation shall have either actual or
constructive notice of the interest of such other person.
Section 3. Transfer of Shares. The shares of the Corporation shall be
--------- ------------------
transferable on the stock transfer book of the Corporation by the holder of
record thereof, or such holder's duly authorized attorney or legal
representative, upon endorsement and surrender for cancellation of the
certificates representing such shares. All certificates surrendered for
transfer shall be cancelled and
<PAGE>
no new certificate shall be issued until a former certificate or certificates
for a like number of shares shall have been surrendered and cancelled, except
that in the new case of a lost, destroyed, or mutilated certificate, a new
certificate may be issued therefor upon such conditions for the protection of
the Corporation and any transfer agent or registrar as the Board of Directors of
the Secretary may prescribe. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its sole discretion and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or such owner's legal representative, to
give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate or certificates alleged to have been lost or destroyed.
ARTICLE TWO
-----------
Meetings of Shareholders
------------------------
Section 1. Place of Meetings. All meetings of shareholders shall be held
--------- -----------------
at such place within or without the State of Texas as may be designated by the
Board of Directors or officer calling the meeting. If no designation is so
made, meetings of the shareholders shall be held at the principal office of the
Corporation.
Section 2. Annual Meeting. Unless otherwise determined by the Board of
--------- --------------
Directors, the annual meeting of the shareholders shall be held on the third
Tuesday in the fourth month after the end of the Corporation's fiscal year for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall
be a legal holiday in the State of Texas, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as convenient.
Failure to hold the annual meeting at the designated time shall not work a
dissolution of the Corporation.
Section 3. Special Meetings. Special meetings of the shareholders may be
--------- ----------------
called at any time by the President (or by the Chairman of the Board or the
Chief Executive Officer, if such officers have been elected), the executive
committee (if any exists), or the Board of Directors. Special meetings of
shareholders may also be called by the Secretary upon the written request of the
holders of at least ten percent of the outstanding stock entitled to be voted as
such meeting. Such request shall state the purpose or purposes of such meeting.
The Secretary must deliver notice of such meeting within ten days of receipt of
such written request.
Section 4. Notice of Meeting. Written notice of all meetings, stating the
--------- -----------------
place, date, and time of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than sixty days before the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder 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 addressed to the shareholders at such
shareholder's address as it appears on the stock transfer book of the
Corporation, with postage thereon prepaid. Notice for an adjourned meeting is
not necessary unless the meeting is adjourned for thirty days or more, in which
case, notice of the adjourned meeting shall be given as in the case of any
special meeting. Any notice required to be given to any
<PAGE>
shareholder under any provision of the Texas Business Corporation Act, the
Articles of Incorporation, or these Bylaws need not be given to the shareholder
if the failure to give such notice is permitted pursuant to Article 2.25 of the
Texas Business Corporation Act, as amended from time to time, or any successor
law applicable thereto.
Section 5. Conduct of Meetings. All meetings of shareholders shall be
--------- -------------------
presided over by the Chairman of the Board, if there shall be such an officer,
or in the Chairman of the Board's absence, by the Chief Executive Officer, if
there shall be such an officer, or in the Chief Executive Officer's absence, by
the President, or, if the President is not present, by a chairman chosen at the
meeting by the holders of a majority of the voting shares present in person or
by proxy. The Secretary or, if the Secretary is not present, a person
designated by the chairman, shall act as secretary of the meeting. The chairman
of any meeting shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as the chairman may deem appropriate. Unless the chairman of the
meeting shall otherwise determine, the precedence of, and procedure on, motions
and other procedural matters at the meeting shall be governed by Robert's Rules
of Order insofar as those rules are not inconsistent with law, with the
Corporation's Articles of Incorporation, or with these Bylaws.
Section 6. Closing of Share Transfer Records and Record Date. The closing
--------- -------------------------------------------------
of share transfer records and record date shall be made in accordance with
Article 2.26 of the Texas Business Corporation Act, as amended from time to
time, or any successor law applicable thereto.
Section 7. Voting List. The officer or agent having charge of the stock
--------- -----------
transfer book of the Corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, arranged in alphabetical order, with
the address of, and the number of shares held by, each shareholder, which list,
for a period of ten days prior to such meeting, shall be kept on file at the
registered office or principal place of business of the Corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original stock transfer book shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders. Failure to comply
with any requirements of this Section 7 shall not affect the validity of any
action taken at such meeting.
Section 8. Quorum. The holders of at least one third of the outstanding
--------- ------
shares of the Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of the shareholders. Treasury shares,
shares of the Corporation's stock owned by another corporation the majority of
the voting stock of which is owned or controlled by the Corporation, and shares
of the Corporation's stock held by the Corporation in a fiduciary capacity,
shall not be counted in determining the total number of outstanding shares at
any given time. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 9. Adjournments. If the holders of the amount of shares necessary
--------- ------------
to constitute a quorum shall fail to attend any meeting of the shareholders in
person or by proxy, then the holders of a majority of the shares entitled to
vote, represented in person or by proxy, may adjourn any such meeting from time
to time without notice, other than by announcement at the meeting of the time
<PAGE>
and place at which the meeting with reconvene, until holders of the amount of
shares requisite to constitute a quorum shall be present at the particular
meeting or at any adjournment thereof, in person or by proxy. The holders of a
majority of the shares entitled to vote, represented in person or by proxy, may
also adjourn any meeting of the shareholders from time to time and without
notice, other than by announcement at the meeting of the time and place at which
the meeting will reconvene, until the transaction of any and all business
submitted or proposed to be submitted to such meeting or any adjournment thereof
shall have been completed. If the adjournment is for more than 60 days, or if
after adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of record
entitled to vote at such meeting. At any such adjourned meeting at which a
quorum is present, in person or by proxy, any business may be transacted which
might have been transacted at the meeting as originally notified or called.
Section 10. Proxies. At all meetings of the shareholders a shareholder
---------- -------
may vote by proxy executed in writing by the shareholder or by such
shareholder's duly authorized attorney in fact. Such proxy shall be filed with
the Secretary before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy. A proxy shall be revocable unless expressly provided therein to be
irrevocable and the proxy is coupled with an interest or unless otherwise made
irrevocable by law. Should a proxy designate two or more persons to act as
proxies, unless such instrument shall provide the contrary, a majority of such
persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred, or if only one can be present, then such powers may
be exercised by that one; or, if any even number attend and a majority do not
agree on any particular issue, each proxy so attending shall be entitled to
exercise such powers in respect of the same portion of the shares as such proxy
is of the proxies representing such shares.
Section 11. Voting of Shares. Except as otherwise provided by law, the
---------- ----------------
Articles of Incorporation, or these Bylaws, each shareholder shall have one vote
for each share having voting rights registered in such shareholder's name on the
books of the Corporation at the time of the closing of the stock transfer books
(or at the record date) for such meeting. When a quorum is present at any
meeting, the vote of holders of a majority of the shares entitled to vote,
present in person or represented by proxy, shall decide any matter submitted to
such meeting, unless the matter is one upon which by law, the Articles of
Incorporation, or these Bylaws the vote of a greater number is required, in
which case the vote of such greater number shall govern and control the decision
of such matter; provided, however, that directors shall be elected by a
plurality of the votes cast by shareholders entitled to vote in the election of
directors at a meeting at which a quorum is present. All voting shall be by oral
vote, except that upon the determination of the chairman of the meeting or upon
the demand of any qualified voter or such voter's proxy, voting on any question,
matter, or business at such meeting shall be by ballot. In the event any
business, question, or matter is so voted upon by ballot, then each ballot shall
be signed by the shareholder voting or by such shareholder's proxy and shall
state the number of shares so voted.
Section 12. Voting of Shares by Certain Holders. Shares standing in the
---------- -----------------------------------
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may authorized, or, in the absence of such
authorization, as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian, or conservator may be voted
by such person so long as such shares forming a part of an estate are in the
possession and forming a
<PAGE>
part of the estate served by such person, either in person or by proxy, without
a transfer of such shares into such person's name. Shares standing in the name
of a trustee may be voted by the trustee, either in person or by proxy, but no
trustee shall be entitled to vote shares held by such trustee without transfer
of such shares into the trustee's name as trustee. Shares standing in the name
of a receiver may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the transfer of such
shares into such receiver's name if authority to vote such shares is contained
in an appropriate order of the court by which such receiver was appointed. A
shareholder whose shares are pledged shall be entitled to vote such shares until
such shares have been transferred on the books and records of the Corporation
into the name of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred. Treasure shares, shares of the Corporation's
stock owned by another corporation the majority of voting stock of which is
owned or controlled by the Corporation, and shares of the Corporation's stock
held by the Corporation in a fiduciary capacity, shall not be voted, directly or
indirectly, at any meeting.
Section 13. Inspectors of Election. In advance of any meeting of the
---------- ----------------------
shareholders, the Board of Directors may appoint one or more inspectors of
election. If there is no such appointment made in advance, or if any appointed
person refuses or fails to serve, the chairman of the meeting may appoint such
inspectors or appoint a replacement for any inspector refusing or failing to
serve. Inspectors of election shall determine the number of shares outstanding,
voting power of each share, shares represented at the meeting, existence of a
quorum, and authenticity, validity, and effect of proxies; shall receive votes,
ballots, assents, and consents, and hear and determine all challenges and
questions in any way arising in connection with a vote; shall count and tabulate
all votes, assents, and consents, and determine and announce results; and do all
other acts as may be proper to conduct elections or votes with fairness to all
of the shareholders.
ARTICLE THREE
-------------
Directors
---------
Section 1. Number, Tenure, and Qualifications. The number of directors of
--------- ----------------------------------
the Corporation shall be determined from time to time by resolution adopted by a
majority of the Board of Directors or by the shareholders (but in no event shall
be less than three); provided, however, that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. If the Board of Directors or shareholders make no such determination,
the number of directors shall be the same as the number constituting the initial
Board of Directors set forth in the Articles of Incorporation. Unless sooner
removed in accordance with these Bylaws, each director shall hold office until
the next annual meeting of the shareholders, or special meeting held for the
purpose of electing directors, and until such director's successor shall have
been elected and qualified. Directors need not be residents of the State of
Texas or shareholders of the Corporation.
Section 2. Vacancies. Any vacancy occurring in the Board of Directors may
--------- ---------
be filled by the affirmative vote of a majority of the remaining directors,
through less than a quorum of the entire Board of Directors. A director elected
to fill a vacancy shall be elected for the unexpired term of such director's
predecessor in office. Any directorship to be filled by reason of an increase
in the number of directors may be filled by the Board of Directors for a term of
office continuing only until the next election of one or more directors by the
shareholders; provided that the Board of
<PAGE>
Directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders. Any vacancy
occurring in the Board of Directors or any directorship to be filled by reason
of an increase in the number of directors may be filled by election at an annual
or special meeting of shareholders called for that purpose.
Section 3. Place of Meeting. Meetings of the Board of Directors may be
--------- ----------------
held either within or without the State of Texas, at whatever place is specified
by the officer calling the meeting. In the absence of specific designation, the
meetings shall be held at the principal office of the Corporation.
Section 4. Annual and Regular Meetings. Unless otherwise determined by
--------- ---------------------------
the Board of Directors, the annual meeting of the Board of Directors shall be
held without other notice than these Bylaws immediately after, and at the same
place as, the annual meeting of the shareholders. The Board of Directors may
provide by resolution the time, date, and place for the holding of additional
regular meetings without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors
--------- ----------------
may be held at any time upon the call of the President (or the Chairman of the
Board or the Chief Executive Officer, if such officers have been elected), or
any two directors of the Corporation, or, if there is only one director, by such
director. Notice shall be sent in writing by mail, facsimile, telegram, or
other reasonable means of written communication to the last known address of
each director at least forty eight hours before the meeting. Except as
otherwise herein provided, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of the number of directors fixed by or in
--------- ------
the manner provided in these Bylaws shall constitute a quorum for the
transaction of business, but a smaller number may adjourn the meeting from time
to time until they can secure the attendance of a quorum. The act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors. Any regular or special directors' meeting
may be adjourned from time to time by those present, whether a quorum is present
or not.
Section 7. Compensation. By resolution of the Board of Directors, the
--------- ------------
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
Section 8. Removal. At any meeting of the shareholders called expressly
--------- -------
for that purpose, any director or the entire Board of Directors may be removed
from office, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote at an election of directors; provided that, if
shareholders have the right to cumulate votes for the election of directors, of
less than the entire Board is to be removed, no director may be removed if the
votes cast against such director's removal would be sufficient to elect such
director if then cumulatively voted at any election of the entire Board of
Directors, or if there be classes of directors, at an election of the class of
directors of which such director is a part; and any vacancy or vacancies in the
Board resulting therefrom may be filled by the remaining directors, though less
than a quorum, or by the shareholders, whichever shall first act thereon.
<PAGE>
Section 9. Conduct of Meetings. All meetings of Directors shall be
--------- -------------------
presided over by the Chairman of the Board, if there shall be such an officer,
or in the Chairman of the Board's absence, by the Chief Executive Officer, if
there shall be such an officer, or in the Chairman of the Board's absence, by
the Chief Executive Officer, if there shall be such an officer, or in the Chief
Executive Officer's absence, by the President, or, if the President is not
present, by any director chosen by a majority of the directors present. The
Secretary or, if the Secretary is not present, a person designated by the
chairman, shall act as secretary of the meeting. The chairman of any meeting
shall determine the order of business and the procedure at the meting, including
such regulation of the manner of voting and the conduct of discussion as the
chairman may deem appropriate. Unless the chairman of the meeting shall
otherwise determine, the precedence of, and procedure on, motions and other
procedural matters at the meeting shall be governed by Robert's Rules of Order
insofar as those rules are not inconsistent with law, with the Corporation's
Articles of Incorporation, or with these Bylaws.
ARTICLE FOUR
------------
Officers
--------
Section 1. Officers. The officers of the Corporation shall be elected by
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the Board of Directors and shall, at a minimum, consist of a President and a
Secretary. The Board of Directors may elect such other officers, including,
without limitation, a Chairman of the Board, a Chief Executive Officer, a Chief
Financial Officer, a Vice President or Vice Presidents, a Treasurer, and
Assistant Secretaries and Assistant Treasurers, and appoint such agents, as it
may deem necessary and appropriate. All officers shall, unless otherwise
removed by the Board of Directors, hold office until their successors are
elected and qualified or until such officer's death or until such officer shall
resign or shall have been removed from office in the manner hereinafter
provided. Any two or more offices may be held by the same person. The salaries
and other compensation of the officers shall be determined in the manner
provided by the Board of Directors, and may be altered in the manner provided by
the Board of Directors, and may be altered in the manner provided by the Board
of Directors from time to time, except as otherwise provided by contract.
Section 2. Vacancies. Whenever any vacancies shall occur in any office by
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death, resignation, increase in the number of officers of the Corporation, or
otherwise, the same shall be filled by the Board of Directors, and the officer
so elected shall hold office until such officer's successor is chosen and
qualified, or until such officer's death, resignation, or removal from office in
the manner hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the
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Board of Directors may be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 4. Power and Duties of Officers. The officers shall perform the
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duties and exercise the powers expressly conferred or provided for in these
Bylaws, as well as the usual duties and powers incident to such officers,
respectively, and such other duties and powers as may be assigned to them by the
Board of Directors or by the President.
<PAGE>
Section 5. Chairman of the Board. The Chairman of the Board, if there
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shall be such an officer, shall, if present, preside at all meetings of the
Board of Directors and the shareholders and exercise and perform such other
powers and duties as may from time to time be assigned to the Chairman of the
Board by the Board of Directors.
Section 6. President. Subject to the supervisory powers, if any, that may
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be given by the Board of Directors to the Chairman of the Board or to the Chief
Executive Officer, if there be such officers, the President shall be the
principal executive officer of the Corporation, and subject to the control of
the Board of Directors, shall, in general, supervise and control all of the
business and affairs of the Corporation. The President may sign certificates
for shares of the Corporation, and any deeds, mortgages, bonds, contracts, or
other instruments which the Board of Directors has authorized to be executed,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation, or shall be required by law to be otherwise signed and
executed; and in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors
from time to time.
Section 7. Vice President. Each Vice President, if there shall be such an
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officer, shall perform such duties and have such powers as may from time to time
be prescribed by the Board of Directors or be delegated to such Vice-President
by the President or Chairman of the Board or the Chief Executive Officer (if
any). Vice Presidents may be given special designations such as "Senior Vice
President," "Executive Vice President," "Vice President - Finance," or any other
designation deemed appropriate by the Board of Directors.
Section 8. Secretary. It shall be the duty of the Secretary to send any
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and all required notices of and, unless otherwise prescribed by the Board of
Directors, to attend all meetings of the shareholders and Board of Directors and
record correctly the proceedings of such meeting in a book suitable for that
purpose. It shall also be the duty of the Secretary to attest with the
Secretary's signature and the seal of the Corporation all stock certificates
issued by the Corporation and to keep a stock transfer book in which shall be
correctly recorded all transactions pertaining to the capital stock of the
Corporation. The Secretary shall also attest with the Secretary's signature and
the seal of the Corporation any instruments requiring the seal of the
Corporation. The person holding the office of Secretary shall also perform,
under the direction and subject to the control of the Board of Directors, such
other duties as may be assigned to the Secretary by the Chairman of the Board or
the Chief Executive Officer (if any), or the President. The duties of the
Secretary may also be performed by any Assistant Secretary.
Section 9. Treasurer. The Treasurer, if there shall be such an officer,
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shall keep such moneys of the Corporation as may be entrusted to the Treasurer's
keeping and account for the same. The Treasurer shall be prepared at all times
to give information as to the condition of the Corporation and shall make a
detailed annual report of the entire business and financial condition of the
Corporation. The person holding the office of Treasurer shall also perform,
under the direction and subject to the control of the Board of Directors, such
other duties as may be assigned to the Treasurer by the Chairman of the Board or
the Chief Executive Officer (if any), or the President. The duties of the
Treasurer may also be performed by any Assistant Treasurer.
Section 10. Additional Officers and Titles. In addition to the officers
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designated in Sections 5 through 9 of this Article IV, the Board of Directors
may designate and appoint additional officers
<PAGE>
or give officers additional titles indicative of their managerial
responsibilities within the Corporation. The officer of the Corporation chiefly
responsible for corporate policy-making and the general supervision and
direction of the Corporation's business may, in addition to such officer's other
title or titles, if any, be designated the "Chief Executive Officer." The
officer of the Corporation charged with supervision and management of the daily
operations of the Corporation may, in addition to such officer's other title or
titles, if any, be designated the "Chief Operating Officer." The officer of the
Corporation chiefly responsible for the finances, securities, and accounting
systems of the Corporation may, in addition to such officer's other title or
titles, if any, be designated the "Chief Financial Officer." The Board of
Directors may give officers of the Corporation such other additional titles and
designations as it shall deem appropriate.
Section 11. Securities of Other Corporations. Any officer of the
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Corporation shall have the power and authority to transfer, endorse for
transfer, vote, consent, or take any other action with respect to any securities
of another issuer which may be held or owned by the Corporation and to make,
execute, and deliver any waiver, proxy, or consent with respect to any such
securities and otherwise to exercise any and all rights and powers which the
Corporation may possess by reason of its ownership of securities in such other
corporation.
Section 12. Delegation of Authority. In the case of any absence of any
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officer of the Corporation or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may delegate some or all of the
powers or duties of such officer to any other officer or to any director,
employee, shareholder, or agent for whatever period of time seems appropriate,
providing that a majority of the entire Board of Directors concurs therein.
ARTICLE FIVE
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Committees
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Section 1. Committees of Directors. The Board of Directors may by
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resolution designate and appoint one or more committees, each of which shall
consist of two or more directors, which committees, to the extent provided in
such resolution, shall exercise the authority of the Board of Directors in the
management of the Corporation. However, no such committee shall have the
authority of the Board of Directors in reference to amending, altering, or
repealing these Bylaws; electing, appointing, or removing any member of any such
committee or any director or officer of the Corporation; amending the Articles
of Incorporation; adopting a plan of merger or adopting a plan of consolidation
with another corporation; authorizing the sale, lease, or exchange of all or
substantially all of the property or assets of the Corporation; authorizing the
voluntary dissolution of the Corporation or revoking proceedings therefor;
adopting a plan for the distribution of the Assets of the Corporation; or
amending, altering, or repealing any resolution of the Board of Directors which
by its terms provides that it shall not be amended, altered, or repealed by such
committee. The designation and appointment of any such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any individual director, of any responsibility imposed on it or
such director by law.
Section 2. Other Committees. Other committees not having and exercising
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the authority of the Board of Directors in the management of the Corporation may
be designated by resolution adopted by the Board of Directors. Except as
otherwise provided in such resolution, the President of the Corporation shall
appoint the members thereof. Any members thereof may be removed by
<PAGE>
the person or persons authorized to appoint such member whenever in their
judgment the best interests of the Corporation shall be served by such removal.
Section 3. Term of Office. Each member of a committee shall continue as
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such until the next annual meeting of the Board of Directors, and until such
member's successor is appointed, unless the committee shall be sooner
terminated, or unless such member be removed from such committee, or unless such
member shall cease to qualify as a member thereof.
Section 4. Chairman. One member of each committee shall be appointed
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chairman by the person or persons authorized to appoint the members thereof.
Section 5. Vacancies. Vacancies in the membership of any committee may be
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filled by appointments made in the same manner as provided in the case of the
original appointments.
Section 6. Quorum. Unless otherwise provided in the resolution of the
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Board of Directors designating a committee, a majority of the whole committee
shall constitute a quorum and the act of a majority of the members present at a
meeting at which a quorum is present shall be the act of the committee.
Section 7. Rules. Each committee may adopt rules for its own governance
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not inconsistent with these Bylaws or with rules adopted by the Board of
Directors.
ARTICLE SIX
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Miscellaneous Provisions
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Section 1. Amendments. The Board of Directors shall have the power to
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amend or repeal these Bylaws or adopt new Bylaws, unless any provision of these
Bylaws expressly provides, or unless the shareholders in amending, repealing, or
adopting a new Bylaw expressly provide, that only the shareholders may amend or
repeal that Bylaw.
Section 2. Waiver. Whenever, under the provisions of any law, the
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Articles of Incorporation or amendments thereto, or these Bylaws, any notice is
required to be given to any shareholders, director or committee member, 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 equivalent to the
giving of such notice. Moreover, attendance at any meeting by a shareholder or
director shall constitute a waiver of notice of such meeting by such shareholder
or director unless such individual attends the meeting for the specific purpose
of objecting to the transaction of any business thereat on the ground that the
meeting is not lawfully called or convened.
Section 3. Resignations. Any director or officer may resign at any time.
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Such resignation shall be made in writing and shall take effect at the time
specified therein, or, if no time be specified, at the time of its receipt by
the Board of Directors, the President, or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 4. Seal. The seal of the Corporation may be such as from time to
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time may be approved by the Board of Directors, but the use of a seal shall not
be essential to the validity of any agreement entered into by the Corporation,
unless otherwise provided by law.
<PAGE>
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
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determined by resolution of the Board of Directors.
Adopted by the Board of Directors
on ______________, 2000.
By:__________________________________
Jana Mitcham, Secretary
