<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X]Preliminary Proxy Statement [_]CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
IGEN, Inc.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
IGEN, Inc.
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/
(4) Proposed maximum aggregate value of transaction:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(5) Amount Previously Paid:
(6) Form, Schedule or Registration Statement No.:
(7) Filing Party:
(8) Date Filed:
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/1/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
IGEN, INC.
16020 INDUSTRIAL DRIVE
GAITHERSBURG, MARYLAND 20877
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 10, 1996
TO THE SHAREHOLDERS OF IGEN, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IGEN,
Inc., a California corporation (the "Company"), will be held on September 10,
1996 at 10:00 a.m. local time at the Gaithersburg Marriott, Washingtonian
Center, 9751 Washingtonian Boulevard, Gaithersburg, Maryland 20878 for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve a change in the Company's state of incorporation from
California to Delaware.
3. To ratify the selection of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending March 31, 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on July 24, 1996, as
the record date for the determination of shareholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Andrei M. Manoliu
Secretary
Gaithersburg, Maryland
August 19, 1996
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
IGEN, INC.
16020 INDUSTRIAL DRIVE
GAITHERSBURG, MARYLAND 20877
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of IGEN,
Inc., a California corporation (the "Company"), for use at the Annual Meeting
of Shareholders to be held on September 10, 1996, at 10:00 a.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the Gaithersburg Marriott, Washingtonian
Center, 9751 Washingtonian Boulevard, Gaithersburg, Maryland 20878. The
Company intends to mail this proxy statement and accompanying proxy card on or
about August 19, 1996, to all shareholders entitled to vote at the Annual
Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on July 24,
1996 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on July 24, 1996, the Company had outstanding and entitled
to vote 14,953,318 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
toward a quorum but are not counted for any purpose in determining whether a
matter is approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 16020
Industrial Drive, Gaithersburg, Maryland 20877, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by
attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the Company's
1997 Annual Meeting of Shareholders must be received by the Company not later
than April 17, 1997 to be included in the proxy statement and proxy relating
to that Annual Meeting.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
There are six nominees for the six Board positions presently authorized in
the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of shareholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Mr.
Lewis Scheffey resigned his Board position effective September 30, 1995. Each
of the nominees listed below is currently a director of the Company and each
nominee has previously been elected by the shareholders.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the six nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for
election has agreed to serve if elected and management has no reason to
believe that any nominee will be unable to serve.
The six candidates receiving the highest number of affirmative votes cast at
the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Samuel J. Wohlstadter 54 Chairman, Chief Executive Officer and Director
Richard J. Massey, Ph.D. 49 President, Chief Operating Officer and Director
Edward B. Lurier(1)(2) 65 Director
William J. O'Neill(1)(2) 54 Director
Hubert Rehkaemper(2) 58 Director
Robert R. Salsmans 51 Director
</TABLE>
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(1) Member of Audit Committee.
(2) Member of Compensation Committee.
SAMUEL J. WOHLSTADTER is a founder of the Company and has been Chairman of
the Board and Chief Executive Officer since its formation in 1982. Mr.
Wohlstadter has been a venture capitalist for more than 20 years and has
experience in founding, supporting and managing high technology companies,
including Amgen Inc., a biopharmaceutical company, and Applied Biosystems,
Inc., a medical and biological research products company. Mr. Wohlstadter is
also Chief Executive Officer of Hyperion Catalysis International, an advanced
materials company, which he founded in 1981, of Pro-Neuron, Inc., a drug
discovery company, which he founded in 1985, of Proteinix Corporation, a
development stage company organized to conduct research in intracellular
metabolic processes, which he founded in 1988, and of Pro-Virus, Inc., a drug
discovery company, which commenced operations in 1994.
RICHARD J. MASSEY, Ph.D. is a founder of the Company, has been President and
Chief Operating Officer of the Company since February 1992, a Director of the
Company since 1990 and served as Senior Vice President since 1985. From 1981
until he joined IGEN in 1983, Dr. Massey was a faculty member in the
Microbiology and Immunology Department at Rush Medical Center in Chicago.
Prior to that, he was Senior Research Scientist at the National Cancer
Institute, Frederick Cancer Research Center.
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EDWARD B. LURIER is a General Partner of Gryphon Ventures, a venture capital
fund, and Chairman of Gryphon Management Co., Inc., a venture capital firm,
positions he has held since January 1986. Mr. Lurier has been a Director of
the Company since 1987. Mr. Lurier is also a Director of Energy Biosystems
Corp., a fossil fuel, biotechnology research and development company, and
several privately held companies.
WILLIAM J. O'NEILL has been a Director of the Company since 1984. He serves
as Executive Vice President and Chief Financial Officer of Polaroid
Corporation, a photographic equipment company, where he has been employed for
more than 25 years.
HUBERT REHKAEMPER serves as President and Chief Executive Officer of
Boehringer Mannheim Corporation, a diagnostics company, affiliated with
Corange Ltd., a holding company with high technology operating units in the
medical industry, where he has been employed for more than 27 years.
ROBERT R. SALSMANS has served as President and Chief Executive Officer of
Organon Teknika, a business unit that is part of the Pharma group of Akzo
Nobel N.V., a holding company with high technology operating units in the
biotechnology, medical, and pharmaceutical industries, in the Netherlands,
since September 1994. From October 1993 through August 1994, Mr. Salsmans
served as Managing Director of Organon Teknika and from 1990 through September
1993, he served as Managing Director of Organon International B.V.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 1996 the Board of Directors held
seven (7) meetings. The Board has an Audit Committee and a Compensation
Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and to discuss the
financial statements; recommends to the Board the independent auditors to be
retained; and receives and considers the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. During fiscal 1996, the Audit Committee
consisted of two non-employee directors: initially Messrs. Evans and O'Neill,
and later Lurier and O'Neill. It met twice during the fiscal year ended March
31, 1996; Messrs. Evans and O'Neill attended the first meeting, and Messrs.
Lurier and O'Neill attended the second meeting.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants
under the Company's stock option plans and otherwise determines compensation
levels and performs such other functions regarding compensation as the Board
may delegate. The Compensation Committee is composed of three (3) non-employee
directors: Messrs. Lurier, O'Neill and Rehkaemper. It met once during the
fiscal year ended March 31, 1996 and Messrs. Lurier, O'Neill and Rehkaemper
attended that meeting.
During the fiscal year ended March 31, 1996, all directors attended at least
75% of the aggregate number of the meetings of the Board and of the committees
on which they served, held during the period for which they were a director or
committee member, respectively, except for Mr. Salsmans, who attended at least
50%.
3
<PAGE>
PROPOSAL 2
REINCORPORATION OF THE COMPANY IN DELAWARE
AND RELATED CHANGES TO THE RIGHTS OF SHAREHOLDERS
GENERAL
The Board of Directors has unanimously approved a proposal to change the
Company's state of incorporation from California to Delaware. The Board of
Directors believes the change in domicile to be in the best interests of the
Company and its shareholders for several reasons. Principally, the Board of
Directors believes that reincorporation will enhance the Company's ability to
attract and retain qualified members of the Company's Board of Directors as
well as encourage directors to continue to make independent decisions in good
faith on behalf of the Company. To date, the Company has not experienced
difficulty in retaining directors. The Company believes that the more
favorable corporate environment afforded by Delaware will enable it to compete
more effectively with other public companies, most of which are incorporated
in Delaware, to attract new directors and to retain its current directors.
Reincorporation in Delaware will allow the Company the increased flexibility
and predictability afforded by Delaware law. Concurrent with the
reincorporation, the Company proposes to adopt or maintain certain measures
designed to make hostile takeovers of the Company more difficult. The Board
believes that adoption of these measures will enable the Board to consider
fully any proposed takeover attempt and to negotiate terms that maximize the
benefit to the Company and its shareholders.
In recent years, a number of major public companies have obtained the
approval of their shareholders to reincorporate in Delaware. For the reasons
explained below, the Company believes it is beneficial and important that the
Company likewise avail itself of Delaware law.
For many years Delaware has followed a policy of encouraging incorporation
in that state. In furtherance of that policy, Delaware has adopted
comprehensive corporate laws which are revised regularly to meet changing
business circumstances. The Delaware Legislature is particularly sensitive to
issues regarding corporate law and is especially responsive to developments in
modern corporate law. The Delaware courts have developed considerable
expertise in dealing with corporate issues as well as a substantial body of
case law construing Delaware's corporate law. As a result of these factors, it
is anticipated that Delaware law will provide greater predictability in the
Company's legal affairs than is presently available under California law.
In 1986, Delaware amended its corporate law to allow corporations to limit
the personal monetary liability of its directors for their conduct as
directors under certain circumstances. It should be noted that Delaware law
does not permit a Delaware corporation to limit or eliminate the liability of
its directors for intentional misconduct, bad faith conduct or any transaction
from which the director derives an improper personal benefit or for violations
of federal laws such as the federal securities laws. In 1987, California
amended its corporate law in a manner similar to Delaware to permit a
California corporation to limit the personal monetary liability of its
directors for their conduct as directors under certain circumstances. The
Company adopted articles and bylaws and entered into indemnification
agreements to take advantage of these changes in California law. Nonetheless,
the Board of Directors believes that the protection from liability for
directors is somewhat greater under the Delaware law than under the California
law and therefore that the Company's objectives in adopting this type of
provision can be better achieved by reincorporation in Delaware. The directors
have elected to adopt such a provision in the Delaware certificate and bylaws.
The Board believes that Delaware incorporation will enhance the Company's
ability to recruit and retain directors in the future, however, the
shareholders should be aware that such a provision inures to the benefit of
the directors, and the interest of the Board in recommending the
reincorporation may therefore be in conflict with the interests of the
shareholders. See "Indemnification and Limitation of Liability" for a more
complete discussion of these issues.
4
<PAGE>
The interests of the Board of Directors of the Company, management and
affiliated shareholders in voting on the reincorporation proposal may not be
the same as those of unaffiliated shareholders. Delaware law does not afford
minority shareholders some of the rights and protections available under
California law. Reincorporation of the Company in Delaware may make it more
difficult for minority shareholders to elect directors and influence Company
policies. A discussion of the principal differences between California and
Delaware law as they affect shareholders begins on page 7 of this Proxy
Statement.
In addition, portions of the reincorporation proposal may have the effect of
deterring hostile takeover attempts. A hostile takeover attempt may have a
positive or a negative effect on the Company and its shareholders, depending
on the circumstances surrounding a particular takeover attempt. Takeover
attempts that have not been negotiated or approved by the board of directors
of a corporation can seriously disrupt the business and management of a
corporation and generally present to the shareholders the risk of terms which
may be less than favorable to all of the shareholders than would be available
in a board-approved transaction. Board-approved transactions may be carefully
planned and undertaken at an opportune time in order to obtain maximum value
for the corporation and all of its shareholders with due consideration to
matters such as the recognition or postponement of gain or loss for tax
purposes, the management and business of the acquiring corporation and maximum
strategic deployment of corporate assets.
The Board of Directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences or effects described above and may
frequently be beneficial to the shareholders, providing all of the
shareholders with considerable value for their shares. However, the Board of
Directors believes that the potential disadvantages of unapproved takeover
attempts are sufficiently great such that prudent steps to reduce the
likelihood of such takeover attempts are in the best interests of the Company
and its shareholders. Accordingly, the reincorporation plan includes certain
proposals that may have the effect of discouraging or deterring hostile
takeover attempts.
Notwithstanding the belief of the Board as to the benefits to shareholders
of the changes, shareholders should recognize that one of the effects of such
changes may be to discourage a future attempt to acquire control of the
Company which is not presented to and approved by the Board of Directors, but
which a substantial number and perhaps even a majority of the Company's
shareholders might believe to be in their best interests or in which
shareholders might receive a substantial premium for their shares over the
current market price. As a result, shareholders who might desire to
participate in such a transaction may not have an opportunity to do so.
The Company's current Third Amended and Restated Articles of Incorporation,
as amended (the "California Articles") and Bylaws (the "California Bylaws")
already include a number of provisions available to certain public companies
under California law that deter hostile takeover attempts, such as elimination
of cumulative voting, elimination of action by written consent of
shareholders, advance notice requirement for shareholder proposals and
supermajority requirements for amendment of certain provisions in the
California Articles and California Bylaws. These provisions will also be
included in the Company's new charter documents following the reincorporation.
In addition, the Delaware certificate and bylaws will contain a provision
limiting the ability of the shareholders to remove any director without cause
and a provision to require a vacancy on the board resulting from an increase
in number of directors to be filled by the majority vote of the directors.
In considering the proposals, shareholders should be aware that the overall
effect of certain of the proposed changes is to make it more difficult for
holders of a majority of the outstanding shares of Common Stock to change the
composition of the Board of Directors and to remove existing management in
circumstances where a majority of the shareholders may be dissatisfied with
the performance of the incumbent directors or otherwise desire to make
changes.
The provisions in the Company's new charter documents could make a proxy
contest a less effective means of removing or replacing existing directors or
could make it more difficult to make a change in control of the Company which
is opposed by the Board of Directors. This strengthened tenure and authority
of the Board of
5
<PAGE>
Directors could enable the Board of Directors to resist change and otherwise
thwart the desires of a majority of the shareholders. Because this provision
may have the effect of continuing the tenure of the current Board of
Directors, the Board has recognized that the individual directors have a
personal interest in this provision that may differ from those of the
shareholders. However, the Board believes that these provisions' primary
purpose is to ensure that the Board will have sufficient time to consider
fully any proposed takeover attempt in light of the short and long-term
benefits and other opportunities available to the Company and, to the extent
the Board determines to proceed with the takeover, to effectively negotiate
terms that would maximize the benefits to the Company and its shareholders.
The Board of Directors has considered the potential disadvantages and
believes that the potential benefits of the provisions included in the
proposed charter documents outweigh the possible disadvantages. In particular,
the Board believes that the benefits associated with attracting and retaining
skilled and experienced outside directors and with enabling the Board to fully
consider and negotiate proposed takeover attempts, as well as the greater
sophistication, breadth and certainty of Delaware law, make the
reincorporation proposed beneficial to the Company, its management and its
shareholders.
The proposal to include these antitakeover provisions in the proposed
reincorporation does not reflect knowledge on the part of the Board of
Directors or management of any proposed takeover or other attempt to acquire
control of the Company. Management may in the future propose other measures
designed to discourage takeovers apart from those proposed in this Proxy
Statement, if warranted from time to time in the judgment of the Board of
Directors.
The proposed reincorporation would be accomplished by merging the Company
into a newly formed Delaware corporation which, just before the merger, will
be a wholly owned subsidiary of the Company (the "Delaware Company"), pursuant
to an Agreement and Plan of Merger (the "Merger Agreement"), in substantially
the form attached as Exhibit A to this Proxy Statement. Upon the effective
date of the merger, the Delaware Company's name will be IGEN International,
Inc. The reincorporation will not result in any change in the Company's
business, assets or liabilities, will not cause its corporate headquarters to
be moved and will not result in any relocation of management or other
employees.
On the effective date of the proposed reincorporation, each outstanding
share of Common Stock of the Company will automatically convert into one share
of Common Stock of the Delaware Company, and shareholders of the Company will
automatically become shareholders of the Delaware Company. On the effective
date of the reincorporation, the number of outstanding shares of Common Stock
of the Delaware Company will be equal to the number of shares of Common Stock
of the Company outstanding immediately prior to the effective date of the
reincorporation. In addition, each outstanding option or right to acquire
shares of Common Stock of the Company will be converted into an option or
right to acquire an equal number of shares of Common Stock of the Delaware
Company, under the same terms and conditions as the original options or
rights. All of the Company's employee benefit plans, including the 1994 Stock
Option Plan, the 1994 Non-Employee Directors' Stock Option Plan and the
Company's 401(k) Profit Sharing Plan and Trust will be adopted and continued
by the Delaware Company following the reincorporation. Shareholders should
recognize that approval of the proposed reincorporation will constitute
approval of the adoption and assumption of those plans by the Delaware
Company.
No action need be taken by shareholders to exchange their stock certificates
now; this will be accomplished at the time of the next transfer by the
shareholder. Certificates for shares in the Company will automatically
represent an equal number of shares in the Delaware Company upon completion of
the merger. The Company intends to apply for the listing and registration of
the Common Stock of the Delaware Company on the NASDAQ National Market System.
Under the California Articles and the California Bylaws, the affirmative
vote of a majority of the outstanding shares of the Company's voting stock is
required for approval of the reincorporation. If approved by the shareholders,
it is anticipated that the reincorporation would be completed as soon
thereafter as practicable. The reincorporation may be abandoned or the Merger
Agreement may be amended (with certain exceptions), either before or after
shareholder approval has been obtained, if in the opinion of the Board of
Directors,
6
<PAGE>
circumstances arise that make such action advisable; provided, that any
amendment that would effect a material change from the charter provisions
discussed in this Proxy Statement would require further approval by the holders
of a majority of the outstanding voting shares.
SIGNIFICANT CHANGES CAUSED BY REINCORPORATION
In general, the Company's corporate affairs are governed at present by the
corporate law of California, the Company's state of incorporation, and by the
California Articles and the California Bylaws, which have been adopted pursuant
to California law. The California Articles and California Bylaws are available
for inspection during business hours at the principal executive offices of the
Company. In addition, copies may be obtained by writing to the Company at IGEN,
Inc., 16020 Industrial Drive, Gaithersburg, Maryland 20877, Attention:
Corporate Secretary.
If the reincorporation proposal is adopted, the Company will merge into, and
its business will be continued by, the Delaware Company. Following the merger,
issues of corporate governance and control would be controlled by Delaware,
rather than California law (however, see "Application of California Law After
Reincorporation"). The California Articles and California Bylaws, will, in
effect, be replaced by the Certificate of Incorporation of the Delaware Company
(the "Delaware Certificate") and the bylaws of the Delaware Company (the
"Delaware Bylaws"), copies of which are attached as Exhibits B and C to this
Proxy. Accordingly, the differences among these documents and between Delaware
and California law are relevant to your decision whether to approve the
reincorporation proposal.
A number of differences between California and Delaware law and among the
various charter documents are summarized in the chart below. Shareholders are
requested to read the following chart in conjunction with the discussion
following the chart and the Merger Agreement, the Delaware Certificate and the
Delaware Bylaws attached to this Proxy Statement. For each item summarized in
the chart, there is a reference to a page of this Proxy Statement on which a
more detailed discussion appears.
<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
----- -------- ----------
<S> <C> <C>
Limitation of Delaware law permits the California law contains
Liability of limitation of liability of additional exceptions to the
Directors and directors and officers to the liability limitations of
Officers (see page Company except in connection with directors and officers. See
9). (i) breaches of the duty of "Indemnification and Limitations
loyalty; (ii) acts or omissions of Liability."
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 a director received an
improper personal benefit.
Indemnification of Delaware law permits somewhat California Law permits
Directors and broader indemnification and could indemnification under certain
Officers (see page result in indemnification of circumstances, subject to certain
10). directors and officers in limitations. See "Indemnification
circumstances where California and Limitation of Liability."
law would not permit
indemnification. See
"Indemnification and Limitation
of Liability."
Cumulative Voting Cumulative is voting not California law permits NASDAQ/NMS
for Directors (see available under Delaware law corporations with over 800 equity
page 12). because it is not provided for in security holders to eliminate
the Delaware Certificate. cumulative voting; the California
Articles have eliminated
cumulative voting.
Number of Directors Determined solely by resolution Determined by Board within range
(see page 12). of the Board. set in the California Bylaws.
Changes in the authorized range
must be approved by the
shareholders.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
----- -------- ----------
<S> <C> <C>
Filling Board Delaware law provides for the California law permits (a) any
Vacancies Delaware Court of Chancery to holder of 5% or more of the
(see page 14). order an election to fill corporation's Voting Stock or (b)
vacancies or newly created the superior court of the
directorships upon the appropriate county to call a
application of the holders of 10% special meeting of shareholders
of the outstanding shares having to elect the entire board if,
a right to vote for such after filling any vacancy, the
directors if, at the time of directors then in office who have
filling such vacancies or been elected by the shareholders
directorships, the directors then constitute less than a majority
in office constitute less than a of the directors then in office.
majority of the entire board as
constituted immediately prior to
any increase.
Classified Board Delaware law permits the adoption The California Company presently
(see of a classified board with has a Board consisting of a
page 13). staggered terms. The Delaware single class of directors.
Certificate and the Delaware
Bylaws provide for a classified
Board of Directors with three
classes of directors.
Removal of Delaware law permits the removal California law permits the
Directors by of a director only with cause, removal of a director with or
Shareholders (see unless otherwise specified in the without cause by affirmative vote
page 14). Certificate of Incorporation. The of a majority of the outstanding
Delaware Certificate expressly shares, provided that shares
prohibits the removal of a voting against removal could not
director without cause, and elect such director under
permits removal for cause by cumulative voting.
affirmative vote of a majority of
the outstanding shares of voting
stock entitled to vote at an
election of directors.
Action by Written Actions by written consent not Actions by written consent not
Consent of permitted by Delaware permitted by California Articles.
Shareholders in Certificate. All shareholder All shareholder actions must take
Lieu of a action must take place by a place by a shareholder vote at a
Shareholder Vote at shareholder vote at a meeting of meeting of shareholders.
Shareholder Meeting shareholders.
(see page 15).
Tender Offer Restricts hostile two-step No comparable statute; the
Statute; Fair Price takeovers; the Delaware California Articles do not
Provision (see Certificate does not contain a contain a fair price provision.
page 16). fair price provision.
Amendment of Amendments to provisions relating Amendments to provisions relating
Certificate (see to director indemnification, to management of the Company, and
page 21). management of the Delaware amendment of the California
Company, and amendment of the Articles require approval by 66
Delaware Certificate require 2/3% of the voting stock of the
approval by 66 2/3% of the voting California Company.
stock of the Delaware Company.
Amendment of Bylaws By the Board or the holders of 66 By the Board or the holders of a
(see page 21). 2/3% of the outstanding voting majority of the outstanding
shares for amendments relating to voting shares (66 2/3% of the
certain provisions relating to outstanding voting shares for
shareholder meetings, the number amendments relating to certain
of directors and vacancies on the provisions relating to
Board. shareholder meetings, the number
of directors, vacancies on the
Board, director fees and
amendment of the California
Bylaws).
Loans to Officers Board may authorize if expected Loans must be approved or
and Directors (see to benefit the Company. ratified by a majority of the
page 21). outstanding shares.
Class Vote for Generally not required unless a A reorganization transaction must
Reorganizations reorganization adversely affects generally be approved by a
(see a specific class of shares. majority vote of each class of
page 21). shares outstanding.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
ISSUE DELAWARE CALIFORNIA
----- -------- ----------
<S> <C> <C>
Right of Permitted for any purpose Permitted for any purpose
Shareholders to reasonably related to a reasonably related to a
Inspect Shareholder shareholder's interest as a shareholder's interest as a
List (see page 22). shareholder. shareholder. Also, an absolute
right to 5% shareholders and
certain 1% shareholders.
Appraisal Rights Generally available if Available in certain
(see shareholders receive cash in circumstances if the holders of
page 22). exchange for the shares and in 5% of the class assert such
certain other circumstances. rights.
Dividends (see page Paid from surplus (including Generally limited to the greater
22). paid-in and earned surplus or net of (i) retained earnings or (ii)
profits). an amount which would leave the
Company with assets of 125% of
liabilities and current assets of
100% of current liabilities.
Other Responsive legislature and larger
body of corporate case law in
Delaware provides more
predictable corporate legal
environment in Delaware.
</TABLE>
INDEMNIFICATION AND LIMITATION OF LIABILITY
LIMITATIONS ON DIRECTOR LIABILITY. Both California and Delaware permit a
corporation to limit the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of certain duties as a
director. The California and Delaware laws adopt a self-governance approach by
enabling a corporation to take advantage of these provisions only if an
amendment to the charter limiting such liability is approved by a majority of
the outstanding shares or such language is included in the original charter.
The California Articles eliminate the liability of directors to the
corporation to the fullest extent permissible under California law. California
law does not permit the elimination of monetary liability where such liability
is based on: (a) intentional misconduct or knowing and culpable violation of
law; (b) acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders, or that involve the absence
of good faith on the part of the director; (c) receipt of an improper personal
benefit; (d) acts or omissions that show reckless disregard for the director's
duty to the corporation or its shareholders, where the director in the
ordinary course of performing a director's duties should be aware of a risk of
serious injury to the corporation or its shareholders; (e) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation and its shareholders; (f)
interested transactions between the corporation and a director in which a
director has a material financial interest; or (g) liability for improper
distributions, loans or guarantees.
The Delaware Certificate also eliminates the liability of directors to the
fullest extent permissible under Delaware law, as such law exists currently or
as it may be amended in the future. Under Delaware law, such provision may not
eliminate or limit director monetary liability for (a) breaches of the
director's duty of loyalty to the corporation or its shareholders; (b) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law; (c) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (d) transactions in which the director received
an improper personal benefit. Such limitation of liability provision also may
not limit director's liability for violation of, or otherwise relieve the
Delaware Company or its directors from the necessity of complying with,
federal or state securities laws or affect the availability of non-monetary
remedies such as injunctive relief or rescission.
Shareholders should recognize that the proposed reincorporation and
associated measures are designed to shield a director from suits by the
Delaware Company or its stockholders for monetary damages for negligence or
gross negligence by the director in failing to satisfy the director's duty of
care. As a result, an action for monetary damages against a director
predicated on a breach of the duty of care would be available only if the
Delaware Company or its shareholders were able to establish that the director
was disloyal in his conduct, failed to act in good faith, engaged in
intentional misconduct, knowingly violated the law, derived an improper
personal benefit or approved an illegal dividend or stock repurchase.
Consequently, the effect of such measures may be to
9
<PAGE>
limit or eliminate an effective remedy which might otherwise be available to a
shareholder who is dissatisfied with Board of Directors' decisions. Although
an aggrieved shareholder could sue to enjoin or rescind an action taken or
proposed by the Board of Directors, such remedies may not be timely or
adequate to prevent or redress injury in all cases.
The Company believes that directors are motivated to exercise due care in
managing the Company's affairs primarily by concern for the best interests of
the Company and its shareholders rather than by the fear of potential monetary
damage awards. As a result, the Company believes that the reincorporation
proposal should sustain the Board of Directors' continued high standard of
corporate governance without any decrease in accountability by directors to
the Company and its shareholders.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The California and Delaware
Bylaws relating to indemnification similarly require that the California
Company and the Delaware Company, respectively, indemnify its directors and
its executive officers to the fullest extent permitted by the respective state
law, provided, that the Company may modify the extent of such indemnification
by individual contracts with its directors and executive officers, and,
provided, further, that the Company will not be required to indemnify any
director or executive officer in connection with a proceeding initiated by
such person, with certain exceptions. Such Bylaws permit the California
Company and the Delaware Company, respectively, to provide indemnification to
its other officers, employees and agents as set forth in the respective state
law. Such indemnification is intended to provide the full flexibility
available under such laws. The Delaware Bylaws contain provisions similar to
the California Bylaws with respect to advances in that the Company is required
to advance expenses related to any proceeding contingent on such persons'
commitment to repay any advances unless it is determined ultimately that such
persons are entitled to be indemnified.
California and Delaware have similar laws respecting indemnification by a
corporation of its officers, directors, employees and other agents. There are
nonetheless certain differences between the laws of the two states.
California law permits indemnification of expenses incurred in derivative or
third-party actions, except that with respect to derivative actions (a) no
indemnification may be made without court approval when a person is adjudged
liable to the corporation in the performance of that person's duty to the
corporation and its shareholders, unless a court determines such person is
entitled to indemnity for expenses, and then such indemnification may be made
only to the extent that such court shall determine and (b) no indemnification
may be made under California law, without court approval in respect of amounts
paid or expenses incurred in settling or otherwise disposing of a threatened
or pending action or amounts incurred in defending a pending action which is
settled or otherwise disposed of without court approval. Delaware allows
indemnification of such expenses without court approval.
Indemnification is permitted by both California and Delaware law providing
the requisite standard of conduct is met, as determined by a majority vote of
a disinterested quorum of the directors, independent legal counsel (if a
quorum of independent directors is not obtainable), a majority vote of a
quorum of the shareholders (excluding shares owned by the indemnified party)
or the court handling the action.
California law requires indemnification when the individual has successfully
defended the action on the merits, as opposed to Delaware law which requires
indemnification relating to a successful defense on the merits or otherwise.
Delaware law generally permits indemnification of expenses 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 shareholders that the
person seeking indemnification acted in good faith and in a manner reasonably
believed to be in or (in contrast to California law) not opposed to the best
interests of the corporation. Without court approval, however, no
indemnification
10
<PAGE>
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 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 California Articles include such a provision. In addition, the
Company, following shareholder approval, entered into indemnification
agreements with its officers and directors providing for indemnification
beyond that expressly mandated by the California Corporations Code.
A provision of Delaware law states that the indemnification provided by
statute shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise. Under
Delaware law, rights to indemnification and expenses are non-exclusive, in
that they need not be limited to those expressly provided by statute.
California law is similar in that it permits non-exclusive indemnification if
authorized in the Company's charter. The California Articles contain such an
enabling provision. Under Delaware law and the Delaware Bylaws, the Delaware
Company is permitted to indemnify its directors, officers, employees and other
agents, within the limits established by law and public policy, pursuant to an
express contract, bylaw provision, shareholder vote or otherwise, any or all
of which could provide indemnification rights broader than those currently
available under the California Bylaws or the California indemnification
statutes. Under Delaware law, therefore, the indemnification agreements
entered into by the California Company with its officers and directors may be
assumed by the Delaware Company upon completion of the proposed
reincorporation. If the proposed reincorporation is approved, the
indemnification agreements will be assumed as previously approved by the
Company's shareholders without change. THUS A VOTE IN FAVOR OF THE PROPOSED
REINCORPORATION WILL ALSO APPROVE ASSUMPTION OF THE INDEMNIFICATION AGREEMENTS
IN THEIR PRESENT FORM. ALTHOUGH THE LAW IN THIS REGARD IS NOT CERTAIN,
SHAREHOLDERS WHO VOTE IN FAVOR OF THE REINCORPORATION PROPOSAL, AND THEREBY
APPROVE ASSUMPTION OF THE INDEMNITY CONTRACTS, MAY BE PREVENTED FROM
CHALLENGING THE VALIDITY OF THE INDEMNITY CONTRACTS IN A SUBSEQUENT COURT
PROCEEDING.
The indemnification and limitation of liability provisions of California
law, and not Delaware law, will apply to actions of the directors and officers
of the California Company made prior to the proposed reincorporation.
Nevertheless, the Board has recognized in considering this reincorporation
proposal that the individual directors have a personal interest in obtaining
the application of Delaware law to such indemnity and limitation of liability
issues affecting them and the Company in the event they arise from a potential
future case, and that the application of Delaware law, to the extent that any
director or officer is actually indemnified in circumstances where
indemnification would not be available under California law, would result in
expense to the Company which the Company would not incur if the Company were
not reincorporated. The Board believes, however, that the overall effect of
reincorporation is to provide a corporate legal environment that enhances the
Company's ability to attract and retain high quality outside directors and
thus benefits the interests of the Company and its shareholders.
There is no pending or, to the Company's knowledge, threatened litigation to
which any of its directors is a party in which the rights of the Company or
its shareholders would be affected if the Company currently were subject to
the provisions of Delaware law rather than California law.
California and Delaware corporate law, the bylaws of both the Company and of
the Delaware Company, as well as any indemnity agreements, may permit
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Board of Directors has been advised that, in
the opinion of the Securities and Exchange Commission (the "SEC"),
indemnification for liabilities arising under the Securities Act is contrary
to public policy and is therefore unenforceable, absent a decision to the
contrary by a court of appropriate jurisdiction.
11
<PAGE>
CUMULATIVE VOTING FOR DIRECTORS
Cumulative voting permits the holder of each share of stock entitled to vote
in the election of directors to cast that number of votes which equal the
number of directors to be elected. The holder may allocate all votes
represented by a share to a single candidate or may allocate those votes among
as many candidates as he chooses. Thus, a shareholder with a significant
minority percentage of the outstanding shares may be able to elect one or more
directors if voting is cumulative. In contrast, the holder or holders of a
majority of the shares entitled to vote in an election of directors will be
able to elect all the directors of the Delaware Company.
Under California law cumulative voting in the election of directors is
mandatory upon notice given by a shareholder at a shareholders' meeting at
which directors are to be elected. In order to cumulate votes a shareholder
must give notice at the meeting, prior to the voting, of the shareholder's
intention to vote cumulatively. If any one shareholder gives such a notice,
all shareholders may cumulate their votes. However, California law permits a
company, by amending its articles of incorporation or bylaws, to eliminate
cumulative voting when the Company's shares are listed on a national stock
exchange or traded on the NASDAQ National Market System and are held by at
least 800 equity security holders. On the basis of this exception, cumulative
voting was eliminated under the California Bylaws.
Cumulative voting is not available under Delaware law unless so provided in
the corporation's certificate of incorporation. The Delaware Certificate does
not provide for cumulative voting.
The elimination of cumulative voting could deter investors from acquiring a
minority block in the Company with a view toward obtaining a board seat and
influencing Company policy. It is also conceivable that the absence of
cumulative voting might deter efforts to seek control of the Company on a
basis which some shareholders might deem favorable.
OTHER MATTERS RELATING TO DIRECTORS
NUMBER OF DIRECTORS. California law allows the number of persons
constituting the board of directors of a corporation to be fixed by the bylaws
or the articles of incorporation, or permits the bylaws to provide that the
number of directors may vary within a specified range, the exact number to be
determined by the Board of Directors. California law further provides that, in
the case of a variable board, the maximum number of directors may not exceed
two times the minimum number minus one. The California Articles and Bylaws
provide for a board of directors that may vary between five and nine members,
inclusive, and the Board of Directors has fixed the exact number of directors
at six. California law also requires that any change in a fixed number of
directors and any change in the range of a variable board of directors
specified in the articles and bylaws must be approved by a majority in
interest of the outstanding shares entitled to vote (or such greater
proportion of the outstanding shares as may be required by the articles of
incorporation), provided that a change reducing the minimum number of
directors to less than three cannot be adopted if votes cast against its
adoption are equal to more than 16 2/3% of the outstanding shares entitled to
vote. The California Articles require the vote of 66 2/3% in interest of the
voting power of all of the then outstanding shares to change the range of the
Company's variable Board of Directors.
Delaware law permits a board of directors to change the authorized number of
directors by amendment to the bylaws unless the number of directors is fixed
in the certificate of incorporation or the manner of fixing the number of
directors is set forth in the certificate of incorporation, in which case the
number of directors may be changed only by amendment of the certificate of
incorporation or consistent with the manner specified in the certificate of
incorporation, as the case may be. The Delaware Certificate provides that the
exact number of directors shall be fixed from time to time exclusively by the
Board of Directors by resolution.
ELECTIONS; CLASSIFIED BOARD OF DIRECTORS. California law generally requires
that directors be elected annually but does permit a "classified" Board of
Directors if (i) a corporation is listed on a national stock exchange or (ii)
the corporation's shares are traded in the NASDAQ National Market System and
are held by at
12
<PAGE>
least 800 shareholders. California law also allows the election of one or more
directors by the holders of a particular class or series of shares. The
California Articles currently do not provide for a classified board of
directors. The directors of the California Company, who will also be the
directors of the Delaware Company if the reincorporation proposal is approved,
are set forth in Proposal One.
Delaware law permits, but does not require, the adoption of a classified
board of directors with staggered terms. A maximum of three classes of
directors is permitted by Delaware law, with members of one class to be
elected each year for a maximum term of three years. Classification of the
Board of Directors might make it more difficult for a person acquiring shares
to take immediate control of the Board of Directors. The Delaware Certificate
and the Delaware Bylaws provide for a classified Board of Directors with three
classes of directors (the "Classified Board Provision").
Under the Classified Board Provision, the Board of Directors would be
divided into three classes, designated Class I, Class II and Class III. Any
director in Class I will hold office until the first annual meeting of
shareholders following the closing of the Initial Public Offering; any
director in Class II will hold office until the second annual meeting of
shareholders following the closing of the Initial Public Offering; and any
director in Class III will hold office until the third annual meeting of
shareholders following the closing of the Initial Public Offering and, in each
case, until their successors are duly elected and qualified or until their
earlier resignation, removal from office or death. As a result, only one class
of directors will be elected at each annual meeting of shareholders, with the
remaining classes continuing their respective three-year terms.
If the Reincorporation Proposal is adopted, the directors of the Delaware
Company, who are also the current directors of the Company, will be divided
into classes as follows:
<TABLE>
<CAPTION>
NAME CLASS
---- -----
<S> <C>
Robert Salsmans.................................................... I
Edward B. Lurier................................................... I
Hubert Rehkaemper.................................................. II
Richard J. Massey.................................................. II
William J. O'Neill................................................. III
Samuel J. Wohlstadter.............................................. III
</TABLE>
By approving Proposal Two, shareholders will be approving the Classified
Board Provision, the election of the same directors as would be elected to the
Board of Directors of the Company in the event Proposal One is approved by the
shareholders, and the initial classification of directors set forth above.
Classification of directors is likely to provide the Board of Directors with
greater continuity and experience, since normally at least one member of the
Board of Directors would be in such member's second year of service and at
least one member of the Board of Directors would be in such member's third
year of service. Although the Board of Directors is not aware of any problems
experienced by the Company in the past with respect to continuity and
stability of leadership and policy, the Board of Directors believes that a
classified Board of Directors could decrease the likelihood of such problems
arising in the future.
Adoption of the Classified Board Provision may significantly extend the time
required to elect a new majority to the Board of Directors. Presently, the
California Articles allows a change in control of the Board of Directors by a
majority of the Company's shareholders at a single annual meeting or special
meeting of shareholders. With the Classified Board Provision, unless directors
are removed, it will require at least two annual meetings of shareholders for
a majority of shareholders that is less than a two-thirds majority to make a
change in control of the Board of Directors, since only a minority of the
directors will be elected at each meeting. A significant effect of a
classified Board of Directors may be to deter hostile takeover attempts
because an
13
<PAGE>
acquirer would experience delay in replacing a majority of the directors.
However, a classified Board of Directors will also make it more difficult for
shareholders to effect a change in control of the Board of Directors, even if
such a change in control is sought due to dissatisfaction with the performance
of the Company's directors.
The existence of a classified Board may deter so-called "creeping
acquisitions" in which a person or group seeks to acquire: (i) a controlling
position without paying a normal control premium to the selling shareholders;
(ii) a position sufficient to exert control over the Company through a proxy
contest or otherwise; or (iii) a block of stock with a view toward attempting
to promote a sale or liquidation or a repurchase by the Company of the block
at a premium, or an exchange of the block for assets of the Company. Faced
with a classified Board of Directors, such a person or group would have to
assess carefully its ability to control or influence the Company. Furthermore,
the ability of the incumbent Board of Directors to respond appropriately to a
creeping acquisition will be strengthened. If free of the necessity to act in
response to an immediately threatened change in control, the Board of
Directors can act in a more careful and deliberative manner to make and
implement appropriate business judgments in response to a creeping
acquisition.
REMOVAL OF DIRECTORS. Under California law, a director may be removed with
or without cause by the affirmative vote of a majority of the outstanding
shares, provided that the shares voted against removal would not be sufficient
to elect the director by cumulative voting. Under Delaware law, a director on
a classified board of directors can be removed from office during his term by
shareholders only for cause unless the certificate of incorporation provides
otherwise. The Delaware Certificate provides that the Company's directors may
be removed from office at any time with cause by the affirmative vote of the
holders of a majority of the voting power of the then outstanding shares of
voting stock of the Company entitled to vote in the election of directors (the
"Voting Stock") and that no director can be removed without cause. The term
"cause" with respect to the removal of directors is not defined in the
Delaware General Corporation Law and its meaning has not been precisely
delineated by the Delaware courts.
FILLING BOARD VACANCIES. Under California law, if, after the filling of any
vacancy by the directors of a corporation, the directors then in office who
have been elected by the corporation's shareholders constitute less than a
majority of the directors then in office, then: (i) any holder of more than 5%
of the corporation's Voting Stock may call a special meeting of shareholders,
or (ii) the superior court of the appropriate county may order a special
meeting of the shareholders to elect the entire board of directors of the
corporation. Delaware law provides that if, at the time of filling any vacancy
or newly created directorship, the directors then in office constitute less
than a majority of the entire board of directors as constituted immediately
prior to any increase, the Delaware Court of Chancery may, upon application of
any shareholder or shareholders holding at least 10% of the total number of
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships or to replace the directors chosen by the directors then
in office.
The proposed Delaware Certificate and Bylaws provide that vacancies shall,
unless the Board of Directors determines by resolution that any such vacancies
be filled by the shareholders or as otherwise provided by law, be filled only
by the affirmative vote of a majority of directors then in office, even if
such directors comprise less than a quorum of the Board of Directors.
CAPITALIZATION; BLANK CHECK PREFERRED
The Company's capital stock consists of 50,000,000 authorized shares of
Common Stock, $.001 par value, of which 14,953,318 shares were issued and
outstanding as of July 24, 1996, and 10,000,000 authorized shares of Preferred
Stock, $.001 par value, of which (a) 600,000 shares are designated Series A
Junior Preferred Stock and (b) none are issued and outstanding as of July 24,
1996.
Upon the effectiveness of the reincorporation, the Delaware Company will
have the same number of outstanding shares of Common Stock that the Company
had outstanding immediately prior to the reincorporation.
14
<PAGE>
The capitalization of the Delaware Company is identical to the
capitalization of the Company with authorized capital stock of 50,000,000
shares of Common Stock, $.001 par value and 10,000,000 shares of Preferred
Stock, $.001 par value (600,000 of which are designated Series A Junior
Preferred Stock), consistent with maintaining adequate capitalization for the
current needs of the Company. The Delaware Company's authorized but unissued
shares of Preferred Stock will be available for future issuance.
Under the Delaware Certificate, as under the California Articles, the Board
of Directors has the authority to determine or alter the rights, preferences,
privileges and restrictions to be granted to or imposed upon any wholly
unissued series of Preferred Stock and to fix the number of shares
constituting any such series and to determine the designation thereof. The
rights, preferences, privileges and restrictions granted to and imposed upon
the Series A Junior Preferred Stock in the Delaware Certificate are identical
to those granted and imposed in the California Certificate.
The Board may authorize the issuance of Preferred Stock for the purpose of
adopting shareholder rights plans and in connection with various corporate
transactions, including corporate partnering arrangements. IF THE
REINCORPORATION IS APPROVED, IT IS NOT THE PRESENT INTENTION OF THE BOARD OF
DIRECTORS TO SEEK SHAREHOLDER APPROVAL PRIOR TO ANY ISSUANCE OF PREFERRED
STOCK, EXCEPT AS REQUIRED BY LAW OR REGULATION. See "Anti-Takeover Measures."
ACTIONS BY WRITTEN CONSENT OF SHAREHOLDERS
Under California and Delaware law, shareholders may execute an action by
written consent in lieu of a shareholder meeting. Both California and Delaware
law permits a corporation to eliminate such actions by written consent in its
charter. The California Articles have eliminated the ability of shareholders
to act by written consent. The Delaware Certificate also eliminates actions by
written consent of shareholders.
Elimination of such shareholders written consents may lengthen the amount of
time required to take shareholder actions because certain actions by written
consent are not subject to the minimum notice requirement of a shareholders'
meeting. The elimination of shareholders written consents may deter hostile
takeover attempts because of the lengthened shareholder approval process.
Without the ability to act by written consent, a holder or group of holders
controlling a majority in interest of the Delaware Company's capital stock
will not be able to amend the Delaware Bylaws or remove directors pursuant to
a written consent. Any such holder or group of holders would have to wait
until a shareholders' meeting was held to take any such action. The Board
believes this provision, like the other provisions to be included in the
Delaware Certificate and Bylaws, will enhance the Board's opportunity to fully
consider and effectively negotiate in the context of a takeover attempt.
15
<PAGE>
ADVANCE NOTICE REQUIREMENT FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
There is no specific statutory requirement under either California or
Delaware law with regard to advance notice of director nominations and
shareholder proposals. Absent a bylaw restriction, director nominations and
shareholder proposals may be made without advance notice at the annual
meeting. However, federal securities laws generally provide that shareholder
proposals that the proponent wishes to include in the Company's proxy
materials must be received not less than 120 days in advance of the date of
the proxy statement released in connection with the previous year's annual
meeting.
Both the California Bylaws and the Delaware Bylaws provide that in order for
director nominations or shareholder proposals to be properly brought before
the meeting, the shareholder must have delivered timely notice to the
Secretary of the corporation. To be timely, notice must be delivered not less
than 120 days prior to the anniversary of the mailing date for the previous
year's annual meeting under the California Bylaws, and not less than 120 days
prior to the date of the Company's proxy statement released to stockholders in
connection with the previous year's annual meeting under the Delaware Bylaws.
If no annual meeting was held in the previous year or the date of the annual
meeting has been changed by more than 30 days from the date contemplated at
the time of the previous year's proxy statement, the California Bylaws provide
that notice must be provided a reasonable time before the solicitation is made
and the Delaware Bylaws will provide that notice must be given not more than
90 days nor less than 60 days prior to the annual meeting. Proper notice under
the federal securities laws for a proposal to be included in the Company's
proxy materials will constitute proper notice under the Delaware Bylaws. These
notice requirements help ensure that shareholders are aware of all proposals
to be voted on at the meeting and have the opportunity to consider each
proposal in advance of the meeting.
ANTI-TAKEOVER MEASURES
Delaware law has been widely viewed to permit a corporation greater
flexibility in governing its internal affairs and its relationships with
shareholders and other parties than do the laws of many other states,
including California. In particular, Delaware law permits a corporation to
adopt a number of measures designed to reduce a corporation's vulnerability to
hostile takeover attempts. Such measures are either not currently permitted or
are more narrowly drawn under California law. Among these measures are the
establishment of a classified board of directors and the elimination of the
right of shareholders to call special shareholders' meetings, each of which is
described above. In addition, certain types of "poison pill" defenses (such as
shareholder rights plans) have been upheld by Delaware courts, while
California courts have yet to decide on the validity of such defenses, thus
rendering their effectiveness in California less certain.
As discussed herein, certain provisions of the Delaware Certificate and
Delaware Bylaws could be considered to be anti-takeover measures. The
California Company currently has a shareholder rights plan, which plan will be
terminated if the shareholders vote to approve this Proposal 2. The Company
intends that the Delaware Company will adopt a stockholders rights plan
similar to the existing shareholders rights plan; however, the Company does
not have any present intention of adopting any further anti-takeover measures,
nor does the Board of Directors have knowledge that any attempt to gain
control of the Company is being contemplated. As discussed above, numerous
differences between California and Delaware law, effective without additional
action by the Delaware Company, could have a bearing on unapproved takeover
attempts. See "Description of the California Company's 1996 Preferred Share
Purchase Rights Plan."
One such difference is the existence of a Delaware statute regulating tender
offers, which statute is intended to limit coercive takeovers of companies
incorporated in that state. California has no comparable statute. The Delaware
law provides that a corporation may not engage in any business combination
with any interested shareholder for a period of three years following the date
that such shareholder became an interested shareholder, unless (i) prior to
the date the shareholder became an interested shareholder the Board of
Directors approved the business combination or the transaction which resulted
in the shareholder becoming an interested shareholder, or
16
<PAGE>
(ii) upon consummation of the transaction which resulted in the shareholder
becoming an interested shareholder, the interested shareholder owned at least
85% of the Voting Stock, or (iii) the business combination is approved by the
Board of Directors and authorized by 66 2/3% of the outstanding Voting Stock
which is not owned by the interested shareholder. An interested shareholder
means any person that is the owner of 15% or more of the outstanding Voting
Stock; however, the statute provides for certain exceptions to parties who
otherwise would be designated interested shareholders, including an exception
for parties that held 15% or more of the outstanding Voting Stock as of
December 23, 1987. Any corporation may decide to opt out of the statute in its
original certificate of incorporation or, at any time, by action of its
shareholders. The Company has no present intention of opting out of the
statute.
There can be no assurance that the Board of Directors would not adopt any
further antitakeover measures available under Delaware law (some of which may
not require shareholder approval). Moreover, the availability of such measures
under Delaware law, whether or not implemented, may have the effect of
discouraging a future takeover attempt which a majority of the Delaware
Company's shareholders may deem to be in their best interests or in which
shareholders may receive a premium for their shares over the then current
market price. As a result, shareholders who might desire to participate in
such transactions may not have the opportunity to do so. Shareholders should
recognize that, if adopted, the effect of such measures, along with the
possibility of discouraging takeover attempts, may be to limit in certain
respects the rights of shareholders of the Delaware Company compared with the
rights of shareholders of the Company.
The Board of Directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences or effects described above and may
frequently be beneficial to the shareholders, providing all of the
shareholders with considerable value for their shares. However, the Board of
Directors believes that the potential disadvantages of unapproved takeover
attempts (such as disruption of the Company's business and the possibility of
terms which may be less than favorable to all of the shareholders than would
be available in a board-approved transaction) are sufficiently great such that
prudent steps to reduce the likelihood of such takeover attempts and to enable
the Board to fully consider the proposed takeover attempt and actively
negotiate its terms are in the best interests of the Company and its
shareholders.
In addition to the various anti-takeover measures that would be available to
the Delaware Company after the reincorporation due to the application of
Delaware law, the Delaware Company would retain the rights currently available
to the Company under California law to issue shares of its authorized but
unissued capital stock. Following the effectiveness of the proposed
reincorporation, shares of authorized and unissued Common Stock and Preferred
Stock of the Delaware Company could (within the limits imposed by applicable
law) be issued in one or more transactions, or Preferred Stock could be issued
with terms, provisions and rights which would make more difficult and,
therefore, less likely, a takeover of the Delaware Company. Any such issuance
of additional stock could have the effect of diluting the earnings per share
and book value per share of existing shares of Common Stock and Preferred
Stock, and such additional shares could be used to dilute the stock ownership
of persons seeking to obtain control of the Delaware Company.
It should be noted that the voting rights to be accorded to any unissued
series of Preferred Stock of the Delaware Company ("Delaware Preferred Stock")
remain to be fixed by the Delaware Board. Accordingly, if the Delaware Board
so authorizes, the holders of Delaware Preferred Stock may be entitled to vote
separately as a class in connection with approval of certain extraordinary
corporate transactions in circumstances where Delaware law does not ordinarily
require such a class vote, or might be given a disproportionately large number
of votes. Such Delaware Preferred Stock could also be convertible into a large
number of shares of Common Stock of the Delaware Company under certain
circumstances or have other terms which might make acquisition of a
controlling interest in the Delaware Company more difficult or more costly,
including the right to elect additional directors to the Delaware Board.
Potentially, the Delaware Preferred Stock could be used to create voting
impediments or to frustrate persons seeking to effect a merger or otherwise to
gain control of the Delaware Company. Also, the Delaware Preferred Stock could
be privately placed with purchasers who might side with the management of the
Delaware Company in opposing a hostile tender offer or other attempt to obtain
control.
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<PAGE>
On December 14, 1995, the Board of Directors of the California Company
approved the adoption of a Preferred Share Purchase Rights Plan (the
"California Rights Plan"). See "Description of the Company's 1996 Preferred
Share Purchase Rights Plan." In addition to the shares of Series A Junior
Preferred Stock authorized in connection with the adoption of the California
Rights Plan, the Board may authorize the issuance of additional Preferred
Stock for the purpose of adopting another shareholder rights plan and/or in
connection with various corporate transactions, including corporate partnering
arrangements. The Delaware Certificate authorizes the issuance of 600,000
shares of Series A Junior Preferred Stock with rights, preferences and
privileges identical to those of the California Company's Series A Junior
Preferred Stock authorized in connection with the California Rights Plan.
However, future issuances of Delaware Preferred Stock as an anti-takeover
device might preclude shareholders from taking advantage of a situation which
might otherwise be favorable to their interests. In addition (subject to the
considerations referred to above as to applicable law), the Delaware Board
could authorize issuance of shares of Common Stock of the Delaware Company
("Delaware Common Stock") or Delaware Preferred Stock to a holder who might
thereby obtain sufficient voting power to ensure that any proposal to alter,
amend, or repeal provisions of the Delaware Certificate unfavorable to a
suitor would not receive the necessary vote of 66 2/3% of the Voting Stock
required for certain of the proposed amendments (as described below).
IF THE REINCORPORATION IS APPROVED IT IS NOT THE PRESENT INTENTION OF THE
BOARD OF DIRECTORS TO SEEK SHAREHOLDER APPROVAL PRIOR TO ANY ISSUANCE OF THE
DELAWARE PREFERRED STOCK OR DELAWARE COMMON STOCK, EXCEPT AS REQUIRED BY LAW
OR REGULATION. Frequently, opportunities arise that require prompt action, and
it is the belief of the Board of Directors that the delay necessary for
shareholder approval of a specific issuance would be a detriment to the
Delaware Company and its shareholders. The Board of Directors does not intend
to issue any Preferred Stock except on terms which the Board of Directors
deems to be in the best interests of the Delaware Company and its then
existing shareholders.
DESCRIPTION OF THE COMPANY'S 1996 PREFERRED SHARE PURCHASE RIGHTS PLAN
Terms of the California Rights Plan provide for a dividend distribution of
one preferred share purchase right (a "Right") for each outstanding share of
common stock, par value $.001 per share (the "Common Shares"), of the Company.
The dividend was paid on January 19, 1996 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.001 per share (the "Preferred
Stock"), at an exercise price of $65.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment, and a redemption price of
$.01 per Right. Each one one-hundredth of a share of Preferred Stock has
designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions which make its value approximately equal to the
value of a Common Share. The description and terms of the Rights are set forth
in a Rights Agreement dated as of August 1, 1995 (the "Rights Agreement"),
between the Company and The First National Bank of Boston, as Rights Agent
(the "Rights Agent").
Initially, the Rights are and will be evidenced by stock certificates
representing the Common Shares then outstanding, and no separate Rights
Certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person, entity or group of affiliated
or associated persons (other than (a) the Company, (b) a majority-owned
subsidiary of the Company, (c) any employee benefit plan of the Company or any
majority-owned subsidiary of the Company, (d) any entity holding Common Shares
for or pursuant to the terms of any such plan or (e) Mr. Samuel J.
Wohlstadter, his affiliates and associates, his heirs, and any trust or
foundation to which he has transferred or may transfer Common Shares of the
Company ("Wohlstadter") and each of the persons listed in (a) through (e)
above, (an "Excepted Person")) (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding Common Shares or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person, entity or group of affiliated or
associated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Common Shares (the earlier
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<PAGE>
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate, with a copy of the
Summary of Rights which is included in the Rights Agreement as Exhibit C
thereof (the "Summary of Rights"), attached thereto. So long as Rights are
attached to the Common Stock as provided in the Rights Agreement, one
additional Right shall be delivered with each share of Common Stock issued
after January 19, 1996, including but not limited to Common Stock issued upon
conversion of any convertible securities of the Company and exercise of options
to purchase Common Stock granted by the Company.
Under the California Rights Plan, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights are transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date, upon transfer or new issuance of Common Shares, will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
Under the California Rights Plan, the Rights are not exercisable until the
Distribution Date. The Rights will expire on December 13, 2005 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed, exchanged or terminated by the Company, in each
case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares, or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above). The
exercise of Rights for Preferred Shares is at all times subject to the
availability of a sufficient number of authorized but unissued Preferred
Shares.
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidation or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, a minimum preferential quarterly dividend payment in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provisions for adjustment set forth in the Certificate of
Designation, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise) declared on the Common Stock since the
immediately preceding date such a quarterly dividend payment was made or, with
respect to the date on which the first quarterly dividend payment was made,
since the first issuance of any share or fraction of a share of Preferred Stock
but will be entitled to an aggregate dividend of 100 times the dividend
declared per Common Share. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $100 but will be entitled to
19
<PAGE>
an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in
which Common Shares are exchanged (other than a reincorporation by the Company
to change its state of domicile (an "Excluded Reincorporation")), each
Preferred Share will be entitled to receive 100 times the amount of
consideration received per Common Share. These rights are protected by
customary anti-dilution provisions. Because of the nature of the Preferred
Shares' dividend and liquidation rights, the value of one one-hundredth of a
Preferred Share should approximate the value of one Common Share.
In the event that any person, entity or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will for a 60-day period have the
right to receive upon exercise that number of Common Shares having a market
value of two times the exercise price of the Right (or, if such number of
shares is not and cannot be authorized, the Company may issue Preferred Stock,
cash, debt, stock or a combination thereof in exchange for the Rights). This
right will terminate 60 days after the date on which the Rights become
nonredeemable (as described below), unless there is an injunction or similar
obstacle to exercise of the Rights, in which event this right will terminate
60 days after the date on which the Rights again become exercisable.
In the event that the Company is acquired by any person or entity (other
than Wohlstadter) in a merger or other business combination transaction, or
50% or more of its consolidated assets or earning power are sold to any person
or entity (other than Wohlstadter), other than in the case of an Excluded
Reincorporation, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will have
a market value of two times the exercise price of the Right.
At any time after the acquisition by a person, entity or group of affiliated
or associated persons and prior to the acquisition by such person, entity or
group of 50% or more of the outstanding Common Shares, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such
person, entity or group which have become void), in whole or in part, at an
exchange ratio of one Common Share, or one one-hundredth of a Preferred Share,
per Right (or, if the number of shares is not and cannot be authorized, the
Company may issue cash, debt, stock or a combination thereof in exchange for
the Rights), subject to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredths of a Preferred
Share issuable upon the exercise of one Right, which may, at the option of the
Company, be evidenced by depository receipts), and in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.
At any time prior to the earliest of (i) the close of business on the
twentieth day following the first public announcement that a person has become
an Acquiring Person (subject to extension for one or more successive ten day
periods pursuant to the Rights Agreement), (ii) such time on or after the
first public announcement that such person has become an Acquiring Person as
there shall have occurred a Change of Control (as defined in the Rights
Agreement) of the Company, or (iii) the Final Expiration Date, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). Following the expiration of
the above periods, the Rights become nonredeemable. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to any percentage which
is (i) greater than the largest percentage of the outstanding Common Shares
then known to the Company
20
<PAGE>
to be beneficially owned by any person, entity or group of affiliates or
associated persons (other than an Excepted Person) and (ii) not less than 10%,
except that from and after such time as any person, entity or group of
affiliated or associated persons becomes an Acquiring Person no such amendment
may adversely affect the interest of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, has no rights as a
stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
The Rights have certain anti-takeover effects. The Rights granted under the
California Rights Plan will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the Company's
Board of Directors. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors, since the Rights may
be redeemed by the Company at $.01 per Right prior to the earliest of (i) the
twentieth day following the time that a person or group has acquired
beneficial ownership of 15% or more of the Common Shares (unless extended for
one or more 10 day periods by the Board of Directors), (ii) a Change of
Control, or (iii) the Final Expiration Date of the Rights.
The California Rights Plan permits the Board to terminate the Plan in the
event the Company is reincorporated in Delaware. The Board intends to adopt a
similar stockholders rights plan for the Delaware Company if the
reincorporation is approved. A VOTE IN FAVOR OF THE PROPOSED REINCORPORATION
DESCRIBED IN THIS PROPOSAL 2 WILL RESULT IN THE TERMINATION OF THE CALIFORNIA
RIGHTS PLAN AND THE APPROVAL AND ADOPTION OF A SIMILAR STOCKHOLDERS RIGHTS
PLAN BY THE BOARD OF THE DELAWARE COMPANY. See "Anti-Takeover Measures."
AMENDMENT OF CERTIFICATE
The California Articles may be amended by the approval of a majority of the
members of the Board of Directors and by a majority of the outstanding shares
(66 2/3% of the outstanding shares with regard to amendment of certain
provisions regarding management of the Company). The Delaware Certificate
provides that the provisions relating to (i) indemnification of officers and
directors and (ii) the number, term, election and removal of directors can
only be amended by the affirmative vote of the holders of at least 66 2/3% of
the voting power of the outstanding voting stock of the Delaware Company.
AMENDMENT OF BYLAWS
The California Bylaws may be amended or repealed either by the Board of
Directors or by the holders of a majority in interest of the outstanding stock
of the Company (66 2/3% of the outstanding stock with respect to certain
provisions relating to shareholder meetings and actions, director vacancies
and fees and amendment of the California Bylaws), except that a change in the
authorized maximum or minimum number of directors may only be effected by a
vote of 66 2/3% of the outstanding shares. Upon the effectiveness of the
proposed reincorporation, the Delaware Bylaws may be adopted, amended or
repealed by the Delaware Board or by the holders of at least 66 2/3% of the
voting power of the outstanding capital stock of the Delaware Company.
LOANS TO OFFICERS, DIRECTORS AND EMPLOYEES
California law provides that any loan or guaranty (other than loans to
permit the purchase of shares under certain stock purchase plans) for the
benefit of any officer or director, or any employee benefit plan authorizing
such loan or guaranty (except certain employee stock purchase plans), must be
approved by the shareholders of a California corporation.
Under Delaware law, a corporation may make loans to, or guarantee the
obligations of, officers or other employees when, in the judgment of the board
of directors, the loan or guaranty may reasonably be expected to benefit the
corporation. Both California law and Delaware law permit such loans or
guaranties to be unsecured and without interest.
21
<PAGE>
CLASS VOTE FOR CERTAIN REORGANIZATIONS
With certain exceptions, California law requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved
by a majority vote of each class of shares outstanding. Delaware law generally
does not require class voting for such transactions, except in certain
situations involving an amendment to the certificate of incorporation which
adversely affects a specific class of shares.
California law also requires that holders of a California corporation's
Common Stock receive nonredeemable Common Stock in a merger of the corporation
with the holder (or an affiliate of the holder) of more than 50% but less than
90% of its Common Stock, unless all of the holders of its Common Stock consent
to the merger or the merger has been approved by the California Commissioner
of Corporations at a "fairness" hearing. This provision of California law may
have the effect of making a cash "freezeout" merger by a majority shareholder
more difficult to accomplish. A cash freezeout merger is a transaction whereby
a minority shareholder is forced to relinquish his share ownership in a
corporation in exchange for cash, subject in certain instances to dissenters
rights. Delaware law has no comparable provision.
INSPECTION OF SHAREHOLDER LISTS
California law provides for an absolute right of inspection of the
shareholder list for shareholders holding 5% or more of a corporation's
outstanding voting shares or shareholders holding 1% or more or' such shares
who have filed a Schedule 14B with the Securities and Exchange Commission (the
"SEC"). Delaware law provides no such absolute right of shareholder
inspection. However, both California and Delaware law permit any shareholder
of record to inspect the shareholder list for any purpose reasonably related
to that person's interest as a shareholder.
APPRAISAL RIGHTS
Under both California law and Delaware law, a shareholder of a corporation
participating in certain mergers and reorganizations may be entitled to
receive cash in the amount of the "fair value" (Delaware) or "fair market
value" (California) of its shares, as determined by a court, in lieu of the
consideration it would otherwise receive in the transaction. The limitations
on such dissenters' appraisal rights are somewhat different in California and
Delaware.
Shareholders of a California corporation, the shares of which are listed on
a national securities exchange or on the OTC margin stock list, generally do
not have appraisal rights unless the holders of at least 5% of the class of
outstanding shares assert the appraisal right. In any reorganization in which
one corporation or the shareholders of one corporation own more than 5/6 of
the voting power of the surviving or acquiring corporation, shareholders are
denied dissenters' rights under California law. For this reason, appraisal
rights will not be available to shareholders in connection with the
reincorporation proposal.
Under Delaware law appraisal rights are not available to shareholders with
respect to a merger or consolidation by a corporation, the shares of which are
either listed on a national securities exchange or designated as a national
market system security or an interdealer quotation system security by the
National Association of Securities Dealers, Inc., or are held of record by
more than 2,000 holders if the shareholders receive shares of the surviving
corporation or shares of any other corporation which are similarly listed or
dispersed, and the shareholders do not receive any other property in exchange
for their shares except cash for fractional shares. Appraisal rights are also
unavailable under Delaware law to shareholders of a corporation surviving a
merger if no vote of those shareholders is required to approve the merger
because, among other things, the number of shares to be issued in the merger
does not exceed 20% of the shares of the surviving corporation outstanding
immediately before the merger and certain other conditions are met.
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<PAGE>
VOTING APPRAISAL RIGHTS IN CERTAIN TRANSACTIONS
Delaware law does not provide shareholders with voting or appraisal rights
when a corporation acquires another business through the issuance of its
stock, whether in exchange for assets or stock or in a merger with a
subsidiary. California law treats these kinds of acquisitions in the same
manner as a merger of the corporation directly with the business to be
acquired and provides appraisal rights in the circumstances described in the
preceding section.
DIVIDENDS
Under California law, any dividends or other distributions to shareholders,
such as redemptions, are limited to the greater of (i) retained earnings or
(ii) an amount which would leave the corporation with assets (excluding
certain intangible assets) equal to at least 125% of its liabilities
(excluding certain deferred items) and current assets equal to at least 100%
(or, in certain circumstances, 125%) of its current liabilities. Delaware law
allows the payment of dividends and redemption of stock out of surplus
(including paid-in and earned surplus) or out of net profits for the current
and immediately preceding fiscal years. The Company has never paid cash
dividends and has no present plans to do so.
APPLICATION OF CALIFORNIA LAW AFTER REINCORPORATION
California law provides that if (i) the average of certain property, payroll
and sales factors results in a finding that more than 50% of the Delaware
Company's business is conducted in California, and in a particular fiscal year
more than 50% of the Delaware Company's outstanding voting securities are held
of record by persons having addresses in California, and (ii) the Company's
shares are traded in the NASDAQ National Market System and are held by fewer
than 800 equity security holders, as of its most recent annual meeting of
shareholders, then the Delaware Company would become subject to certain
provisions of California law regardless of its state of incorporation. The
Company does not currently meet all of the above requirements.
Because the Company's Common Stock is traded in the NASDAQ National Market
System and the Company's shares are held by at least 800 equity security
holders, as of its most recent annual meeting of shareholders, California law
will not initially apply to the Delaware Company if the reincorporation is
approved. The Company would not be subject to California law as long as it
continued to meet both of these requirements.
If the Delaware Company were to become subject to the provisions of
California law referred to above, and such provisions were enforced by
California courts in a particular case, many of the Delaware laws described in
this Proxy Statement would not apply to the Delaware Company. Instead, the
Delaware Company could be governed by certain California laws, including those
regarding liability of directors for breaches of the duty of care,
indemnification of directors, dissenters' rights of appraisal, removal of
directors as well as certain other provisions discussed above, to the
exclusion of Delaware law. The effects of applying both Delaware and
California laws to a Delaware corporation whose principal operations are based
in California have not yet been determined.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The reincorporation provided for in the Merger Agreement is intended to be a
tax free reorganization under the Internal Revenue Code of 1986, as amended.
Assuming the reincorporation qualifies as a reorganization, no gain or loss
will be recognized to the holders of capital stock of the Company as a result
of consummation of the reincorporation, and no gain or loss will be recognized
by the Company or the Delaware Company. Each former holder of capital stock of
the Company will have the same basis in the capital stock of the Delaware
Company received by such holder pursuant to the reincorporation as such holder
has in the capital stock of the Company held by such holder at the time of
consummation of the reincorporation. Each shareholder's holding period with
respect to the Delaware Company's capital stock will include the period during
which such holder held the corresponding Company capital stock, provided the
latter was held by such holder as a capital asset at the time
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<PAGE>
of consummation of the reincorporation. The Company has not obtained a ruling
from the Internal Revenue Service or an opinion of legal or tax counsel with
respect to the consequences of the reincorporation.
The foregoing is only a summary of certain federal income tax consequences.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF THE LAWS OF
ANY STATE OR OTHER JURISDICTION.
BOARD RECOMMENDATION
The foregoing discussion is an attempt to summarize the more important
differences in the corporation laws of Delaware and California and does not
purport to be an exhaustive discussion of all of the differences. Such
differences can be determined in full by reference to the California
Corporations Code and to the Delaware General Corporation Law. In addition,
both California and Delaware law provide that some of the statutory provisions
as they affect various rights of holders of shares may be modified by
provisions in the charter or bylaws of the corporation.
A vote FOR the reincorporation proposal will constitute approval of the
merger, the Delaware Certificate, the Delaware Bylaws, assumption of the
indemnification agreements, the adoption and assumption by the Delaware
Company of each of the Company's stock option, stock purchase and employee
benefit plans and all other aspects of this Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997 and has further
directed that management submit the selection of independent auditors for
ratification by the shareholders at the Annual Meeting. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and will be
available to respond to questions.
Shareholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the shareholders for ratification as a matter of good corporate
practice. If the shareholders fail to ratify the selection, the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a
different independent auditing firm at any time during the year if the Board
determines that such a change would be in the best interests of the Company
and its shareholders.
The affirmative vote of a majority of the shares of Common Stock and
Preferred Stock, voting together as a single class on an as-converted basis,
present in person or represented by proxy and entitled to vote at the Annual
Meeting, will be required to ratify the selection of Deloitte & Touche, LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of June 30, 1996 by: (i) each current
director; (ii) each nominee for director; (iii) each of the executive officers
named in the Summary Compensation Table; (iv) all executive officers and
directors of the Company as a group; and (v) all those known by the Company to
be beneficial owners of more than five percent (5%) of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------------
NAME NUMBER OF SHARES PERCENT OF TOTAL
- ---- ---------------- ----------------
<S> <C> <C>
Samuel J. and Nadine Wohlstadter (2)......... 4,311,437 27.77%
c/o IGEN, Inc.
16020 Industrial Drive
Gaithersburg, MD 20877
Richard J. Massey, Ph.D. (3)................. 1,252,000 8.17%
c/o IGEN, Inc.
16020 Industrial Drive
Gaithersburg, MD 20877
Putnam Investment Management, Inc. (4)....... 1,081,050 7.23%
One Post Office Square
Boston, MA 02109
Four Partners (5)............................ 755,500 5.05%
c/o Thomas J. Tisch
667 Madison Ave.
New York, NY 10021
Edward B. Lurier (6)......................... 440,291 2.94%
George V. Migausky (7)....................... 200,000 1.33%
Herman H. Spolders, Ph.D. (8)................ 72,500 *
Robert Connelly (9).......................... 62,400 *
William J. O'Neill (10)...................... 41,500 *
Robert R. Salsmans (11)...................... 10,000 *
Hubert Rehkaemper (12)....................... 10,000 *
All directors and executive officers as a
group (12 persons) (13)..................... 6,535,130 40.04%
</TABLE>
- --------
*Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal shareholders. Unless otherwise indicated in the footnotes to
this table and subject to the community property laws where applicable,
each of the shareholders named in this table has sole voting and
investment power with respect to the shares shown as beneficially owned
by him. Percentage of beneficial ownership is based on 14,945,689 shares
of Common Stock outstanding as of June 30, 1996, adjusted as required by
rules promulgated by the SEC.
(2) Includes 3,728,937 shares held by Mr. Wohlstadter and his wife and does
not include 128,100 shares held by Mr. Wohlstadter's adult children. Also
includes 582,500 shares issuable upon exercise of options held by Mr.
Wohlstadter, which are subject to certain vesting conditions expiring
ratably through April 1999. Mr. Wohlstadter's percentage ownership,
counting only those shares issuable upon exercise of options held by him
which vest as of August 29, 1996, would be 26.94%.
(3) Includes 375,000 shares issuable upon exercise of options held by Dr.
Massey, which are subject to certain vesting conditions expiring ratably
through April 1999. Dr. Massey's percentage ownership, counting only
those shares issuable upon exercise of options held by him which vest as
of August 29, 1996, would be 7.38%.
(4) Based on information contained in the quarterly report provided by NASDAQ
for the quarter ended June 30, 1996.
25
<PAGE>
(5) Based on information contained in the Schedule 13D filed with the
Securities and Exchange Commission on December 13, 1995.
(6) Includes 10,000 shares issuable upon exercise of options held by Mr.
Lurier, which are subject to certain vesting conditions expiring ratably
through April 1999. Also includes 418,091 shares held by Gryphon Ventures
I, L.P. I ("Gryphon Ventures"). Mr. Lurier is a general partner of
Gryphon Ventures and may be deemed to own beneficially all of its shares.
Mr. Lurier's percentage ownership, counting only those shares issuable
upon exercise of options held by him which vest as of August 29, 1996,
would be 2.9%.
(7) Includes 16,800 shares held by Mr. Migausky's minor children and 147,700
shares issuable upon exercise of options held by Mr. Migausky, which are
subject to certain vesting conditions expiring ratably through April
1999. Mr. Migausky's percentage ownership, counting only those shares
issuable upon exercise of options held by him which vest as of August 29,
1996, would be 0.86%.
(8) Includes 72,500 shares issuable upon exercise of options held by Dr.
Spolders, which are subject to certain vesting conditions expiring
ratably through February 1998.
(9) Includes 60,000 shares issuable upon exercise of options held by Mr.
Connelly, which are subject to certain vesting conditions expiring
ratably through February 1999.
(10) Includes 10,000 shares issuable upon exercise of options held by Mr.
O'Neill, which are subject to certain vesting conditions expiring ratably
through April 1999.
(11) Includes 10,000 shares issuable upon exercise of options held by Mr.
Salsmans, which are subject to certain vesting conditions expiring
ratably through August 2000. Excludes 346,135 shares held of record by
Organon Teknika B.V. to which Mr. Salsmans disclaims beneficial
ownership.
(12) Includes 10,000 shares issuable upon exercise of options held by Mr.
Rehkaemper, which are subject to certain vesting conditions expiring
ratably through August 2000.
(13) Includes 1,377,500 shares issuable upon exercise of options, some of
which are subject to certain vesting restrictions. See also Notes (2),
(3) and (6) through (12).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Offices, directors and
greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
26
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
In accordance with Company policy, all members of the Board of Directors are
eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings.
Effective April 25, 1994, each non-employee director of the Company receives
a per meeting attendance fee of $1,000. In the fiscal year ended March 31,
1996, the total compensation paid to non-employee directors (all directors
except Mr. Wohlstadter and Dr. Massey) was $14,000.
On April 25, 1994, each non-employee director of the Company then sitting on
the Board of Directors was granted an option to purchase 10,000 shares of the
Company's Common Stock under the 1994 Non-Employee Directors' Stock Option
Plan at a purchase price of $8.75 per share (the closing sales price reported
in the NASDAQ National Market System on the day prior to the date of grant).
Messrs. Salsmans and Rehkaemper were each granted an option to purchase 10,000
shares of the Company's Common Stock under the 1994 Non-Employee Directors'
Stock Option Plan at a purchase price of $6.25 when they joined the Board
effective on August 25, 1995 (the closing price reported in the NASDAQ
National Market System on the day prior to the date of grant). The options
vest over a period of five years with one-fifth of the option becoming
exercisable one year from the date of grant and an additional one-twentieth
becoming exercisable every three months thereafter. Such vesting is
conditioned upon continued service as a director of the Company.
27
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ending March 31, 1996, 1995
and 1994, compensation awarded or paid to, or earned by the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at March 31, 1996 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------------ OTHER ANNUAL
NAME AND PRINCIPAL SALARY BONUS OPTIONS COMPENSATION
POSITION YEAR ($) ($) (# SHARES) ($)
------------------ ---- ------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Samuel J. Wohlstadter 1996 $237,000 $50,000 -- --
Chairman and Chief 1995 $227,000 $40,000 62,500 $5,400(1)
Executive Officer 1994 $216,000 $32,000 -- $6,938(1)
Richard J. Massey, Ph.D. 1996 $200,000 $40,000 -- $8,750(1)
President and Chief 1995 $191,000 $35,000 50,000 $8,750(1)
Operating Officer 1994 $182,000 $27,000 -- $8,750(1)
George V. Migausky 1996 $150,000 $30,000 -- --
Vice President and Chief 1995 $142,000 $25,000 27,500 --
Financial Officer 1994 $135,000 $20,000 -- --
Herman H. Spolders, Ph.D. 1996 $172,250 $25,000 -- --
Vice President, Business 1995 $150,000 -- -- --
Development and Planning 1994 $150,000 -- -- --
Robert Connelly 1996 $127,000 $20,000 -- --
Vice President, 1995 $120,000 $12,000 30,000 --
Marketing and Sales 1994 $ 10,000(2) $ 5,000(2) -- --
</TABLE>
- --------
(1) Consists of annual lease value of Company-provided automobile.
(2) Mr. Connelly joined the Company in February 1994.
28
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company has granted options to its executive officers under its 1985
Stock Option Plan (the "1985 Plan") and its 1994 Stock Option Plan (the "1994
Plan") (collectively, the "Plans"). The 1994 Plan was adopted by the Board of
Directors in July 1994 to replace the 1985 Plan and was approved by the
shareholders in September 1994. However, no options were granted under the
Plans to any of the Named Executive Officers during the fiscal year ended
March 31, 1996. As of March 31, 1996, options to purchase a total of
1,492,436 shares were issued and outstanding under the Plans and options to
purchase 867,479 shares remained available for grant under the 1994 Plan. The
Company is empowered to and from time to time does repurchase shares of Common
Stock in the open market for the purpose of making shares available for
issuance upon the exercise of options.
The following tables show for the fiscal year ended March 31, 1996, certain
information regarding options granted to, exercised by and held at year end by
the Named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND MARCH 31, 1996 OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
ON EXERCISE REALIZED MARCH 31, 1996 (#) MARCH 31, 1996 ($)
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(3)
---- ----------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Samuel J. Wohlstadter... -- -- 357,875/124,625 $228,144/$57,036
Richard J. Massey,
Ph.D................... -- -- 214,200/80,800 $147,560/$32,796
George V. Migausky...... 4,035 $18,880 66,700/31,000 $ 76,655/$13,182
Herman H. Spolders,
Ph.D. ................. -- -- 31,500/21,000 $ 21,420/$14,280
Robert Connelly......... -- -- 12,000/18,000 $ -0-/$ -0-
</TABLE>
- --------
(1) Based on the fair market value of the Company's Common Stock on the dates
of exercise minus the exercise price.
(2) Includes both "in-the-money" and "out-of-the-money" options. "In-the-
money" options are options with exercise prices below the market price of
the Company's Common Stock at March 31, 1996.
(3) Based on the closing price of the Company's Common Stock on March 31, 1996
($5.25) minus the exercise price.
CERTAIN TRANSACTIONS
The Company's Bylaws provide that the Company will indemnify its directors
and may indemnify its officers, employees and other agents to the fullest
extent permitted by California law. The Company is also empowered under its
Bylaws to enter into indemnification contracts with its directors and officers
and to purchase insurance on behalf of any person whom it is required or
permitted to indemnify. Pursuant to these provisions, the Company has entered
into indemnity agreements with each of its directors and executive officers
and has obtained director and officer liability insurance in the amount of
$4,000,000.
In addition, the Company's Amended and Restated Articles of Incorporation
provide that the liability of the directors for monetary damages shall be
eliminated to the fullest extent permissible under California law. Pursuant to
California law, the Company's directors shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its shareholders. However, this provision does not eliminate the duty of care,
and in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under California law.
In addition, each director will continue to be subject to liability for (i)
acts or omissions that involve intentional misconduct or a knowing and
culpable violation of law, (ii) acts or omissions that a director believes to
be contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the director, (iii) any
transaction from which
29
<PAGE>
a director derived an improper personal benefit, (iv) acts or omissions that
show a reckless disregard for the director's duty to the Company or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a
risk of serious injury to the Company 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 Company or its shareholders, (vi)
any transaction that constitutes an illegal distribution or dividend under
California law, and (vii) any transaction involving an unlawful conflict of
interest between the director and the Company under California law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental
laws.
In May 1993, the Company entered into a $20 million license agreement and a
stock purchase agreement with Organon Teknika. Following this transaction, Mr.
Joop Sistermans, then President and Chief Executive Officer of the Organon
Teknika group of companies, joined the Company's Board of Directors in
November 1993 and resigned from the Board of Directors effective August 25,
1995. Robert Salsmans, the current President and Chief Executive Officer of
Organon Teknika, replaced Mr. Sistermans on the Company's Board of Directors
at the August 1995 Board Meeting. During fiscal 1996, the Company recognized
contract revenue of approximately $1.1 million and recorded product sales of
approximately $1.1 million with respect to Organon Teknika.
In May 1993, the Company established HyperGen, a joint venture partnership
with Hyperion Catalysis International ("Hyperion"). Messrs. Lurier, Massey and
Wohlstadter are affiliated with Hyperion. During fiscal 1994, pursuant to a
Product Development and Marketing Agreement between the Company, Hyperion and
HyperGen (the "Agreement"), the Company paid Hyperion a $5,000,000 license
fee, $3,000,000 of which was paid upon execution of the Agreement and
$2,000,000 of which was paid for research and development upon the achievement
of certain milestones. The Company also paid HyperGen a $750,000 license fee
pursuant to the Agreement. In addition, from time to time prior to 1993, the
Company has borrowed money from and loaned money to Hyperion pursuant to
various promissory notes in favor of the Company or Hyperion. The maximum
amount due either company at any one time was $767,000 owed by Hyperion in May
1993. All loans between the Company and Hyperion were repaid in May 1993.
During fiscal 1995, the Company acquired Hyperion's remaining 50% interest in
HyperGen for $3,000,000 and entered into a long term supply agreement with
Hyperion to ensure itself of sufficient supplies of graphite fibrils. Also
during fiscal 1996, the Company entered into a research and supply agreement
under which the Company prepaid $500,000.
Proteinix Corporation ("Proteinix") and Pro-Neuron, Inc. ("Pro-Neuron") have
a facilities agreement and have shared certain equipment and administrative
services with the Company since 1992 and 1986, respectively. Proteinix and
Pro-Neuron reimburse the Company for their relative share of the services
received. In June 1995, the Company entered into a research and development
agreement with Proteinix pursuant to which the Company has paid $650,000 of
the $950,000 committed by the Company to be paid under the agreement. In
addition, from time to time prior to 1993, the Company has advanced operating
funds to Proteinix and Pro-Neuron evidenced by interest bearing promissory
notes. No intercompany loans or advances currently exist. Mr. Wohlstadter is
the principal shareholder and Chief Executive Officer of both Proteinix and
Pro-Neuron.
During November 1995, the Company formed a Joint Venture for the development
and commercialization of advanced diagnostic products utilizing a proprietary
combination of multi-array technology together with the Company's ORIGEN
technology. Products based on these technologies would be used for high
throughput, multiparameter analysis for DNA sequencing, clinical chemistry and
immunodiagnostics. The joint venture is named Meso Scale Diagnostics, LLC
("MSD"), and was formed together with Meso Scale Technologies, LLC ("MST"), a
company based in Maryland. The Company has agreed to provide initial capital
contributions to MSD of $5 million over time, in exchange for its ownership
interest and to fund the organizational and certain ongoing (non-research)
operating expenses of MSD. The Company will also participate in a
collaborative research program. MST is a technology-based company established
and operated by Jacob Wohlstadter, the son of Samuel J. Wohlstadter, the Chief
Executive Officer of the Company. Nadine Wohlstadter, a member of MST,
30
<PAGE>
is the spouse of Samuel J. Wohlstadter. Over the forty month period beginning
on June 1, 1996, Jacob Wohlstadter will receive an aggregate of approximately
$420,000 from his employment at MSD and will receive $115,000 for each year he
is employed at MSD thereafter. The Company has agreed to indemnify Jacob
Wohlstadter against liability from the joint venture.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors and principal shareholders and their
affiliates will be approved by a majority of the Board of Directors, including
a majority of the independent and disinterested outside directors on the Board
of Directors, and have been and will be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.
Furthermore, the Company adopted in April 1988 a policy on conflicts of
interest requiring the Company's directors, officers and Scientific Advisory
Board members to provide detailed disclosure of any outside activities or
interest that might potentially conflict or appear to conflict with the
Company's best interests. The Company also adopted a policy on related party
transactions in January 1990 requiring review and approval by the Board of
Directors of transactions involving, among others, the Company's management,
principal shareholders or parties controlled by them when the value of the
transaction equals or exceeds $50,000 or its duration exceeds three months.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Messrs. Lurier, O'Neill and Rehkaemper, none of whom has been an
officer or employee of the Company. The Committee is responsible for
establishing the Company's compensation programs for executive officers.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract,
retain and reward executive officers and other key employees who contribute to
the long-term success of the Company and to establish an appropriate
relationship between executive compensation and the creation of long-term
shareholder value. To meet these goals, the Committee has adopted a mix among
the compensation elements of salary, bonus and stock options.
BASE SALARY. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual
performance, levels of responsibility, prior experience, breadth of knowledge
and competitive pay practices, with emphasis on the latter. In general, the
salaries and stock option awards of executive officers are not determined by
the Company's achievement of specific corporate performance criteria. Instead
the Committee determines the salaries for executive officers based upon a
review of salary surveys of other emerging health care companies performed for
the Committee. To provide the Compensation Committee with more information for
making compensation comparisons, IGEN utilizes published salary surveys for
the life science industry and surveys a group of health care companies that
have recently made an initial public offering or are publicly traded. This
group includes diagnostic, biotechnology and pharmaceutical companies with
public capitalizations similar to that of the Company. Based upon such
surveys, the executive officers' salaries are set in the mid-range as compared
to other comparable health care companies.
- --------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before
or after the date hereof and irrespective of any general incorporation
language contained in any such filing.
31
<PAGE>
BONUS. The bonus program is a variable pay program for executive officers of
the Company to earn additional annual compensation. The bonus award earned
depends on the extent to which Company and individual performance objectives
are achieved. The Company objectives consist of operating, strategic and
financial goals that are considered to be critical to the Company's
fundamental long-term goal of building shareholder value. For fiscal 1996,
these goals were: (i) effective implementation of the planned growth of the
Company; (ii) continued advances toward project goals in research and
development programs; (iii) expansion of technological capabilities; (iv)
progress toward commercial goals in development programs; (v) progress in
connection with attainment of collaborative relationships; and (vi) progress
in certain financial and administrative activities.
These goals were substantially met and the bonuses awarded, ranging from
$10,000 to $50,000, reflect subjective judgments and the Committee's
philosophy that bonuses in the early years of the Company's bonus program be
relatively modest when compared with other emerging health care companies.
OPTION PLANS
The Option Plans offered by the Company have been established to provide all
employees of the Company with an opportunity to share, along with shareholders
of the Company, in the long-term performance of the Company.
Periodic grants of stock options are generally made to all eligible
employees, with additional grants being made to certain employees upon
commencement of employment and occasionally following a significant change in
job responsibilities, scope or title. Stock options granted generally have a
five-year vesting schedule and expire ten years from the date of grant. The
exercise price of options granted under the stock option plans is usually 100%
of fair market value of the underlying stock on the date of grant.
Guidelines for the number of stock options for each participant in the
periodic grant program generally are determined by a formula established by
the Compensation Committee whereby several factors are applied to the salary
and performance level of each participant and then related to the approximate
market price of the stock at the time of grant. In awarding stock options, the
Committee considers individual performance, overall contribution to the
Company, officer retention, the number of unvested stock options and the total
number of stock options to be awarded. The Committee awarded no options during
fiscal 1996.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Compensation Committee has
determined that stock options granted under the Company's 1994 Stock Option
Plan with an exercise price at least equal to the fair market value of the
Company's common stock on the date of grant shall be treated as "performance-
based compensation" and any compensation recognized by a Named Executive
Officer as a result of the grant of such a stock option is deductible by the
Company.
CEO COMPENSATION
The Committee uses the same procedures described above in setting the annual
salary, bonus and stock option awards for the CEO. The CEO's salary is
determined based on comparisons with other recently public health care
companies as described above. In awarding stock options, the Committee
considered the CEO's performance, overall contribution to the Company,
retention, the number of unvested options and the total number of options to
be granted. The CEO's fiscal 1996 bonus was awarded based on the Company's
achievement of the performance goals outlined above and the Committee's
subjective evaluation of the CEO's performance. As described above, in
determining where the CEO's total compensation is set within the ranges and in
light of the considerations described above, the Committee by necessity makes
certain subjective
32
<PAGE>
evaluations. Compared to other health care companies surveyed by the Company,
the CEO's salary is in the mid range and his bonus and stock options are in
the low range. The Committee recognizes, however, that the CEO's overall
equity ownership of the Company accumulated over a 13-year period is in the
high range.
CONCLUSION
Through the plans described above, a significant portion of the Company's
compensation program and the CEO's and the other executive officers'
compensation are contingent on Company performance, and realization of
benefits by the CEO and the other executive officers is closely linked to
increases in long-term shareholder value. The Company remains committed to
this philosophy of pay for performance, recognizing that the competitive
market for talented executives and the volatility of the Company's business
may result in highly variable compensation.
COMPENSATION COMMITTEE
Edward B. Lurier
William J. O'Neill
Hubert Rehkaemper
33
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following chart shows the value of an investment of $100 in February
1994 in cash of (i) the Company's Common Stock, (ii) the Wilshire 5000 Index
and (iii) the H&Q Health Care Sector Index. All values assume reinvestment of
the full amount of all dividends and are calculated as of March 31, 1996:
COMPARISON OF TOTAL CUMULATIVE RETURN ON INVESTMENT
[26 MONTH COMPARISON GRAPH APPEARS HERE]
- --------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC, and is not to be incorporated by reference into any
filing of the company under the 1933 Act or 1934 Act, whether made before
or after the date hereof and irrespective of any general incorporation
language contained in any such filing.
(2) $100 invested on 02/03/94 in Stock or on 01/31/94 in Index--including
reinvestment of dividends. Fiscal year ending March 31.
34
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Andrei M. Manoliu
Secretary
August 19, 1996
35
<PAGE>
EXHIBIT A
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as of
__________, 1996, by and between IGEN, INC., a California corporation ("IGEN
California"), and IGEN INTERNATIONAL, INC., a Delaware corporation ("IGEN
Delaware"). IGEN California and IGEN Delaware are sometimes referred to as the
"Constituent Corporations."
The authorized capital stock of IGEN California consists of 50,000,000
shares of Common Stock, $.001 par value, and 10,000,000 shares of Preferred
Stock, $.001 par value, of which 600,000 shares have been designated Series A
Junior Preferred Stock and none of which are issued and outstanding as of the
date hereof. The authorized capital stock of IGEN Delaware, upon effectuation
of the transactions set forth in this Merger Agreement, will consist of
50,000,000 shares of Common Stock, $.001 par value, and 10,000,000 shares of
Preferred Stock, $.001 par value, of which 600,000 shares have been designated
Series A Junior Preferred Stock and none of which are issued and outstanding as
of the date hereof.
The directors of the Constituent Corporations deem it advisable and to the
advantage of said corporations that IGEN California merge into IGEN Delaware
upon the terms and conditions herein provided.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that IGEN California
shall merge into IGEN Delaware on the following terms, conditions and other
provisions:
1. TERMS AND CONDITIONS.
1.1. Merger. IGEN California shall be merged with and into IGEN Delaware
(the "Merger"), and IGEN Delaware shall be the surviving corporation (the
"Surviving Corporation") effective upon the date when this Merger Agreement is
filed with the Secretary of State of the State of Delaware (the "Effective
Date").
1.2. Succession. On the Effective Date, IGEN Delaware shall continue its
corporate existence under the laws of the State of Delaware, and the separate
existence and corporate organization of IGEN California, except insofar as it
may be continued by operation of law, shall be terminated and cease.
1.3. Transfer of Assets and Liabilities. On the Effective Date, the
rights, privileges, powers and franchises, both of a public as well as of a
private nature, of each of the Constituent Corporations shall be vested in and
possessed by the Surviving Corporation, subject to all of the disabilities,
duties and restrictions of or upon each of the Constituent Corporations; and all
and singular rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, of each of
the Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the
<PAGE>
Constituent Corporations shall be transferred to and vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest, shall be thereafter the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger;
provided, however, that the liabilities of the Constituent Corporations and of
their shareholders, directors and officers shall not be affected and all rights
of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and any claim existing or action or
proceeding pending by or against either of the Constituent Corporations may be
prosecuted to judgment as if the Merger had not taken place except as they may
be modified with the consent of such creditors and all debts, liabilities and
duties of or upon each of the Constituent Corporations shall attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by it.
1.4. Common Stock of IGEN California and IGEN Delaware. On the Effective
Date, by virtue of the Merger and without any further action on the part of the
Constituent Corporations or their shareholders, (i) each share of Common Stock
of IGEN California issued and outstanding immediately prior thereto shall be
changed and converted into one fully paid and nonassessable share of the Common
Stock of IGEN Delaware, (ii) resulting fractional shares shall not be issued,
but holders of fractional shares shall be compensated, based upon the closing
price of the Common Stock on the Nasdaq National Market on the Effective Date,
and (iii) each share of Common Stock of IGEN Delaware issued and outstanding
immediately prior thereto shall be cancelled and returned to the status of
authorized but unissued shares.
1.5. Stock Certificates. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of the
Common Stock of IGEN California shall be deemed for all purposes to evidence
ownership of and to represent the shares of IGEN Delaware into which the shares
of IGEN California represented by such certificates have been converted as
herein provided and shall be so registered on the books and records of the
Surviving Corporation or its transfer agent. The registered owner of any such
outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and been entitled to exercise
any voting and other rights with respect to and to receive any dividend and
other distributions upon the shares of IGEN Delaware evidenced by such
outstanding certificate as above provided.
1.6. Options. On the Effective Date, the Surviving Corporation will
assume and continue all of IGEN California's stock option plans in existence on
the Effective Date, including without limitation the 1985 Stock Option Plan, the
401(k) Plan and the outstanding and unexercised portions of all options to
purchase Common Stock of IGEN California, including without limitation all
options outstanding under such stock option plans and any other outstanding
options, shall be combined, changed, and converted into options of IGEN Delaware
such that an option for one share of IGEN California shall be converted into an
option for one share of IGEN Delaware. Effective on the Effective Date, IGEN
Delaware hereby assumes the outstanding and unexercised portions of such options
and the obligations of IGEN California with respect thereto.
2.
<PAGE>
1.7. 1996 Preferred Share Purchase Plan. On the Effective Date, the 1996
Preferred Share Purchase Plan approved and adopted by IGEN California's Board of
Directors on December 14, 1995, will be terminated.
1.8. Employee Benefit Plans. On the Effective Date, the Surviving
Corporation shall assume all obligations of IGEN California under any and all
employee benefit plans in effect as of such date with respect to which employee
rights or accrued benefits are outstanding as of such date; provided, however,
that one share of Common Stock of IGEN Delaware shall be substituted for each
share of Common Stock of IGEN California (if any) thereunder. On the Effective
Date, the Surviving Corporation shall adopt and continue in effect all such
employee benefit plans upon the same terms and conditions as were in effect
immediately prior to the Merger and shall reserve that number of shares of IGEN
Delaware Common Stock with respect to each such employee benefit plan as is
proportional to that number of shares of IGEN California Common Stock (if any)
so reserved on the Effective Date.
2. CHARTER DOCUMENTS.
2.1. Certificate of Incorporation. The Certificate of Incorporation of
IGEN Delaware in effect on the Effective Date shall continue to be the
Certificate of Incorporation of the Surviving Corporation.
3. MISCELLANEOUS.
3.1. Further Assurances. From time to time, and when required by the
Surviving Corporation or by its successors and assigns, there shall be executed
and delivered on behalf of IGEN California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other action,
as shall be appropriate or necessary in order to vest or perfect in or to
conform of record or otherwise, in the Surviving Corporation the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of IGEN California and otherwise to
carry out the purposes of this Merger Agreement, and the officers and directors
of the Surviving Corporation are fully authorized in the name and on behalf of
IGEN California or otherwise to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
3.2. Amendment. At any time before or after approval by the shareholders
of IGEN California, this Merger Agreement may be amended in any manner (except
that, after the approval of the Merger Agreement by the shareholders of IGEN
California, the principal terms may not be
3.
<PAGE>
amended without the further approval of the shareholders of IGEN California) as
may be determined in the judgment of the respective Board of Directors of IGEN
Delaware and IGEN California to be necessary, desirable, or expedient in order
to clarify the intention of the parties hereto or to effect or facilitate the
purpose and intent of this Merger Agreement.
3.3. Conditions to Merger. The obligation of the Constituent Corporations
to effect the transactions contemplated hereby is subject to satisfaction of the
following conditions (any or all of which may be waived by either of the
Constituent Corporations in its sole discretion to the extent permitted by law):
(a) the Merger shall have been approved by the shareholders of
IGEN California in accordance with applicable provisions of the General
Corporation Law of the State of California; and
(b) IGEN California, as sole stockholder of IGEN Delaware, shall
have approved the Merger in accordance with the General Corporation Law of the
State of Delaware; and
(c) any and all consents, permits, authorizations, approvals, and
orders deemed in the sole discretion of IGEN California to be material to
consummation of the Merger shall have been obtained.
3.4. Abandonment or Deferral. At any time before the Effective Date, this
Merger Agreement may be terminated and the Merger may be abandoned by the Board
of Directors of either IGEN California or IGEN Delaware or both, notwithstanding
the approval of this Merger Agreement by the shareholders of IGEN California or
IGEN Delaware, or the consummation of the Merger may be deferred for a
reasonable period of time if, in the opinion of the Board of Directors of IGEN
California and IGEN Delaware, such action would be in the best interest of such
corporations. In the event of termination of this Merger Agreement, this Merger
Agreement shall become void and of no effect and there shall be no liability on
the part of either Constituent Corporation or its Board of Directors or
shareholders with respect thereto, except that IGEN California shall pay all
expenses incurred in connection with the Merger or in respect of this Merger
Agreement or relating thereto.
3.5. Counterparts. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
4.
<PAGE>
IN WITNESS WHEREOF, this Merger Agreement, having first been duly approved
by the Board of Directors of IGEN California and IGEN Delaware, is hereby
executed on behalf of each said corporation and attested by their respective
officers thereunto duly authorized.
IGEN, Inc.
a California corporation
By
----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
ATTEST:
- ----------------------------------
Andrei M. Manoliu
Secretary
IGEN International, Inc.
a Delaware corporation
By
----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
ATTEST:
- ----------------------------------
Andrei M. Manoliu
Secretary
5.
<PAGE>
IGEN International, INC.
OFFICERS' CERTIFICATE OF APPROVAL OF MERGER
The undersigned, Samuel J. Wohlstadter and Andrei M. Manoliu, do hereby
certify that:
1. They are the Chairman/Chief Executive Officer and Secretary,
respectively, of IGEN International, Inc., a Delaware corporation (the
"Corporation").
2. The Agreement and Plan of Merger attached to this Certificate
providing for the merger of IGEN, Inc., a California corporation, with and into
the Corporation was duly approved by the Board of Directors and by the
stockholder of the Corporation.
3. The Corporation has two authorized classes of shares designated
Common Stock and Preferred Stock. The number of shares of Common Stock
outstanding and entitled to vote upon the merger was One Thousand (1,000) shares
of Common Stock. There are no shares of Preferred Stock outstanding.
4. The terms of the Agreement and Plan of Merger were approved by the
Corporation by the vote of more than fifty percent (50%) of the outstanding
shares of Common Stock of the Corporation, which equaled or exceeded the vote
required.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
____ day of _________________, 1996.
----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
----------------------------------------
Andrei M. Manoliu
Secretary
<PAGE>
Each of the undersigned declares under penalty of perjury that he has read
the foregoing Certificate and knows the contents thereof and that the same is
true of his own knowledge.
Executed at _______________, on _____________, 1996.
-----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
-----------------------------------------
Andrei M. Manoliu
Secretary
2.
<PAGE>
IGEN, INC.
OFFICERS' CERTIFICATE OF APPROVAL OF MERGER
The undersigned, Samuel J. Wohlstadter and Andrei M. Manoliu, do hereby
certify that:
1. They are the Chairman/Chief Executive Officer and Secretary,
respectively, of IGEN, Inc., a California corporation (the "Corporation").
2. The Agreement and Plan of Merger attached to this Certificate
providing for the merger of the Corporation, with and into IGEN International,
Inc., a Delaware Corporation, was duly approved by the Board of Directors and by
the shareholders of the Corporation.
3. The Corporation has two authorized classes of shares, designated
Common Stock and Preferred Stock. The total number of outstanding shares of
Common Stock is __________ (___________). No shares of Preferred Stock are
outstanding. All outstanding shares of stock were entitled to vote on the
merger.
4. The terms of the Agreement and Plan of Merger were approved by the
Corporation by the vote of more than fifty percent (50%) of the outstanding
shares of Common Stock, which equaled or exceeded the vote required.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
____ day of ______________, 1996.
----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
----------------------------------------
Andrei M. Manoliu
Secretary
<PAGE>
Each of the undersigned declares under penalty of perjury that he has read
the foregoing Certificate and knows the contents thereof and that the same is
true of his own knowledge.
Executed at _______________, on ____________ __, 1996.
-----------------------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
-----------------------------------------
Andrei M. Manoliu
Secretary
2.
<PAGE>
EXHIBIT B
<PAGE>
CERTIFICATE OF INCORPORATION
OF
IGEN INTERNATIONAL, INC.
The undersigned, a natural person (the "Sole Incorporator"), for the
purpose of organizing a corporation to conduct the business and promote the
purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Delaware hereby certifies that:
I.
The name of this corporation is IGEN International, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent of the corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
III.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is Sixty Million
(60,000,000) shares. Fifty Million (50,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Ten Million
(10,000,000) shares shall be Preferred Stock, each having a par value of one-
tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to
1.
<PAGE>
establish from time to time the number of shares constituting any such series or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be decreased in accordance with the foregoing sentence, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
C. Six Hundred Thousand (600,000) shares of Preferred Stock, $.001 par
value, are hereby designated "Series A Junior Participating Preferred Stock"
with the rights, preferences, privileges and restrictions specified herein (the
"Junior Preferred Stock"). Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the corporation convertible into Junior
Preferred Stock.
(1) Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect to dividends, the holders of shares of
Junior Preferred Stock, in preference to the holders of Common Stock, par value
$.001 per share (the "Common Stock"), of the corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Junior Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $l.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise) declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of
2.
<PAGE>
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The corporation shall declare a dividend or distribution on
the Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Junior Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Junior Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Junior Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
(2) Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of the
corporation. In the event the corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Junior Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
3.
<PAGE>
(b) Except as otherwise provided herein, in any other
Certificate of Determination of Preferences creating a series of Preferred Stock
or any similar stock, or by law, the holders of shares of Junior Preferred Stock
and the holders of shares of Common Stock and any other capital stock of the
corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the corporation.
(c) Except as set forth herein, or as otherwise provided by law,
holders of Junior Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
(3) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior Preferred Stock and
all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock, provided
that the corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity with the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
4.
<PAGE>
(b) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
(4) Reacquired Shares. Any shares of Junior Preferred Stock purchased
or otherwise acquired by the corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Amended and
Restated Articles of Incorporation, or in any other Certificate of Determination
of Preferences creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
(5) Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received the greater of: (A) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment; or (B) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(6) Consolidation, Merger, etc. In case the corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment
5.
<PAGE>
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Junior Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(7) No Redemption. The shares of Junior Preferred Stock shall not be
redeemable.
(8) Rank. The Junior Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all other series
of the corporation's Preferred Stock.
(9) Amendment. The Certificate of Incorporation of the corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Junior Preferred Stock, voting together
as a single class.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
(1) The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
(2) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, the directors
shall be divided into three classes designated as Class I, Class II and Class
III, respectively. Directors shall be assigned to each
6.
<PAGE>
class in accordance with a resolution or resolutions adopted by the Board of
Directors. At the first annual meeting of stockholders following the adoption
and filing of this Certificate of Incorporation, the term of office of the Class
I directors shall expire and Class I directors shall be elected for a full term
of three years. At the second annual meeting of stockholders following the
adoption and filing of this Certificate of Incorporation, the term of office of
the Class II directors shall expire and Class II directors shall be elected for
a full term of three years. At the third annual meeting of stockholders
following the adoption and filing of this Certificate of Incorporation, the term
of office of the Class III directors shall expire and Class III directors shall
be elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his or her successor is duly elected and qualified or until
his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
(3) Subject to the rights of the holders of any series of Preferred
Stock, no director shall be removed without cause. Subject to any limitations
imposed by law, the Board of Directors or any individual director may be removed
from office at any time with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of voting stock
of the corporation, entitled to vote at an election of directors (the "Voting
Stock").
(4) Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B.
(1) Subject to paragraph (g) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock. The Board of Directors shall
also have the power to adopt, amend, or repeal Bylaws.
7.
<PAGE>
(2) The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
(3) No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws. No action shall be taken by the stockholders by written consent.
(4) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors shall fix.
(5) Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
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B. Notwithstanding any other provisions 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 Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
VIII.
The name and the mailing address of the Sole Incorporator is as follows:
Name Mailing Address
Andrei M. Manoliu Cooley Godward Castro
Huddleson & Tatum
3000 El Camino Real
5 Palo Alto Square
4th Floor
Palo Alto, CA 94306-2155
In Witness Whereof, this Certificate has been subscribed this ____ day of
__________, 199_ by the undersigned who affirms that the statements made herein
are true and correct.
------------------------------------------
Andrei M. Manoliu
Sole Incorporator
9.
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EXHIBIT C
<PAGE>
BYLAWS
OF
IGEN INTERNATIONAL, INC.
(A DELAWARE CORPORATION)
Article I
Offices
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castle.
Section 2. Other Offices. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
Article II
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Article III
Stockholders' Meetings
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
<PAGE>
Section 5. Annual Meeting.
(b) The annual meeting of the stockholders of the corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business one hundred twenty (120) calendar days prior to the date of the
corporation's proxy statement released to stockholders in connection with the
preceding year's annual meeting of stockholders; provided, however, that in the
event that no annual meeting was held in the previous year or the date of the
annual meeting has been changed by more than thirty (30) days from the date
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be so received not earlier than the close of
business on the ninetieth (90th) day prior to such annual meeting and not later
than the close of business on the later of the sixtieth (60th) day prior to such
annual meeting or, in the event public announcement of the date of such annual
meeting is first made by the corporation fewer than seventy (70) days prior to
the date of such annual meeting, the close of business on the tenth (10th) day
following the day on which public announcement of the date of such meeting is
first made by the corporation. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the class and number of shares
of the corporation which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934
Act"), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b). The
chairman of the annual meeting shall, if the facts warrant, determine and
declare at the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this paragraph (b), and, if he should
so
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determine, he shall so declare at the meeting that any such business not
properly brought before the meeting shall not be transacted. (Del. Code Ann.,
tit. 8: (S) 211(b))
(c) Only persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section 5.
At the request of the Board of Directors, any person nominated by a stockholder
for election as a director shall furnish to the Secretary of the corporation
that information required to be set forth in the stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
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Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors, shall fix.
(b) If a special meeting is called by any person or persons other than
the Board of Directors, the request shall be in writing, specifying the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within sixty
(60) days after the receipt of the request, the person or persons requesting the
meeting may set the time and place of the meeting and give the notice. Nothing
contained in this paragraph (b) shall be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the Board
of Directors may be held.
Section 7. Notice of Meetings. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum,
any meeting of stockholders may be adjourned, from time to time, either by the
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chairman of the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at which a quorum
is present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present shall be valid and
binding upon the corporation; provided, however, that directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Where a
separate vote by a class or classes or series is required, except where
otherwise provided by the statute or by the Certificate of Incorporation or
these Bylaws, a majority of the outstanding shares of such class or classes or
series, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter and, except
where otherwise provided by the statute or by the Certificate of Incorporation
or these Bylaws, the affirmative vote of the majority (plurality, in the case of
the election of directors) of the votes cast, including abstentions, by the
holders of shares of such class or classes or series shall be the act of such
class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting
of stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
Section 11. Joint Owners of Stock. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
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order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
Section 13. Action Without Meeting. No action shall be taken by the
stockholders except at an annual or special meeting of stockholders called in
accordance with these Bylaws, and no action shall be taken by the stockholders
by written consent.
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
(b) The Board of Directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to
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questions or comments by participants and regulation of the opening and closing
of the polls for balloting on matters which are to be voted on by ballot. Unless
and to the extent determined by the Board of Directors or the chairman of the
meeting, meetings of stockholders shall not be required to be held in accordance
with rules of parliamentary procedure.
Article IV
Directors
Section 15. Number and Term of Office. The authorized number of
directors of the corporation shall be fixed in accordance with the Certificate
of Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
Section 17. Classes of Directors.
Subject to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, the directors shall be
divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the adoption and filing of this Certificate of
Incorporation, the term of office of the Class I directors shall expire and
Class I directors shall be elected for a full term of three years. At the second
annual meeting of stockholders following the adoption and filing of this
Certificate of Incorporation, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the adoption and filing of
this Certificate of Incorporation, the term of office of the Class III directors
shall expire and Class III directors shall be elected for a full term of three
years. At each succeeding annual meeting of stockholders, directors shall be
elected for a full term of three years to succeed the directors of the class
whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
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Section 18. Vacancies. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A
vacancy in the Board of Directors shall be deemed to exist under this Bylaw in
the case of the death, removal or resignation of any director.
Section 19. Resignation. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 20. Removal. Subject to the rights of the holders of any series
of Preferred Stock, no director shall be removed without cause. Subject to any
limitations imposed by law, the Board of Directors or any individual director
may be removed from office at any time with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares of
voting stock of the corporation, entitled to vote at an election of directors
(the "Voting Stock").
Section 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors shall
be held immediately before or after the annual meeting of stockholders and at
the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided, regular
meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or
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without the State of Delaware which has been designated by resolution of the
Board of Directors or the written consent of all directors.
(c) Special Meetings. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any two of the directors.
(d) Telephone Meetings. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting.
(e) Notice of Meetings. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
facsimile, telegraph or telex, during normal business hours, at least twenty-
four (24) hours before the date and time of the meeting, or sent in writing to
each director by first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice of any meeting may be waived in writing
at any time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
(f) Waiver of Notice. The transaction of all business at any meeting of
the Board of Directors, or any committee thereof, however called or noticed, or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a) Unless the Certificate of Incorporation requires a greater number
and except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of directors
fixed from time to time in accordance with the Certificate of Incorporation, a
quorum of the Board of Directors shall consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Certificate of Incorporation; provided, however, at any meeting whether
a quorum be present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.
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(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 24. Fees and Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, including without limitation the power or authority
to declare a dividend, to authorize the issuance of stock and to adopt a
certificate of ownership and merger, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the
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stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the bylaws of the corporation.
(b) Other Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, from time to time appoint such
other committees as may be permitted by law. Such other committees appointed by
the Board of Directors shall consist of one (1) or more members of the Board of
Directors and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committee have the powers denied to the Executive Committee in
these Bylaws.
(c) Term. Each member of a committee of the Board of Directors shall
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Bylaw may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of
any committee may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director attends such special meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. A majority of the authorized number
of members of any such committee shall
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constitute a quorum for the transaction of business, and the act of a majority
of those present at any meeting at which a quorum is present shall be the act of
such committee.
Section 26. Organization. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
Article V
Officers
Section 27. Officers Designated. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
Section 28. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman of the
Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.
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(c) Duties of President. The President shall preside at all meetings of
the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) Duties of Vice Presidents. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) Duties of Secretary. The Secretary shall attend all meetings of the
stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) Duties of Chief Financial Officer. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial affairs
of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
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Section 29. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
Section 30. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
Section 31. Removal. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
Article VI
Execution Of Corporate Instruments And Voting
Of Securities Owned By The Corporation
Section 32. Execution of Corporate Instruments. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
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Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
Section 33. Voting of Securities Owned by the Corporation. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
Article VII
Shares Of Stock
Section 34. Form and Execution of Certificates. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or shall, except as otherwise required by
law, set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section or
otherwise required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
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Section 35. Lost Certificates. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. Transfers.
(a) Transfers of record of shares of stock of the corporation shall be
made only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
Section 37. Fixing Record Dates.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such
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purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Section 38. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
Article VIII
Other Securities Of The Corporation
Section 39. Execution of Other Securities. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
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Article IX
Dividends
Section 40. Declaration of Dividends. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
Section 41. Dividend Reserve. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
Article X
Fiscal Year
Section 42. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Article XI
Indemnification
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees and Other Agents.
(a) Directors and Officers. The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the Delaware
General Corporation Law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
officers; and, provided, further, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation, (iii) such
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indemnification is provided by the corporation, in its sole discretion, pursuant
to the powers vested in the corporation under the Delaware General Corporation
Law or (iv) such indemnification is required to be made under subsection (d).
(b) Expenses. The corporation shall advance to any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer, of
the corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph
(e) of this Bylaw, no advance shall be made by the corporation to an officer of
the corporation (except by reason of the fact that such officer is or was a
director of the corporation in which event this paragraph shall not apply) in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding, or (ii) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation.
(c) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and officers
under this Bylaw shall be deemed to be contractual rights and be effective to
the same extent and as if provided for in a contract between the corporation and
the director or officer. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on behalf of the
person holding such right in any court of competent jurisdiction if (i) the
claim for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. In
connection with any claim for indemnification, the corporation shall be entitled
to raise as a defense to any such action that the claimant has not met the
standards of conduct that make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. In connection with any claim by an officer of the corporation (except
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such executive officer is or was a
director of the corporation) for advances, the corporation shall be entitled to
raise a defense as to any such action clear and
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convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct. In any suit
brought by a director or officer to enforce a right to indemnification or to an
advancement of expenses hereunder, the burden of proving that the director or
officer is not entitled to be indemnified, or to such advancement of expenses,
under this Article XI or otherwise shall be on the corporation.
(d) Non-Exclusivity of Rights. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(e) Survival of Rights. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(f) Insurance. To the fullest extent permitted by the Delaware General
Corporation Law, the corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(g) Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(h) Saving Clause. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
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(i) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:
(i)The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony
in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(ii)The term "expenses" shall be broadly construed and shall include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of
any nature or kind incurred in connection with any proceeding.
(iii)The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Bylaw with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(iv)References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(v)References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this Bylaw.
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Article XII
Notices
Section 44. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.
(b) Notice to directors. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such director.
(c) Affidavit of Mailing. An affidavit of mailing, executed by a duly
authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d) Time Notices Deemed Given. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing, and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.
(e) Methods of Notice. It shall not be necessary that the same method
of giving notice be employed in respect of all directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.
(f) Failure to Receive Notice. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, shall not be affected or extended in any manner by the
failure of such stockholder or such director to receive such notice.
(g) Notice to Person with Whom Communication Is Unlawful. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or
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Bylaws of the corporation, to any person with whom communication is unlawful,
the giving of such notice to such person shall not be required and there shall
be no duty to apply to any governmental authority or agency for a license or
permit to give such notice to such person. Any action or meeting which shall be
taken or held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice had been duly
given. In the event that the action taken by the corporation is such as to
require the filing of a certificate under any provision of the Delaware General
Corporation Law, the certificate shall state, if such is the fact and if notice
is required, that notice was given to all persons entitled to receive notice
except such persons with whom communication is unlawful.
(h) Notice to Person with Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
Article XIII
Amendments
Section 45. Amendments. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. The
Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.
23.
<PAGE>
Articl XIV
Loans To Officers
Section 46. Loans to Officers. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
24.
<PAGE>
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<CAPTION>
TABLE OF CONTENTS
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<S> <C> <C>
Article I Offices....................................... 1.
Section 1. Registered Office............................. 1.
Section 2. Other Offices................................. 1.
Article II Corporate Seal................................ 1.
Section 3. Corporate Seal................................ 1.
Article III Stockholders' Meetings........................ 1.
Section 4. Place of Meetings............................. 1.
Section 5. Annual Meeting................................ 2.
Section 6. Special Meetings.............................. 3.
Section 7. Notice of Meetings............................ 4.
Section 8. Quorum........................................ 4.
Section 9. Adjournment and Notice of Adjourned Meetings.. 5.
Section 10. Voting Rights................................. 5.
Section 11. Joint Owners of Stock......................... 5.
Section 12. List of Stockholders.......................... 5.
Section 13. Action Without Meeting........................ 6.
Section 14. Organization.................................. 6.
Article IV Directors..................................... 6.
Section 15. Number and Term of Office..................... 6.
Section 16. Powers........................................ 7.
Section 17. Classes of Directors.......................... 7.
Section 18. Vacancies..................................... 7.
Section 19. Resignation................................... 7.
Section 20. Removal....................................... 8.
Section 21. Meetings...................................... 8.
(a) Annual Meetings............................... 8.
(b) Regular Meetings.............................. 8.
(c) Special Meetings.............................. 8.
(d) Telephone Meetings............................ 8.
(e) Notice of Meetings............................ 8.
(f) Waiver of Notice.............................. 9.
Section 22. Quorum and Voting............................. 9.
Section 23. Action Without Meeting........................ 9.
Section 24. Fees and Compensation......................... 9.
Section 25. Committees.................................... 10.
(a) Executive Committee........................... 10.
i.
</TABLE>
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<S> <C> <C>
(b) Other Committees.............................. 10.
(c) Term.......................................... 10.
(d) Meetings...................................... 11.
Section 26. Organization.................................. 11.
Article V Officers...................................... 11.
Section 27. Officers Designated........................... 11.
Section 28. Tenure and Duties of Officers................. 12.
(a) General....................................... 12.
(b) Duties of Chairman of the Board of Directors.. 12.
(c) Duties of President........................... 12.
(d) Duties of Vice Presidents..................... 12.
(e) Duties of Secretary........................... 12.
(f) Duties of Chief Financial Officer............. 12.
Section 29. Delegation of Authority....................... 13.
Section 30. Resignations.................................. 13.
Section 31. Removal....................................... 13.
Article VI Execution Of Corporate Instruments And Voting
Of Securities Owned By The Corporation........ 13.
Section 32. Execution of Corporate Instruments............ 13.
Section 33. Voting of Securities Owned by the Corporation. 14.
Article VII Shares Of Stock............................... 14.
Section 34. Form and Execution of Certificates............ 14.
Section 35. Lost Certificates............................. 15.
Section 36. Transfers..................................... 15.
Section 37. Fixing Record Dates........................... 15.
Section 38. Registered Stockholders....................... 16.
Article VIII Other Securities Of The Corporation........... 16.
Section 39. Execution of Other Securities................. 16.
Article IX Dividends..................................... 17.
Section 40. Declaration of Dividends...................... 17.
Section 41. Dividend Reserve.............................. 17.
</TABLE>
ii.
<PAGE>
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<CAPTION>
TABLE OF CONTENTS
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(continued)
<S> <C> <C>
Article X Fiscal Year................................... 17.
Section 42. Fiscal Year................................... 17.
Article XI Indemnification............................... 17.
Section 43. Indemnification of Directors, Executive
Officers, Other Officers, Employees and Other
Agents........................................ 17.
(a) Directors and Officers........................ 17.
(b) Expenses...................................... 18.
(c) Enforcement................................... 18.
(d) Non-Exclusivity of Rights..................... 19.
(e) Survival of Rights............................ 19.
(f) Insurance..................................... 19.
(g) Amendments.................................... 19.
(h) Saving Clause................................. 19.
(i) Certain Definitions........................... 19.
Article XII Notices....................................... 20.
Section 44. Notices....................................... 20.
(a) Notice to Stockholders........................ 20.
(b) Notice to directors........................... 21.
(c) Affidavit of Mailing.......................... 21.
(d) Time Notices Deemed Given..................... 21.
(e) Methods of Notice............................. 21.
(f) Failure to Receive Notice..................... 21.
(g) Notice to Person with Whom Communication Is
Unlawful...................................... 21.
(h) Notice to Person with Undeliverable Address... 21.
Article XIII Amendments.................................... 22.
Section 45. Amendments.................................... 22.
Article XIV Loans To Officers............................. 22.
Section 46. Loans to Officers 22.
</TABLE>
iii.
<PAGE>
IGEN, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 10, 1996
The undersigned hereby appoints SAMUEL J. WOHLSTADTER and GEORGE V.
MIGAUSKY, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all of the shares of stock of IGEN, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of IGEN, Inc. to be held at THE GAITHERSBURG MARRIOTT,
WASHINGTONIAN CENTER IN GAITHERSBURG, MARYLAND ON TUESDAY, SEPTEMBER 10, 1996
at 10:00 A.M., local time, and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors voting or otherwise, to hold office until the
next Annual Meeting of Shareholders and until their successors are
elected.
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees
below). listed below.
Nominees: Edward B. Lurier, Richard J. Massey, William J. O'Neill, Robert R.
Salsmans, Hubert Rehkaemper, Samuel J. Wohlstadter
To withhold authority to vote for any nominee(s), write such nominee(s)' name(s)
below
________________________________________________________________________________
________________________________________________________________________________
(Continued on other side)
<PAGE>
(Continued from other side)
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
PROPOSAL 2: To approve the change of the Company's state of incorporation from
California to Delaware through the merger of the Company into a
wholly-owned Delaware subsidiary, and to approve the form of
Agreement and Plan of Merger and the Delaware Certificate of
Incorporation and Delaware Bylaws attached to the Proxy Statement
(check one box).
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 3: To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for its fiscal year ending March 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed on other side)
(Continued from other side)
DATED ______________, 19__ ______________________________________
______________________________________
SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators,
trustees, guardians and attorneys-in-fact
should add their titles. If signer is a
corporation, please give full corporate
name and have a duly authorized officer
sign, stating title. If signer is a
partnership, please sign in partnership
name by authorized person.
Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.
2.
