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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Confidential, For Use of the Commission Only (as permitted by
14a-6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SUPERGEN, INC.
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(Name of Registrant as Specified in Its Charter)
SUPERGEN, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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SUPERGEN, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1997
------------------------
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of SuperGen, Inc., a California corporation (the "Company"), will be
held on Tuesday, May 27, 1997 at 2:00 p.m., local time, at the San Ramon
Marriot, 2600 Bishop Drive, San Ramon, CA 94583 for the following purposes:
1. To elect six (6) directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To approve a change in the state of incorporation of the Company from
the State of California to the State of Delaware by means of a merger of
the Company with and into a wholly-owned Delaware subsidiary.
3. To ratify and approve an amendment to the Company's Amended and Restated
1993 Stock Option Plan increasing the number of shares of Common Stock
reserved for issuance by 500,000 shares for a total of 2,500,000 shares
reserved under the Plan.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal 1997.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only holders of record of the Company's Common Stock at the close of
business on March 28, 1997, the record date, are entitled to notice of and to
vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
JOSEPH RUBINFELD
PRESIDENT, CHIEF EXECUTIVE OFFICER,
CHIEF SCIENTIFIC OFFICER AND DIRECTOR
San Ramon, California
April 25, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE
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SUPERGEN, INC.
----------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
---------------------
PROCEDURAL MATTERS
GENERAL
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of SuperGen, Inc. (the "Company") for use
at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
Tuesday, May 27, 1997 at 2:00 p.m., local time, and at any adjournments thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting of Shareholders. The Annual Meeting will be held at the San Ramon
Marriot, 2600 Bishop Drive, San Ramon, CA 94583. The Company's headquarters is
located at Two Annabel Lane, Suite 220, San Ramon, California 94583, and the
telephone number at that location is (510) 327-0200.
These proxy solicitation materials were mailed on or about April 25, 1997,
together with the Company's 1997 Annual Report to Shareholders, to all
shareholders entitled to vote at the Annual Meeting.
RECORD DATE
Shareholders of record at the close of business on March 28, 1997 (the
"Record Date") are entitled to notice of and to vote at the meeting. As of the
Record Date, 16,952,292 shares of the Company's Common Stock were issued and
outstanding. No shares of Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING PROCEDURES
Each shareholder is entitled to one vote for each share of Common Stock on
all matters to be voted on by the shareholders. The affirmative vote of a
majority of the outstanding shares of Common Stock is required to approve the
matters scheduled to be voted on at the Annual Meeting. Votes cast in person or
by proxy will be tabulated by ChaseMellon Shareholder Services, L.L.C., the
Company's transfer agent.
Upon the execution and return of the enclosed form of proxy, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy, the
shares represented thereby will be voted (i) "FOR" the election of each of the
Company's nominees as a director, (ii) "FOR" the approval of the proposed change
of the state of incorporation of the Company from California to Delaware by
means of a merger of the Company with and into a wholly-owned Delaware
subsidiary, (iii) "FOR" ratification and approval of an amendment to the
Company's Amended and Restated 1993 Stock Option Plan increasing the number of
shares of Common Stock reserved for issuance by 500,000 to 2,500,000 shares, and
(iv) "FOR" ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for fiscal 1997. For purposes of the approval of these
proposals, both abstentions and broker non-votes will have the same effect as
votes against these proposals.
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QUORUM; ABSTENTIONS; BROKER NON-VOTES
A majority of the outstanding shares of Common Stock entitled to vote on the
Record Date, whether present in person or represented by proxy, shall constitute
a quorum for the transaction of business at the Annual Meeting or any
adjournments thereof. The Company intends to include abstentions and broker
non-votes as present or represented for purposes of establishing a quorum for
the transaction of business.
COSTS OF SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. Proxies may also be solicited by certain of the Company's directors,
officers and employees, without additional compensation, personally or by
telephone, telegram, letter or facsimile.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of the Company's shareholders intended to be presented at the
regularly scheduled 1998 Annual Meeting of Shareholders must be received by the
Company no later than December 26, 1997, and must satisfy the conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's proxy statement for that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is currently comprised of six members. The
directors are elected to serve one-year terms and until their respective
successors are elected and qualified. The Board of Directors has nominated the
persons set forth below, all of whom are currently directors of the Company, for
election as directors. Unless otherwise instructed, the holders of proxies
solicited by this Proxy Statement will vote the proxies received by them for
such nominees. In the event that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxy holders will vote for a
nominee designated by the present Board of Directors to fill the vacancy. The
Company is not aware of any reason that any nominee will be unable or will
decline to serve as a director.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote will be required to elect each director. Both abstentions and
broker non-votes will have the same effect as votes against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR NAMED BELOW.
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INFORMATION REGARDING NOMINEES
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- -------------------------------------- --- -------------------------------------------------------------------
<S> <C> <C>
Joseph Rubinfeld...................... 64 President, Chief Executive Officer, Chief Scientific Officer and
Director
Denis Burger(1)(2).................... 53 President and Chief Executive Officer, AntiVirals, Inc.
David M. Fineman...................... 53 Director
J. Gregory Swendsen................... 44 Director
Julius A. Vida........................ 68 President, Vida International Pharmaceutical Consultants
Daniel Zurr(1)(2)..................... 48 Chief Executive Officer, Expression Systems, Inc.
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
JOSEPH RUBINFELD, PH.D., co-founded the Company in 1991. He has served as
Chief Executive Officer, President, Chief Scientific Officer and a director of
the Company since its inception. Dr. Rubinfeld was one of the four initial
founders of Amgen, Inc. ("Amgen") in 1980 and served as Vice President and Chief
of Operations until 1983. From 1987 to 1990, he was a Senior Director at Cetus
Corporation. From 1968 to 1980, Dr. Rubinfeld was employed at Bristol-Myers
Squibb Company (formerly Bristol-Myers International Corporation
("Bristol-Myers")) in a variety of positions, most recently as Vice President
and Director of Research and Development. While at Bristol-Myers, Dr. Rubinfeld
was instrumental in licensing the original anticancer line of products for
Bristol-Myers, including Mitomycin and Bleomycin. Prior to that time, Dr.
Rubinfeld was a research scientist with several pharmaceutical and consumer
product companies including Schering-Plough Corporation and Colgate-Palmolive
Co. He received his B.S. in chemistry from C.C.N.Y., and his M.A. and Ph.D. in
chemistry from Columbia University. Dr. Rubinfeld has numerous patents and/or
publications on a wide range of inventions and developments including the
10-second developer for Polaroid film, manufacture of cephalosporins (the next
generation of antibiotics following penicillin) and the first commercial
synthetic biodegradable detergent. In 1984 Dr. Rubinfeld received the
Commonwealth Award for Invention.
DENIS BURGER, PH.D., has served as a director of the Company since January
1996. Dr. Burger has served as President and Chief Operating Officer of
AntiVirals, Inc., a biotechnology company specializing in gene-targeted
therapeutic and diagnostic products since February 1992 and as Chief Executive
Officer since February 1996. Dr. Burger was a co-founder of Epitope, Inc., a
biotechnology company, and served as its Chairman from 1981 until 1990. He has
also been the general partner of Sovereign Ventures, LLC, a biotechnology
consulting and merchant banking venture since 1991. Dr. Burger is a member of
the Board of Directors of Cellegy Pharmaceuticals, Inc., AntiVirals Inc. and
Trinity Biotech, PLC. He received his B.A. in Bacteriology and Immunology from
the University of California, Berkeley, and his M.S. and Ph.D. in Microbiology
and Immunology from the University of Arizona, Tucson.
DAVID M. FINEMAN, a co-founder of the Company, has served as a director of
the Company since its inception and served as Acting Chief Financial Officer
from December 1995 to March 1996. Mr. Fineman served as Secretary from the
Company's inception until December 1996. He served as a General Partner of
Strategic Pharmaceutical Partners I & II, the California limited partnerships
which provided the initial funding for the Company. He received his B.A. from
the University of Maryland and an M.A. from the Graduate Faculty of the New
School for Social Research in New York, where he also completed his Ph.D. course
work.
J. GREGORY SWENDSEN, a co-founder of the Company, has served as a director
of the Company since its inception. Mr. Swendsen was the Treasurer of the
Company from its inception until December 1995. He is President of Swendsen &
Company, a management company founded in 1984 that specializes in venture
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capital in applied technology industries. Mr. Swendsen was a General Partner of
Strategic Pharmaceutical Partners I & II, which provided the initial funding for
the Company.
JULIUS A. VIDA, PH.D., has served as a director of the Company since January
1996. Since June 1993, Dr. Vida has served as President of Vida International
Pharmaceutical Consultants. From 1976 to May 1993, Dr. Vida worked at
Bristol-Myers, where he served as Vice President of Business Development,
Licensing and Strategic Planning from 1991 to 1993, as Vice President of
Licensing from 1985 to 1991 and as Director of Licensing from 1982 to 1985. Dr.
Vida is a member of the Board of Directors of Biomatrix, Inc., Medarex, Inc.,
FibroGen, Inc., Codon Pharmaceuticals, Inc., and Drug Innovation and Design,
Inc., all biotechnology companies. Dr. Vida received his Ph.D. in Chemistry from
Carnegie Mellon University and his M.B.A. from Columbia University.
DANIEL ZURR, PH.D., has been a director of the Company since January 1994.
Dr. Zurr currently serves as Chief Executive Officer of Expression Systems, Inc.
Dr. Zurr served as Scientific Director and Business Development Director of the
Pharmaceutical Division of Israel Chemicals, Ltd., an Israeli limited liability
company ("ICL") from 1984 to 1985. He also served as Director of Licensing at
G.D. Searle & Company, Limited, from 1980 to 1983. He was Chief Executive
Officer of Plantex-Ikapharm, an Israeli pharmaceutical company, from 1975 to
1980. Dr. Zurr received his M.Sc. at the Hebrew University of Jerusalem and his
Ph.D. from the Imperial College University of London in 1972.
BOARD MEETINGS AND COMMITTEES
During fiscal 1996, the Board of Directors held two meetings (including
regularly scheduled and special meetings), and all of the incumbent directors
attended 75% or more of the meetings of the Board of Directors and committees,
if any, upon which such directors served. Certain matters were approved by the
Board of Directors by unanimous written consent.
The Board of Directors of the Company currently has two standing committees:
an Audit Committee and a Compensation Committee. Both the Audit Committee and
the Compensation Committee are composed of Messrs. Burger and Zurr. The Company
has no nominating committee or committee performing similar functions.
AUDIT COMMITTEE. The Audit Committee makes such examinations as are
necessary to monitor the corporate financial reporting and the internal and
external audits of the Company, provides to the Board of Directors the results
of its examinations and recommendations derived therefrom, outlines to the Board
improvements made, or to be made, in internal accounting controls, nominates
independent auditors, and provides to the Board such additional information and
materials as it may deem necessary to make the Board aware of significant
financial matters that require Board attention. The Audit Committee held no
meetings during fiscal 1996.
COMPENSATION COMMITTEE. The Compensation Committee reviews the Company's
executive compensation policy, including equity compensation for senior
executives of the Company, and makes recommendations to the Board of Directors
regarding such matters. The Compensation Committee took action by unanimous
written consent, but held no formal meetings during fiscal 1996.
DIRECTOR COMPENSATION
All non-employee directors (the "Outside Directors") of the Company other
than David M. Fineman and J. Gregory Swendsen will receive $1,000 in
compensation for attendance at each meeting of the Board of Directors, and Board
Committee members shall each receive $1,000 for each Board Committee meeting
held on a day on which no Board of Directors meeting is held. Directors and
Board Committee members are also reimbursed for all reasonable expenses incurred
by them in attending Board and Committee meetings. The Company has adopted the
1996 Directors' Stock Option Plan providing for stock options to be granted to
certain non-employee directors.
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PROPOSAL TWO
REINCORPORATION IN DELAWARE
GENERAL
The Board of Directors believes that the best interests of the Company and
its shareholders will be served by changing the state of incorporation of the
Company from California to Delaware (the "Reincorporation Proposal" or the
"Proposed Reincorporation"). As discussed below, the principal reasons for
reincorporation are the greater flexibility of Delaware corporate law, the
substantial body of case law interpreting that law and the increased ability of
the Company to attract and retain qualified directors. The Company believes that
its shareholders will benefit from the well-established principles of corporate
governance that Delaware law affords. Although Delaware law provides the
opportunity for the Board of Directors to adopt various mechanisms which may
enhance the Board's ability to negotiate favorable terms for the shareholders in
the event of an unsolicited takeover attempt, the Reincorporation Proposal is
not being proposed in order to prevent a current unsolicited takeover attempt,
nor is it in response to any present attempt known to the Board of Directors to
acquire control of the Company, obtain representation on the Board of Directors
or take significant action that affects the Company. Shareholders are urged to
read carefully the following sections of this Proxy Statement, including the
related exhibits, before voting on the Reincorporation Proposal. Throughout the
Proxy Statement, the term "SuperGen California" refers to the existing
California corporation and the term "SuperGen Delaware" refers to the new
proposed Delaware corporation, a wholly-owned subsidiary of SuperGen California.
The Proposed Reincorporation will be effected by merging SuperGen California
into SuperGen Delaware (the "Merger"). Upon completion of the Merger, SuperGen
California will cease to exist and SuperGen Delaware will continue to operate
the business of the Company under the name SuperGen, Inc. Pursuant to the
Agreement and Plan of Merger between SuperGen California and SuperGen Delaware,
a copy of which is attached hereto as EXHIBIT A (the "Merger Agreement"), each
outstanding share of SuperGen California Common Stock, $0.001 par value, will
automatically be converted into one share of SuperGen Delaware Common Stock,
$0.001 par value. IT IS NOT NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF SUPERGEN DELAWARE.
Upon the date on which the Merger is effective (the "Effective Date"),
SuperGen Delaware will also assume and continue the outstanding stock options
and all other employee benefit plans of SuperGen California. Each outstanding
and unexercised option, warrant or other right to purchase shares of SuperGen
California Common Stock will become an option, warrant or right to purchase the
same number of shares of SuperGen Delaware Common Stock on the same terms and
conditions and at the same exercise price applicable to any such SuperGen
California option, warrant or stock purchase right at the Effective Date.
The Reincorporation Proposal has been unanimously approved by SuperGen
California's Board of Directors. If approved by the shareholders, it is
anticipated that the Effective Date of the Merger will be as soon as reasonably
practicable following the Annual Meeting of Shareholders. However, pursuant to
the Merger Agreement, the Merger may be abandoned or the Merger Agreement may be
amended by the Board of Directors (except that certain principal terms may not
be amended without shareholder approval) either before or after shareholder
approval has been obtained and prior to the Effective Date of the Proposed
Reincorporation if, in the opinion of the Board of Directors of either company,
circumstances arise that make it inadvisable to proceed.
Shareholders of SuperGen California will have no dissenters' rights of
appraisal with respect to the Reincorporation Proposal. See "Significant
Differences Between the Corporation Laws of California and Delaware--Appraisal
Rights." The discussion set forth below is qualified in its entirety by
reference to the
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Merger Agreement, and the Certificate of Incorporation and Bylaws of SuperGen
Delaware, copies of which are attached hereto as EXHIBITS A, B AND C,
respectively.
VOTE REQUIRED FOR THE REINCORPORATION PROPOSAL
Approval of the Reincorporation Proposal will require the affirmative vote
of the holders of a majority of the outstanding shares of SuperGen California
Common Stock. Such approval will also constitute approval of the (i) Merger
Agreement and the Certificate of Incorporation and Bylaws of SuperGen Delaware,
(ii) the assumption of SuperGen California's employee benefit plans and
outstanding stock options by SuperGen Delaware, and (iii) revisions to the
Company's indemnification agreements with its officers and directors to conform
those agreements to Delaware law. The effect of an abstention or a broker
non-vote is the same as that of a vote against the reincorporation proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSED REINCORPORATION
IN DELAWARE.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
The Board of Directors and management believe that it is essential to be
able to draw upon well-established principles of corporate governance in making
legal and business decisions. The prominence and predictability of Delaware
corporate law provide a reliable foundation on which the Company's governance
decisions can be based, and the Company believes that shareholders will benefit
from the responsiveness of Delaware corporate law and Delaware courts to their
needs and to those of the corporation they own.
PROMINENCE, PREDICTABILITY AND FLEXIBILITY OF DELAWARE LAW. For many years,
Delaware has followed a policy of encouraging incorporation in that state and,
in furtherance of that policy, has been a leader in adopting, construing and
implementing comprehensive, flexible corporate laws responsive to the legal and
business needs of corporations organized under its laws. Many corporations have
chosen Delaware initially as a state of incorporation or have subsequently
changed corporate domicile to Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
WELL-ESTABLISHED PRINCIPLES OF CORPORATE GOVERNANCE. There is substantial
judicial precedent in the Delaware courts as to the legal principles applicable
to measures that may be taken by a corporation and as to the conduct of the
Board of Directors under the business judgment rule. The Company believes that
its shareholders will benefit from the well-established principles of corporate
governance that Delaware law affords.
INCREASED ABILITY TO ATTRACT AND RETAIN QUALIFIED DIRECTORS. Both
California and Delaware law permit a corporation to include a provision in its
certificate of incorporation which reduces or limits the monetary liability of
directors for breaches of fiduciary duty in certain circumstances. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and money
required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce these risks to its directors
and officers and to limit situations in which monetary damages can be recovered
against directors so that the Company may continue to attract and retain
qualified directors who otherwise might be unwilling to serve because of the
risks involved. The Company believes that, in general, Delaware law provides
greater protection to directors than California law and that Delaware case law
regarding a corporation's ability to limit director liability is more developed
and provides more guidance than California law.
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NO CHANGE IN THE NAME, BOARD MEMBERS, BUSINESS, MANAGEMENT, EMPLOYEE BENEFIT
PLANS OR LOCATION OF PRINCIPAL EXECUTIVE OFFICES OR FACILITIES OF THE COMPANY
The Proposed Reincorporation will effect a change in the legal domicile of
the Company, but not its physical location. The Proposed Reincorporation will
not result in any change in the name, business, management, fiscal year, assets
or liabilities (except to the extent of legal and other costs of effecting the
reincorporation) or location of the principal facilities of the Company. The
current directors, if re-elected at the Annual Meeting, will become the
directors of SuperGen Delaware. All employee benefit plans of SuperGen
California will be assumed and continued by SuperGen Delaware. Each stock
outstanding and an exercised option, warrant or other right to acquire Common
Stock of SuperGen California will automatically be converted into an option,
warrant or right to purchase the same number of shares of SuperGen Delaware
Common Stock at the same price per share, upon the same terms, and subject to
the same conditions. SuperGen California's other employee benefit arrangements
will also be continued by SuperGen Delaware upon the terms and subject to the
conditions currently in effect.
ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a number of
measures through amendment of the certificate of incorporation or bylaws or
otherwise, which measures are designed to reduce a corporation's vulnerability
to unsolicited takeover attempts. The Reincorporation Proposal is not being
proposed in order to prevent an unsolicited takeover attempt, nor is it in
response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
In addition, Delaware law permits a corporation to adopt such measures as
shareholder rights plans designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. There is substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive measures
and as to the conduct of a board of directors under the business judgment rule
with respect to unsolicited takeover attempts. The Board of Directors has no
present intention following the Proposed Reincorporation to amend the
Certificate of Incorporation or Bylaws to include provisions which might deter
an unsolicited takeover attempt. However, in the discharge of its fiduciary
obligations to its shareholders, the Board of Directors of the Company will
continue to evaluate the Company's vulnerability to potential unsolicited bids
to acquire the Company on unfavorable terms and to consider strategies to
enhance the Board's ability to negotiate with an unsolicited bidder.
THE CHARTERS AND BYLAWS OF SUPERGEN CALIFORNIA AND SUPERGEN DELAWARE
The provisions of the SuperGen Delaware Certificate of Incorporation and
Bylaws are similar to those of the SuperGen California Articles of Incorporation
and Bylaws in many respects. However, the Reincorporation Proposal includes the
implementation of certain provisions in the SuperGen Delaware Certificate of
Incorporation and Bylaws that alter the rights of shareholders and the powers of
management. In addition, SuperGen Delaware could implement certain other changes
by amending its Certificate of Incorporation and Bylaws. For a discussion of
such changes, see "Significant Differences Between the Corporation Laws of
California and Delaware."
The Articles of Incorporation of SuperGen California currently authorize the
Company to issue up to 40,000,000 shares of Common Stock, $0.001 par value, and
2,000,000 shares of Preferred Stock, $0.001 par value. The Certificate of
Incorporation of SuperGen Delaware provides that the Company will have
40,000,000 authorized shares of Common Stock, $0.001 par value, and 2,000,000
shares of Preferred Stock, $0.001 par value. Like SuperGen California's Articles
of Incorporation, SuperGen Delaware's Certificate of Incorporation provides that
the Board of Directors is entitled to determine the powers, preferences and
rights, and the qualifications, limitations or restrictions of the authorized
and unissued preferred stock. Thus, although it has no present intention of
doing so, the Board of Directors, without shareholder
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approval, could authorize the issuance of Preferred Stock upon terms which could
have the effect of delaying or preventing a change in control of the Company or
modifying the rights of holders of the Company's Common Stock under either
California or Delaware law. The Board of Directors could also utilize such
shares for further financings, possible acquisitions and other uses.
MONETARY LIABILITY OF DIRECTORS. The Articles of Incorporation of SuperGen
California and the Certificate of Incorporation of SuperGen Delaware both
provide for the elimination of personal monetary liability of directors to the
fullest extent permissible under law. The provision eliminating monetary
liability of directors set forth in the SuperGen Delaware Certificate of
Incorporation is potentially more expansive than the corresponding provision in
the SuperGen California Articles of Incorporation, in that the former
incorporates future amendments to Delaware law with respect to the elimination
of such liability. For a more detailed explanation of the foregoing, see
"Significant Differences Between the Corporation Laws of California and Delaware
Indemnification and Limitation of Liability."
SIZE OF THE BOARD OF DIRECTORS. The Bylaws of SuperGen Delaware provide for
a Board of Directors consisting of six directors. The Bylaws of SuperGen
California provide for a Board of Directors of from six to ten members, with the
exact number currently set at six directors. Under California law, although
changes in the number of directors, in general, must be approved by a majority
of the outstanding shares, the Board of Directors may fix the exact number of
directors within a stated range set forth in the articles of incorporation or
bylaws, if the stated ranges have been approved by the shareholders. Delaware
law permits the board of directors, acting alone, to change the authorized
number of directors by amendment to the bylaws, unless the directors are not
authorized to amend the bylaws or the number of directors is fixed in the
certificate of incorporation (in which case a change in the number of directors
may be made only by amendment to the certificate of incorporation following
approval of such change by the shareholders). The SuperGen Delaware Certificate
of Incorporation provides that the number of directors will be as specified in
the Bylaws and authorizes the Board of Directors to adopt, alter, amend or
repeal the Bylaws. Following the Proposed Reincorporation, the Board of
Directors of SuperGen Delaware could amend the Bylaws to change the size of the
Board of Directors from six directors without further shareholder approval. If
the Reincorporation Proposal is approved, the six current directors of SuperGen
California, if re-elected at the Annual Meeting, will continue as the six
directors of SuperGen Delaware after the Proposed Reincorporation is
consummated.
CUMULATIVE VOTING FOR DIRECTORS. Under California law, if a shareholder has
given notice of an intention to cumulate votes for the election of directors,
any other shareholder of the corporation is also entitled to cumulate his or her
votes at such election. Cumulative voting provides that each share of stock
normally having one vote is entitled to a number of votes equal to the number of
directors to be elected. A shareholder may then cast all such votes for a single
candidate or may allocate them among as many candidates as the shareholder may
choose. In the absence of cumulative voting, the holders of a majority of the
shares present or represented at a meeting in which directors are to be elected
would have the power to elect all the directors to be elected at such meeting,
and no person could be elected without the support of holders of a majority of
the shares present or represented at such meeting. Elimination of cumulative
voting could make it more difficult for a minority shareholder adverse to a
majority of the shareholders to obtain representation on the Company's Board of
Directors. California corporations whose stock is listed on a national stock
exchange or whose stock is held by 800 shareholders of record and included in
the Nasdaq National Market System (a "Listed Company") can also eliminate
cumulative voting with shareholder approval. The Company qualifies as a Listed
Company, and cumulative voting has been eliminated pursuant to the Bylaws of the
Company. Under Delaware law, cumulative voting in the election of directors is
not mandatory, but is a permitted option. The SuperGen Delaware Certificate of
Incorporation does not provide for cumulative voting rights.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS. Under California law, a
special meeting of shareholders may be called by the Board of Directors, the
Chairman of the Board, the President, the holders of shares
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entitled to cast not less than ten percent (10%) of the votes at such meeting
and such additional persons as are authorized by the articles of incorporation
or the bylaws. Under Delaware law, a special meeting of shareholders may be
called by the Board of Directors or by any other person authorized to do so in
the Certificate of Incorporation or the Bylaws. The Bylaws of SuperGen Delaware
currently authorize the Board of Directors, the Chairman of the Board, the
President and/or the holders of not less than ten percent (10%) of the shares
entitled to vote to call a special meeting of shareholders. Therefore, no
substantive change is contemplated in this provision, although the Board could
in the future amend the Company's Bylaws without shareholder approval.
FILLING VACANCIES ON THE BOARD OF DIRECTORS. Under California law, any
vacancy on the board of directors other than one created by removal of a
director may be filled by the Board. If the number of directors is less than a
quorum, a vacancy may be filled by the unanimous written consent of the
directors then in office, by the affirmative vote of a majority of the directors
at a meeting held pursuant to notice or waivers of notice or by a sole remaining
director. A vacancy created by removal of a director may be filled by the board
only if so authorized by a corporation's articles of incorporation or by a bylaw
approved by the corporation's shareholders. SuperGen California's Articles of
Incorporation and Bylaws do not permit directors to fill vacancies created by
removal of a director who is removed by the vote or written consent of the
shareholders or by court order. Under Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors then in office (even
though less than a quorum) or by a sole remaining director, unless otherwise
provided in the certificate of incorporation or bylaws (or unless the
certificate of incorporation directs that a particular class of stock is to
elect such director(s), in which case a majority of the directors elected by
such class, or a sole remaining director so elected, shall fill such vacancy or
newly created directorship). The Bylaws of SuperGen Delaware provide, consistent
with the Bylaws of SuperGen California, that any vacancy created by the removal
of a director by the shareholders of SuperGen Delaware or by court order may be
filled only by the shareholders. Following the Proposed Reincorporation, the
Board of Directors of SuperGen Delaware could, although it has no current
intention to do so, amend the Bylaws to provide that directors may fill any
vacancy created by removal of directors by the shareholders.
LOANS TO OFFICERS AND EMPLOYEES. Under California law, any loan or guaranty
to or for the benefit of a director or officer of the corporation or its parent
requires approval of the shareholders unless such loan or guaranty is provided
under a plan approved by shareholders owning a majority of the outstanding
shares of the corporation. However, under California law, shareholders of any
corporation with 100 or more shareholders of record, such as the Company, may
approve a bylaw authorizing the board of directors alone to approve loans or
guaranties to or on behalf of officers (whether or not such officers are
directors) if the board determines that any such loan or guaranty may reasonably
be expected to benefit the corporation. The Bylaws of SuperGen California do not
contain the foregoing provision. Pursuant to the SuperGen Delaware Bylaws and in
accordance with Delaware law, SuperGen Delaware may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees and those of
its subsidiaries (including directors who are also officers or employees) when
such action, in the judgment of the directors, may reasonably be expected to
benefit the corporation. The Company has no present commitments, understandings
or intentions to make any loan or guarantee to any of its officers, directors or
employees.
VOTING BY BALLOT. California law provides that the election of directors
may proceed in the manner described in a corporation's bylaws. SuperGen
California's Bylaws provide that the election of directors at a shareholders'
meeting may be by voice vote or ballot, unless prior to such vote a shareholder
at the meeting demands a vote by ballot, in which case such vote must be by
ballot. Under Delaware law, the right to vote by written ballot may be
restricted if so provided in the certificate of incorporation. The Bylaws of
SuperGen Delaware do not address election by ballot, but the Certificate of
Incorporation of SuperGen Delaware provides that election of directors shall not
be by written ballot. It may be more difficult for a shareholder to contest the
outcome of a vote that has not been conducted by written ballot.
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COMPLIANCE WITH DELAWARE AND CALIFORNIA LAW
Following the Annual Meeting, if the Reincorporation Proposal is approved,
the Company will submit the Merger Agreement to the offices of the California
Secretary of State and the Delaware Secretary of State for filing.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The corporation laws of California and Delaware differ in many respects.
Although all the differences are not set forth in this Proxy Statement, certain
provisions, which could materially affect the rights of shareholders, are
discussed below.
SHAREHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
In recent years, a number of states have adopted special laws designed to
make certain kinds of "unfriendly" corporate takeovers, or other transactions
involving a corporation and one or more of its significant shareholders, more
difficult. Under Section 203, certain "business combinations" of a Delaware
corporation with "any interested shareholder" are subject to a three-year
moratorium unless specified conditions are met.
Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested shareholder" for three years following the date
that such person or entity becomes an interested shareholder. With certain
exceptions, an interested shareholder is a person or entity who or which owns,
individually or with or through certain other persons or entities, fifteen
percent (15%) or more of the corporation's outstanding voting stock (including
any rights to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion or exchange
rights, and stock with respect to which the person has voting rights only), or
is an affiliate or associate of the corporation and was the owner, individually
or with or through certain other persons or entities, of fifteen percent (15%)
or more of such voting stock at any time within the previous three years, or is
an affiliate or associate of any of the foregoing.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested shareholder; sales
or other dispositions to the interested shareholder (except proportionately with
the corporation's other shareholders) of assets of the corporation or a direct
or indirect majority-owned subsidiary equal in aggregate market value to ten
percent (10%) or more of the aggregate market value of either the corporation's
consolidated assets or all of its outstanding stock; the issuance or transfer by
the corporation or a direct or indirect majority-owned subsidiary of stock of
the corporation or such subsidiary to the interested shareholder (except for
certain transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested shareholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock or of the corporation's voting stock); any transaction
involving the corporation or any direct or indirect majority-owned subsidiary of
the corporation which has the effect, directly or indirectly, of increasing the
proportionate share of the stock of any class or series, or securities
convertible to such stock, of the corporation or the majority-owned subsidiary
which is owned by the interested shareholder (except as a result of immaterial
changes due to fractional share adjustments or as a result of purchases or
redemptions not caused, directly or indirectly, by the interested shareholder);
or receipt by the interested shareholder (except proportionately as a
shareholder), directly or indirectly, of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation or a
subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date on which such shareholder becomes an
interested shareholder the board of directors approves either the business
combination or the transaction that resulted in the person or entity becoming an
interested shareholder; (ii) upon consummation of the transaction that made him
or her an interested shareholder, the interested shareholder owns at least
eighty-five percent (85%) of the corporation's voting
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stock outstanding at the time the transaction commenced (excluding from the
eighty-five percent (85%) calculation shares owned by directors who are also
officers of the target corporation and shares held by employee stock plans that
do not give employee participants the right to decide confidentially whether to
accept a tender or exchange offer); or (iii) on or after the time such person or
entity becomes an interested shareholder, the board approves the business
combination and it is also approved at a shareholder meeting by sixty-six and
two-thirds percent (66 2/3%) of the outstanding voting stock not owned by the
interested shareholder.
Section 203 only applies to certain publicly held corporations that have a
class of voting stock that is (i) listed on a national securities exchange, (ii)
authorized for quotation on the Nasdaq Stock Market or (iii) held of record by
more than 2,000 shareholders. Although a Delaware corporation to which Section
203 applies may elect not to be governed by Section 203, SuperGen Delaware does
not intend to so elect.
Section 203 will encourage any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also might have the effect of limiting
the ability of a potential acquiror to make a two-tiered bid for SuperGen
Delaware in which all shareholders would not be treated equally. Shareholders
should note, however, that the application of Section 203 to SuperGen Delaware
will confer upon the Board the power to reject a proposed business combination
in certain circumstances, even though a potential acquiror may be offering a
substantial premium for SuperGen Delaware's shares over the then-current market
price. Section 203 would also discourage certain potential acquirors unwilling
to comply with its provisions. See "Shareholder Voting" herein.
REMOVAL OF DIRECTORS
Under California law, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote; however, no individual director may be
removed (unless the entire board is removed) if the number of votes cast against
such removal would be sufficient to elect the director under cumulative voting.
Under Delaware law, a director of a corporation that does not have a classified
board of directors or cumulative voting may be removed with or without cause
with the approval of a majority of the outstanding shares entitled to vote at an
election of directors. In the case of a Delaware corporation having cumulative
voting, if less than the entire board is to be removed, a director may not be
removed without cause if the number of shares voted against such removal would
be sufficient to elect the director under cumulative voting. A director of a
corporation with a classified board of directors may be removed only for cause,
unless the certificate of incorporation otherwise provides. The Certificate of
Incorporation of SuperGen Delaware does not provide for a classified board of
directors or for cumulative voting.
CLASSIFIED BOARD OF DIRECTORS
A classified board is one on which a certain number, but not all, of the
directors are elected on a rotating basis each year. This method of electing
directors makes changes in the composition of the board of directors more
difficult, and thus a potential change in control of a corporation a lengthier
and more difficult process. California law permits certain qualifying
corporations to provide for a classified board of directors by adopting
amendments to their articles of incorporation or bylaws, which amendments must
be approved by the shareholders. Although SuperGen California qualifies to adopt
a classified board of directors, its Board of Directors has no present intention
of doing so. Delaware law permits, but does not require, a classified board of
directors, pursuant to which the directors can be divided into as many as three
classes with staggered terms of office, with only one class of directors
standing for election each year. The SuperGen Delaware Certificate of
Incorporation and Bylaws do not provide for a classified board and SuperGen
Delaware presently does not intend to propose establishment of a classified
board. The establishment of a classified board following the Proposed
Reincorporation would require the approval of the shareholders of SuperGen
Delaware.
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INDEMNIFICATION AND LIMITATION OF LIABILITY
California and Delaware have similar laws respecting indemnification by a
corporation of its officers, directors, employees and other agents. The laws of
both states also permit, with certain exceptions, a corporation to adopt a
provision in its articles of incorporation or certificate of incorporation, as
the case may be, eliminating the liability of a director to the corporation or
its shareholders for monetary damages for breach of the director's fiduciary
duty. There are nonetheless certain differences between the laws of the two
states respecting indemnification and limitation of liability.
The Articles of Incorporation of SuperGen California eliminate the liability
of directors to the corporation to the fullest extent permissible under
California law. California law does not permit the elimination of monetary
liability where such liability is based on: (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 duties to the
corporation or its shareholders; (f) interested transactions between the
corporation and a director in which a director has a material financial
interest; and (g) liability for improper distributions, loans or guarantees.
The Certificate of Incorporation of SuperGen Delaware also eliminates the
liability of directors to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director 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 provisions also may not limit a director's
liability for violation of, or otherwise relieve SuperGen Delaware 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.
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 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 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 that is settled or otherwise disposed of without court approval.
California law requires indemnification when the individual has defended
successfully 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, including
attorneys fees, actually and reasonably incurred in the defense or settlement of
a derivative or third-party action, provided there is a determination by a
majority vote of the disinterested directors, even though such directors may
constitute less than a quorum; if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion; or by
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 may be made in
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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 any action, claim, issue,
or matter therein, on the merits or otherwise.
Expenses incurred by an officer or director in defending an action may be
paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
agreements or bylaw provisions which make mandatory the permissive
indemnification provided by California law. Under California law, there are two
limitations on such additional rights to indemnification: (i) such
indemnification is not permitted for acts, omissions or transactions from which
a director of a California corporation may not be relieved of personal
liability, as described above; and (ii) such indemnification is not permitted in
circumstances where California law expressly prohibits indemnification, as
described above. SuperGen California's Articles of Incorporation permit
indemnification of its directors and officers to the extent permitted by the
California Corporations Code. SuperGen California has entered into
indemnification agreements with its officers and directors.
Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. By contrast to California law, Delaware
law does not require authorizing provisions in the certificate of incorporation
and does not contain express prohibitions on indemnification in certain
circumstances, limitations on indemnification may be imposed by a court,
however, based on principles of public policy.
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, therefore, the indemnification agreements entered into by SuperGen
California with its officers and directors may be assumed by SuperGen Delaware
upon completion of the Proposed Reincorporation. If the Proposed Reincorporation
is approved, the indemnification agreements will be amended to the extent
necessary to conform the agreements to Delaware law, and a vote in favor of the
Proposed Reincorporation is also approval of such amendments to the
indemnification agreements. In particular, the indemnification agreements will
be amended to include within their purview future changes in Delaware law that
expand the permissible scope of indemnification of directors and officers of
Delaware corporations.
INSPECTION OF SHAREHOLDER LIST
Both California and Delaware law allow any shareholder to inspect the
shareholder list for a purpose reasonably related to such person's interest as a
shareholder. California law provides, in addition, for an absolute right to
inspect and copy the corporation's shareholder list by persons holding an
aggregate of five percent (5%) or more of a corporation's voting shares, or
shareholders holding an aggregate of one percent (1%) or more of such shares who
have filed a Schedule 14B with the Securities and Exchange Commission in
connection with a contested election of directors. The latter provision has not
been amended in response to the elimination of Schedule 14B under the revised
proxy rules. Under California law, such absolute inspection rights also apply to
a corporation formed under the laws of any other state if its principal
executive offices are in California or if it customarily holds meetings of its
board in California. Delaware law also provides for inspection rights as to a
list of shareholders entitled to vote at a meeting
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within a ten day period preceding a shareholders' meeting for any purpose
germane to the meeting. However, Delaware law contains no provisions comparable
to the absolute right of inspection provided by California law to certain
shareholders.
DIVIDENDS AND REPURCHASES OF SHARES
California law dispenses with the concepts of par value of shares as well as
statutory definitions of capital, surplus and the like. The concepts of par
value, capital and surplus are retained under Delaware law.
Under California law, a corporation may not make any distribution (including
dividends, whether in cash or other property, and repurchases of its shares,
other than repurchases of its shares issued under employee stock plans
contemplated by Section 408 of the California Corporations Code) unless either
(i) the corporation's retained earnings immediately prior to the proposed
distribution equal or exceed the amount of the proposed distribution or (ii)
immediately after giving effect to such distribution, the corporation's assets
(exclusive of goodwill, capitalized research and development expenses and
deferred charges) would be at least 125% of its liabilities (not including
deferred taxes, deferred income and other deferred credits), and the
corporation's current assets would be at least equal to its current liabilities
(or 1 1/4 times its current liabilities if the average pre-tax and pre-interest
expense earnings for the preceding two fiscal years were less than the average
interest expense for such years). Such tests are applied to California
corporations on a consolidated basis.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired immediately prior thereto and such redemption or
repurchase would not impair the capital of the corporation.
To date, the Company has never declared or paid any cash dividends on its
Common Stock. The Company intends to reinvest earnings, if any, in the
development and expansion of the Company's business. Any future declaration of
cash dividends will be at the discretion of the Board of Directors and will
depend upon the earnings, capital requirements and financial position of the
Company, general economic conditions and other pertinent factors.
SHAREHOLDER APPROVAL OF CERTAIN TRANSACTIONS
Both California and Delaware law generally require that a majority of the
shareholders of both acquiring and target corporations approve statutory
mergers. Delaware law does not require a shareholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the stock of the
surviving corporation outstanding immediately before the effective date of the
merger is an identical outstanding or treasury share after the merger, and (c)
either no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or
delivered under the plan of merger plus those initially issuable upon conversion
of any other shares, securities or obligations to be issued or delivered under
such plan do not exceed twenty percent (20%) of the shares of common stock of
such constituent corporation outstanding immediately prior to the effective date
of the merger. California law contains a similar exception to its voting
requirements for reorganizations where shareholders or the corporation itself,
or both, immediately prior to the reorganization will own, immediately after the
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reorganization, equity securities constituting more than five-sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
Both California law and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the outstanding voting shares of the corporation transferring such assets.
With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved by
a majority vote of each class of shares outstanding. In contrast, Delaware law
generally does not require class voting, except in certain transactions
involving an amendment to the certificates of incorporation that adversely
affects a specific class of shares. As a result, shareholder approval of such
transactions may be easier to obtain under Delaware law for companies which have
more than one class of shares outstanding.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than fifty percent (50%) but less than ninety percent (90%) of
such common stock or its affiliate unless all of the holders of such common
stock consent to the transaction. This provision of California law may have the
effect of making a "cash-out" merger by a majority shareholder more difficult to
accomplish. Although Delaware law does not parallel California law in this
respect, under some circumstances Section 203 does provide similar protection
against coercive two-tiered bids for a corporation in which the shareholders are
not treated equally. See "Significant Differences Between the Corporation Laws
of California and Delaware-- Shareholder Approval of Certain Business
Combinations."
California law provides that, except in certain circumstances, when a tender
offer or a proposal for a reorganization or for a sale of assets is made by an
interested party (generally a controlling or managing person of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least ten days prior to the date of
acceptance of the interested party proposal, the shareholders must be informed
of the later offer and be afforded a reasonable opportunity to withdraw any
vote, consent or proxy, or to withdraw any tendered shares. Delaware law has no
comparable provision.
INTERESTED DIRECTOR TRANSACTIONS
Under both California and Delaware law, certain contracts or transactions in
which one or more of a corporation's directors has an interest are not void or
voidable because of such interest, provided that certain conditions, such as
obtaining the required approval and fulfilling the requirements of good faith
and full disclosure, are met. With certain exceptions, the conditions are
similar under California and Delaware law. Under California and Delaware law,
(a) either the shareholders or the board of directors must approve any such
contract or transaction after full disclosure of the material facts, and, in the
case of board approval, the contract or transaction must also be "just and
reasonable" (in California) or "fair" (in Delaware) to the corporation, or (b)
the contract or transaction must have been just and reasonable or fair as to the
corporation at the time it was approved. In the latter case, California law
explicitly places the burden of proof on the interested director. Under
California law, if shareholder approval is sought, the interested director is
not entitled to vote his shares at a shareholder meeting with respect to any
action regarding such contract or transaction. If board approval is sought, the
contract or transaction must be approved by a majority vote of a quorum of the
directors, without counting the vote of any interested directors (except that
interested directors may be counted for purposes of establishing a quorum).
Under Delaware law, if board approval is sought, the contract or transaction
must be approved by a majority of the disinterested directors (even if the
disinterested directors are less than a quorum). Though SuperGen
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Delaware, like SuperGen California, has a board constituted of one inside
director and five outside directors, conceivably certain transactions that the
Board of Directors of SuperGen California might not be able to approve because
of the number of interested directors, could be approved by a majority of the
disinterested directors of SuperGen Delaware, although less than a majority of a
quorum. The Company is not aware of any plans to propose any transaction
involving directors of the Company that could not be so approved under
California law but could be so approved under Delaware law.
SHAREHOLDER DERIVATIVE SUITS
California law provides that a shareholder bringing a derivative action on
behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under Delaware
law, a shareholder may bring a derivative action on behalf of the corporation
only if the shareholder was a shareholder of the corporation at the time of the
transaction in question or if his or her stock thereafter devolved upon him or
her by operation of law. California law also provides that the corporation or
the defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.
APPRAISAL RIGHTS
Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction. Under Delaware law, such fair market value is determined exclusive
of any element of value arising from the accomplishment or expectation of the
merger or consolidation, and such appraisal rights are not available (a) with
respect to the sale, lease or exchange of all or substantially all of the assets
of a corporation, (b) with respect to a merger or consolidation by a corporation
the shares of which are either listed on a national securities exchange or are
held of record by more than 2,000 holders if such shareholders receive only
shares of the surviving corporation or shares of any other corporation that are
either listed on a national securities exchange or held of record by more than
2,000 holders, plus cash in lieu of fractional shares of such corporation, or
(c) to shareholders of a corporation surviving a merger if no vote of the
shareholders of the surviving corporation is required to approve the merger
under certain provisions of Delaware law.
The limitations on the availability of appraisal rights under California law
are different from those under Delaware law. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System generally do not have such appraisal rights unless the
holders of at least five percent (5%) of the class of outstanding shares claim
the right or the corporation or any law restricts the transfer of such shares.
Appraisal rights are also unavailable if the shareholders of a corporation or
the corporation itself, or both, immediately prior to the reorganization, will
own immediately after the reorganization equity securities constituting more
than five-sixths of the voting power of the surviving or acquiring corporation
or its parent entity (as will be the case in the Reincorporation Proposal).
California law generally affords appraisal rights mainly in sale of asset
reorganizations. Appraisal or dissenters' rights are, therefore, not available
to shareholders of SuperGen California with respect to the Reincorporation
Proposal.
DISSOLUTION
Under California law, shareholders holding fifty percent (50%) or more of
the total voting power may authorize a corporation's dissolution, with or
without the approval of the corporation's board of directors, and this right may
not be modified by the articles of incorporation. Under Delaware law, unless the
board of directors approves the proposal to dissolve, the dissolution must be
approved by all the shareholders entitled to vote thereon. Only if the
dissolution is initially approved by the board of directors may it be
16
<PAGE>
approved by a simple majority of the outstanding shares of the corporation's
stock entitled to vote. In the event of such a board-initiated dissolution,
Delaware law allows a Delaware corporation to include in its certificate of
incorporation a supermajority (greater than a simple majority) voting
requirement in connection with dissolutions. SuperGen Delaware's Certificate of
Incorporation contains no such supermajority voting requirement, however, and a
majority of the outstanding shares entitled to vote, voting at a meeting at
which a quorum is present, would be sufficient to approve a dissolution of
SuperGen Delaware that had previously been approved by its Board of Directors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of SuperGen California Common Stock who receive
SuperGen Delaware Common Stock in exchange for their SuperGen California Common
Stock as a result of the Proposed Reincorporation. The discussion does not
address all of the tax consequences of the Proposed Reincorporation that may be
relevant to particular SuperGen California shareholders, such as dealers in
securities, or those SuperGen California shareholders who acquired their shares
upon the exercise of stock options, nor does it address the tax consequences to
holders of options or warrants to acquire SuperGen California Common Stock.
Furthermore, no foreign, state, or local tax considerations are addressed
herein. IN VIEW OF THE VARYING NATURE OF SUCH TAX CONSEQUENCES, EACH SHAREHOLDER
IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE PROPOSED REINCORPORATION, INCLUDING THE APPLICABILITY OF
FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS.
Subject to the limitations, qualifications and exceptions described herein,
and assuming the Proposed Reincorporation qualifies as a reorganization within
the meaning of Section 368(a) of the Code, the following tax consequences
generally should result:
(a) No gain or loss should be recognized by holders of SuperGen
California Common Stock upon receipt of SuperGen Delaware Common Stock
pursuant to the Proposed Reincorporation;
(b) The aggregate tax basis of the SuperGen Delaware Common Stock
received by each shareholder in the Proposed Reincorporation should be equal
to the aggregate tax basis of the SuperGen California Common Stock
surrendered in exchange therefor; and
(c) The holding period of the SuperGen Delaware Common Stock received by
each shareholder of SuperGen California should include the period for which
such shareholder held the SuperGen California Common Stock surrendered in
exchange therefor, provided that such SuperGen California Common Stock was
held by the shareholder as a capital asset at the time of the Proposed
Reincorporation.
(d) The Company should not recognize gain or loss for federal income tax
purposes as a result of the Proposed Reincorporation, and SuperGen Delaware
should succeed, without adjustment, to the federal income tax attributes of
SuperGen California.
The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") with respect to the federal income tax consequences of the Proposed
Reincorporation under the Code. The Company will, however, receive an opinion
from legal counsel substantially to the effect that the Proposed Reincorporation
will qualify as a reorganization within the meaning of Section 368(a) of the
Code (the "Tax Opinion"). The Tax Opinion will neither bind the IRS nor preclude
it from asserting a contrary position. In addition, the Tax Opinion will be
subject to certain assumptions and qualifications and will be based upon the
truth and accuracy of representations made by SuperGen Delaware and SuperGen
California.
17
<PAGE>
PROPOSAL THREE
AMENDMENT TO AMENDED AND RESTATED
1993 STOCK OPTION PLAN
GENERAL
The Company's Amended and Restated 1993 Stock Option Plan (the "1993 Plan")
provides for the granting to employees of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and for the granting to employees, officers, directors and consultants
of nonstatutory stock options and stock purchase rights ("SPRs"). The 1993 Plan
was approved by the Board of Directors in December 1993, amended by the Board of
Directors in January 1996, and approved by the shareholders in February 1993.
Unless terminated sooner, the 1993 Plan will terminate automatically in December
2003.
In February 1997, the Board of Directors voted to increase the number of
shares reserved for issuance under the 1993 Plan by 500,000 shares, bringing the
total shares currently reserved for issuance under the 1993 Plan to 2,500,000
shares. Proposal Three seeks shareholder approval of the increase in shares
reserved under the Plan. Approval of the amendment to the 1993 Plan also
perfects the shareholder approval requirement of Section 422 of the Code.
The Company believes that stock options play a key role in the Company's
ability to recruit, reward and retain executives and key employees. Companies
like SuperGen have historically used stock options as an important part of
recruitment and retention packages. The Company competes directly with other
companies for experienced executives and sales personnel and believes that it
must be able to offer comparable packages to attract the caliber of individual
necessary to the Company's business. The Company's growth is partly responsible
for the need to increase shares issuable under the 1993 Plan. The total number
of employees has increased from 15 full-time employees as of December 31, 1996
to 30 full-time employees, 2 part-time employees and approximately 5 consultants
as of March 31, 1997.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote will be required to ratify and approve the amendment to the
1993 Plan. Both abstentions and broker non-votes will have the same effect as
votes against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE 1993 PLAN.
The essential provisions of the 1993 Plan are outlined below.
ADMINISTRATION
The 1993 Plan is administered by the Board or a committee appointed by the
Board. Such committee may consist of (i) two or more "non-employee" directors in
order to grant options and stock purchase rights to officers and directors in
compliance with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") or (ii) two or more "outside" directors in
order to grant options intended to qualify as "performance-based compensation"
under the tax laws. The administrators of the 1993 Plan are referred to herein
as the "Administrator."
ELIGIBILITY; LIMITS ON GRANTS
The 1993 Plan provides that options and stock purchase rights may be granted
to employees, officers, directors and consultants to the Company, its parent or
subsidiaries. Incentive stock options may be granted only to employees,
including employee directors and officers. The Administrator approves the
participants, the time or times at which options and stock purchase rights are
granted and the number of
18
<PAGE>
shares subject to each. The 1993 Plan is administered so as to satisfy certain
requirements under the federal securities laws, including requirements under the
Exchange Act and the Code.
The 1993 Plan limits the discretion allowed to the Administrator in granting
options. This limitation is intended to preserve the Company's ability to deduct
for federal income tax purposes the compensation expense relating to options
granted to certain executive officers under the 1993 Plan. The limitation
provides that under the 1993 Plan no employee may be granted in any one fiscal
year options to receive more than 500,000 shares of Common Stock (except in
connection with the commencement of employment, in which case options to
purchase no more than an additional 200,000 shares may be granted). See
discussion below under "Tax Information" for a summary of the more general rules
governing the availability to the Company of tax deductions in connection with
stock options granted under the 1993 Plan.
As of March 31, 1997, there were approximately 30 employees and 5
consultants currently eligible to participate in the 1993 Plan, and 58
optionees, including consultants, held outstanding options under the 1993 Plan.
TERMS OF OPTIONS
The terms of options and stock purchase rights granted under the 1993 Plan
are determined by the Administrator but may not be longer than ten years, except
in the case of incentive stock options granted to an optionee who at the time of
grant owns stock representing ten percent (10%) of the voting power of all
classes of stock of the Company or any parent or subsidiary of the Company, for
whom the term of each option may not be longer than five years. Each option or
stock purchase right is evidenced by a written agreement between the Company and
the optionee to whom such option or stock purchase right is granted and is
subject to the following additional terms and conditions:
(a) EXERCISE OF THE OPTION: The Administrator determines when options
may be exercisable. Shares subject to an option generally vest and are
exercisable over four (4) years at the rate of one-quarter ( 1/4) of the
shares on the first anniversary of the option grant and the balance of the
shares subject to the option vesting at the rate of 1/36th per month
thereafter. The Administrator may accelerate the vesting of any outstanding
option. The purchase price of the shares to be purchased upon exercise of
any option may be paid, at the discretion of the Administrator, in cash,
check, or other shares of Common Stock (with some restrictions), or, if
specified in the optionee's option agreement, promissory note, cashless
exercise, a reduction in the amount of any Company liability to the
optionee, any combination thereof, or other legally permitted consideration.
(b) EXERCISE PRICE: The exercise price under the 1993 Plan is
determined by the Administrator, provided that, generally in the case of an
incentive stock option, the exercise price may not be less than 100% of the
fair market value of the Common Stock on the date the option is granted,
and, provided further, that, in the case of an incentive stock option
granted to an employee who, at the time of such grant, owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any parent or subsidiary of the Company, the
exercise price may be no less than 110% of the fair market value of the
Common Stock on the date the option is granted. In the case of a
non-statutory stock option, the exercise price is determined by the
Administrator. In the
case of a non-statutory option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price may not be less than 100% of the fair market value of the Common Stock
on the date the option is granted.
(c) TERMINATION OF EMPLOYMENT: If the optionee's status as an employee
or consultant terminates for any reason other than death or disability, an
option under the 1993 Plan may be exercised not later than thirty (30) days
(or such other period of time, not exceeding 90 days in the case of
incentive options, as is determined by the Administrator and specified in
the optionee's option agreement) after such termination (but in no event
later than the date of expiration of the term of the
19
<PAGE>
option) and may be exercised only to the extent such option was exercisable
and vested on the date of termination.
(d) DISABILITY OF OPTIONEE: If an optionee's continuous status as an
employee, director or consultant terminates as a result of the optionee's
disability (as defined in Section 22(e)(3) of the Code), an option may be
exercised within twelve (12) months after termination of employment due to
such disability (but in no event later than the date of expiration of the
term of the option), but only to the extent such option was exercisable and
vested on the date of termination.
(e) DEATH OF OPTIONEE: If an optionee should die while employed by the
Company, an option may be exercised at any time within twelve (12) months
after the date of death (but in no event later than the date of expiration
of the term of the option), but only to the extent such options were
exercisable and vested on the date of termination.
(f) TERMINATION OF OPTIONS: Stock options granted under the 1993 Plan
expire as determined by the Administrator, but in no event later than ten
(10) years from the date of grant. However, in the case of an incentive
stock option granted to an employee who, at the time of such grant, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
the term of the option may not be greater than five (5) years. Under the
form of option agreement currently used by the Company, options generally
expire ten (10) years from the date of grant.
(g) NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS: Unless
otherwise specified by the Administrator, options and stock purchase rights
are non-transferable by the optionee other than by will or by the laws of
descent or distribution and are exercisable during the optionee's lifetime
only by the optionee.
(h) OTHER PROVISIONS: The option agreement may contain such other
terms, provisions and conditions not inconsistent with the 1993 Plan as may
be determined by the Administrator.
STOCK PURCHASE RIGHTS
The 1993 Plan permits the Company to grant stock purchase rights to purchase
Common Stock of the Company either alone, in addition to, or in tandem with
other awards under the 1993 Plan and/or cash awards made outside the Plan. Upon
the granting of a stock purchase right under the 1993 Plan, the offeree is
advised in writing of the terms, conditions and restrictions related to the
offer, including the number of shares of Common Stock that the offeree is
entitled to purchase, the price to be paid and the time within which the offeree
must accept such offer (which shall in no event exceed six (6) months from the
date of grant). The offer is accepted by execution of a restricted stock
purchase agreement between the Company and the offeree.
Unless the Administrator determines otherwise, the restricted stock purchase
agreement grants the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the purchaser's employment or consulting
relationship with the Company for any reason (including death or disability as
defined in Section 22(e)(3) of the Code). The purchase price for shares
repurchased pursuant to this repurchase option is the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option lapses at such rate as the Administrator
may determine.
Upon exercise of a stock purchase right, the purchaser has all rights of a
shareholder of the Company.
CHANGES IN CAPITALIZATION
In the event a change, such as a stock split or stock dividend payable in
Common Stock, is made in the Company's capitalization which results in an
exchange of Common Stock for a greater or lesser number of
20
<PAGE>
shares without receipt of consideration by the Company, appropriate adjustment
will be made in the number of shares reserved for issuance under the 1993 Plan
and in the number of shares subject to outstanding options and stock purchase
rights under the 1993 Plan, as well as in the price per share of Common Stock
covered by such options and stock purchase rights. Such adjustment will be made
by the Board of Directors, whose determination is final, binding and conclusive.
In the event of the proposed dissolution or liquidation of the Company,
options and stock purchase rights outstanding under the 1993 Plan will terminate
immediately prior to such action. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
into another corporation, outstanding options and stock purchase rights may be
assumed or an equivalent option or stock purchase right may be substituted by
the successor entity. If such outstanding options and stock purchase rights are
not assumed or substituted, however, the Administrator must provide for all or
some part of the options and stock purchase rights to become fully vested and
immediately exercisable for a period of fifteen (15) days.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may amend the 1993 Plan at any time, or may terminate
the 1993 Plan, without shareholder approval; provided, however, that shareholder
approval is required for any amendment to the 1993 Plan for which shareholder
approval would be required under the Code or other applicable rules, and no
action by the Board of Directors or shareholders may unilaterally impair any
option or stock purchase right previously granted under the 1993 Plan. In any
event, the 1993 Plan will terminate in December 2003. Any options outstanding
under the 1993 Plan at the time of its termination will remain outstanding until
they expire by their terms.
TAX INFORMATION
THE FOLLOWING IS A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION WITH
RESPECT TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE
1993 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE OR FOREIGN COUNTRY IN WHICH A PARTICIPANT MAY RESIDE.
INCENTIVE STOCK OPTIONS
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
NON-STATUTORY STOCK OPTIONS
All other options which do not qualify as incentive stock options are
referred to as non-statutory stock options. An optionee will not recognize any
taxable income at the time he or she is granted a non-statutory stock option.
However, upon the option's exercise, the optionee will recognize taxable income,
generally measured as the excess of the then fair market value of the shares
purchased over the exercise price. Any
21
<PAGE>
taxable income recognized in connection with an option exercise by an optionee
who is also an employee of the Company will be subject to tax withholding by the
Company. The Company will be entitled to a tax deduction in the same amount as
the ordinary income recognized by the optionee. Upon resale of such shares by
the optionee, any difference between the sales price and the exercise price, to
the extent not recognized as taxable income as described above, will be treated
as long-term or short-term capital gain or loss, depending on the holding
period.
STOCK PURCHASE RIGHTS
Stock purchase rights will generally be taxed in the same manner as
non-statutory stock options. However, the stock issued upon exercise of a stock
purchase right is usually subject to the Company's right to repurchase such
stock upon the purchaser's termination of employment with the Company, which
right lapses progressively over time. As a result, at the time of purchase, this
restricted stock is subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. As a result, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the date or dates when the stock ceases to be subject to
substantial risk of forfeiture. The stock will generally cease to be subject to
a substantial risk of forfeiture when it is no longer subject to the Company's
right to repurchase the stock (i.e., as it "vests"). At such times, the
purchaser will recognize the ordinary income measured as the difference between
the purchase price and the fair market value of the stock on the date the stock
is no longer subject to a substantial risk of forfeiture. The ordinary income
recognized by a purchaser who is an employee will be treated as wages and will
be subject to tax withholding by the Company. Generally, the Company will be
entitled to a tax deduction in the amount and at the time the purchaser
recognizes ordinary income.
Notwithstanding the foregoing, a purchaser may accelerate the date of his or
her recognition of ordinary income, and the beginning of any capital gain
holding period, by timely filing an election pursuant to Section 83(b) of the
Code. In such event, the ordinary income recognized, if any, would be equal to
the difference between the purchase price and the fair market value of the stock
on the date of purchase, and the capital gain holding period would commence on
the purchase date.
Different rules may apply in the case of purchasers who are subject to
Section 16 of the Exchange Act.
PARTICIPATION IN THE 1993 PLAN
The grant of options and stock purchase rights under the 1993 Plan to
eligible employees and consultants is subject to the discretion of the
Administrator. The table on page 24 sets forth information with respect to
options granted under the 1993 Plan during the Last Fiscal Year to each of the
officers named in the Summary Compensation Table. The term of options under the
1993 Plan (other than those granted to 10% shareholders, such as Dr. Rubinfeld,
as to which the term is five years from the date of grant) is generally ten
years from the date of grant.
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<PAGE>
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP as independent auditors of the Company to audit the
consolidated financial statements of the Company for the year ending December
31, 1997, and recommends that the shareholders vote for ratification of such
appointment.
Ernst & Young LLP has audited the Company's financial statements since March
1994. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement and is expected to
be available to respond to appropriate questions.
VOTE REQUIRED
Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors will require the affirmative vote of a majority of the
outstanding shares of Common Stock entitled to vote. Both abstentions and broker
non-votes will have the same effect as a vote against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF APPOINTING
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
SHARE OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of March 28, 1997 for the following: (i) each person or entity
who is known by the Company to own beneficially more than 5% of the outstanding
shares of the Company's Common Stock; (ii) each of the Company's directors;
(iii) each of the officers named in the Summary Compensation Table; and (iv) all
current directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OWNED(1) OWNED(%)
- -------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Israel Chemicals, Ltd.(2)........................................... 2,761,000 16.29
c/o Dead Sea Works Ltd.
P.O. Box 725
Beer-Sheva, Israel 84100
Joseph Rubinfeld(3)................................................. 1,992,916 11.58
Elliot L. Fineman(4)................................................ 1,808,336 10.67
J. Gregory Swendsen(5).............................................. 1,526,250 9.03
David M. Fineman(6)................................................. 1,392,750 8.22
Francis H. Lee(7)................................................... 80,833 *
Simon M. Wrenn, Jr.(8).............................................. 22,266 *
Frank Brenner(9).................................................... 85,834 *
R. David Lauper(10)................................................. 45,333 *
Julius A. Vida(11).................................................. 20,000 *
Denis Burger(12).................................................... 20,000 *
Daniel Zurr(12)..................................................... 20,000 *
All current directors and named executive officers as a group (11
persons)(13)...................................................... 7,014,518 40.13
</TABLE>
- ------------------------
* Less than 1%.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any
23
<PAGE>
other purpose. Under such rule, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire within 60
days of March 28, 1997 through the exercise of any stock option or other
right. Unless otherwise indicated in the footnotes, each person has sole
voting and investment power (or shares such powers with his or her spouse)
with respect to the shares shown as beneficially owned.
(2) Israel Chemicals, Ltd., an Israeli limited liability company, is
beneficially owned by: the State of Israel (48.52%), public stockholders
(15.65%), Ha'hevra Le Israel Ltd. (12.45%), Penn Bellmore Inc. (12.45%),
Bank Leumi Group (5.53%) and Bank Hapoalim Group (5.40%).
(3) Includes 1,677,500 shares held jointly by Joseph and Loretta Rubinfeld,
husband and wife, 35,000 shares held by Joseph and Loretta Rubinfeld as
custodians under the California Uniform Transfers to Minors Act and 260,416
shares issuable upon exercise of an option to purchase shares of Common
Stock exercisable within 60 days of March 28, 1997. Not included are an
additional 229,167 option shares which become issuable upon a change of
control of the Company or upon exercise (or redemption) of all Warrants
issued in the Company's initial public offering.
(4) Includes 1,583,336 shares held jointly by Elliott L. and Shelley W.
Fineman, husband and wife, and 200,000 shares beneficially owned by the
minor children of Elliott L. and Shelley W. Fineman. Mr. Fineman disclaims
beneficial ownership of such 200,000 shares benefically owned by his minor
children.
(5) Includes 1,526,250 shares held jointly by J. Gregory Swendsen and Susan H.
Bell, Co-Trustees of The J. Gregory Swendsen and Susan H. Bell Revocable
Inter Vivos Trust.
(6) Includes 1,312,500 shares held jointly by David M. and Ellen Gunn Fineman,
husband and wife, and 15,750 shares held in the name of the Gunn-Fineman
Incorporated Profit Sharing Money Purchase Pension Trust.
(7) Includes 80,833 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable within 60 days of March 28,
1997.
(8) Includes 22,266 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable within 60 days of March 28,
1997.
(9) Includes 3,300 shares of Common Stock and warrants to purchase 3,300 shares
of Common Stock exercisable within 60 days of March 28, 1997, held by Frank
Brenner and Christine Carey , his wife, as joint tenants. Also includes
51,750 shares issuable upon options to purchase Common Stock exercisable by
Frank Brenner within 60 days of March 28, 1997, and 10,484 options to
purchase Common Stock exercisable by Christine Carey, his wife, within 60
days of March 28, 1997. Ms. Carey is also a Vice President of the Company.
(10) Includes 29,333 shares issuable upon the exercise of stock options to
purchase shares of Common Stock and warrants to purchase 8,000 shares of
Common Stock exercisable within 60 days of March 28, 1997.
(11) Includes 20,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock issuable within 60 days of March 28, 1997.
Does not include an additional 25,000 shares issuable upon the exercise of
performance-based options to purchase Common Stock of the Company.
(12) Includes 20,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock issuable within 60 days of March 28, 1997.
(13) See footnotes (3) through (12). Includes 11,300 shares issuable upon
exercise of warrants to purchase shares of Common Stock and 515,082 shares
issuable upon the exercise of stock options to purchase shares of Common
Stock held by executive officers and directors which are exercisable within
60 days of March 28, 1997.
24
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities ("10% Shareholders") to file with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. reports of ownership on Form 3 and reports on changes
in ownership on Form 4 or Form 5. Such executive officers, directors and 10%
Shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that, during the period
from March 13, 1996 (the date on which the Company first became subject to
Section 16(a)) until March 31, 1997, its executive officers, directors and 10%
Shareholders complied with all applicable Section 16(a) filing requirements,
except a Form 4 required to be filed by David M. Fineman for February 1997 and a
Form 3 required to be filed by Christine A. Carey for November 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in January of 1993 and is
currently composed of Messrs. Burger and Zurr. Daniel Zurr is a director and
member of the Company's Compensation Committee and the President of Expression
Systems, Inc. Joseph Rubinfeld is the President, Chief Executive Officer and
Chief Scientific Officer of the Company and is a member of the Board of
Directors of Expression Systems, Inc. No member of the Compensation Committee is
or was formerly an officer or an employee of the Company.
25
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four other
executive officers (the "Named Officers") for services rendered to the Company
in all capacities during the Fiscal Year ended March 31, 1995 (FY 1994), the
nine months ended December 31, 1995 (FY 1995) and the Fiscal Year Ended December
31, 1996 (FY 1996).
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY COMPENSATION BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(2)
- ------------------------------------------- ----------- ------------- --------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Rubinfeld, Ph.D .................... 1996 $ 250,000(1) -- $ 312,500 500,000 $ 41,340
President, Chief Executive Officer and 1995 112,500 -- -- -- --
Chief Scientific Officer 1994 155,500 -- 3,000 -- --
Frank Brenner ............................. 1996 112,000 -- 5,400 -- 3,750
Vice President, Sales and Marketing 1995 63,750 -- -- 10,000 --
1994 79,916 -- 2,000 48,000 --
R. David Lauper, Pharm.D.(4) .............. 1996 100,000 -- 5,000 -- 1,923
Vice President, Professional Services 1995 36,800 -- -- 75,000 --
1994 N/A N/A N/A N/A N/A
Francis H. Lee, Ph.D.(5) .................. 1996 115,000 -- 6,000 -- 5,861
Vice President, Clinical Research to 1995 86,250 -- -- 25,000 --
Development and Regulatory Affairs 1994 79,916 -- 2,000 80,000 --
Simeon Wrenn, Ph.D ........................ 1996 100,561 -- 4,175 75,000 21,879(3)
Vice President, Biotechnology 1995 N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) Dr. Rubinfeld's amended Employment Agreement provides for an annual base
salary of $250,000 and a minimum annual performance bonus of $150,000. The
Board of Directors approved a $300,000 bonus for Dr. Rubinfeld ($150,000 for
FY 1996 and $150,000 for FY 1997), which bonus was paid in 1996.
(2) Includes payout of vacation earned but not paid as of December 31, 1995.
(3) Includes relocation reimbursement.
(4) Dr. Lauper joined the Company in August 1995.
(5) Dr. Wrenn joined the Company in January 1996.
26
<PAGE>
OPTION GRANTS IN FISCAL 1996
The following table shows, as to the Named Officers, information concerning
stock options granted during the year ended December 31, 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR(1) PER SHARE DATE(2) 5% 10%
- ----------------------------------------- ----------- --------------- --------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Rubinfeld, Ph.D................... 500,000 59.10% $ 6.00 3/12/01 $ 190,704 $ 1,026,275
Frank Brenner............................ -- -- -- -- -- --
R. David Lauper, Pharm. D................ -- -- -- -- -- --
Francis H. Lee, Ph.D..................... -- -- -- -- -- --
Simeon M. Wrenn, Jr., Ph.D............... 75,000 8.87 5.00 1/16/06 235,835 597,653
</TABLE>
- ------------------------
(1) Total number of shares subject to options granted to employees in Fiscal
1996 was 846,000, which number includes options granted to employee
directors but excludes options granted to nonemployee directors and
consultants.
(2) Dr. Rubinfeld's option shares vest 25% on March 12, 1996, and 1/36th of the
balance of the shares subject to the option vest monthly thereafter, and the
term of the option grant is 5 years; provided, however, that upon exercise
of all warrants issued in connection with the Company's initial public
offering, the option to purchase all 500,000 shares shall become immediately
fully exercisable. Dr. Wrenn's options vest 25% on January 16, 1997, and
1/48th of the balance of the shares subject to the option (56,250) vest
monthly thereafter, and the term of his option grant is 10 years.
(3) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which, for Dr. Wrenn, is equal to the exercise price
of options granted in Fiscal 1996, and for Dr. Rubinfeld is equal to $5.00,
assuming that the stock appreciates in value from the date of grant until
the end of the option term at the annual rate specified (5% and 10%).
Potential Realizable Value is net of the option exercise price. The assumed
rates of appreciation are specified in rules of the SEC and do not represent
the Company's estimate or projection of future stock price. Actual gains, if
any, resulting from stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions, as well as the option holders' continued employment
through the exercise/vesting period. There can be no assurance that the
amounts reflected in this table will be achieved.
27
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth, as to the Named Officers, certain
information concerning stock options exercised during Fiscal 1996 and the number
of shares subject to both exercisable and unexercisable stock options as of
December 31, 1996. Also reported are values for unexercised "in-the-money"
options, which values represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of the
Company's Common Stock as of December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE FISCAL YEAR END: FISCAL YEAR END:(2)
ACQUIRED ON REALIZED --------------------------------- ------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ----------------------------- --------------- ------------- --------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Rubinfeld............. -- -- 218,750 281,250 $ 1,367,188 $ 1,757,813
Frank Brenner................ -- -- 39,125 18,875 458,796 195,223
R. David Lauper.............. -- -- 24,666 51,334 231,026 474,840
Francis H. Lee............... -- -- 64,167 40,333 751,120 449,330
Simeon Wrenn................. -- -- 75,000 -- 543,750 --
</TABLE>
- ------------------------------
(1) The fair market value of the Company's Common Stock as of December 31, 1996
was $12.25.
(2) Market value of underlying securities based on the $12.25 closing price of
the Company's Common Stock on December 31, 1996 (the last market trading day
in 1996) minus the respective exercise prices.
CERTAIN TRANSACTIONS
AGREEMENT WITH ISRAEL CHEMICALS, LTD. In January 1994, the Company and its
founders (Dr. Joseph Rubinfeld, Elliott L. Fineman, David M. Fineman and J.
Gregory Swendsen) entered into a Stock Purchase Agreement and a Shareholders
Agreement with Israel Chemicals, Ltd. ("ICL"), which agreements were amended and
restated on May 30, 1995 and June 2, 1995, respectively (the "ICL Agreements").
Pursuant to the ICL Agreements, ICL invested approximately $9 million in the
Company, in exchange for 2,980,000 shares of the Company's Common Stock. The ICL
Agreements terminated at the time of the initial public offering by the Company.
However, certain provisions of the ICL Agreements survived the termination,
including the provision that the Company invest an aggregate amount of $1
million ($500,000 on or prior to December 31, 1996, and, provided that the
Company has adequate financial capability as reasonably determined by the
Company's Board of Directors, an additional $500,000 on or prior to December 31,
1997) in projects in Israel, subject to certain conditions. The Company also
granted certain marketing rights to ICL in Israel, India, China and South Korea
with respect to all of its current potential products, subject to the
negotiation and execution of acceptable agreements.
FINANCIAL ADVISORY SERVICES AND CONSULTING AGREEMENTS. The Company has
entered into financial advisory and consulting agreements for consulting
services in the area of corporate development and administration with two
directors, David M. Fineman and J. Gregory Swendsen, both of whom are directors
and shareholders of the Company. During the fiscal year ended December 31, 1996,
payments under these agreements totaled $127,000.
AGREEMENT WITH AMUR. The Company entered into an exclusive Research and
License Agreement (the "Research Agreement") with Amur Research Corp., a New
York corporation, effective August 1, 1993, for successive one-year terms. The
Research Agreement provides that the Company shall sponsor the research efforts
of Amur ("Amur Research") as outlined by the Company, with the goal of
developing patentable products, and the Company shall, in turn, be granted an
exclusive worldwide license, with sublicense rights, to any intellectual
property, patentable or nonpatentable, which is developed, conceived or reduced
to practice in the course of the sponsored Amur Research. The Company shall pay
Amur royalties on net sales of any products developed as a result of the Amur
Research for the life of any valid patent issuing from the Amur Research. The
Company provided approximately $248,000 in research
28
<PAGE>
funding for the year ended December 31, 1996. The Company previously paid
$210,000 for the purchase of 630,000 shares of Common Stock of Amur,
approximately 8.9% of the outstanding shares of Amur, and has rights to purchase
an additional 600,000 shares of Amur Common Stock, which rights expire July 31,
2001. The Company also has a right to purchase additional capital stock of Amur.
Dr. Joseph Rubinfeld, David M. Fineman and J. Gregory Swendsen, directors and
shareholders of the Company, beneficially own an aggregate of 225,667 shares of
Amur, or approximately 3.2% of the outstanding shares of Amur as of December 31,
1996. David M. Fineman and J. Gregory Swendsen are also directors of Amur.
EXPRESSION SYSTEMS, INC. INVESTMENT. The Company proposes to enter into a
stock purchase agreement and related documents with Expression Systems, Inc.
("ESI"), a biotechnical company, for the purchase of 125,000 shares of Series C
Preferred Stock for a total investment of $500,000, representing less than 1% of
the outstanding shares of ESI. Dr. Joseph Rubinfeld, David M. Fineman, J.
Gregory Swendsen and Daniel Zurr, directors and shareholders of the Company, and
Elliott L. Fineman, who beneficially owns more than 5% of the Company,
beneficially own an aggregate of 973,000 shares or approximately 7.1% of ESI as
of December 31, 1996. Dr. Joseph Rubinfeld, David M. Fineman, J. Gregory
Swendsen and Daniel Zurr are also directors of ESI. Daniel Zurr is the President
and Chief Executive Officer of ESI.
RESEARCH PERFORMED BY QBI ENTERPRISES LTD. QBI Enterprises Ltd., an Israeli
company ("QBI"), performs research for the Company in Israel. Payments to QBI
during fiscal 1996 totaled $43,500 and $156,500 was accrued but unpaid as of
December 31, 1996. QBI is 99% owned by ESI. Dr. Joseph Rubinfeld, David M.
Fineman, J. Gregory Swendsen and Daniel Zurr, directors and shareholders of the
Company, beneficially own an aggregate of 913,000 shares or approximately 6.6%
of ESI as of December 31, 1996. Dr. Joseph Rubinfeld, David M. Fineman, J.
Gregory Swendsen and Daniel Zurr are also directors of QBI. Daniel Zurr is the
President and Chief Executive Officer of ESI.
AGREEMENT WITH GALENICA, INC. In November 1996, the Company paid $250,000
for approximately 4% of the ownership interest in Galenica, Inc. ("Galenica"), a
biopharmaceutical company, and agreed to enter into a strategic collaboration
relating to the discovery and development of new anticancer drugs based on
natural products. David M. Fineman and J. Gregory Swendsen, directors and
shareholders of the Company, are directors of Galenica.
SEVERANCE AGREEMENT. In August of 1995, the Company entered into an
agreement (the "Severance Agreement") with Elliott L. Fineman in connection with
his resignation as Vice President, Director of Licensing and as a member of the
Company's Board of Directors. Mr. Fineman continued to provide consulting
services to the Company and was paid $131,250 during fiscal 1996, which had been
accrued during fiscal 1995 pursuant to the Severance Agreement. Elliott L.
Fineman beneficially owns an aggregate of 1,808,336 shares of Common Stock or
approximately 10.67% of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
consists of directors Daniel Zurr and Denis Burger, neither of whom is an
employee or officer of the Company. The Committee was established in January
1996 and is responsible for reviewing and making recommendations to the Board of
Directors regarding all forms of compensation to be provided to the executive
officers and directors of the Company, including stock compensation and loans,
and all bonus and stock compensation to all employees. The goal of the Committee
is to insure the compensation practices of the Company are sufficient to attract
the necessary talent to enable the growth from a development stage company into
one with commercialized products.
29
<PAGE>
COMPENSATION COMMITTEE PURPOSES
The Compensation Committee of the Board of Directors serves an an
administrative arm of the Board to make decisions on behalf of the Board with
respect to all forms of compensation to executive officers of the Company and
all bonus and stock compensation to employees.
Compensation for officers and key employees includes both cash and equity
elements. Cash compensation consists of base salary, which is determined on the
basis of the level of responsibility, expertise and experience of the employee,
taking into account competitive conditions in the industry. In addition, cash
bonuses may be awarded to officers and other key employees. Such bonuses are
based on accomplishment of designated Company goals.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of the Company are eligible to
participate in the 1993 Stock Option Plan, as amended and restated (the "Option
Plan"), which was adopted prior to the Company's initial public offering in
March 1996. The Option Plan permits the Board of Directors or a Committee
designated by the Board to grant stock options to employees on such terms as the
Board or the Committee may determine. Employee option grants typically vest over
a four-year period and thus require the employee's continuing efforts on behalf
of the Company. The Committee believes that it is in the shareholders' interests
to link employee compensation as closely as possible to equity appreciation and
thus to share with the employees the benefits of their efforts on behalf of the
Company's success.
DESCRIPTION OF 401(K)
The Company also maintains a 401(k) Plan to provide retirement benefits
through tax deferred salary deductions for all its employees. The Company may
make discretionary contributions, which will be allocated based upon the
relative compensation of each participant with 1,000 hours of service during the
plan year and who are employed by the Company on the last day of the plan year.
Company contributions vest ratably over five years. For 1996, the Company made a
discretionary contribution at the rate of 50% of each participating employee's
contribution, up to a maximum of 3% of each participant's salary, as defined.
FISCAL 1996 EXECUTIVE COMPENSATION
Executive compensation for fiscal year 1996 included base salary, cash
bonuses, incentive stock option grants and other compensation. Cash bonuses were
issued in recognition of the employee's prior service and contributions towards
the achievement of Company goals.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1996
The compensation for Joseph Rubinfeld for fiscal year 1996 was intended to
reward Dr. Rubinfeld for increasing shareholder value. It included a base salary
of $250,000 per annum commencing January 1, 1996, a bonus grant of $150,000 for
Fiscal 1996 and $150,000 for Fiscal 1997, and an option to purchase 500,000
shares of Company stock at $6.00 per share granted on March 12, 1996, vesting
25% on March 12, 1996, with the balance of the shares vesting ratably over three
years; provided, however, that if there is a change of control of the Company or
all of the warrants issued in connection with the initial public offering of the
Company are exercised, the option becomes immediately fully vested.
SUMMARY
The Compensation Committee advises the Board of Directors regarding the
Company's cash and equity incentive programs for the purpose of attracting and
retaining highly skilled executives who will promote the Company's business
goals and providing incentive for these persons to achieve goals which will
build long-term shareholder value.
30
<PAGE>
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Denis Burger, Chairman
Daniel Zurr
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return with those of the Nasdaq Composite Index and the Nasdaq Pharmaceutical
Index. The graph assumes that $100 was invested (i) on March 13, 1996 (the
effective date of the Company's initial public offering) in the Company's Common
Stock and (ii) on February 29, 1996 in the Nasdaq Composite Index and the Nasdaq
Pharmaceutical Index, including reinvestment of dividends. Note that historic
stock price performance is not necessarily indicative of future stock price
performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 10 MONTH CUMULATIVE
TOTAL RETURN*
AMONG SUPERGEN, INC., THE NASDAQ STOCK MARKETUS
INDEX AND THE NASDAQ PHARMACEUTICAL INDEX
SUPERGEN, INC. NASDAQ STOCK MARKET-US
<S> <C> <C>
3/13/96 100 100
12/31/96 288 118
<CAPTION>
COMPARISON OF 10 MONTH CUMULATIVE
TOTAL RETURN*
AMONG SUPERGEN, INC., THE NASDAQ STOCK MARKETUS
INDEX AND THE NASDAQ PHARMACEUTICAL INDEX
NASDAQ PHARMACEUTICAL
<S> <C>
3/13/96 100
12/31/96 94
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Company may recommend.
31
<PAGE>
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are therefore urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
THE BOARD OF DIRECTORS
San Ramon, California
April 25, 1997
32
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF SUPERGEN, INC.,
A DELAWARE CORPORATION,
AND
SUPERGEN, INC.,
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of , 1997 (the "Agreement")
is between SuperGen, Inc., a Delaware corporation ("SuperGen Delaware"), and
SuperGen, Inc., a California corporation ("SuperGen California"). SuperGen
Delaware and SuperGen California are sometimes referred to herein as the
"Constituent Corporations."
RECITALS
A. SuperGen Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 42,000,000
shares, $0.001 par value, of which 40,000,000 shares are designated "Common
Stock," and 2,000,000 shares are designated "Preferred Stock." The Preferred
Stock of SuperGen Delaware is undesignated as to series, rights, preferences,
privileges or restrictions. As of , 1997, 100 shares of Common Stock were
issued and outstanding, all of which are held by SuperGen California, and no
shares of Preferred Stock were issued and outstanding.
B. SuperGen California is a corporation duly organized and existing under
the laws of the State of California and has an authorized capital of 42,000,000
shares, $0.001 par value, of which 40,000,000 are designated "Common Stock," and
2,000,000 shares are designated "Preferred Stock." The Preferred Stock of
SuperGen California is undesignated as to series, rights, preferences,
privileges or restrictions. As of , 1997, shares of Common Stock
were issued and outstanding, and no shares of Preferred Stock were issued and
outstanding.
C. The Board of Directors of SuperGen California has determined that, for
the purpose of effecting the reincorporation of SuperGen California in the State
of Delaware, it is advisable and in the best interests of SuperGen California
and its shareholders that SuperGen California merge with and into SuperGen
Delaware upon the terms and conditions herein provided.
D. The respective Boards of Directors of SuperGen Delaware and SuperGen
California have approved this Agreement and have directed that this Agreement be
submitted to a vote of their respective shareholders and executed by the
undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, SuperGen Delaware and SuperGen California hereby agree, subject to
the terms and conditions hereinafter set forth, as follows:
I
MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law,
SuperGen California shall be merged with and into SuperGen Delaware (the
"Merger"), the separate existence of SuperGen California shall cease and
SuperGen Delaware shall survive the Merger and shall continue to be governed by
the laws of the State of Delaware, and SuperGen Delaware shall be, and is herein
sometimes referred to as, the "Surviving Corporation," and the name of the
Surviving Corporation shall be SuperGen, Inc.
<PAGE>
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved
by the shareholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the California
General Corporation Law;
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof;
(c) An executed Certificate of Merger or an executed, acknowledged and
certified counterpart of this Agreement meeting the requirements of the
Delaware General Corporation Law shall have been filed with the Secretary of
State of the State of Delaware; and
(d) An executed Certificate of Merger or an executed counterpart of this
Agreement meeting the requirements of the California General Corporation Law
shall have been filed with the Secretary of State of the State of
California.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of SuperGen California shall cease and SuperGen Delaware, as
the Surviving Corporation, (i) shall continue to possess all of its assets,
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
and SuperGen California's Boards of Directors, (iii) shall succeed, without
other transfer, to all of the assets, rights, powers and property of SuperGen
California in the manner as more fully set forth in Section 259 of the Delaware
General Corporation Law, (iv) shall continue to be subject to all of its debts,
liabilities and obligations as constituted immediately prior to the Effective
Date of the Merger, and (v) shall succeed, without other transfer, to all of the
debts, liabilities and obligations of SuperGen California in the same manner as
if SuperGen Delaware had itself incurred them, all as more fully provided under
the applicable provisions of the Delaware General Corporation Law and the
California General Corporation Law.
II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
SuperGen Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.2 BYLAWS. The Bylaws of SuperGen Delaware as in effect immediately prior
to the Effective Date of the Merger shall continue in full force and effect as
the Bylaws of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of SuperGen
California immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their respective
successors shall have been duly elected and qualified or until as otherwise
provided by law, or the Certificate of Incorporation of the Surviving
Corporation or the Bylaws of the Surviving Corporation.
A-2
<PAGE>
III
MANNER OF CONVERSION OF STOCK
3.1 SUPERGEN CALIFORNIA COMMON STOCK. Upon the Effective Date of the
Merger, each share of SuperGen California Common Stock, $0.001 par value, issued
and outstanding immediately prior thereto shall, by virtue of the Merger and
without any action by the Constituent Corporations, the holder of such shares or
any other person, be changed and converted into and exchanged for one fully paid
and nonassessable share of Common Stock, $.001 par value, of the Surviving
Corporation.
3.2 SUPERGEN CALIFORNIA OPTIONS AND STOCK PURCHASE RIGHTS. Upon the
Effective Date of the Merger, the Surviving Corporation shall assume and
continue the stock option plans (including without limitation the 1993 Stock
Option Plan and the 1996 Directors Stock Option Plan) and all other employee
benefit plans, [(including without limitation the 401(k) Matching Plan, the
Profit Sharing Plan and the Executive Profit Sharing Plan) of SuperGen
California]. Each outstanding and unexercised option or other right to purchase
or security convertible into SuperGen California Common Stock shall become an
option or right to purchase or a security convertible into the Surviving
Corporation's Common Stock on the basis of one share of the Surviving
Corporation's Common Stock for each share of SuperGen California Common Stock
issuable pursuant to any such option, stock purchase right or convertible
security, on the same terms and conditions and at an exercise price per share
equal to the exercise price applicable to any such SuperGen California option,
stock purchase right or convertible security at the Effective Date of the
Merger. There are no options, purchase rights for or securities convertible into
Preferred Stock of SuperGen California.
A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, stock purchase rights or
convertible securities equal to the number of shares of SuperGen California
Common Stock so reserved immediately prior to the Effective Date of the Merger.
3.3 SUPERGEN DELAWARE COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, $0.001 par value, of SuperGen Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by SuperGen Delaware, the holder of such shares or any other person,
be canceled and returned to the status of authorized but unissued shares.
3.4 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of SuperGen California
Common Stock may, at such stockholder's option, surrender the same for
cancellation to , as exchange agent (the "Exchange Agent"), and each such
holder shall be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares of the Surviving Corporation's
Common Stock into which such holders' shares of SuperGen California Common Stock
were converted as herein provided. Unless and until so surrendered, each
outstanding certificate theretofore representing shares of SuperGen California
Common Stock shall be deemed for all purposes to represent the number of whole
shares of the Surviving Corporation's Common Stock into which such shares of
SuperGen California Common Stock were converted in the Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any shares of stock represented by such outstanding
certificate shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to the Surviving Corporation
or the Exchange Agent, have and be entitled to exercise any voting and other
rights with respect to and to receive dividends and other distributions upon the
shares of Common Stock of the Surviving Corporation represented by such
outstanding certificate as provided above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of SuperGen California so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws.
A-3
<PAGE>
If any certificate for shares of SuperGen Delaware stock is to be issued in
a name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to SuperGen Delaware or the Exchange Agent any transfer or
other taxes payable by reason of the issuance of such new certificate in a name
other than that of the registered holder of the certificate surrendered or
establish to the satisfaction of SuperGen Delaware that such tax has been paid
or is not payable.
IV
GENERAL
4.1 COVENANTS OF SUPERGEN DELAWARE. SuperGen Delaware covenants and agrees
that it will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California General Corporation Law;
(b) File any and all documents with the California Franchise Tax Board
necessary for the assumption by SuperGen Delaware of all of the franchise
tax liabilities of SuperGen California; and
(c) Take such other actions as may be required by the California General
Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by
SuperGen Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of SuperGen California such deeds and other instruments, and
there shall be taken or caused to be taken by SuperGen Delaware and SuperGen
California such further and other actions, as shall be appropriate or necessary
in order to vest or perfect in or conform of record or otherwise by SuperGen
Delaware the title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of SuperGen
California and otherwise to carry out the purposes of this Agreement, and the
officers and directors of SuperGen Delaware are fully authorized in the name and
on behalf of SuperGen California or otherwise to take any and all such action
and to execute and deliver any and all such deeds and other instruments.
4.3 ABANDONMENT. At any time before the filing of this Agreement with the
Secretary of State of the State of Delaware, this Agreement may be terminated
and the Merger may be abandoned for any reason whatsoever by the Board of
Directors of either SuperGen California or SuperGen Delaware, or both,
notwithstanding the approval of this Agreement by the shareholders of SuperGen
California or by the sole stockholder of SuperGen Delaware, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretaries of State of the States of
California and Delaware, provided that an amendment made subsequent to the
adoption of this Agreement by the shareholders of either Constituent Corporation
shall not: (1) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of such Constituent
Corporation, (2) alter or change any term of the Certificate of Incorporation of
the Surviving Corporation to be effected by the Merger, or (3) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class of shares or series thereof of
such Constituent Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving Corporation
in the State of Delaware is located at Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, Delaware 19801, County of New Castle, and The
Corporation Trust Company is the registered agent of the Surviving Corporation
at such address.
A-4
<PAGE>
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at Two Annabel Lane,
Suite 220, San Ramon, California 94583 and copies thereof will be furnished to
any shareholder of either Constituent Corporation, upon request and without
cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
4.8 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement, having first been approved by
resolutions of the Boards of Directors of SuperGen Delaware and SuperGen
California, is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
SUPERGEN, INC.,
a Delaware corporation
By: __________________________________
Name
TITLE
ATTEST:
__________________________________________
Name
TITLE
SUPERGEN, INC.,
a California corporation
By: __________________________________
Name
TITLE
ATTEST:
__________________________________________
Name
TITLE
A-5
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
SUPERGEN, INC.
<TABLE>
<S> <C>
FIRST: The name of the Corporation is SuperGen, Inc. (the "Corporation").
SECOND: The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, zip code 19801. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The Corporation is authorized to issue two classes of stock to be designated
respectively Common Stock and Preferred Stock. The total number of shares of
all classes of stock which the Corporation has authority to issue is
42,000,000, consisting of 40,000,000 shares of Common Stock, $0.001 par
value (the "Common Stock"), and 2,000,000 shares of Preferred Stock, $0.001
par value (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized subject to limitations
prescribed by law, to fix by resolution or resolutions the designations,
powers, preferences and rights, and the qualifications, limitations or
restrictions thereof, of each such series of Preferred Stock, including
without limitation authority to fix by resolution or resolutions, the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, and liquidation preferences of any wholly unissued series of
Preferred Stock, and the number of shares constituting any such series and
the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above the
total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of
shares of any series, the number of which was fixed by it, subsequent to the
issue of shares of such series then outstanding, subject to the powers,
preferences and rights, and the qualifications, limitations and restrictions
thereof stated in the resolution of the Board of Directors originally fixing
the number of shares of such series. If the number of shares of any series
is so decreased, then the shares constituting such decrease shall resume the
status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
FIFTH: The name and mailing address of the incorporator are as follows:
Daniel F. Vaughn
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The election of directors need not be by written ballot unless a stockholder
demands election by written ballot at a meeting of stockholders and before
voting begins or unless the Bylaws of the Corporation shall so provide.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
EIGHTH: The number of directors which constitute the whole Board of Directors of the
Corporation shall be designated in the Bylaws of the Corporation.
NINTH: In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation.
TENTH: To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, no director of the Corporation
shall be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article in respect of
any matter occurring, or any cause of action, suit or claim that, but for
this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
ELEVENTH: At the election of directors of the Corporation, each holder of stock of any
class or series shall be entitled to one vote for each share held. No
stockholder will be permitted to cumulate votes at any election of
directors.
TWELFTH: Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be
kept (subject to any provision contained in the laws of the State of
Delaware) outside of the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of
the Corporation.
THIRTEENTH: 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 the laws of the State of Delaware, and all rights
conferred herein are granted subject to this reservation.
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is his act and deed and that the facts stated
herein are true.
</TABLE>
Dated: May , 1997
--------------------------------------
Daniel F. Vaughn
INCORPORATOR
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<PAGE>
EXHIBIT C
BYLAWS
OF
SUPERGEN, INC.
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE. The registered office of the corporation shall be
fixed in the certificate of incorporation of the corporation.
1.2 OTHER OFFICES. The board of directors may at any time establish branch
or subordinate offices at any place or places where the corporation is qualified
to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS. Meetings of stockholders shall be held at any place
within or outside the State of Delaware designated by the board of directors. In
the absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the corporation.
2.2 ANNUAL MEETING. The annual meeting of stockholders shall be held each
year on a date and at a time designated by the board of directors. In the
absence of such designation, the annual meeting of stockholders shall be held on
the third Wednesday of May in each fiscal year at such time as the Board shall
determine. However, if such day falls on a legal holiday, then the meeting shall
be held at the same time and place on the next succeeding full business day. At
the meeting, directors shall be elected, and any other proper business may be
transacted.
2.3 SPECIAL MEETING. A special meeting of the stockholders may be called
at any time by the board of directors, or by the chairman of the board, or by
the president.
If a special meeting is called by any person or persons other than the board
of directors or the chairman of the board or the president, then the request
shall be in writing, specifying the time of such meeting and 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, the president, any vice president or the secretary of the
corporation. The officer receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote, in accordance with the provisions of
Sections 2.4 and 2.5 of these bylaws, that a meeting will be held at the time
requested by the person or persons calling the meeting, so long as that time is
not less than ten (10) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after receipt of the
request, then the person or persons requesting the meeting may give the notice.
Nothing contained in this paragraph of this Section 2.3 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.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS. All notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 2.5 of
these bylaws not less than ten (10) nor more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date, and hour of the
meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted (no business other than that specified in the notice
may be transacted) or (ii) in the case of the annual meeting, those matters
which the board of directors, at the time of giving the notice, intends to
present for action by the stockholders (but any proper matter may be presented
at the meeting for such action). The notice of any meeting at which directors
are to be elected shall include the name of any nominee or nominees who, at the
time of the notice the board intends to present for election.
<PAGE>
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Written notice of any
meeting of stockholders shall be given either personally or by first-class mail
or by telegraphic or other written communication. Notices not personally
delivered shall be sent postage prepaid and shall be addressed to the
stockholder at the address of that stockholder appearing on the books of the
corporation or given by the stockholder to the corporation for the purpose of
notice. Notice shall be deemed to have been given at such time as it is
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS. To be
properly brought before an annual meeting or special meeting, nominations for
the election of directors or other 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.
2.7 QUORUM. The holders of a majority of the shares entitled to vote,
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at all meetings of stockholders, except as otherwise
provided by statute or by the certificate of incorporation. The stockholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
When a quorum is present at any meeting, the affirmative vote of holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE. When any meeting of stockholders, either
annual or special, is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken. At any 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.
2.9 VOTING. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.11 of these bylaws, subject to the provisions of 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners, and to voting trusts and other voting arrangements).
Except as otherwise provided in the certificate of incorporation or bylaws,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.10 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. No action
which may be taken at any annual or special meeting of stockholders may be taken
without a meeting and without prior notice, in a consent in writing.
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2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING. For purposes of
determining the stockholders entitled to notice of any meeting or to vote
thereat or entitled to give consent to corporate action without a meeting, the
board of directors may fix, in advance, a record date, which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, 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 business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held.
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
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section 8.1 of
these bylaws.
2.12 PROXIES. Every person entitled to vote for directors, or on any other
matter, shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware (relating to the irrevocability of proxies).
2.13 ORGANIZATION. The president, or in the absence of the president, the
chairman of the board, or in the absence of the chairman. any executive officer
of the corporation, shall call the meeting of the stockholders to order, and
shall act as chairman of the meeting. In the absence of the president, the
chairman of the board, and all of the executive officers, the stockholders shall
appoint a chairman for such meeting. The chairman of any meeting of stockholders
shall determine the order of business and the procedures at the meeting,
including such matters as the regulation of the manner of voting and the conduct
of business. The secretary of the corporation shall act as secretary of all
meetings of the stockholders, but in the absence of the secretary at any meeting
of the stockholders, the chairman of the meeting may appoint any person to act
as secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and 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 so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS. Subject to the provisions of the General Corporation Law of
Delaware and to any limitations in the certificate of incorporation or these
bylaws relating to action required to be approved by
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<PAGE>
the stockholders or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS. The board of directors shall consist of five (5)
members. The number of directors may be changed by an amendment to this bylaw,
duly adopted by the board of directors or by the stockholders, or by a duly
adopted amendment to the certificate of incorporation.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. Except as provided in
Section 3.4 of these bylaws, directors shall be elected at each annual meeting
of stockholders to hold office until the next annual meeting. Each director,
including a director elected or appointed to fill a vacancy, shall hold office
until the expiration of the term for which elected and until a successor has
been elected and qualified.
3.4 RESIGNATION AND VACANCIES. Any director may resign effective on giving
written notice to the chairman of the board, the president, the secretary or the
board of directors, unless the notice specifies a later time for that
resignation to become effective. If the resignation of a director is effective
at a future time, the board of directors may elect a successor to take office
when the resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum. or by a sole remaining
director; provided, a vacancy created by the removal of a director by the vote
of the stockholders or by court order may be filled only by the affirmative vote
of a majority of the shares represented and voting at a duly held meeting at
which a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(1) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by
a sole remaining director.
(2) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a
sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the 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 as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware (relating to meetings of stockholders) as far as
applicable.
3.5 REMOVAL OF DIRECTORS. Unless otherwise restricted by statute, by the
certificate of incorporation or by these bylaws, any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
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3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. Regular meetings of the
board of directors may be held at any place within or outside the State of
Delaware that has been designated from time to time by resolution of the board.
In the absence of such a designation, regular meetings shall be held at the
principal executive office of the corporation. Special meetings of the board may
be held at any place within or outside the State of Delaware that has been
designated in the notice of the meeting or, if not stated in the notice or if
there is no notice, at the principal executive office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such directors shall
be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
3.8 REGULAR MEETINGS. Regular meetings of the board of directors may be
held without notice if the times of such meetings are fixed by the board of
directors. If any regular meeting day shall fall on a legal holiday, then the
meeting shall be held at the same time and place on the next succeeding full
business day.
3.9 SPECIAL MEETINGS; NOTICE. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board, the president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.10 QUORUM. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 3.12 of these bylaws. Every act or decision done or made by
a majority of the directors present at a duly held meeting at which a quorum is
present shall be regarded as the act of the board of directors, subject to the
provisions of the certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.11 WAIVER OF NOTICE. Notice of a meeting need not be given to any
director (i) who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or (ii)
who attends the meeting other than for the express purpose of objecting at the
beginning of the meeting of the transaction of any business because the meeting
is not lawfully called or convened. All such waivers, consents, and approvals
shall be filed with the corporate records or made part of the minutes of the
meeting. A waiver of notice need not specify the purpose of any regular or
special meeting of the board of directors.
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3.12 ADJOURNMENT. A majority of the directors present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
3.13 NOTICE OF ADJOURNMENT. Notice of the time and place of holding an
adjourned meeting need not be given unless the meeting is adjourned for more
than twenty-four (24) hours. If the meeting is adjourned for more than
twenty-four (24) hours, then notice of the time and place of the adjourned
meeting shall be given before the adjourned meeting takes place, in the manner
specified in Section 3.9 of these bylaws, to the directors who were not present
at the time of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
required or permitted to be taken by the board of directors may be taken without
a meeting. provided that all members of the board individually or collectively
consent in writing to that action. Such action by written consent shall have the
same force and effect as a unanimous vote of the board of directors. Such
written consent and any counterparts thereof shall be filed with the minutes of
the proceedings of the board.
3.15 FEES AND COMPENSATION OF DIRECTORS. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
board of directors. This Section 3.15 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent. employee or otherwise and receiving compensation for those services.
3.16 APPROVAL OF LOANS TO OFFICERS. The corporation may lend money or
property to, or guarantee the obligations of, or otherwise assist any officer or
other employee of the corporation or its parent or any subsidiary, whether or
not a director of the corporation or its parent or any subsidiary, whenever, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the corporation. The loan, guaranty 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 contained in this section shall
be deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION. In the event
only one director is required by these bylaws or the certificate of
incorporation, then any reference herein to notices, waivers, consents, meetings
or other actions by a majority or quorum of the directors shall be deemed to
refer to such notice, waiver. etc., by such sole director, who shall have all
the rights and duties and shall be entitled to exercise all of the powers and
shall assume all the responsibilities otherwise herein described as given to the
board of directors.
3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL
MEETINGS. Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the board of directors
or any nominating committee appointed by the board of directors or by any
stockholder entitled to vote in the election of directors generally. However, a
stockholder generally entitled to vote in the election of directors may nominate
one or more persons for election as directors at a meeting only if written
notice of such stockholder's intent to make such nomination or nominations has
been given, either by personal delivery or by United States mail, postage
prepaid, to the secretary of the corporation not later than (i) with respect to
an election to be held at an annual meeting of stockholders, 60 days in advance
of such meeting and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the seventh day following the date on which notice of such meeting is first
given to stockholders. Each such notice shall set forth the following
information: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the corporate on entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the stockholder, each
nominee or any other person or persons (naming such person or persons) pursuant
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to which the nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the board of directors of the
corporation; and (e) the consent of each nominee to serve as a director of the
corporation if so elected. At the request of the board of directors any person
nominated by the board of directors for election as a director shall furnish to
the secretary of the corporation that information required to be set forth in a
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 herein. A majority of the board of
directors may reject any nomination by a stockholder not timely made or
otherwise not in accordance with the terms of this Section 3.18. If a majority
of the board of directors reasonably determines that the information provided in
a stockholder's notice does not satisfy the informational requirements of this
Section 3.18 in any material respect, the secretary of the corporation shall
promptly notify such stockholder of the deficiency in writing. The stockholder
shall have an opportunity to cure the deficiency by providing additional
information to the secretary within such period of time, not to exceed ten (10)
days from the date such deficiency notice is given to the stockholder, as a
majority of the board of directors shall reasonably determine. If the deficiency
is not cured within such period, or if a majority of the board of directors
reasonably determines that the additional information provided by the
stockholder, together with the information previously provided, does not satisfy
the requirements of this Section 3.18 in any material respect, then a majority
of the board of directors may reject such stockholder's nomination. The
secretary of the corporation shall notify a stockholder in writing whether the
stockholder's nomination has been made in accordance with the time and
information requirements of this Section 3.18.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the chairman of the meeting or (ii) by any stockholder of the
corporation who complies with the notice procedures set forth in this Section
3.18. 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 less than 60 days prior to the meeting; provided, however, that
in the event that less than 70 days notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. A stockholder's
notice to the secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting the following information: (a) 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, (b)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder and (d) any material
direct or indirect interest, financial or otherwise of the stockholder or its
affiliates or associates in such business. The board of directors may reject any
stockholder proposal not timely made in accordance with this Section 3.18. If
the board of directors determines that the information provided in a
stockholder's notice does not satisfy the informational requirements hereof, the
secretary of the corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall then have an opportunity to cure
the deficiency by providing additional information to the secretary within such
period of time, not to exceed ten days from the date such deficiency notice is
given to the stockholder, as the board of directors shall determine. If the
deficiency is not cured within such period, or if the board of directors
determines that the additional information provided by the stockholder, together
with the information previously provided, does not satisfy the requirements of
this Section 3.18, then the board of directors may reject such stockholder's
proposal. The secretary of the corporation shall notify a stockholder in writing
whether the stockholder's proposal has been made in accordance with the time and
information requirements hereof.
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This provision shall not prevent the consideration and approval or
disapproval at an annual meeting of reports of officers, directors and
committees of the board of directors, but in connection therewith no new
business shall be acted upon at any such meeting unless stated, filed and
received as herein provided. Notwithstanding anything in these bylaws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with procedures set forth in this Section 3.18.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate one (1)
or more committees, each consisting of two or more directors, to serve at the
pleasure of the board. The board may designate one (1) or more directors as
alternate members of any committee, who may replace any absent member at any
meeting of the committee. The appointment of members or alternate members of a
committee requires the vote of a majority of the authorized number of directors.
Any committee, to the extent provided in the resolution of the board, shall have
all the authority of the board, but no such committee shall have the power and
authority to (i) amend 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 as provided in
Section 151(a) of the General Corporation Law of Delaware, 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), (ii) adopt an agreement of merger or consolidation
under Sections 251 or 252 of the General Corporation Law of Delaware (relating
to mergers and consolidations of domestic and foreign corporations), (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware (relating to mergers of parent and subsidiary
corporations).
4.2 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of committees
shall be governed by, and held and taken in accordance with, the provisions of
Article III of these bylaws: Section 3.6 (place of meetings; meetings by
telephone), Section 3.8 (regular meetings), Section 3.9 (special meetings;
notice), Section 3.10 (quorum), Section 3.11 (waiver of notice), Section 3.12
(adjournment), Section 3.13 (notice of adjournment) and Section 3.14 (board
action by written consent without meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may be determined either by resolution of the
board of directors or by resolution of the committee, that special meetings of
committees may also be called by resolution of the board of directors, and that
notice of special meetings of committees shall also be given to all alternate
members, who shall have the right to attend all meetings of the committee. The
board of directors may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.
4.3 COMMITTEE MINUTES. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
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ARTICLE V
OFFICERS
5.1 OFFICERS. The corporate officers of the corporation shall be a
president, a secretary, and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents (however denominated), one or more assistant
secretaries, and such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.
5.2 ELECTION OF OFFICERS. The corporate officers of the corporation,
except such officers as may be appointed in accordance with the provisions of
Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board,
subject to the rights, if any, of an officer under any contract of employment,
and shall hold their respective offices for such terms as the board of directors
may from time to time determine.
5.3 SUBORDINATE OFFICERS. The board of directors may appoint, or may
empower the president to appoint, such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority, and perform such duties as are provided in these bylaws or as
the board of directors may from time to time determine, and, in the case of an
officer chosen by the president, by the president.
5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any, of
an officer under any contract of employment, any officer may be removed, either
with or without cause, by the board of directors at any regular or special
meeting of the board or, except in case of an officer chosen by the board of
directors, by any officer upon whom such power of removal may be conferred by
the board of directors, and, in the case of an officer chosen by the president,
by the president.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD. The chairman of the board, if such an officer
be elected, shall, if present, preside at meetings of the board of directors and
exercise and perform such other powers and duties as may from time to time be
assigned to him or her by the board of directors or as may be prescribed by
these bylaws. If there is no president, then the chairman of the board shall
also be the chief executive officer of the corporation and shall have the powers
and duties prescribed in Section 5.7 of these bylaws.
5.7 PRESIDENT. Subject to such supervisory powers, if any, as may be given
by the board of directors to the chairman of the board, if there be such an
officer, the president shall be the 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 the officers of the
corporation. The president shall preside at all meetings of the stockholders
and, in the absence or nonexistence of a chairman of the board, at all meetings
of the board of directors. The president shall have the general powers and
duties of management usually vested in the office of president of a corporation,
and shall have such other powers and duties as may be prescribed by the board of
directors or these bylaws.
5.8 VICE PRESIDENTS. In the absence or disability of the president, the
vice presidents, if any, in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and
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perform such other duties as from time to time may be prescribed for them
respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.9 SECRETARY. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the board
of directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. The secretary shall keep the seal of the corporation, if one be
adopted in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER. The chief financial officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares. The books
of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
5.11 AUTHORITY AND DUTIES OF OFFICERS. In addition to the foregoing
powers, authority and duties, all officers of the corporation shalt respectively
have such authority and powers and perform such duties in the management of the
business of the corporation as may be designated from time to time by the board
of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall, to
the maximum extent and in the manner permitted by the General Corporation Law of
Delaware as the same now exists or may hereafter be amended, indemnify any
person against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred in connection with
any threatened, pending or completed action, suit, or proceeding in which such
person was or is a party or is threatened to be made a party by reason of the
fact that such person is or was a director or officer of the corporation. For
purposes of this Section 6.1, a "director" or "officer" of the corporation shall
mean any person (i) who is or was a director or officer of the corporation, (ii)
who is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
or (iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
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The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of directors of the corporation.
Any repeal or modification of the foregoing provisions of this Article shall
not adversely affect any right or protection hereunder of any person in respect
of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS. The corporation shall have the power, to
the maximum extent and in the manner permitted by the General Corporation Law of
Delaware as the same now exists or may hereafter be amended, to indemnify any
person (other than directors and officers) against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding, in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was
an employee or agent of the corporation. For purposes of this Section 6.2, an
"employee" or "agent" of the corporation (other than a director or officer)
shall mean any person (i) who is or was an employee or agent of the corporation,
(ii) who is or was serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was an employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE. Corporation shall pay the expenses
(including attorney's fees) incurred by a director or officer of the corporation
entitled to indemnification hereunder in defending any action, suit or
proceeding referred to in this Section 6.1 in advance of its final disposition;
provided, however, that payment of expenses incurred by a director or officer of
the corporation in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by the director or
officer to repay all amounts advanced if it should ultimately be determined that
the director or officer is not entitled to be indemnified under this Section 6.1
or otherwise.
6.4 INDEMNITY NOT EXCLUSIVE. The rights conferred on any person by this
Article shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the corporation's Certificate
of Incorporation, these bylaws, agreement, vote of the stockholders or
disinterested directors or otherwise.
6.5 INSURANCE INDEMNIFICATION. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liability under the provisions of the
General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER. The corporation shall
keep either at its principal executive office or at the office of its transfer
agent or registrar (if either be appointed), as determined by resolution of the
board of directors, a record of its stockholders listing the names and addresses
of all stockholders and the number and class of shares held by each stockholder.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records
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and to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a stockholder. In every instance
where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS. Any director shall have the right to examine
the corporation's stock ledger, a list of its stockholders and its other books
and records for a purpose reasonably related to his or her position as a
director.
7.3 ANNUAL REPORT TO STOCKHOLDERS. The board of directors shall present at
each annual meeting of the stockholders a full and clear statement of the
business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of the
board, the president, any vice president, the chief financial officer, the
secretary or assistant secretary of this corporation, or any other person
authorized by the board of directors or the president or a vice president, is
authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority herein granted may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.
7.5 CERTIFICATION AND INSPECTION OF BYLAWS. The original or a copy of
these bylaws, as amended or otherwise altered to date, certified by the
secretary, shall be kept at the corporation's principal executive office and
shall be open to inspection by the stockholders of the corporation, at all
reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For purposes of
determining 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 other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action. In that case, only stockholders of record at
the close of business on the date so fixed are entitled to receive the dividend,
distribution or allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Code.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. From time to time, the
board of directors shall determine by resolution which person or persons may
sign or endorse all checks, drafts, other orders for payment of money, notes or
other evidences of indebtedness that are issued in the name of or payable to the
corporation, and only the persons so authorized shall sign or endorse those
instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. The board of
directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so 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
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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.
8.4 CERTIFICATES FOR SHARES. The shares of the corporation shall be
represented by certificates, provided that the board of directors of the
corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the corporation. Notwithstanding the adoption of
such a resolution by the board of directors, every holder of stock represented
by certificates and, upon request, every holder of uncertificated shares, shall
be entitled to have a certificate signed by, or in the name of the corporation
by, the chairman or vice-chairman of the board of directors, or the president or
vice-president, and by the chief financial officer, or the secretary or an
assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any, a conspicuous notice of
restrictions upon transfer or registration of transfer, if any, a statement as
to any applicable voting trust agreement; and, if the shares be assessable, or,
if assessments are collectible by personal action, a plain statement of such
facts.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly paid
and subject to call for the remainder of the consideration to be paid therefor.
Upon the face or back of each stock certificate issued to represent any such
partly paid shares, or upon the books and records of the corporation in the case
of uncertificated partly paid shares, the total amount of the consideration to
be paid therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the corporation shall declare
a dividend upon partly paid shares of the same class, but only upon the basis of
the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is authorized
to issue more than one class of stock or more than one series of any class, then
the powers, the designations, the preferences and the 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 shall be set forth in full or summarized on the face or back of the
certificate that the corporation shall issue to represent such class or series
of stock; provided, however, that, except as otherwise provided in Section 202
of the General Corporation Law of Delaware (relating to transfers of stock,
stock certificates and undercertificated stock), in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences and the 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.
8.6 LOST CERTIFICATES. Except as provided in this Section 8.6, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and
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canceled at the same time. The board of directors may, in case any share
certificate or certificate for any other security is lost, stolen or destroyed,
authorize the issuance of replacement certificates on such terms and conditions
as the board may require; the board may require indemnification of the
corporation secured by a bond or other adequate security sufficient to protect
the corporation against any claim that may be made against it, including any
expense or liability, on account of the alleged loss, theft or destruction of
the certificate or the issuance of the replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS. The board of directors may appoint one
or more transfer agents or transfer clerks, and one or more registrars, each of
which shall be an incorporated bank or trust company, either domestic or
foreign, who shall be appointed at such times and places as the requirements of
the corporation may necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise, the
general provisions, rules of construction, and definitions in the Code shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeat bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
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P SUPERGEN, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O The undersigned shareholder of SuperGen, Inc., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting
X of shareholders and Proxy Statement, each dated April 25, 1997 and
hereby appoints Joseph Rubinfeld, its proxy and attorney-in-fact, with
Y full power of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 1997 Annual Meeting of
shareholders of SuperGen, Inc. to be held on Tuesday, May 27, 1997, at
2:00 p.m. local time, at the San Ramon Marriot, 2600 Bishop Drive, San
Ramon, CA 94583 and at any adjournment(s) thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth on the
reverse side, and, in their discretion, upon such other matter or
matters which may properly come before the meeting and any
adjournment(s) thereof.
This proxy will be voted as directed, or, if no contrary direction
is indicated, will be voted FOR the election of the specified nominees
as directors, FOR changing the state of incorporation of the Company
from the State of California to the State of Delaware by means of a
merger of the Company with and into a wholly-owned Delaware subsidiary,
FOR the ratification and approval of an amendment to the Amended and
Restated 1993 Stock Option Plan to increase the number of shares
reserved for issuance by 500,000 shares to 2,500,000 shares, FOR the
ratification of the appointment of Ernst & Young LLP as independent
auditors, and as said proxies deem advisable on such other matters as
may properly come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE -----------
SEE REVERSE
SIDE
-----------
<PAGE>
Please mark
/x/ votes as in
this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, FOR THE PROPOSAL TO CHANGE THE STATE OF INCORPORATION OF THE
COMPANY FROM THE STATE OF CALIFORNIA TO THE STATE OF DELAWARE BY MEANS OF A
MERGER OF THE COMPANY WITH AND INTO A WHOLLY-OWNED DELAWARE SUBSIDIARY, FOR
THE RATIFICATION AND APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED
1993 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
BY 500,000 SHARES TO 2,500,000 SHARES, FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS, AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THIS MEETING.
1. ELECTION OF DIRECTORS:
Nominees: Joseph Rubinfeld, Denis Burger, David M. Fineman, J. Gregory
Swendsen, Julius A. Vida, Daniel Zurr
FOR WITHHELD
/ / / /
2. PROPOSAL TO CHANGE THE STATE OF INCORPORATION OF THE COMPANY FROM THE
STATE OF CALIFORNIA TO THE STATE OF DELAWARE BY MEANS OF A MERGER OF THE
COMPANY WITH AND INTO A WHOLLY-OWNED DELAWARE SUBSIDIARY:
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL TO RATIFY AND APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
1993 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
BY 500,000 SHARES TO 2,500,000 SHARES:
FOR AGAINST ABSTAIN
/ / / / / /
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY:
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, upon such other matter or matters which may properly come
before the meeting and any adjournment(s) thereof.
/ / -------------------------------------- MARK HERE
For all nominees except as noted above FOR ADDRESS / /
CHANGE AND
NOTE BELOW
This Proxy should be marked, dated, signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.
Signature:------------------------ Date---------------
Signature:------------------------ Date---------------
