<PAGE> 1
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KYZEN CORPORATION
(Name of Registrant as Specified in Its Charter)
-------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
<PAGE> 2
KYZEN CORPORATION
430 HARDING INDUSTRIAL DRIVE
NASHVILLE, TN 37211
March 12, 1999
TO THE SHAREHOLDERS OF
KYZEN CORPORATION:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of Kyzen Corporation, to be held on Friday, April 9, 1999, at 2:30
p.m. (Nashville Time) at Kyzen Corporation's corporate headquarters, 430 Harding
Industrial Drive, Nashville, Tennessee 37211.
Please read the enclosed Annual Report to Shareholders and Proxy
Statement for the 1999 Annual Meeting of Shareholders. Whether or not you plan
to attend the meeting, please sign, date and return the enclosed proxy card as
soon as possible so that your vote will be recorded. If you attend the meeting,
you may withdraw your proxy and vote your shares personally. You must provide
proof of ownership of Kyzen Corporation Class A Common Stock as of the record
date, February 4, 1999, in order to attend the meeting.
On behalf of the Board of Directors and management of Kyzen
Corporation, I would like to thank you for your continued support and
confidence, and look forward to meeting as many of our shareholders as possible
on April 9, 1999.
Sincerely,
/s/ Mike Bixenman
Michael L. Bixenman
Chairman of the Board
IMPORTANT
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY.
<PAGE> 3
KYZEN CORPORATION
430 HARDING INDUSTRIAL DRIVE
NASHVILLE, TN 37211
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 9, 1999
-------------------------
TO THE SHAREHOLDERS OF
KYZEN CORPORATION:
The Annual Meeting of Shareholders of Kyzen Corporation (the "Company")
will be held on Friday, April 9, 1999, at 2:30 p.m. (Nashville Time) at the
Company's corporate headquarters, 430 Harding Industrial Drive, Nashville,
Tennessee 37211, for the following purposes:
(1) To elect three nominees as directors to serve on the Board
of Directors until the Annual Meeting of Shareholders in 2002;
(2) To consider and approve amending and restating the
Articles of Incorporation of the Company;
(3) To consider and approve amending and restating the Bylaws
of the Company;
(4) To consider and approve changing the Company's state of
incorporation from Utah to Tennessee; and
(5) To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 4,
1999 as the record date for determining shareholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
By order of the Board of Directors,
/s/ Thomas J. Herrmann
Thomas J. Herrmann
Corporate Secretary
Nashville, Tennessee
March 12, 1999
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THE PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING AND
WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY
IS EXERCISED.
<PAGE> 4
KYZEN CORPORATION
430 HARDING INDUSTRIAL DRIVE
NASHVILLE, TN 37211
-------------------------
PROXY STATEMENT
-------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board of Directors") of Kyzen
Corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at 430 Harding Industrial Drive, Nashville,
Tennessee 37211, on April 9, 1999, at 2:30 p.m. (Nashville Time), for the
purposes set forth in the accompanying notice, and at any adjournment thereof.
This Proxy Statement and the accompanying form of proxy are first being mailed
or given to shareholders of the Company on or about March 15, 1999.
The close of business on February 4, 1999 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting. As of the close of business on that date, the Company had
5,006,781 shares of Class A Common Stock, $.01 par value (the "Common Stock"),
outstanding and entitled to vote. Holders of the Common Stock are entitled to
one vote per share on any matter which may properly come before the Annual
Meeting.
A shareholder who signs and delivers a proxy has the right to revoke it
at any time before it is exercised by writing to the Corporate Secretary, by
timely delivery of a properly executed, later-dated proxy or by voting by ballot
at the Annual Meeting.
If the enclosed proxy is properly executed, returned and not revoked,
it will be voted in accordance with the instructions, if any, given by the
shareholder, and if no instructions are given, will be voted (a) FOR the
election as directors of the nominees listed thereon and described in this Proxy
Statement, (b) FOR the approval of the amendment and restatement of the Articles
of Incorporation of the Company, (c) FOR the approval of the amendment and
restatement of the Bylaws of the Company, (d) FOR the approval of the
reincorporation of the Company from Utah to Tennessee, and (e) in accordance
with the recommendations of the Board of Directors on any other proposal that
may properly come before the Annual Meeting. The persons named as proxies in the
enclosed form of proxy were selected by the Board of Directors.
<PAGE> 5
PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company, as amended (the "Utah Bylaws"), provide that
the terms for the Board of Directors are to be staggered so that approximately
one-third of the directors are reelected at each annual meeting. Pursuant to the
Utah Bylaws, the Board of Directors has divided the current Board into two
classes of two directors each and one class of three directors. One class of
directors is elected each year. The terms of Janet Korte Baker, Michael L.
Bixenman and John A. Davis III expire at the Annual Meeting.
The Board of Directors has nominated Ms. Baker and Messrs. Bixenman and
Davis for election at the Annual Meeting to serve until the annual meeting of
shareholders in 2002 or until their successors have been elected and qualified.
Ms. Baker and Messrs. Bixenman and Davis have consented to be candidates and to
serve as directors if elected.
In accordance with the Utah Revised Business Corporation Act (the
"URBCA"), directors are elected by a plurality of the votes cast by the shares
entitled to vote at a meeting of shareholders at which a quorum is present. The
Company's Articles of Incorporation, as amended (the "Utah Articles"), do not
provide for cumulative voting and, accordingly, the holders of Common Stock do
not have cumulative voting rights with respect to the election of directors.
Consequently, each shareholder may cast only one vote per share for each of the
nominees.
Unless a proxy specifies otherwise, the persons named in the proxy will
vote the shares covered by the proxy for the individuals nominated by the Board
of Directors. Should any nominee become unavailable for election, shares covered
by a proxy will be voted for a substitute nominee selected by the current Board
of Directors.
The Board of Directors recommends that shareholders vote FOR the
election of the following nominees:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Janet Korte Baker(1) 46 Director
Michael L. Bixenman 45 Chairman of the Board, Vice President and Director
John A. Davis III 66 Director
</TABLE>
- ---------------
(1) Effective December 31, 1998, Mr. Edward F. Bradley resigned as a Director
of the Company to pursue other interests and Ms. Baker was appointed by
the remaining members of the Board of Directors to fill the vacancy
created by Mr. Bradley's departure for the remainder of Mr. Bradley's
term, which expires at the Annual Meeting. Ms. Baker accepted her
appointment on January 20, 1999.
JANET KORTE BAKER has served as a Director of the Company since January
20, 1999. Ms. Baker has been an independent business consultant and financial
advisor in Nashville, Tennessee since 1990. She specializes in financial
advisory work for clients ranging from small business owners to companies up to
$100 million in revenues. Prior to 1990, Ms. Baker spent 14 years in the banking
industry. She was a Senior Vice President of SunTrust Bank, Nashville and
Executive Vice President of Brentwood National Bank.
MICHAEL L. BIXENMAN has served as Chairman of the Board since June
1995, Vice President since the Company's inception in 1990 and Director since
December 1994. Prior to co-founding the Company, Mr. Bixenman was employed in
several positions, the last as Vice President-General Manager with Bix
Manufacturing Company.
2
<PAGE> 6
JOHN A. DAVIS III has served as a Director of the Company since August
1995. Mr. Davis is an attorney in Little Rock, Arkansas and has been associated
with various law firms in Arkansas since 1993. Prior to 1993, Mr. Davis served
as General Counsel, Senior Vice President and Secretary for United Dominion
Industries (NYSE:UDI), a multinational construction and industrial machinery
producer. Mr. Davis is the uncle of Mr. Doyel's wife.
CONTINUING DIRECTORS
The persons named below will continue to serve as directors until the
annual meeting of shareholders in the years indicated and until their successors
are elected and qualified. The following table shows the names, ages and
positions of each continuing director:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
TERMS EXPIRING IN 2000:
Thomas M. Forsythe 41 Vice President, Treasurer, Chief Accounting Officer and Director
James R. Gordon 53 Director
TERMS EXPIRING IN 2001:
Kyle J. Doyel 43 President, Chief Executive Officer and Director
Larry A. Lofgreen 36 Director
</TABLE>
THOMAS M. FORSYTHE has served as Vice President since September 1995,
as Treasurer and Chief Accounting Officer since January 1998 and as a Director
of the Company since June 1995. Mr. Forsythe joined the Company in 1992 and
served as General Manager from July 1992 to September 1995. From 1989 to 1992,
Mr. Forsythe directed, as Business Manager, a business unit of WR Grace & Co.
charged with entering the CFC-free cleaning chemical market, focused on the
aerospace industry.
JAMES R. GORDON has served as a Director of the Company since July
1996. Mr. Gordon is the President, Director and Founder of TCS Management Group,
Inc., a multi-national software development company, formed in 1975. TCS
Management Group, Inc. is currently a wholly-owned subsidiary of Aspect
Telecommunications Corporation (Nasdaq:ASPT). Mr. Gordon currently serves on the
Board of Directors and Executive Committee of the Society of International
Business Fellows and is a member of the Board of Trustees of Harding Academy in
Nashville, Tennessee.
KYLE J. DOYEL has served as Chief Executive Officer, President and
Director since the Company's inception in 1990, and served as Chairman of the
Board from the Company's inception until February 1995. Prior to co-founding the
Company in 1990, Mr. Doyel was employed in several management, sales, commercial
development and products development positions within the chemical industry.
LARRY A. LOFGREEN has served as a Director of the Company since June
1995. Mr. Lofgreen is the President and Chief Executive Officer of Datum
Technologies, Inc., a systems consulting firm he founded in 1997. From 1996 to
1997, Mr. Lofgreen was President of CI Technologies, Inc. and from 1994 to 1996
served as Executive Vice President of Cannon Industries, an industrial
development/venture capital firm.
3
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during 1998. All directors
attended at least 75% of the meetings of the Board of Directors and its
committees held while they were directors.
The Board of Directors has an Audit Committee and a Compensation
Committee, both of which consist of at least two "non-employee directors" as
defined by Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Audit Committee makes recommendations to the Board of Directors
with respect to the Company's financial statements and the appointment of
independent accountants. The Audit Committee also reviews significant audit and
accounting policies and practices, meets with the Company's independent public
accountants concerning, among other things, the scope of audit reports and
reviews the performance of the overall accounting and financial controls of the
Company. Messrs. Bradley, Davis, Gordon, and Lofgreen serve on the Audit
Committee. The Audit Committee held one meeting during 1998.
The Compensation Committee reviews and approves salaries, bonuses and
other compensation and benefits of executive officers. The Compensation
Committee also advises management regarding benefits and other terms and
conditions of compensation and administers the Company's stock option plans.
Messrs. Doyel, Gordon and Lofgreen serve on the Compensation Committee. The
Compensation Committee held one meeting during 1998.
The Company currently has no standing nominating committee.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors or any board committee.
Directors who are not employees of the Company are paid one thousand dollars
($1,000) for attending each meeting of the Board of Directors. Directors are
reimbursed for any travel expenses incurred in attending meetings of the Board
of Directors.
In April 1998, each of Messrs. Davis, Lofgreen, Gordon and Bradley (a
former Director) were granted 5,000 options to purchase Common Stock at an
exercise price of $1.84 per share under the Company's stock option plans.
4
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership as of February 17, 1999 of the Common Stock by (a) each person known
by the Company to be a beneficial owner of more than 5% of the outstanding
shares of Common Stock, based solely on a review of electronic filings made with
the Securities and Exchange Commission (the "SEC"), (b) each Director of the
Company, (c) each individual listed under "Executive Compensation - Summary
Compensation Table" below and (d) all directors and executive officers of the
Company as a group. Each beneficial owner named below has advised the Company
that such owner has sole investment and voting power with respect to the shares
of Common Stock shown below. The address for each of the beneficial owners is
shown below.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
- ------------------- ------------------ ---------------------
<S> <C> <C>
Christopher B. Cannon 1,130,677(2) 22.5%
60 East South Temple, Salt Lake City, UT
Kyle J. Doyel 613,845(3) 12.2%
430 Harding Industrial Drive, Nashville, TN
Michael L. Bixenman 490,482(4) 9.7%
430 Harding Industrial Drive, Nashville, TN
Thomas M. Forsythe 161,895(5) 3.2%
430 Harding Industrial Drive, Nashville, TN
Thomas J. Herrmann 51,013(6) 1.0%
430 Harding Industrial Drive, Nashville, TN
John A. Davis III 42,000(7) *
500 E. Markham St., Little Rock, AR
James R. Gordon 25,000(8) *
430 Harding Industrial Drive, Nashville, TN
Larry A Lofgreen 20,000(9) *
6525 W. 10760 N., Highland, UT
Janet Korte Baker -- *
430 Harding Industrial Drive, Nashville, TN
All Executive Officers and Directors as a Group 1,404,235 26.4
(8 persons)
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Pursuant to the rules of the SEC, shares of Common Stock which beneficial
owners set forth in this table have a right to acquire within 60 days of
the date hereof pursuant to the exercise of stock options are deemed to
be outstanding for the purpose of computing the percent of Common Stock
beneficially owned by that owner but are not deemed outstanding for the
purpose of computing percentage ownership of any other beneficial owner
shown in the table.
(2) Includes options currently exercisable to purchase 10,000 shares.
(3) Includes options currently exercisable to purchase 45,334 shares.
(4) Includes options currently exercisable to purchase 42,000 shares.
(5) Includes options currently exercisable to purchase 120,666 shares.
(6) Includes options currently exercisable to purchase 35,000 shares.
(7) Includes options currently exercisable to purchase 32,000 shares.
(8) Includes options currently exercisable to purchase 15,000 shares.
(9) Includes options currently exercisable to purchase 20,000 shares.
5
<PAGE> 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company pays royalties to Bix Manufacturing Company, a shareholder,
in connection with the Company's acquisition of certain patent rights. These
royalty payments are based on 2% of revenues related to the patented chemistry.
The Company is currently satisfying its royalty obligation through consulting
services performed by the Company. In 1998 and 1997, $46,675 and $71,925,
respectively, is recorded as royalty expenses to reflect these transactions.
Michael L. Bixenman, a director and officer of the Company, is a 10% shareholder
of Bix Manufacturing Company.
The Company paid $19,850 and $26,262 in 1998 and 1997 for
transportation services from Benco Sales. Benco Sales is owned by Benny
Bixenman, who is a shareholder of the Company and the brother of Michael L.
Bixenman, a director and officer of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and shareholders who beneficially
own greater than ten percent are required by the SEC's regulations to furnish
the Company with copies of all such filings. The Company is required to report
in this Proxy Statement any failure to file such reports by the specific dates
that these reports are required to be filed during the year ended December 31,
1998.
Based solely on a review of the copies of reports furnished to the
Company and certain written representations that no other reports were required,
the Company believes that all Section 16(a) reporting and filing requirements
applicable to its executive officers, directors and greater than ten percent
shareholders were complied with during the year ended December 31, 1998.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table reflects the compensation of the Company's Chief
Executive Officer and each of the Company's most highly compensated executive
officers whose total annual salary and bonus exceeded $100,000 in each year for
all services rendered in all capacities to the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Securities Underlying
Name and Compensation Stock Options
Principal Position Year Salary (Number of Shares)
- ------------------ ---- ------ ------------------
<S> <C> <C> <C>
Kyle J. Doyel, 1998 $122,860 6,000
Chief Executive Officer 1997 115,994 --
1996 95,000 15,000
Michael L. Bixenman 1998 $114,847 6,000
Chairman of the Board 1997 107,190 --
1996 95,000 10,000
Thomas M. Forsythe, 1998 $106,332 12,000
Vice President 1997 98,490 --
1996 102,009 20,000
Thomas J. Herrmann, 1998 $101,000 15,000
Vice President 1997 92,460 --
1996 66,500 30,000
</TABLE>
The following table shows the aggregate number of options/SARs
exercised and the value of unexercised in-the-money options/SARs at the end of
1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Securities Underlying
Shares Options/SARs at Year End
Acquired Value ------------------------------
Name on Exercise Realized Exercisable Unexercisable
- ---- ----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Kyle J. Doyel, President and Chief -- -- 43,334 11,000
Executive Officer
Michael L. Bixenman, Chairman of the -- -- 40,000 9,333
Board and Vice President
Thomas M. Forsythe, Vice President, -- -- 116,667 18,666
Treasurer and CAO
Thomas J. Herrmann, Vice President and -- -- 30,000 15,000
Secretary
</TABLE>
7
<PAGE> 11
EMPLOYMENT AGREEMENTS
Kyle J. Doyel serves as President and Chief Executive Officer and each
of Michael L. Bixenman and Thomas M. Forsythe serve as Vice Presidents pursuant
to Employment Agreements dated January 1, 1995. Thomas J. Herrmann serves as
Vice President pursuant to an Employment Agreement dated January 1, 1997. Each
Employment Agreement provides for an initial term of one year and thereafter
renews automatically for successive one-year periods unless terminated by 60
days notice by either party prior to the end of an existing one-year period.
In the event that more than 20% of the Common Stock is acquired by a
person or entity (other than an underwriter) which did not own or control shares
of the Common Stock as of January 1, 1995, such acquisitions result in a change
in control of the Company, and the Company terminates their Employment
Agreements, then for a period of two years after such termination, Messrs.
Doyel, Bixenman, Forsythe and Herrmann are entitled to receive semi-monthly
severance payments equal to salary payments that otherwise would have been paid
pursuant to the Employment Agreements.
The Employment Agreements contain covenants not to compete and
confidentiality agreements during the period of the Employment Agreements and
for a period of two years after termination. Messrs. Doyel, Bixenman, Forsythe
and Herrmann have agreed to salary deferral in the event the Company determines
it does not have the necessary funds to pay the full amounts of their salaries.
If their salaries are deferred, they are entitled to interest on the deferred
amounts at a rate of 12% per annum, compounded monthly.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits a company's ability to take a deduction for federal tax purposes
for certain compensation paid to its executive officers. The Company currently
expects that all compensation payable to executive officers during 1998 will be
deductible by the Company for federal income tax purposes. The Compensation
Committee's policy with respect to compensation to be paid to executive officers
is to structure compensation payments to executive officers so as to be
deductible under Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1998, the Compensation Committee was composed of Messrs. Doyel,
Gordon, and Lofgreen. Mr. Doyel is the President and Chief Executive Officer of
the Company. Messrs. Gordon and Lofgreen are not employed by the Company. During
1998, the Compensation Committee recommended salary adjustments for the
executive officers to levels competitive with similar positions in the chemical
industry.
8
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following Stock Performance Graph compares the cumulative total
shareholder return on the Common Stock from the date the Company began trading
in a public market (August 4, 1995) through December 31, 1998 with the
cumulative total return of the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") Stock Market - U.S. Index for the same
period. The stock performance graph assumes an investment of $100 of August 4,
1995 in the Company's Common Stock Units as available at the initial public
offering. Each Unit consisted of three shares of the Common Stock and three
Redeemable Common Stock Warrants. The Units split as of August 23, 1995 and the
Common Stock and the Redeemable Common Stock Warrants each are now traded
separately.
COMPARISON OF CUMULATIVE TOTAL RETURN
KYZEN CORPORATION AND NASDAQ STOCK MARKET - U.S. INDEX
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
8/95 11/95 2/96 5/96 8/96 11/96 2/97 5/97 8/97 11/97 2/98 5/98 8/98 11/98
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kyzen 100 88 107 117 117 86 78 55 50 65 48 48 42 30
- ---------------------------------------------------------------------------------------------------------------------------
Nasdaq 100 104 108 123 113 128 129 138 157 159 173 193 184 191
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 13
PROPOSAL 2:
APPROVAL OF AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION
GENERAL
The Board of Directors proposes to amend and restate the Utah Articles
in substantially the form of the Articles of Amendment and Restatement set forth
in Appendix A hereto (the "Amended Utah Articles"). The Amended Utah Articles
will consolidate all previous amendments to the Utah Articles, eliminate certain
provisions no longer necessary, restate the purpose of the Company, renumber and
reorder sections and effect certain other general changes to the Utah Articles.
The Board of Directors is also recommending certain new provisions that
are designed to make changing control or acquiring the Company more time
consuming and therefore reduce the vulnerability of the Company to unfair or
coercive takeover attempts. These provisions are designed to help assure the
continuity and stability of the Company's business strategies and policies, and
to encourage persons seeking to acquire control of the Company to initiate such
an acquisition through arms-length negotiations with the management and Board of
Directors of the Company, who would then be in a position to negotiate a
transaction which is fair to all shareholders.
Nevertheless, the proposed amendments could have the effect of
discouraging a third party from attempting to obtain control of the Company,
even though such an attempt might be beneficial to the Company and its
shareholders and could, therefore, increase the likelihood that incumbent
directors will retain their positions. In addition, the proposed amendments may
discourage accumulations of large blocks of the Company's stock and thereby
reduce resulting temporary fluctuations in the market price of such stock.
Accordingly, shareholders could be deprived of certain opportunities to sell
their shares at a temporarily higher market price.
This recommendation is not in direct response to any offer made to
management or the Board of Directors in connection with a specific effort to
accumulate the Company's securities or to obtain control of the Company by means
of a merger, tender offer, solicitation in opposition to management or
otherwise. Moreover, management continuity or stability has never been a problem
for the Company. The Company has been made aware, however, that a large
shareholder has been approached by a third party interested in buying his
shares, which could indicate that a hostile takeover is being contemplated by
that third party. Although changes of control of the Board of Directors or the
management of the Company without prior consultation with the incumbent Board of
Directors or management, respectively, may not necessarily be detrimental, and
could be beneficial, to the Company and its shareholders, in view of the current
environment with increasing hostile takeover attempts facing public companies,
the Board of Directors believes that it is prudent and in the interest of
shareholders generally to provide the advantages that will result from the
adoption of the proposed amendments.
The information below under the heading "Comparison of the Amended Utah
Articles to the Utah Articles" sets forth the material differences between the
Amended Utah Articles and the Utah Articles. In the event that the proposed
amendments to the Utah Articles are not approved, the Company will continue to
operate under the Utah Articles. Copies of the Utah Articles are available for
inspection at the principal executive offices of the Company and will be sent to
a shareholder upon request.
APPROVAL REQUIRED FOR AMENDMENT
A majority of the votes entitled to be cast on this proposal is
required for approval of the amendment and restatement of the Utah Articles.
Shareholders of the Company have no dissenters' rights of appraisal with respect
to this proposal to amend and restate the Utah Articles. Because a
10
<PAGE> 14
majority of all the votes entitled to be cast on the proposal is required, an
abstention from voting or a broker non-vote on this proposal will have the same
effect as a vote against this proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that the proposal to amend and restate
the Utah Articles will provide needed flexibility in the Company's operations as
a public company that is not available under the Utah Articles, which were
adopted before the Company's initial public offering. Accordingly, the Board of
Directors believes that amending and restating the Utah Articles is in the best
interest of the Company and its shareholders and therefore recommends that
shareholders vote FOR approval of the proposal. A vote FOR the proposal to amend
and restate the Utah Articles will constitute approval of the Articles of
Amendment and Restatement in substantially the form set forth in Appendix A
hereto.
COMPARISON OF THE AMENDED UTAH ARTICLES TO THE UTAH ARTICLES
The following comparison of the Amended Utah Articles to the Utah
Articles does not purport to be complete and is subject to and qualified in its
entirety by reference to the Form of Articles of Amendment and Restatement, a
copy of which is attached as Appendix A to this Proxy Statement.
CAPITALIZATION OF THE COMPANY. The Amended Utah Articles provide for
capitalization of 40,000,000 authorized shares of common stock and 10,000,000
authorized shares of preferred stock, $.01 par value per share (the "Preferred
Stock"). The Utah Articles provide for capitalization of 32,500,000 authorized
shares of common stock and 10,000,000 authorized shares of Preferred Stock.
The Amended Utah Articles authorize a single class of common stock. The
Utah Articles divide the common stock into three (3) classes: Class A common
stock, Class B redeemable common stock and Class C redeemable common stock. The
Utah Articles authorize the Company to issue 30,000,000 shares of Class A common
stock, 1,500,000 shares of Class B redeemable common stock, and 1,000,000 shares
of Class C common stock. Currently, no shares of Class B redeemable common stock
and no shares of Class C redeemable common stock are outstanding
The Amended Utah Articles, like the Utah Articles, provide that the
authorized but unissued shares of the common stock and the Preferred Stock of
the Company will be available for issue from time to time without further action
or authorization by the shareholders (except as required by law or by the rules
of any applicable stock exchange) for such corporate purposes as may be
determined by the Board of Directors. The terms of any Preferred Stock to be
authorized, including dividend rates, conversion prices, voting rights,
redemption prices, and similar matters, will be determined by the Board of
Directors.
SHAREHOLDER VOTING RIGHTS. The Amended Utah Articles and the Utah
Articles both provide that, except as otherwise provided therein or by law, each
outstanding share of common stock is entitled to one vote on each matter voted
on by the Company's shareholders. All references to classes of common stock are
deleted in the Amended Utah Articles. Neither the Amended Utah Articles nor the
Utah Articles provide the right to cumulate votes for the election of directors.
STAGGERED TERMS FOR DIRECTORS. By dividing the directors into two or
three groups, the directors on a staggered board are elected for terms of two or
three years after the initial staggered terms expire. Consequently, only certain
directors' terms expire at each annual meeting. The Amended Utah Articles and
the Utah Bylaws divide the Board of Directors into three (3) classes such that
the terms of approximately one-third (1/3) of the directors expire at each
annual meeting.
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REMOVAL OF DIRECTORS. The Amended Utah Articles provide that a director
may be removed with or without cause by vote of the holders of at least
sixty-seven percent (67%) of the shares of the common stock entitled to vote.
The Utah Bylaws provide that directors may be removed with or without cause by
the shareholders if the number of votes cast to remove the director exceeds the
number of votes cast not to remove the director. The Utah Articles do not
contain a procedure for removal of directors.
VACANCIES ON THE BOARD OF DIRECTORS. The Amended Utah Articles provide
that vacancies on the Board of Directors may be filled by the affirmative vote
of a majority of the remaining directors then in office, even if less than a
quorum, or by a sole remaining director. Under the Amended Utah Articles,
shareholders do not have the ability to fill a vacancy on the Board of
Directors. Under the Utah Bylaws, however, the shareholders have the power to
fill a vacancy on the Board of Directors. The Utah Articles do not have a
procedure for filling vacancies on the Board of Directors.
CONSIDERATION OF NON-SHAREHOLDER CONSTITUENCIES. The Amended Utah
Articles provide that the Board of Directors may consider the effects of a
proposed merger, exchange, tender offer or significant disposition of assets on
the Company's employees, customers, suppliers and the communities in which it
operates. The Utah Articles do not contain such a provision.
AMENDMENTS TO ARTICLES. The Amended Utah Articles provide that the
Board of Directors reserves the right to amend, alter, change or repeal any
provision of the Amended Utah Articles and that the affirmative vote of the
holders of at least sixty-seven percent (67%) of the voting shares of the
Company, voting together as a single class, will be required to repeal, amend or
adopt any provision inconsistent with the provisions in the Amended Utah
Articles pertaining to the Board of Directors (including classification and
removal of the Board of Directors), limitation on directors' liability,
indemnification, consideration of non-shareholder constituencies and amendments.
The Utah Articles do not contain a provision pertaining to amendment, but the
URBCA permits the Board of Directors to make certain amendments without
shareholder approval and otherwise permits the Board of Directors to propose
amendments to shareholders, who generally must approve the proposed amendments
by a majority of the votes entitled to be cast on the amendment.
AMENDMENTS TO BYLAWS. The Amended Utah Articles provide that the
affirmative vote of the holders of at least sixty-seven percent (67%) of the
voting power of the Company, voting together as a single class, is required to
repeal, amend or adopt certain provisions inconsistent with the Amended Utah
Bylaws. The Utah Articles do not have a procedure for repealing, amending or
adopting provisions inconsistent with the Utah Bylaws, but the URBCA permits the
Board of Directors to make certain amendments without shareholder approval and
also permits the shareholders to make certain amendments by shareholder
approval.
PREEMPTIVE RIGHTS. Neither the Amended Utah Articles nor the Utah
Articles provide any preemptive rights.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Amended Utah Articles
require, subject to certain limitations, the Company to indemnify, and upon
request advance expenses to, officers and directors of the Company. The Amended
Utah Articles provide that the Company shall not indemnify officers and
directors under the following circumstances: (i) proceedings by the Company
against an officer or director, (ii) liability of the officer or director is
established for either breach of duty of loyalty or acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of the
law, or (iii) unlawful distributions. The Utah Articles require indemnification
of, and permit the advancement of expenses to, any current or former director,
officer, employee or agent of the Company, or any person who is or was serving
at the Company's request as a director, officer, employee or agent of another
entity, and who was or is a party to any threatened, pending or completed action
or suit if such person acted in good faith and in a manner reasonably believed
to be
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in the best interest of or not opposed to the Company's best interest. If such
person is adjudged liable to the Company, there can be no indemnification unless
the court determines in view of all the circumstances of the case that such
person is entitled to indemnification. Indemnification can be made only if the
applicable standard of conduct is met, which determination must be made by a
majority vote of a quorum of the Board of Directors or the shareholders. The
indemnification and advancement of expenses provided for in the Utah Articles
are not exclusive of any other rights the indemnitees may have under the
Company's Bylaws, by agreement, by vote of the shareholders or disinterested
directors or otherwise.
LIMITATION OF LIABILITY. The Amended Utah Articles provide that the
liability of directors of the Company to shareholders for money damages for
breach of fiduciary duty will be eliminated except for (i) a breach of the
director's duty of loyalty to the Company or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, or (iii) unlawful distributions to shareholders of the
Company. The Utah Articles additionally eliminate such liability for
transactions from which a director derives an improper personal benefit.
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PROPOSAL 3:
APPROVAL OF AMENDMENTS TO BYLAWS
GENERAL
The Board of Directors proposes to amend and restate the Utah Bylaws in
substantially the form of the Amended and Restated Bylaws set forth in Appendix
B hereto (the "Amended Utah Bylaws"). The Amended Utah Bylaws will consolidate
all previous amendments to the Utah Bylaws, eliminate certain unnecessary
provisions covered by applicable law, renumber and reorder sections and effect
certain other general changes to the Utah Bylaws.
The effect of the material amendments to the Utah Bylaws are described
below under the heading "Comparison of the Amended Utah Bylaws to the Utah
Bylaws." In the event that the proposed amendment and restatement of the Utah
Bylaws are not approved, the Company will continue to operate under the Utah
Bylaws. Copies of the Utah Bylaws are available for inspection at the principal
executive offices of the Company and will be sent to a shareholder upon request.
APPROVAL REQUIRED FOR AMENDMENT
Approval of the amendment and restatement of the Utah Bylaws requires
the votes cast in favor of the proposal to exceed the votes cast opposing the
proposal, if a quorum exists. Shareholders of the Company have no dissenters'
rights of appraisal with respect to this proposal to amend and restate the Utah
Bylaws.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that the proposal to amend and restate
the Utah Bylaws will provide needed flexibility in the Company's operations as a
public company that is not available under the Utah Bylaws, which were adopted
before the Company's initial public offering. Accordingly, the Board of
Directors believes that amending and restating the Utah Bylaws is in the best
interest of the Company and its shareholders and therefore recommends that
shareholders vote FOR approval of the proposal. A vote FOR the proposal to amend
and restate the Utah Bylaws will constitute approval of the Amended Utah Bylaws
in substantially the form set forth in Appendix B hereto.
COMPARISON OF THE AMENDED UTAH BYLAWS TO THE UTAH BYLAWS
The following comparison of the Amended Utah Bylaws to the Utah Bylaws
does not purport to be complete and is subject to and qualified in its entirety
by reference to the Form of Amended and Restated Utah Bylaws, a copy of which is
attached as Appendix B to this Proxy Statement.
ADVANCE NOTICE FOR SHAREHOLDER BUSINESS AND NOMINATIONS. The Amended
Utah Bylaws generally provide that for a shareholder to bring nominations of
persons for election to the Board of Directors or other business before an
annual meeting of shareholders, the shareholder must give written notice to the
Company Secretary between 120 and 150 days prior to the anniversary of the date
on which the Company first mailed its proxy statement to shareholders in
connection with the prior year's annual meeting of shareholders. The Utah Bylaws
do not have any provisions for shareholders to bring nominations for the Board
of Directors or other business before an annual meeting. This provision could
have the effect of delaying, deferring or preventing a transaction or a change
in control of the Company that might result in a premium price or otherwise be
in the best interest of the Company.
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REMOVAL OF DIRECTORS. The Amended Utah Bylaws do not contain a
provision relating to removal of directors by shareholders. For a discussion of
the Board of Directors' recommendation regarding removal of directors, see the
discussion under "Proposal 2: Comparison of the Amended Utah Articles to the
Utah Articles -- Removal of Directors." The Utah Bylaws provide that directors
may be removed with or without cause by the shareholders if the number of votes
cast to remove the director exceeds the number of votes cast not to remove the
director.
VACANCIES ON THE BOARD OF DIRECTORS. Under the Amended Utah Bylaws,
shareholders do not have the ability to fill a vacancy on the Board of
Directors. For a discussion of the Board of Directors' recommendation regarding
vacancies of the Board of Directors, see "Proposal 2: Comparison of the Amended
Utah Articles to the Utah Articles -- Vacancies on the Board of Directors."
Under the Utah Bylaws, however, the shareholders have the power to fill a
vacancy on the Board of Directors.
STAGGERED TERMS OF DIRECTORS. The Amended Utah Bylaws do not contain a
provision relating to staggered terms of the Board of Directors. For a
discussion of the Board of Directors' recommendation regarding staggered terms
for directors, see the discussion under "Proposal 2: Comparison of the Amended
Utah Articles to the Utah Articles -- Approval of Articles of Amendment and
Restatement." The Utah Bylaws divide the Board of Directors into three (3)
classes such that the terms of approximately one-third (1/3) of the directors
expire at each annual meeting.
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PROPOSAL 4:
APPROVAL OF THE REINCORPORATION OF THE COMPANY
GENERAL
The Board of Directors proposes to change the Company's state of
incorporation from Utah to Tennessee (the "Reincorporation"). The Company's
predecessor, Organic Chemical Development Corporation, was originally
incorporated in Utah on March 9, 1990. For a number of years, however, the
Company's principal offices, headquarters and the majority of its employees have
all been located in Nashville, Tennessee. The Company has no physical plant or
employees in Utah, and does not conduct substantial operations from or within
Utah. The Company's Board of Directors believes that a change in the Company's
state of incorporation from Utah to Tennessee will provide flexibility and
efficiencies for both the management and business of the Company, and will
reduce certain administrative burdens resulting from being incorporated under
Utah law but having no significant operations located in Utah.
In addition the Reincorporation will effect certain other changes as a
result of the differences between the Tennessee Business Corporation Act (the
"TBCA") and the URBCA. A discussion of certain of the material changes that will
be effected if the Reincorporation is approved are described below under the
heading "Comparison of Rights of Shareholders of the Tennessee Company to
Shareholders of the Company." Certain of these changes could have the effect of
discouraging offers to acquire the Company or delaying, deferring or preventing
a transaction or a change in control of the Company that might result in a
premium price or otherwise be in the best interest of the Company. See
"Comparison of Rights of Shareholders of the Tennessee Company to Shareholders
of the Company -- Investor Protection Statute, -- Control Share Acquisition
Statute, -- Business Combination Statute and -- Greenmail Statute."
In the event that the Reincorporation is not approved, the Company will
continue to operate as a Utah Corporation under the URBCA and will continue to
maintain its principal offices, headquarters and the majority of its operations
in Tennessee.
MERGER OF THE COMPANY INTO A NEWLY-FORMED TENNESSEE CORPORATION
The Board of Directors proposes to accomplish the Reincorporation by
merging the Company into a newly-formed and wholly-owned subsidiary of the
Company, Kyzen Acquisition Corporation, a Tennessee corporation (the "Tennessee
Company"), pursuant to a Plan of Merger, in substantially the form set forth in
Appendix C to this Proxy Statement (the "Merger"). The Tennessee Company has
been incorporated in Tennessee specifically for the purpose of implementing the
Reincorporation and has conducted no business and has no material assets or
liabilities. After the Merger, the Company will cease to exist and the Tennessee
Company will operate the business of the Company under the name Kyzen
Corporation. The Tennessee Company's principal office will be located at 430
Harding Industrial Drive, Nashville, Tennessee 37211. The Reincorporation will
not result in any change in the Company's management, business, assets or
liabilities and will not result in any relocation of management or other
employees.
APPROVAL REQUIRED FOR REINCORPORATION
The affirmative vote of a majority of all the votes entitled to be cast
on this proposal is required for approval of the Reincorporation. Because a
majority of all the votes entitled to be cast on this proposal is required, an
abstention from voting or a broker non-vote on this proposal will have the same
effect as a vote against this proposal.
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DISSENTERS' RIGHTS
Shareholders of the Company will have no dissenters' rights of
appraisal with respect to the Reincorporation proposal. The URBCA provides that
shareholders of a Utah corporation do not have dissenters' rights for
consummation of a plan of merger where the shareholders will receive shares of
the surviving corporation for their shares and where the original shares were
listed on a national securities exchange registered under the Exchange Act or on
the Nasdaq National Market at the time of the record date for the meeting at
which the shareholders vote. Because each outstanding share of the Company's
common stock will automatically be converted into one share of the Tennessee
Company's common stock, $.0.01 par value per share (the "Tennessee Common
Stock") and the Company's common stock is listed on the Boston Stock Exchange on
February 4, 1999, no dissenters' rights will be available to the Company's
shareholders with respect to the Reincorporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that the Reincorporation proposal is in
the best interest of the Company and its shareholders and therefore recommends
that shareholders vote FOR approval of the proposal. A vote FOR the
Reincorporation proposal will constitute approval of the change in the Company's
state of incorporation through the Merger set forth in the Plan of Merger in
substantially the form set forth in Appendix C hereto.
CERTAIN CONSEQUENCES OF THE MERGER
The following discussion summarizes certain terms of the Plan of the
Merger and certain consequences of the Merger. This description is qualified in
its entirety by its reference to the Form of Plan of Merger, a copy of which is
attached to this Proxy Statement as Appendix C.
EFFECTIVE TIME. The Merger will be effective on the later of the filing
of Articles of Merger with the Secretary of State of Tennessee and the filing of
Articles of Merger with the Secretary of State of Utah, which filings are
anticipated to be made as soon as practicable after the Reincorporation proposal
is approved by the shareholders of the Company and the Company has taken all
necessary steps to comply with applicable laws, including federal and state
securities laws (the "Effective Time"). At the Effective Time, the separate
corporate existence of the Company will cease and shareholders of the Company
will become shareholders of the Tennessee Company. The Plan of Merger may,
however, be abandoned at any time prior to the completion of the Merger in the
sole discretion of the Company's Board of Directors.
MANAGEMENT AFTER THE MERGER. At the Effective Time, the current
officers of the Company will become the officers of the Tennessee Company and
the Board of Directors of the Company will become the Board of Directors of the
Tennessee Company (the "Tennessee Board of Directors"). The Tennessee Board of
Directors will continue to hold office as directors of the Tennessee Company for
the same terms for which they would otherwise have served as directors of the
Company.
ARTICLES OF INCORPORATION AND BYLAWS. After the Reincorporation, the
substantive terms of the Charter and Bylaws of the Tennessee Company will be the
same as the substantive terms of the Articles of Incorporation and Bylaws of the
Company which are in effect immediately prior to the Reincorporation; provided,
however, certain changes will be made to these documents as a result of
differences between the TBCA and the URBCA. A discussion of certain of the
material changes that will be effected if the Reincorporation is approved are
described below under the heading "Comparison of Rights of Shareholders of the
Tennessee Company to Shareholders of the Company."
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CONVERSION OF COMMON STOCK. As a result of the Reincorporation, each
outstanding share of Common Stock will automatically be converted into one share
of the Tennessee Common Stock. There will be no change in the percentage of
beneficial ownership of each present shareholder of the Common Stock as a result
of the Reincorporation. There will be various changes in the rights of the
shareholders as a result of the Reincorporation (see "Comparison of Rights of
Shareholders of the Tennessee Company to Shareholders of the Company"). The
Tennessee Common Stock will continue to be listed, without interruption, on
Nasdaq under the same symbol ("KYZN") as the Company's Common Stock prior to the
Merger.
EACH OUTSTANDING CERTIFICATE CURRENTLY REPRESENTING SHARES OF THE
COMPANY'S COMMON STOCK WILL, AFTER THE MERGER, REPRESENT THE SAME NUMBER OF
SHARES OF TENNESSEE COMMON STOCK. ACCORDINGLY, IT WILL NOT BE NECESSARY FOR
SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR EXISTING COMMON STOCK CERTIFICATES
FOR TENNESSEE COMMON STOCK CERTIFICATES.
CONVERSION OF WARRANTS. As a result of the Reincorporation, each
outstanding warrant to purchase one share of Common Stock will automatically be
converted into a warrant to purchase one share of Tennessee Common Stock. There
will be no change in the percentage of beneficial ownership of each present
holder of a warrant to purchase the Common Stock as a result of the
Reincorporation. The Company's outstanding warrants will otherwise be unaffected
by the Reincorporation. The Tennessee Company's warrants will continue to be
listed, without interruption, on Nasdaq under the same symbol ("KYZNW") as the
Company's warrants prior to the Merger.
EACH OUTSTANDING WARRANT CERTIFICATE CURRENTLY REPRESENTING THE RIGHT
TO ACQUIRE SHARES OF THE COMPANY'S COMMON STOCK WILL, AFTER THE MERGER,
REPRESENT THE SAME NUMBER OF WARRANTS TO ACQUIRE SHARES OF TENNESSEE COMMON
STOCK. ACCORDINGLY, IT WILL NOT BE NECESSARY FOR WARRANT HOLDERS OF THE COMPANY
TO EXCHANGE THEIR EXISTING WARRANT CERTIFICATES FOR WARRANT CERTIFICATES OF THE
TENNESSEE COMPANY.
CONVERSION OF PREFERRED SHARE PURCHASE RIGHTS. As a result of the
Reincorporation, each preferred share purchase right issued with each share of
Common Stock and representing the right to purchase 1/100th of a share of the
Company's Series A Junior Participating Preferred Stock will automatically be
converted into one preferred share purchase right representing the right to
purchase 1/100th of a share of the Tennessee Company's Series A Junior
Participating Preferred Stock, which will have identical rights and preferences
to the Company's Series A Junior Participating Preferred Stock.
CAPITALIZATION OF THE TENNESSEE COMPANY. After the Reincorporation, the
authorized capitalization of the Tennessee Company will be identical to the
authorized capitalization of the Company immediately before the Reincorporation.
The common stock is divided into three (3) classes: class A common stock, class
B redeemable common stock and class C redeemable common stock. The Utah Articles
authorize the Company to issue 30,000,000 shares of class A common stock,
1,500,000 shares of class B redeemable common stock, and 1,000,000 shares of
class C common stock. After the Reincorporation, the Tennessee Company will have
only one (1) class of common stock consisting of 32,500,000 authorized shares of
Tennessee Common Stock.
As is the case with the Company, the authorized but unissued shares of
the Tennessee Common Stock and the preferred stock of the Tennessee Company will
be available for issue from time to time without further action or authorization
by the shareholders (except as required by law or by the rules of any applicable
stock exchange) for such corporate purposes as may be determined by the Board of
Directors. In this regard, the terms of any preferred stock to be authorized,
including dividend rates, conversion prices, voting rights, redemption prices,
and similar matters, will be determined by the Tennessee Board of Directors.
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EMPLOYEE BENEFIT PLANS. Approval of the Reincorporation will constitute
approval of the adoption and assumption of each of the Company's employee
benefit plans, including the 1994 Stock Option Plan, as amended (the "Stock
Option Plan") and the Kyzen Corporation 401(k) Plan by the Tennessee Company. In
addition to the assumption by the Tennessee Company of all options outstanding
under the Stock Option Plan, any and all other outstanding options and other
rights to acquire shares of Common Stock will be converted into options or
rights to acquire shares of Tennessee Common Stock.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the
material U.S. federal income tax consequences of the Reincorporation to Company
shareholders who hold Common Stock as a capital asset. The summary is based on
the Internal Revenue Code (the "Code"), Treasury regulations thereunder, and
administrative rulings and court decisions in effect as of the date hereof, all
of which are subject to change at any time, possibly with retroactive effect.
This summary is not a complete description of all of the consequences of the
Reincorporation and, in particular, may not address U.S. federal income tax
considerations applicable to shareholders subject to special treatment under
U.S. federal income tax law (such as non-U.S. persons, financial institutions,
dealers in securities, insurance companies, tax-exempt entities, holders who
acquired Common Stock pursuant to the exercise of an employee stock option or
right or otherwise as compensation, and holders who hold Common Stock as part of
a hedge, straddle or conversion transaction). In addition, no information is
provided herein with respect to the tax consequences of the Reincorporation
under applicable foreign, state or local laws.
The Reincorporation will be treated as a reorganization within the
meaning of Section 368(a) of the Code and, accordingly:
1. No gain or loss will be recognized by the Company or the
Tennessee Company as a result of the Reincorporation;
2. No gain or loss will be recognized by the shareholders of the
Company upon the receipt of Tennessee Common Stock pursuant to
the Reincorporation;
3. Each former holder of shares of Common Stock will have the
same aggregate tax basis in the Tennessee Common Stock
received by such holder pursuant to the Reincorporation as
such holder has in the shares of the Common Stock at the
Effective Time; and
4. Each shareholder's holding period with respect to the
Tennessee Common Stock will include the period during which
such holder held the shares of Common Stock, provided the
latter were held by such holder as a capital asset at the
Effective Time.
The Company does not intend to request a ruling from the Internal
Revenue Service (the "IRS") with respect to the federal income tax consequences
of the Reincorporation. Accordingly, there can be no assurance that the IRS will
not challenge such conclusions or that a court will not sustain such challenge.
COMPANY SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE
TAX CONSEQUENCES OF THE REINCORPORATION TO THEM, INCLUDING THE EFFECTS OF U.S.
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND OF POTENTIAL CHANGES TO
APPLICABLE TAX LAW.
SHAREHOLDERS' RIGHTS. Certain differences in shareholder rights exist
under the URBCA and the TBCA and other applicable Tennessee laws. For example,
the TBCA provides shareholders with certain protections against a hostile
takeover that the URBCA does not provide. These provisions could have the effect
of discouraging offers to acquire the Tennessee Company or delaying, deferring
or preventing a transaction or a change in control of the Tennessee Company that
might result in a premium price or otherwise be in the best interest of the
Tennessee Company. See "Comparison of Rights of Shareholders of the Tennessee
Company to Shareholders of the Company"
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for a more complete discussion of these and other differences between the rights
of shareholders under the TBCA and the URBCA.
ACCOUNTING TREATMENT OF THE MERGER. For financial reporting purposes,
as well as for federal income tax purposes, the Tennessee Company will be deemed
to be a continuation of the Company. Accordingly, all assets and liabilities of
the Company will be transferred to the Tennessee Company at their value on the
Company's books at the Effective Time.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF THE TENNESSEE COMPANY TO SHAREHOLDERS OF
THE COMPANY
As a Tennessee corporation, the Tennessee Company is organized as a
corporation under the laws of the State of Tennessee and is governed by the
TBCA, a general corporation statute dealing with a wide variety of matters. The
Company is organized as a corporation under the laws of the State of Utah and is
governed by the URBCA, a general corporation statute covering substantially the
same matters as the TBCA, the Utah Articles and the Utah Bylaws.
The following discussion of the comparative rights of the shareholders
of the Tennessee Company to the shareholders of the Company does not purport to
be complete and is subject to and qualified in its entirety by reference to the
TBCA and the URBCA.
PREEMPTIVE RIGHTS. Under the TBCA and the URBCA, shareholders have no
preemptive rights to acquire unissued shares unless the Charter or Articles of
Incorporation so provide.
DIVIDENDS AND OTHER DISTRIBUTIONS. The TBCA provides the same
limitations on a corporation's ability to make distributions to its shareholders
that the URBCA provides.
STAGGERED TERMS FOR DIRECTORS. Under both the TBCA and the URBCA, a
corporation may provide for staggering the terms of directors by dividing the
total number of directors into two (2) or three (3) groups. Upon the expiration
of the initial staggered terms, directors are elected for terms of two (2) or
three (3) years, as the case may be.
INTERESTED DIRECTOR TRANSACTIONS. Under both the TBCA and the URBCA,
certain conflict of interest transactions in which one or more of a
corporation's directors has an interest are not voidable (in Tennessee) or may
not be enjoined, set aside or give rise to an award of damages or other
sanctions in a proceeding by a shareholder or the corporation (in Utah) solely
because of such interest if certain conditions are met. The TBCA, unlike the
URBCA, also provides such protection for transactions in which an officer has a
conflict of interest. In addition, by providing guidelines for permissible loans
to officers or directors, the TBCA provides shareholders with protection against
improper loans to directors or officers that the URBCA does not provide.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Both the TBCA and the URBCA
require a corporation to indemnify a director who is successful in defending a
proceeding to which a director is a party because he or she is or was a director
of the corporation. Both the TBCA and the URBCA permit a corporation to
indemnify both officers and directors subject to meeting the standard of conduct
provided in the applicable statute.
RIGHTS OF DISSENTING SHAREHOLDERS. Under both the TBCA and the URBCA, a
shareholder is entitled to dissent from, and obtain payment of the fair value of
the shareholder's shares in the event of the consummation of either (i) a plan
of merger, (ii) a plan of share exchange or (iii) the disposition of
substantially all of the corporation's property. The TBCA additionally provides
dissenters' rights for an amendment of the Charter that, under certain
circumstances, materially and adversely affects rights in respect of a
dissenter's shares. Under both the TBCA and the URBCA, with certain exceptions,
a shareholder is not entitled to dissenting rights for shares listed on a
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national securities exchange registered under the Exchange Act, listed with
Nasdaq or held by more than 2,000 shareholders of record.
DISSOLUTION. Under the TBCA, a corporation may be dissolved by the
written consent of its shareholders or if a proposal to dissolve from the board
of directors is approved by the holders of a majority of all the votes entitled
to be cast on that proposal. Under the URBCA, a corporation may only be
dissolved if a proposal to dissolve from the board of directors is approved by
the holders of a majority of all the votes entitled to be cast on the proposal
by each voting group entitled to vote separately on the proposal.
INVESTOR PROTECTION STATUTE. Because the URBCA does not contain an
investor protection statute, the TBCA provides the Tennessee Company with
certain rights in connection with takeover offers by offerors that are not
provided under the URBCA. Among other things, the Tennessee Investor Protection
Act prohibits offerors from making a takeover offer of a Tennessee corporation
if the offeror beneficially owns five percent (5%) or more of the equity
securities of the Tennessee corporation. The offeror may not make a takeover
offer unless it has previously made a public announcement of its intention with
respect to changing or influencing the management or control of the Tennessee
corporation, has made a full, fair and effective disclosure of such intention to
the persons from whom the offeror intends to acquire such securities, and has
filed with the Commissioner of Commerce and Insurance and the Tennessee
corporation a statement of such intention. Additionally, an offeror may not make
a takeover offer involving a Tennessee corporation which is not made to the
holders of record or beneficial owners of the equity securities of the
Tennessee corporation who reside in Tennessee, or which is not made to such
residents on substantially the same terms as the offer is made to those holders
or owners who reside outside of Tennessee.
CONTROL SHARE ACQUISITION STATUTE. Under both the Tennessee Control
Share Acquisition Act (the "TCSAA") and the Utah Control Shares Acquisition Act
(the "UCSAA") a person who acquires "control shares" must obtain approval of a
majority of the shareholders, subject to certain exceptions, in order to vote
the shares that the acquiror acquires. The TCSAA is not applicable to the
Tennessee Company or the Company because neither corporation has elected to be
covered by the TCSAA. No assurance can be given that such an election, which
must be expressed in the form of a Charter or Bylaw provision, will be made. The
UCSAA is not applicable to the Company because, among other things, the Company
does not have its principal place of business, its principal office, or
substantial assets within the State of Utah.
BUSINESS COMBINATION STATUTE. The Tennessee Business Combination Act
(the "Combination Act") provides, among other things, that any corporation to
which the Combination Act applies, including the Tennessee Company, shall not
engage in any "business combination" with an "interested shareholder" for a
period of five years following the date that such shareholder became an
interested shareholder unless prior to such date the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the shareholder becoming an interested shareholder.
Consummation of a business combination that is subject to the five-year
moratorium is permitted after such period if the transaction (i) complies with
all applicable Charter and Bylaw requirements and applicable Tennessee law and
(ii) is approved by at least two-thirds of the outstanding voting stock not
beneficially owned by the interested shareholder, or when the transaction meets
certain fair price criteria. The URBCA does not contain a business combination
statute. Therefore, the TBCA provides the Tennessee Company with certain rights
in connection with business combinations with interested shareholders that are
not provided under the URBCA.
GREENMAIL STATUTE. The Tennessee Greenmail Act prohibits a Tennessee
corporation from purchasing or agreeing to purchase any of its securities at a
price in excess of "market value" from a holder of three percent (3%) or more of
any class of such securities who has beneficially owned such
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securities for less than two (2) years, unless such purchase has been approved
by the affirmative vote of a majority of the outstanding shares of each class of
voting stock issued by the corporation or such corporation makes an offer of at
least equal value per share to all holders of shares of such class. Because the
URBCA does not contain a greenmail statute, the Tennessee Greenmail Act provides
shareholders of the Tennessee Company with certain rights in connection with the
purchase by the Tennessee Company of its own stock at a price in excess of fair
market value that are not afforded to shareholders of the Company under the
URBCA.
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GENERAL INFORMATION
INDEPENDENT AUDITORS
The Company's financial statements for the year ended December 31, 1998
were audited by PricewaterhouseCoopers LLP, which has audited the Company's
books and records since its inception in 1990.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting, and, while they do not plan to make a statement
at the meeting, such representatives will be available to respond to appropriate
questions from shareholders in attendance.
SHAREHOLDER PROPOSALS FOR THE ANNUAL MEETING OF SHAREHOLDERS IN 2000
All shareholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to the Corporate Secretary, Kyzen
Corporation, 430 Harding Industrial Drive, Nashville, Tennessee 37211 prior to
November 10, 1999.
Additionally, the proxy statement for next year's annual meeting will
confer discretionary authority to vote on any shareholder proposal which the
Company does not know about before January 24, 2000.
COUNTING OF VOTES
All matters specified in this Proxy Statement that are to be voted on
at the Annual Meeting will be by written ballot. Inspectors of election will be
appointed to, among other things, determine the number of shares outstanding,
the shares represented at the Annual Meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, to receive votes of ballots, to
hear and determine all challenges and questions in any way arising in connection
with the right to vote, to count and tabulate all votes and to determine the
result. Each item presented herein to be voted on at the Annual Meeting must be
approved by the affirmative vote of the holders of the number of shares
described under each such item. The inspectors of election will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, do not constitute a vote "for" or "against" any matter and
thus will be disregarded in the calculation of "votes cast."
Inspectors of election will treat shares referred to as "broker
non-votes" as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the broker has physically indicated on the proxy that it
does not have discretionary authority to vote, however, those shares will be
treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters).
MISCELLANEOUS
The Company will bear the cost of printing, mailing and other expenses
in connection with this solicitation of proxies and will also reimburse brokers
and other persons holding shares in their names or in the names of nominees for
their expenses in forwarding this proxy material to the beneficial owners of
such shares. Certain of the directors, officers and employees of the Company
may, without any additional compensation, solicit proxies in person or by
telephone.
Management of the Company is not aware of any matters other than those
described above which may be presented for action at the Annual Meeting. If any
other matters properly come before the Annual Meeting, it is intended that the
proxies will be voted with respect thereto in accordance
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with the judgment of the person or persons voting such proxies subject to the
direction of the Board of Directors.
A copy of the Company's 1998 Annual Report to Shareholders is being
mailed with this Proxy Statement.
Copies of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998 (without exhibits), as filed with the Securities and Exchange
Commission, are available to shareholders free of charge by writing to: Kyle J.
Doyel, Investor Relations Department, Kyzen Corporation, 430 Harding Industrial
Drive, Nashville, Tennessee 37211.
By order of the Board of Directors,
/s/ Thomas J. Herrmann
Thomas J. Herrmann
Corporate Secretary
Nashville, Tennessee
March 12, 1999
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APPENDIX A
FORM OF
ARTICLES OF AMENDMENT AND RESTATEMENT
TO THE ARTICLES OF INCORPORATION
OF
KYZEN CORPORATION
Kyzen Corporation, a corporation organized and existing under the laws
of the State of Utah (the "Corporation"), does hereby certify as follows:
(a) These Articles of Amendment and Restatement were duly
adopted and approved by the shareholders of the Corporation in accordance with
the provisions of Sections 16-10a-1006 and 16-10a-1007 of the Utah Revised
Business Corporation Act (the "Act").
(b) There were 5,006,781 shares of Class A Common Stock of the
Corporation outstanding as of February 4, 1999. There are no voting groups other
than the holders of Class A Common Stock. _________ shares were represented at
the meeting to vote on amendments to the Articles of Incorporation. ________
votes were cast in favor of amending and restating the Articles of
Incorporation, and ________ votes were cast against amending and restating the
Articles of Incorporation.
(c) The text of the Corporation's Articles of Incorporation
are hereby amended and restated to read in their entirety as follows:
1. Name. The name of the corporation is Kyzen Corporation.
2. Registered Office and Registered Agent. The address of the
registered office of the Corporation in Utah is 6525 W. 10760 N., Highland, UT
84003. The Corporation's registered agent at the registered office is Larry
Lofgreen.
3. Principal Office. The address of the principal office of the
Corporation is 430 Harding Industrial Drive, Nashville, Davidson County,
Tennessee 37211.
4. Purpose. The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the Act.
5. Authorized Shares.
(a) The Corporation shall have authority, acting by its Board
of Directors, to issue not more than 50,000,000 shares of capital stock, of
which 40,000,000 shares shall be shares of Common Stock, $.01 par value ("Common
Stock"), and 10,000,000 shall be shares of Preferred Stock, $.01 par value
("Preferred Stock").
(b) All shares of Common Stock shall be one and the same class
and when issued shall have equal rights of participation in dividends and assets
of the Corporation and shall be non-assessable. Except as otherwise provided by
law or in these Articles, each outstanding share of Common Stock shall be
entitled to one vote on each matter submitted to a vote of shareholders.
<PAGE> 29
(c) The Board of Directors is hereby authorized to issue the
Preferred Stock from time to time in one or more classes or series, which
Preferred Stock shall be preferred to the Common Stock as to dividends and
distribution of assets of the Corporation on dissolution, as hereinafter
provided, and shall have such distinctive designations as may be stated in the
articles of amendment providing for the issue of such stock adopted by the Board
of Directors. In such articles of amendment providing for the issuance of shares
of each particular class or series, the Board of Directors is hereby expressly
authorized and empowered to fix the number of shares constituting such class or
series and to fix the relative rights and preferences of the shares of the class
or series so established to the full extent allowable by law except insofar as
such rights and preferences are fixed herein. Such authorization in the Board of
Directors shall expressly include, but not be limited to, the authority to fix
and determine the relative rights and preferences of such shares in the
following respects:
(i) The rate of dividend;
(ii) Whether shares can be redeemed or called and, if
so, the redemption or call price and terms and conditions of redemption or call;
(iii) The amount payable upon shares in the event of
voluntary and involuntary liquidation;
(iv) The purchase, retirement or sinking fund
provisions, if any, for the call, redemption or purchase of shares;
(v) The terms and conditions, if any, on which shares
may be converted into Common Stock or any other securities;
(vi) Whether or not shares have voting rights, and
the extent of such voting rights, if any, including the number of votes per
share; and
(vii) Whether or not shares shall be cumulative,
non-cumulative or partially cumulative as to dividends and the dates from which
any cumulative dividends are to accumulate.
All shares of the Preferred Stock shall be of equal
rank and shall be identical, except in respect to the particulars that may be
fixed by the Board of Directors as hereinabove provided in this paragraph and
which may vary among the classes or series. Different classes or series of the
Preferred Stock shall not be construed to constitute different classes of stock
for the purpose of voting by classes, except when such voting by classes is
expressly required by law.
(d) The holders of Preferred Stock are entitled to receive,
when and as declared by the Board of Directors, but only from funds legally
available for the payment of dividends, cash dividends at the annual rate for
each particular class or series as theretofore fixed and determined by the Board
of Directors as hereinbefore authorized, and no more; such dividends to be
payable before any dividend on Common Stock shall be paid or set apart for
payment. Arrearages in the payment of dividends shall not bear interest.
(e) In the event of any dissolution, liquidation or winding up
of the affairs of the Corporation, after payment or provision for payment of the
debts and other liabilities of the Corporation, the holders of each class or
series of Preferred Stock shall be entitled to receive, out of the net assets of
the Corporation, an amount in cash for each share equal to the amount fixed and
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<PAGE> 30
determined by the Board of Directors in any articles of amendment providing for
the issue of any particular class or series of Preferred Stock, plus an amount
equal to any dividends payable to such holder which are then unpaid, either
under the provisions of the articles of amendment providing for the issue of
such class or series of Preferred Stock or by declaration of the Board of
Directors, on each such share up to the date fixed for distribution, and no
more, before any distribution shall be made to the holders of Common Stock.
Neither the merger or consolidation of the Corporation, nor the sale, lease or
conveyance of all or a part of its assets, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Corporation.
(f) Upon the effective date of these Articles of Amendment and
Restatement, each outstanding share of Class A Common Stock, $.01 par value per
share, shall be reclassified, redesignated and reconstituted into one share of
Common Stock
6. Series A Junior Participating Preferred Stock
(a) Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
(b) Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $.01 per share (the "Common Stock"), of the Corporation, and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
noncash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
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<PAGE> 31
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (A) of
this Section 6(b) immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1
per share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than sixty (60) days prior to the
date fixed for the payment thereof.
(c) Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share
to which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided in this Section 6,
in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth in this Section 6, or as
otherwise provided by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
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<PAGE> 32
(d) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock as provided in Section
6(b) are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 6(d), purchase or otherwise acquire such shares at such time and in
such manner.
(e) Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth in these
Articles of Amendment and Restatement, in any other articles of amendment
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
(f) Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of
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<PAGE> 33
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(g) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(h) No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
(i) Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
(j) Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
7. Board of Directors.
(a) The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors. The number of
directors of the Corporation shall be fixed from time
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<PAGE> 34
to time by resolution adopted by the affirmative vote of a majority of the
entire Board of Directors of the Corporation, except that the minimum number of
directors shall be fixed at no less than three (3). The directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly equal in number as possible, of one-third of the
total number of directors constituting the entire Board of Directors. The terms
of the initial Class I directors of the Corporation shall expire at the annual
meeting of shareholders first occurring following the date that these Articles
of Amendment and Restatement first become effective; the terms of the initial
Class II directors of the Corporation shall expire at the second annual meeting
of shareholders following the date that these Articles of Amendment and
Restatement first become effective; and the terms of the initial Class III
directors of the Corporation shall expire at the third annual meeting of
shareholders following the date that these Articles of Amendment and Restatement
first become effective. At each annual shareholders' meeting held thereafter,
the Directors shall be chosen for a term of three (3) years and until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible. A decrease in the number of Directors
shall not shorten an incumbent Director's term.
(b) Nominations for election to the Board of Directors of the
Corporation at a meeting of shareholders must be made in accordance with the
Bylaws of the Corporation and any applicable law. The chairman of the meeting of
shareholders may, if the facts warrant, determine that a nomination was not made
in accordance with the foregoing procedures, and if the chairman should so
determine, the chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
(c) Any director may be removed with or without cause by a
vote of a majority of the entire Board of Directors or by a vote of the holders
of sixty-seven percent (67%) of the shares of the Corporation entitled to vote,
voting together as a single class.
(d) The Board of Directors may fill any vacancy occurring on
the Board of Directors, including any vacancy resulting from an increase in the
number of Directors or from the resignation or removal of a Director. If the
Directors remaining in office constitute less than a quorum, the Board of
Directors may fill the vacancy by the affirmative vote of a majority of all the
Directors remaining in office. Any director of any class chosen to fill a
vacancy in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his or her term expires
and until such director's successor shall have been elected and qualified.
(e) In furtherance of and not in limitation of the powers
conferred by the Act, the Corporation is expressly authorized, acting upon the
authority of the Board of Directors and without the approval of the
shareholders, to:
(i) Issue shares of any class or series as a share
dividend in respect of shares of the same class or series or any other class or
series;
(ii) Fix or change the number of directors, including
an increase or decrease in the number of directors;
(iii) Determine, establish or modify, in whole or in
part, the preferences, limitations and relative rights of (A) any class or
series of shares before the issuance of any shares of that class or series, or
(B) one or more classes or series within a class or series before the issuance
of
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<PAGE> 35
any shares of that class or series. The Board of Directors is further authorized
to amend these Articles of Amendment and Restatement, without shareholder
action, to set forth such preferences, limitations and relative rights; and
(iv) From time to time establish the information
required from prospective nominees for the Board of Directors. Furthermore, the
Board of Directors may from time to time investigate the eligibility and
qualifications of prospective nominees to hold office if elected.
8. Limitation on Directors' Liability.
(a) A director of the Corporation shall not be personally
liable to the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the Corporation or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, or (iii) unlawful distributions under Section 16-10a-842 of
the Act, as amended from time to time.
(b) If the Act is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Act, as so amended. Any repeal or modification
of the foregoing by the shareholders shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
9. Indemnification.
(a) The Corporation shall indemnify, and upon request shall
advance expenses to, in the manner and to the full extent permitted by law, any
officer or director (or the estate of any such person) who was or is a party to,
or is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, partner, trustee or employee of another
corporation, partnership, joint venture, trust or other enterprise (an
"indemnitee"). The Corporation may, to the full extent permitted by law,
purchase and maintain insurance on behalf of any such person against any
liability which may be asserted against him or her. To the full extent permitted
by law, the indemnification and advances provided for herein shall include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement. The indemnification provided herein shall not be deemed to limit the
right of the Corporation to indemnify any other person for any such expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement to
the full extent permitted by law, both as to action in his official capacity and
as to action in another capacity while holding such office. Notwithstanding the
foregoing, the Corporation shall not indemnify any such indemnitee (i) in any
proceeding by the Corporation against such indemnitee; or (ii) if a judgment or
other final adjudication adverse to the indemnitee establishes his liability for
(A) any breach of the duty of loyalty to the Corporation or its shareholders,
(B) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, or (iii) unlawful distributions under Section
16-10a-842 of the Act.
(b) The rights to indemnification and advancement of expenses
set forth in paragraph 9(a) above are intended to be greater than those which
are otherwise provided for in the Act, are contractual between the Corporation
and the person being indemnified, his heirs, executors and administrators, and,
with respect to paragraph 9(a), are mandatory, notwithstanding a person's
failure to meet the standard of conduct required for permissive indemnification
under the Act, as
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amended from time to time. The rights to indemnification and advancement of
expenses set forth in paragraph 9(a) above are nonexclusive of other similar
rights which may be granted by law, these Articles of Amendment and Restatement,
the Bylaws, a resolution of the Board of Directors or shareholders of the
Corporation, or an agreement with the Corporation, which means of
indemnification and advancement of expenses are hereby specifically authorized.
(c) Any repeal or modification of the provisions of this
paragraph 9, either directly or by the adoption of an inconsistent provision of
these Articles of Amendment and Restatement, shall not adversely affect any
right or protection set forth herein existing in favor of a particular
individual at the time of such repeal or modification. In addition, if an
amendment to the Act limits or restricts in any way the indemnification rights
permitted by law as of the date hereof, such amendment shall apply only to the
extent mandated by law and only to activities of persons subject to
indemnification under this paragraph 9 which occur subsequent to the effective
date of such amendment.
10. Consideration of Non-Shareholder Constituencies. In considering
whether or not to approve, or to recommend that the shareholders approve, any
proposed merger, exchange, tender offer or significant disposition of assets or
to oppose such proposal, the Board of Directors may consider the effect of such
proposed merger, exchange, tender offer or significant disposition of assets on
the Corporation's employees, customers, suppliers and the communities in which
the Corporation and its subsidiaries operate or are located.
11. Amendments to Bylaws. The Board of Directors, without shareholder
approval, is authorized and empowered to amend, alter, change or repeal the
Corporation's Bylaws and adopt new Bylaws by a majority vote of the directors
then in office at any regular or special meeting of the Board of Directors or by
written consent, subject to any specific right under the Act allowing
shareholders of the Corporation to alter or repeal any Bylaws made by the Board
of Directors. Notwithstanding any other provisions of the Corporation's Articles
of Incorporation, the Bylaws or any provision of law which might otherwise
permit a lesser vote or no vote, the shareholders may alter, amend or repeal any
provision of the Bylaws upon the affirmative vote of the holders of at least
sixty-seven percent (67%) of the voting power of the Corporation, voting
together as a single class.
12. Amendments to Articles of Incorporation. The Board of Directors,
without shareholder approval, reserves the right from time to time to amend,
alter, change or repeal any provision contained in these Articles of Amendment
and Restatement in the manner now or hereinafter prescribed by the Act, and all
rights conferred upon shareholders herein are granted subject to this
reservation. Notwithstanding any of the provisions of these Articles of
Amendment and Restatement or the Bylaws of the Corporation (and notwithstanding
the fact that a lesser percentage may be specified by law, these Articles of
Amendment and Restatement or the Bylaws of the Corporation), the affirmative
vote of the holders of at least sixty-seven percent (67%) of the voting power of
the Corporation, voting together as a single class, shall be required to repeal,
or amend or adopt any provision inconsistent with, Sections 7 through 12 herein.
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IN WITNESS WHEREOF, these Articles of Amendment and Restatement are
executed on behalf of the Corporation by its Chief Executive Officer and
attested by its Secretary this _____ day of ___________, 1999.
--------------------------------------------
Chief Executive Officer and President
Attest:
- ---------------------------------
Secretary
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APPENDIX B
FORM OF
BYLAWS
OF
KYZEN CORPORATION
ARTICLE 1
CORPORATE OFFICES
1.01. Name. The name of the corporation is Kyzen Corporation (the
"Corporation"). The Corporation may conduct operations under such other names as
the Board of Directors may designate.
1.02. Offices. The address of the principal office of the Corporation
is 430 Harding Industrial Drive, Nashville, TN 37211. The Corporation may also
have such other offices, including its principal office, at such places as the
Board of Directors may from time to time designate or the business of the
Corporation may require.
ARTICLE 2
SHAREHOLDERS' MEETING
2.01. Annual Meetings. The annual meeting of shareholders shall be held
on a date and time designated by the Board of Directors and, as set forth in the
notice of the meeting, for the purpose of electing Directors and transacting
such other business as may be properly brought before the meeting.
2.02 Special Meetings. Special meetings of shareholders may be called
for any purpose or purposes by the Chairman of the Board, the President, a
majority of the Board of Directors, or by such person or persons as may be
authorized by the Articles of Incorporation or these Bylaws or the Act. A
request for a special meeting shall state the purpose of the meeting and the
matters proposed to be acted on it.
2.03. Notice of Meetings. A written notice of each meeting of
shareholders stating the place, date and time of the meeting, and, in the case
of a special meeting, describing the purpose or purposes for which the meeting
is called, shall be given to each shareholder entitled to notice of such meeting
not less than ten (10) days nor more than sixty (60) days before the date of the
meeting.
2.04. Place of Meetings. Meetings of shareholders shall be held at such
places as may be designated by the Board of Directors and stated in the notice
of meeting.
2.05. Quorum. The holders of shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum exists
with respect to that matter. Unless the Corporation's Articles of Incorporation
or the Act provides otherwise, the holders of a majority of the votes entitled
to be cast on a matter by a voting group constitute a quorum of that voting
group for action on that matter. Once a share is represented for any purpose at
a meeting, the holder is deemed present for quorum purposes for the remainder of
the meeting and for any adjournment of that meeting, unless a new record date is
or must be set for that adjourned meeting.
2.06. Voting. Directors shall be elected by a plurality of the votes
cast by shareholders entitled to vote in the election at a meeting at which a
quorum is present. Shareholder action on any
<PAGE> 39
other matter is approved by a voting group if the votes cast by shareholders
within the voting group in favor of the action exceed the votes cast by
shareholders within the voting group in opposition to such action, unless the
Corporation's Articles of Incorporation or the Act provides otherwise. If two or
more groups are entitled to vote separately on a matter, action on the matter is
approved only when approved by each voting group.
2.07. Adjournment. If a meeting of shareholders is adjourned to another
date, time or place, notice need not be given of the adjourned meeting if the
new date, time and place are announced at the meeting before the adjournment. At
the adjourned meeting, the Corporation may transact any business which might
have been transacted at the time originally designated for the meeting if a
quorum existed at the time originally designated for the meeting; provided,
however, if a new record date is or must be fixed under the Act or these Bylaws,
a notice of the adjourned meeting must be given to shareholders as of the new
record date.
2.08. Proxies. A shareholder may appoint a proxy to vote at a meeting
of shareholders or otherwise act for him by signing an appointment form, either
personally or by his attorney-in-fact. An appointment of a proxy is effective
when received by the Secretary or other Officer or agent authorized to tabulate
votes. An appointment is valid for eleven (11) months, unless another period is
expressly provided for in the appointment form. An appointment of a proxy is
revocable by the shareholder, unless the appointment form conspicuously states
that it is irrevocable and the appointment is coupled with an interest.
2.09. Action by Written Consent. Any action required or permitted to be
taken at a meeting of the shareholders may be taken without a meeting, if all
shareholders consent to the taking of such action without a meeting by signing
one or more written consents describing the action taken and indicating each
shareholder's vote or abstention on the action. The affirmative vote of the
number of shares which would be necessary to authorize or take action at a
meeting of shareholders is the act of the shareholders without a meeting. The
written consent or consents shall be included in the minutes or filed with the
corporate records reflecting the action taken. Action taken by written consent
is effective when the last shareholder signs the consent, unless the consent
specifies a different effective date.
2.10. Business to be Transacted at Annual Meetings.
(a) Director Nominations. The Board of Directors, or a
nominating committee appointed by the Board, shall nominate candidates for
election to the Board of Directors to be elected at meetings of shareholders at
which directors are to be elected.
(b) Other Shareholder Business.
(1) No business shall be transacted at any annual
meeting of shareholders other than business that is: (i) specified in the
Corporation's notice of meeting (including shareholder proposals included in the
Corporation's proxy materials under Rule 14a-8 of Regulation 14A or any
successor rule ("Rule 14a-8") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), (ii) otherwise brought before the meeting by or
at the direction of the Board of Directors, or (iii) a proper subject for the
meeting and which is timely submitted by a shareholder of the Corporation
entitled to vote at such meeting who complies fully with the notice requirements
set forth in this subsection (b) in addition to any other applicable law, rule
or regulation applicable to such meeting.
(2) For business to be properly submitted by a
shareholder before any annual meeting under Section 2.10(b)(1)(iii) above, a
shareholder must give timely notice in writing
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of such business to the Secretary of the Corporation. To be considered timely, a
shareholder's notice must be received by the Secretary at the principal office
of the Corporation not earlier than the date which is one hundred fifty (150)
calendar days nor later than the date which is one hundred twenty (120) calendar
days before the first anniversary of the date on which the Corporation first
mailed its proxy statement to shareholders in connection with the prior year's
annual meeting of shareholders.
(3) However, if the Corporation did not hold an
annual meeting during the previous year, or if the date of the applicable year's
annual meeting has been changed by more than thirty (30) calendar days from the
first anniversary of the date of the previous year's meeting, then a
shareholder's notice must be received by the Secretary not earlier than the date
which is one hundred fifty (150) calendar days before date on which the
Corporation first mailed its proxy statement to shareholders in connection with
the applicable year's annual meeting and not later than the date of the later to
occur of (i) one hundred twenty (120) calendar days before the date on which the
Corporation first mailed its proxy statement to shareholders in connection with
the applicable year's annual meeting of shareholders or (ii) ten (10) calendar
days after the Corporation's first public announcement of the date of the
applicable year's annual meeting of shareholders.
(4) A shareholder's notice to the Secretary to submit
a nomination or other business to an annual meeting of shareholders shall set
forth: (i) the name and address of the shareholder; (ii) the class and number of
shares of stock of the Corporation held of record and beneficially owned by such
shareholder; (iii) the name(s), including any beneficial owners, and address(es)
of such shareholder(s) in which all such shares of stock are registered on the
stock transfer books of the Corporation; (iv) a representation that the
shareholder intends to appear at the meeting in person or by proxy to submit the
business specified in such notice; (v) a brief description of the business
desired to be submitted to the annual meeting of shareholders, the complete text
of any resolutions intended to be presented at the annual meeting and the
reasons for conducting such business at the annual meeting of shareholders; (vi)
any personal or other material interest of the shareholder in the business to be
submitted; (vii) as to each person whom the shareholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected);
and (viii) all other information relating to the proposed business which may be
required to be disclosed under applicable law. In addition, a shareholder
seeking to submit such business at the meeting shall promptly provide any other
information reasonably requested by the Corporation.
(c) General.
(1) Only those persons who are nominated in
accordance with the procedures set forth in this Section 2.10 shall be eligible
for election as directors at any meeting of shareholders. Only business brought
before the meeting in accordance with the procedures set forth in this Section
2.10 shall be conducted at a meeting of shareholders. The chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Section 2.10 and, if any proposed nomination or
business is not in compliance with this Section 2.10, to declare that such
defective proposal shall be disregarded.
(2) For purposes of this Section 2.10, "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press, Business Wire or comparable news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to the Exchange Act.
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(3) Notwithstanding the foregoing provisions of this
Section 2.10, a shareholder shall also comply with all applicable requirements
of state law, the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 2.10.
(4) Notwithstanding the foregoing provisions of this
Section 2.10, a shareholder who seeks to have any proposal included in the
Corporation's proxy materials shall comply with the requirements of Rule 14a-8
under the Exchange Act.
2.11. Inspectors. The Board of Directors shall, in advance of any
meeting of the shareholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If the inspectors shall not be so appointed
or if any of them shall fail to appear or act, the chairman of the meeting shall
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares represented at
the meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all shareholders. On request of
the chairman of the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them. No
director or candidate for the office of director shall act as inspector of an
election of directors. Inspectors need not be shareholders.
2.12. Organization. At every meeting of the shareholders, the Chairman
of the Board, or in the case of a vacancy in the office or absence of the
Chairman of the Board, one of the following persons present in the order stated:
the President, the Vice Presidents in their order of rank, a chairman designated
by the Board of Directors, or a chairman chosen by the shareholders entitled to
cast a majority of the votes which all shareholders present in person or by
proxy are entitled to cast, shall act as chairman of the meeting, and the
Secretary, or, in his absence, an Assistant Secretary, if any, or any person
appointed by the chairman of the meeting, shall act as secretary of the meeting.
ARTICLE 3
RECORD DATE
In order that the Corporation may determine the shareholders entitled
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than seventy (70) nor less than ten (10) days before the date of such
meeting, nor more than seventy (70) days prior to any other action. If no record
date is fixed, (i) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day before the day on which the first notice is given to such
shareholders and (ii) the record date for determining shareholders for any other
purpose shall be at the close of business on the day that the Board of Directors
authorizes the action. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting, unless the Board of Directors fixes a new record date. The Board
of Directors must fix a new record date if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
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ARTICLE 4
DIRECTORS
4.01. Election, Term and Number. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors.
Directors shall be elected at each annual meeting of shareholders to hold office
for the term specified at that annual meeting, but not to exceed three (3)
years. The number of the directors of the Corporation shall be fixed from time
to time be resolution adopted by the affirmative vote of a majority of the
entire Board of Directors of the Corporation, except that the minimum number of
directors shall be fixed at no less than three (3).
4.02. Committees. The Board of Directors, with the approval of a
majority of all the Directors in office when the action is taken, may create one
or more committees in accordance with the Act. Any such committee, to the extent
specified by the Board of Directors, may exercise the authority of the Board of
Directors in supervising the management of the business and affairs of the
Corporation, except that a Committee may not: (i) authorize distributions,
except according to a formula or method prescribed by the Board of Directors;
(ii) approve or propose to shareholders action required by law to be approved by
shareholders; (iii) fill vacancies on the Board of Directors or any of its
committees; (iv) amend the Corporation's Articles of Incorporation; (v) adopt,
amend or repeal Bylaws; (vi) approve a plan of merger not requiring shareholder
approval; (vii) authorize or approve reacquisition of shares, except according
to a formula or method prescribed by the Board of Directors; or (vii) authorize
or approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences and limitations of a class or
series of shares, except that the Board of Directors may authorize a committee
or senior executive Officer of the Corporation to do so within limits
specifically prescribed by the Board of Directors. The provisions of sections
4.04, 4.05, 4.06, 4.07, 4.08, 4.09 and 4.10 of this Article 4 and of Article 5
applicable to the Board of Directors shall also apply to committees.
4.03. Compensation. Directors shall receive such compensation as shall
be fixed by the Board of Directors and shall be entitled to reimbursement for
any reasonable expenses incurred in attending meetings and otherwise carrying
out their duties. Directors may also serve the Corporation in any other capacity
and receive compensation therefor.
4.04. Resignation. A Director may resign at any time by delivering
written notice to the Corporation, the Board of Directors or the President. A
resignation is effective when the notice is delivered, unless the notice
specifies a later effective date.
4.05. Quorum and Voting. A quorum of the Board of Directors consists of
a majority of the number of Directors prescribed by the Board of Directors
pursuant to section 4.01 of this Article 4. If a quorum is present when a vote
is taken, the affirmative vote of a majority of Directors present is the act of
the Board of Directors, unless the Corporation's Articles of Incorporation
requires the vote of a greater number of Directors.
4.06. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice of the date, time, place or purpose of the meeting (i) at
the location of the annual meeting of shareholders immediately after the meeting
in each year and (ii) at such times and at such places as the Board of Directors
may determine from time to time. If one of the purposes of a regular meeting is
to consider the removal of a Director, at least one days' notice stating this
purpose shall be given to all Directors.
4.07. Special Meetings. Special meetings of the Board of Directors may
be called by the President or any two Directors and shall be held at such places
on such dates and at such times as may be stated in the notice of meeting.
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4.08. Notices. Special meetings of the Board of Directors must be
preceded by at least one days' notice of the date, time and place of the
meeting. The notice need not describe the purpose of the meeting, unless the
purpose, or one of the purposes, of the meeting is to remove a Director or
Directors. Notice of an adjourned meeting need not be given if the time and
place to which the meeting is adjourned are fixed at the meeting at which the
adjournment is taken and if the period of any one adjournment does not exceed
thirty (30) days.
4.09. Meeting by Telephone. Any or all Directors may participate in a
regular or special meeting by conference telephone or any other means of
communication by which all Directors participating may simultaneously hear each
other during the meeting. A Director participating in a meeting by this means is
deemed to be present in person at the meeting.
4.10. Action by Written Consent. Any action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting, if
all Directors consent to the taking of such action without a meeting by signing
one or more written consents describing the action taken and indicating each
Director's vote or abstention on the action. The affirmative vote of the number
of Directors that would be necessary to authorize or take action at a meeting is
the act of the Board of Directors without a meeting. The written consent or
consents shall be included in the minutes or filed with the corporate records
reflecting the action taken. Action taken by written consent is effective when
the last Director signs the consent, unless the consent specifies a different
effective date.
ARTICLE 5
WAIVER OF NOTICE
A shareholder or Director may waive any notice required to be given by
the Act, the Corporation's Articles of Incorporation or these Bylaws before or
after the date and time stated in the notice. The waiver must be in writing,
signed by the shareholder or Director entitled to the notice and delivered to
the Corporation and filed in the Corporation's minutes or corporate records,
except that a shareholder's or Director's attendance at or participation in a
meeting may constitute a waiver of notice under the Act. Neither the business to
be transacted at, nor the purpose of, any meeting of the shareholders or
Directors need be specified in any waiver of notice.
ARTICLE 6
OFFICERS
6.01. Election and Term. The Board of Directors shall elect a President
and a Secretary and, as deemed appropriate by the Board of Directors, a Chairman
of the Board, one or more Vice Chairmen, one or more Vice Presidents, a
Treasurer and such other Officers and assistant officers that the Board of
Directors may deem appropriate. The Board of Directors may elect Officers at
such times as it deems advisable. Each Officer of the Corporation shall serve
until his successor is elected and qualified or until his earlier resignation or
removal. Any number of offices may be held by the same person, except that the
President may not serve as the Secretary.
6.02. Compensation. The salaries and other compensation of the Officers
of the Corporation shall be determined by the Board of Directors.
6.03. Removal. The Board of Directors may remove any Officer at any
time, with or without cause, but no such removal shall affect the contract
rights, if any, of the person so removed.
6.04. Resignation. An Officer of the Corporation may resign at any time
by delivering notice to the Corporation. A resignation is effective when the
notice is delivered, unless the notice
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<PAGE> 44
specifies a later effective date. If a resignation is made effective at a later
date and the Corporation accepts the future effective date, the Board of
Directors may fill the pending vacancy before the effective date if it provides
that the successor does not take office until the effective date. An Officer's
resignation does not affect the Corporation's contract rights, if any, with the
Officer.
6.05. Duties. The duties and powers of the Officers of the Corporation
shall be as follows:
(a) President. The President shall (i) preside at all meetings
of the shareholders and the Board of Directors, (ii) be primarily responsible
for the general management of the business of the Corporation and for
implementing the policies and directives of the Board of Directors, (iii) have
authority to make contracts on behalf of the Corporation in the ordinary course
of the Corporation's business and (iv) perform such other duties as from time to
time may be assigned by the Board of Directors.
(b) Chairman of the Board. The Chairman of the Board, if such
an officer is 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 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 have the powers and duties prescribed in these Bylaws for the President.
(b) Vice Presidents. The Vice Presidents in the order
designated by the Board of Directors, shall exercise the functions of the
President during the absence or disability of the President and shall perform
such other duties as may be assigned by the President or the Board of Directors.
(c) Treasurer. The Treasurer shall (i) have general
supervision over the funds of the Corporation and the investment or deposit
thereof, (ii) advise the Officers and, if requested, the Board of Directors
regarding the financial condition of the Corporation and (iii) perform such
other duties as may be assigned by the Board of Directors.
(d) Secretary. The Secretary shall (i) attend the meetings of
the shareholders, the Board of Directors and committees of the Board of
Directors and prepare minutes of all such meetings in a book to be kept for that
purpose, (ii) give, or cause to be given, such notice as may be required of all
meetings of the shareholders, Board of Directors and committees of the Board of
Directors, (iii) authenticate records of the Corporation and (iv) perform such
other duties as may be assigned by the Board of Directors.
ARTICLE 7
DIRECTOR AND OFFICER INDEMNIFICATION
The Corporation shall indemnify an individual who is a party to a
proceedings because such individual is or was a Director or Officer of the
Corporation against any liability incurred in the proceeding and, prior to the
disposition thereof, advance the reasonable expenses incurred by such individual
to the extent permitted under sections 16-10a-902 and 16-10a-904 of the Act. The
determination of entitlement to indemnification and advancement of expenses
shall be made in accordance with section 16-10a-906 of the Act.
ARTICLE 8
EMERGENCY BYLAW
In the event that a quorum of Directors cannot be readily assembled
because of a catastrophic event, the Board of Directors may take action by the
affirmative vote of a majority of
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those Directors present at a meeting and may exercise any emergency power
granted to a Board of Directors under the act not inconsistent with this Bylaw.
If less than three (3) regularly elected Directors are present, the Director
present having the greatest seniority as a Director may appoint one or more
persons (not to exceed the number most recently fixed by the Board of Directors
pursuant to section 4.01 of Article 4) from among the Officers or other
executive employees of the Corporation to serve as substitute Directors. If no
regularly elected Director is present, the Officer present having the greatest
seniority as an Officer shall serve as a substitute Director, shall appoint up
to four (4) additional persons from among the Officers or other executive
employees of the Corporation to serve as substitute Directors. Special meetings
of the Board of Directors may be called in an emergency by the Director or, if
no Director is present at the Corporation's principal offices, by the Officer
present having the greatest seniority as an Officer.
ARTICLE 9
CORPORATE SEAL
The Corporation may have a corporate seal, but the use of or failure to
use any such seal shall not have any legal effect on any action taken or
instrument executed by or on behalf of the Corporation. The seal may be used by
impressing or affixing it to an instrument or by causing a facsimile thereof to
be printed or otherwise reproduced thereon.
ARTICLE 10
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year unless
otherwise established by the Board of Directors.
ARTICLE 11
AMENDMENT
The Board of Directors may amend or repeal these Bylaws by a majority
vote of the directors then in office at any regular or special meeting of the
Board of Directors or by written consent, unless (i) the Corporation's Articles
of Incorporation or the Act reserves this power exclusively to shareholders or
(ii) the shareholders, in amending or repealing a particular Bylaw, provide
expressly that the Board of Directors may not amend or repeal that Bylaw.
Notwithstanding any other provisions of these Bylaws, the shareholders may
alter, amend or repeal any provision of these Bylaws in accordance with the Act
and the Articles of Incorporation.
ARTICLE 12
DEFINITION
The term "Act" as used in these Bylaws refers to the Utah Revised
Business Corporation Act, as amended from time to time. Terms defined in the Act
shall have the same meanings when used in these Bylaws.
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APPENDIX C
FORM OF
PLAN OF MERGER
WHEREAS, Kyzen Corporation ("Kyzen") is a corporation duly
organized and validly existing under the laws of the State of Utah;
WHEREAS, Kyzen Acquisition Corporation ("KAC") is a
corporation duly organized and validly existing under the laws of the State of
Tennessee and a wholly-owned subsidiary of Kyzen;
WHEREAS, the Boards of Directors of Kyzen and KAC have each
determined that it is advisable that Kyzen merge with and into KAC upon the
terms and conditions provided herein (the "Merger"); and
WHEREAS, the Boards of Directors of Kyzen and KAC have
approved this Plan of Merger between Kyzen and KAC.
NOW, THEREFORE, Kyzen and KAC hereby agree to merge into a
single corporation as follows:
FIRST: Pursuant to this Plan of Merger, Kyzen shall be merged
with and into KAC and the separate corporate existence of Kyzen shall thereupon
cease (the "Merger"). KAC shall be the surviving corporation (the "Surviving
Corporation") and shall retain its corporate identity and succeed to all of the
rights, assets, liabilities and obligations of KAC and Kyzen.
SECOND: The Merger shall become effective on the later of the
filing of Articles of Merger with the Secretary of State of Tennessee and the
filing of Articles of Merger with the Secretary of State of Utah, such time
being hereinafter referred to as the "Effective Time."
THIRD: (a) KAC Stock. At the Effective Time, each share of
Common Stock, $.01 par value per share, of KAC (the "KAC Common Stock") issued
and outstanding immediately prior to the Effective Time shall automatically be
redeemed by the Surviving Corporation and, upon payment to the former holders
thereof, shall have no further rights or represent any further claim against the
Surviving Corporation.
(b) Kyzen Securities. (i) At the Effective Time, each share of
Common Stock, $.01 par value per share, of Kyzen (the "Kyzen Common Stock"),
issued and outstanding immediately prior to the Effective Time, other than
shares to be canceled pursuant to subparagraph (b)(iii) hereof below, by virtue
of the Merger and without any action on the part of the holder thereof,
automatically be converted into the right to receive one fully paid and
non-assessable share of the KAC Common Stock. At the Effective Time, no shares
of Kyzen Common Stock shall be outstanding and all such shares shall
automatically be canceled and returned and shall cease to exist.
(ii) As a result of the Merger, each certificate
nominally representing shares of Kyzen Common Stock shall for all purposes be
deemed to evidence the ownership of a like number of shares of KAC Common Stock.
The holders of certificates of Kyzen Common Stock shall not be required
immediately to surrender the certificates in exchange for certificates of KAC
Common Stock but, as certificates nominally representing shares of Kyzen Common
Stock are surrendered for transfer, KAC will cause to be issued certificates for
a like number of shares of KAC Common Stock.
<PAGE> 47
(iii) Each share of Kyzen Common Stock issued and
held in Kyzen's treasury at the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall automatically be canceled and retired and
shall cease to exist without payment of any consideration therefor.
(iv) As a result of the Merger, each outstanding
warrant to purchase one share of Kyzen Common Stock (each a "Kyzen Warrant"),
whether or not then vested or exercisable, will automatically be converted into
a warrant to purchase one share of KAC Common Stock (each a "KAC Warrant"). The
holders of Kyzen Warrant certificates shall not be required immediately to
surrender the certificates in exchange for certificates of KAC Warrants but, as
certificates nominally representing Kyzen Warrants are surrendered for transfer,
KAC will cause to be issued certificates for a like number of KAC Warrants.
(v) As a result of the Merger, each outstanding
option to purchase one share of Kyzen Common Stock (each a "Kyzen Option"),
whether or not then vested or exercisable, will automatically be converted into
an option to purchase one share of KAC Common Stock (each a "KAC Option") on the
same terms and conditions. The holders of Kyzen Options shall not be required
immediately to surrender their option agreements in exchange for option
agreements for KAC Options.
(vi) As a result of the Merger, each preferred share
purchase right issued with each share of Kyzen Common Stock and representing the
right to purchase 1/100th of a share of Kyzen's Series A Junior Participating
Preferred Stock will automatically be converted into one preferred share
purchase right representing the right to purchase 1/100th of a share of KAC's
Series A Junior Participating Preferred Stock, which will have identical rights
and preferences as Kyzen's Series A Junior Participating Preferred Stock.
FOURTH: The Charter of KAC in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation, until duly
amended in accordance with applicable law.
FIFTH: The Bylaws of KAC in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
SIXTH: The members of the board of directors and the officers
of Kyzen immediately prior to the Effective Time shall be the members of the
board of directors and the officers, respectively, of the Surviving Corporation,
until their respective successors are elected and qualified.
SEVENTH: KAC agrees that it may be served with process in
Tennessee in any proceeding for enforcement of any obligation of Kyzen as well
as for the enforcement of any obligation of KAC arising from the Merger.
EIGHTH: This Plan of Merger may be terminated and abandoned by
action of the board of directors of Kyzen at any time prior to the Effective
Time, whether before or after approval by the shareholders of the two corporate
parties hereto.
Dated: ___________, 1999
2
<PAGE> 48
APPENDIX D
PROXY CARD
KYZEN CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Kyle J. Doyel and Michael L. Bixenman,
and either of them, as proxies, with full power of substitution and
resubstitution, to vote all of the shares of Common Stock which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of Kyzen Corporation,
to be held at 430 Harding Industrial Drive, Nashville, Tennessee 37211, on
Friday, April 9, 1999, at 2:30 p.m. (Nashville Time), and at any adjournment
thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE
VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE-NAMED PROXIES WILL
VOTE (A) FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON THE REVERSE SIDE
OF THIS CARD, (B) FOR THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
ARTICLES OF INCORPORATION OF THE COMPANY, (C) FOR THE APPROVAL OF THE AMENDMENT
AND RESTATEMENT OF THE BYLAWS OF THE COMPANY, (D) FOR THE APPROVAL OF THE
REINCORPORATION OF THE COMPANY FROM UTAH TO TENNESSEE, AND (E) IN ACCORDANCE
WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING.
(Continued on reverse side)
1. Election of Directors. Nominees: Janet Korte Baker, Michael L. Bixenman and
John A. Davis III.
<TABLE>
<S> <C> <C>
FOR nominees listed (except AGAINST nominees listed WITHHOLD AUTHORITY to vote for any
withheld to the contrary) individual nominee(s). Write name of
nominee(s) here:
[ ] [ ]
--------------------------------------
2. Proposal to approve amending and restating the Articles of Incorporation of
the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve amending and restating to the Bylaws of the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve changing the Company's state of incorporation from Utah
to Tennessee.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, the proxies are authorized to vote upon such other
matters which may properly come before the meeting or at any postponements
or adjournments thereof.
</TABLE>
Dated: , 1999
-------------------------------------
--------------------------------------------------
Signature
--------------------------------------------------
Signature if held jointly
IMPORTANT: Please sign exactly as your name or
names appear on this proxy and mail promptly in
the enclosed envelope. If you sign as agent or in
any other capacity, please state the capacity in
which you sign.
