EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
AVATEX CORPORATION
AND
XETAVA CORPORATION
DATED AS OF APRIL 9, 1998
NYFS05...:\35\64935\0001\1187\AGR2198S.17J
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER............................ 2
SECTION 1.1. The Merger................................. 2
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SECTION 1.2. Effective Time............................. 2
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SECTION 1.3. Effects of the Merger...................... 2
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SECTION 1.4. Certificate of Incorporation............... 3
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SECTION 1.5. By-Laws.................................... 3
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SECTION 1.6. Directors.................................. 3
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SECTION 1.7. Officers................................... 3
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ARTICLE II
CONVERSION OF SHARES....................... 3
SECTION 2.1. Conversion of Shares....................... 3
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SECTION 2.2. Exchange of Shares......................... 4
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SECTION 2.3. Closing of Transfer Books.................. 7
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SECTION 2.4. Stock Options.............................. 7
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SECTION 2.5. Employment Agreements and Related Arrangements 8
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ARTICLE III
COVENANTS............................ 8
SECTION 3.1. Registration Statement; Proxy Statement/Prospectus 8
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SECTION 3.2. Stockholder Approval....................... 8
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SECTION 3.3. NYSE Listing............................... 9
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SECTION 3.4. Fees and Expenses.......................... 9
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SECTION 3.5. Fairness Opinion........................... 9
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ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF AVATEX
AND XETAVA ........................... 9
SECTION 4.1. Stockholder Approval....................... 9
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SECTION 4.2. Certain Proceedings........................ 9
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SECTION 4.3. NYSE Listing............................... 9
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SECTION 4.4. Registration Statement..................... 10
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SECTION 4.5. Blue Sky Laws.............................. 10
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SECTION 4.6. Tax Opinion................................ 10
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SECTION 4.7. Fairness Opinion........................... 10
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ARTICLE V
CLOSING............................. 10
SECTION 5.1. Time and Place............................. 10
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SECTION 5.2. Filings at the Closing..................... 11
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ARTICLE VI
TERMINATION........................... 11
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Page
SECTION 6.1. Termination................................ 11
ARTICLE VII
MISCELLANEOUS.......................... 11
SECTION 7.1. Amendment and Modification................. 11
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SECTION 7.2. Indemnification............................ 11
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SECTION 7.3. Assignment................................. 13
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SECTION 7.4. Governing Law.............................. 13
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SECTION 7.5. Counterparts............................... 13
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SECTION 7.6. Interpretation............................. 13
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SECTION 7.7. Entire Agreement........................... 13
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Exhibit A -- Certificate of Merger of Avatex Corporation
with and into Xetava Corporation
Exhibit B -- Certificate of Incorporation of Xetava Corporation
Exhibit C -- By-laws of Xetava Corporation
Schedule 2.5 -- Employment Agreements, Benefit Plans
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AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 9,
1998, by and between AVATEX CORPORATION, a Delaware corporation ("Avatex"), and
XETAVA CORPORATION, a Delaware corporation ("Xetava"). Avatex and Xetava are
sometimes collectively referred to herein as the "Constituent Corporations".
W I T N E S S E T H:
WHEREAS, Avatex has authorized capital stock consisting of (i)
50,000,000 shares of common stock, $5.00 par value per share (the "Old Avatex
Common Stock"), of which 13,806,375 shares are issued and outstanding as of the
date hereof, and (ii) 10,000,000 shares of preferred stock, $5.00 par value, of
which (a) 652,331 shares of $5 Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"), and (b) 4,312,351 shares of $4.20 Cumulative
Exchangeable Series A Preferred Stock (the "Series A Preferred Stock" and
together with the Avatex Common Shares and the Convertible Preferred Stock, the
"Avatex Shares") are issued and outstanding as of the date hereof; and
WHEREAS, Xetava has authorized capital stock consisting of
50,000,000 shares of common stock, $0.01 par value per share (the "Common
Stock"), of which 100 shares are issued and outstanding as of the date hereof
and are owned by Avatex, and (ii) 10,000,000 shares of Preferred Stock, $0.01
par value per share, of which no shares are issued and outstanding as of the
date hereof; and
WHEREAS, Xetava is a direct, wholly-owned subsidiary of Avatex;
and
WHEREAS, the Board of Directors of Avatex and Xetava believe it is
in the best interest of each respective corporation and their respective
stockholders to consummate the merger of Avatex with and into Xetava (the
"Merger") pursuant to the applicable provisions of the General Corporation Law
of the State of Delaware ("DGCL") and in accordance with the terms and subject
to the conditions of this Agreement in a transaction intended to qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, the Board of Directors of Avatex, pursuant to the
applicable provisions of the DGCL, has approved this Agreement, and has
recommended adoption of this Agreement by the stockholders of Avatex; and
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WHEREAS, the Board of Directors of Xetava, pursuant to the
applicable provisions of the DGCL, has approved this Agreement and has
recommended adoption of this Agreement by its sole stockholder.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions hereof and in accordance with the DGCL, at the Effective Time (as
defined in Section 1.2 hereof) Avatex shall be merged with and into Xetava in
accordance with the applicable provisions of the DGCL, and the separate
corporate existence of Avatex shall thereupon cease. Following the Merger,
Xetava shall continue as the surviving corporation (hereinafter referred to for
periods from and after the Effective Time as the "Surviving Corporation") under
the laws of the State of Delaware under the name "Avatex Corporation." At the
Effective Time and pursuant to the applicable provisions of the DGCL, the
Surviving Corporation shall possess all of the rights, privileges, powers and
franchises of a public as well as of a private nature, and shall be subject to
all the restrictions, disabilities and duties of each of the Constituent
Corporations; and all property, real, personal and mixed, of the Constituent
Corporations on whatever account, all stock subscriptions and all other things
in action or belonging to each of the Constituent Corporations shall be vested
in the Surviving Corporation; and all other interests shall be thereafter the
property of the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise,
under the laws of the State of Delaware, in any of the Constituent Corporations,
shall not revert or be in any way impaired by reason of the DGCL; but all rights
of creditors and all liens upon any property of any of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the respective Constituent Corporations shall thenceforth attach to
the Surviving Corporation, and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred or contracted by it.
SECTION 1.2. Effective Time. The Merger shall be consummated by and
shall be effective at the time (the "Effective Time") of the filing with the
Delaware Secretary of State of a certificate of merger, in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL, and such other documents as may be required by the provisions of the DGCL
(which filings shall be made as soon as practicable following the satisfaction
or waiver of the conditions set forth in Article IV hereof). At the Effective
Time, the Surviving Corporation shall change its name to "Avatex Corporation."
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SECTION 1.3. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.4. Certificate of Incorporation. The Certificate of
Incorporation of Xetava (attached hereto as Exhibit B) immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter duly amended in accordance with the terms thereof
and the DGCL, except that Article First of the Certificate of Incorporation of
the Surviving Corporation shall read in its entirety as follows:
"FIRST: The name of the corporation is: "Avatex Corporation."
SECTION 1.5. By-Laws. The By-Laws of Xetava (attached hereto as
Exhibit C), as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation until thereafter amended as provided by
law.
SECTION 1.6. Directors. The directors of Xetava at the Effective
Time shall be the initial directors of the Surviving Corporation and will hold
office from the Effective Time for the duration of their terms of office and
until their respective successors are thereafter duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and By-Laws
of the Surviving Corporation, or as otherwise provided by law.
SECTION 1.7. Officers. The officers of Xetava immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and will hold office from the Effective Time until their respective successors
are thereafter duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of Avatex or Xetava or their
respective stockholders:
(i) Each share of Old Avatex Common Stock issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
0.5 share of Common Stock (the "Common Stock Exchange Ratio") of Xetava.
(ii) Each share of Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time shall automatically be
converted into 4.1249 shares of Common Stock (the "Convertible Preferred
Exchange Ratio") of Xetava.
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(iii) Each share of Series A Preferred Stock issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
3.7271 shares of Common Stock (the "Series A Preferred Exchange Ratio") of
Xetava. The shares of Common Stock of Xetava to be received in the Merger are
sometimes hereinafter referred to as the "Merger Consideration."
(iv) Notwithstanding the foregoing, each share of Old Avatex Common
Stock, each share of Convertible Preferred Stock and each share of Series A
Preferred Stock that immediately prior to the Effective Time is held in the
treasury of Avatex shall be cancelled by virtue of the Merger without any
payment of any consideration therefor and shall cease to exist, and no shares of
Common Stock or other consideration shall be delivered in exchange for such
shares.
(v) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time shall automatically be cancelled by virtue of the
Merger without any payment of any consideration therefor and shall cease to
exist.
SECTION 2.2. Exchange of Shares. (a) Prior to the Effective Time,
Xetava shall designate a bank or trust company to act as exchange agent (the
"Exchange Agent") in connection with the Merger. As of the Effective Time,
Xetava shall take all steps necessary to enable and cause the Exchange Agent to
deliver the certificates representing the Merger Consideration (as well as to
deliver any other consideration payable pursuant to this Article II) as and when
certificates for Avatex Shares are properly surrendered. Notwithstanding
anything herein to the contrary, Common Stock into which Avatex Shares shall be
converted in the Merger shall be deemed to be issued as of the Effective Time.
No dividends or other distributions with a record date after the Effective Time
with respect to shares of Common Stock shall be paid to the holder of any
unsurrendered Avatex stock certificate (a "Certificate") with respect to which
shares of Common Stock shall have been issued in the Merger until such
Certificate shall be surrendered for exchange as provided herein, but (i) upon
such surrender there shall be paid, without interest, to the person in whose
name the certificates representing such shares of Common Stock shall be issued
the amount of dividends theretofore paid with respect to such shares of Common
Stock as of any record date subsequent to the Effective Time (but prior to such
surrender) and the amount of any cash payable to such person in lieu of
fractional shares of Common Stock pursuant to this Section 2.2 and (ii) at the
appropriate payment date or as soon as practicable thereafter, there shall be
paid to such person the amount of dividends with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of Common Stock, subject in any
case to any applicable abandoned property, escheat or similar laws.
(b) Promptly after the Effective Time, Avatex shall cause the
Exchange Agent to mail to each record holder of a Certificate, a form of letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and
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title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates.
(c) Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed and completed in accordance with
the instructions thereto, and such other documents as may be requested, the
holder of such Certificate shall be entitled to receive in exchange therefor
stock certificates representing the Merger Consideration deliverable in respect
of the Avatex Shares formerly evidenced by such Certificate or Certificates
(together with any cash in lieu of fractional shares of Common Stock pursuant to
Section 2.2(e)) and amounts payable pursuant to Section 2.2(a) hereof, and such
Certificate or Certificates shall forthwith be cancelled. Until surrendered in
accordance with the provisions of this Section 2.2(c), each Certificate shall
represent for all purposes the Merger Consideration and the right to receive
cash in lieu of fractional shares and amounts payable pursuant to Section 2.2(a)
hereof. If a Certificate or Certificates formerly evidencing more than one
Avatex Share shall be surrendered for exchange as provided in this Agreement at
one time by the same holder, certificates representing the number of full shares
of Common Stock, the amount of cash in lieu of fractional shares of Common Stock
and amounts payable pursuant to Section 2.2(a) hereof deliverable upon the
surrender thereof shall be computed on the basis of the aggregate number of
Avatex Shares formerly evidenced by such Certificates so surrendered.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Avatex Shares for any Merger Consideration or any
other consideration payable pursuant to this Article II delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(d) If the certificates representing the shares of Common Stock are
to be delivered to a person other than the person in whose name the Certificate
surrendered in exchange thereof is registered, it shall be a condition to the
delivery of such certificates representing Common Stock that the Certificate so
surrendered shall be properly endorsed or accompanied by appropriate stock
powers and otherwise in proper form for transfer, that such transfer otherwise
be proper and that the person requesting such transfer pay to the Exchange Agent
any transfer or other taxes payable by reason of the foregoing or establish to
the satisfaction of the Exchange Agent that such taxes have been paid or are not
required to be paid.
(e) Notwithstanding anything herein to the contrary, no certificates
representing fractional shares of Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Section 2.2, and no
fractional shares of Common Stock shall be issued in the Merger. Such fractional
share interests shall not entitle the holder thereof to vote or to any rights as
a security holder of Xetava. In lieu of any fractional shares of Common Stock,
the Exchange Agent shall, on behalf of all persons who otherwise would have been
entitled to fractional shares of Common Stock, as soon as practicable after the
Effective Time, aggregate all such fractional interests (collectively, the
"Fractional Shares") and, at Xetava's option, such Fractional Shares shall be
purchased by Xetava or otherwise sold by the Exchange Agent as agent for the
persons who otherwise would have been entitled to such Fractional Shares, in
either case at the then prevailing price on the New York Stock Exchange (the
"NYSE"), all in the manner provided in Section 2.2(f). Xetava
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will pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including expenses and compensation of the Exchange Agent, incurred in
connection with such sale of the Fractional Shares.
(f) To the extent not purchased by Xetava, the sale of the
Fractional Shares by the Exchange Agent will be executed on the NYSE or through
one or more member firms of the NYSE and will be executed in round lots to the
extent practicable. In either case, the Exchange Agent will determine the
portion, if any, of the net proceeds of such sale to which each person who would
otherwise have been entitled to a Fractional Share is entitled, by multiplying
the amount of the aggregate net proceeds of the sale of the Fractional Shares,
by a fraction, the numerator of which is the amount of Fractional Shares such
person would otherwise have been entitled to and the denominator of which is the
aggregate amount of Fractional Shares to which all such persons would otherwise
have been entitled to.
(g) As soon as practicable after the determination of the amount of
cash, if any, to be paid to the persons who would otherwise have been entitled
to such amounts, without interest, to such persons; provided, however, that no
such amount will be paid to any such person prior to the surrender by such
person of the Certificates formerly representing such person's Avatex Shares.
All cash proceeds from the sale of Fractional Shares to be paid pursuant to this
Section, if unclaimed at the sixth month anniversary of the Effective Time,
shall be released and paid by the Exchange Agent to Xetava, after which time
persons entitled thereto may look only to Xetava for payment thereof.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable for any cash proceeds delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h) Promptly following the date that is six months after the
Effective Time, the Exchange Agent shall return to Xetava all certificates
representing shares of Common Stock, as well as all other amounts payable
pursuant to this Article II in its possession, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Certificate formerly representing
an Avatex Share may surrender such Certificate to Xetava and (subject to
applicable abandoned property, escheat or similar laws) receive in exchange
therefor the certificates representing Merger Consideration, cash in lieu of
Fractional Shares, if any, pursuant to the terms hereof and any amounts payable
pursuant to Section 2.2(a) hereof.
(i) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, Xetava shall issue in exchange
for such lost, stolen or destroyed certificate, certificates representing the
Merger Consideration, cash in lieu of fractional shares, if any, and any amounts
payable pursuant to Section 2.2(a) hereof, deliverable in respect thereof as
determined in accordance with this Article II; provided, however, that the Board
of Directors of Xetava may, in its discretion and as a condition precedent to
the delivery thereof, require the owner of such lost, stolen or destroyed
Certificate to give Xetava a bond in such sum as it may direct as indemnity
against any claim that may be made against Xetava with respect to the
Certificate alleged to have been lost, stolen or destroyed.
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SECTION 2.3. Closing of Transfer Books. After the Effective Time
there shall be no transfers on the stock transfer books of Avatex of the Avatex
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged for certificates representing the Merger
Consideration, cash in lieu of fractional shares, if any, as provided in this
Article II and any amounts payable pursuant to Section 2.2(a) hereof.
SECTION 2.4. Stock Options. At the Effective Time, Avatex's
obligations with respect to each outstanding option to purchase shares of Old
Avatex Common Stock (collectively, the "Stock Options" and each a "Stock
Option") granted pursuant to Avatex's 1993 Stock Option and Performance Award
Plan, as amended (the "Avatex Option Plan"), or any of Avatex's other stock
option plans or agreements (the "Avatex Stock Option Plans") shall be assumed by
Xetava. The Stock Options assumed by Xetava shall continue to have, and be
subject to, the same terms and conditions set forth in the Avatex Stock Option
Plans and agreements pursuant to which such Stock Options were issued as in
effect immediately prior to the Effective Time, except that the Stock Options
shall thereupon be exercisable for shares of Common Stock and (a) the number of
shares for which such Stock Option shall be exercisable shall equal the product
of the Common Stock Exchange Ratio and the number of shares of Old Avatex Common
Stock subject to the Stock Option immediately prior to the Effective Time
(rounded down to the nearest whole number), and (b) the per share exercise price
for the shares of Common Stock issuable upon the exercise of such assumed Stock
Option shall be equal to the aggregate exercise price for the shares of Old
Avatex Common Stock subject to the Stock Option, divided by the number of shares
of Common Stock deemed to be purchasable pursuant to the Option. The date of
grant shall be the date on which the Stock Option was originally granted. Xetava
shall (i) reserve for issuance the number of shares of Common Stock that will
become issuable upon the exercise of such Stock Options pursuant to this Section
2.4, (ii) at the Effective Time, execute a document evidencing the assumption by
Xetava of Avatex's obligations with respect thereto under this Section 2.4 and
(iii) cause the shares of Common Stock issuable upon exercise of such Stock
Options to be registered under the Securities Act of 1933, as amended (the
"Securities Act"), as soon as practicable following the Effective Time, and to
use its best efforts to maintain the effectiveness of such registration for so
long as such Stock Options remain outstanding. Nothing in this Section 2.4 shall
affect the schedule of the vesting (or the acceleration thereof) with respect to
the Stock Options, in accordance with the terms thereof, to be assumed by Xetava
as provided in this Section 2.4.
SECTION 2.5. Employment Agreements and Related Arrangements. At the
Effective Date, Xetava shall assume all of Avatex's rights and obligations under
the employment agreements and other benefit plans and arrangements applicable to
or covering current employees of Avatex listed on Schedule 2.5 hereto. All
references to Avatex in such agreements, plans and arrangements shall be deemed
to be references to Xetava.
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ARTICLE III
COVENANTS
SECTION 3.1. Registration Statement; Proxy Statement/Prospectus.
After the execution of this Agreement, Xetava shall prepare and file with the
SEC under the Securities Act a registration statement (the "Registration
Statement") with respect to the Common Stock to be issued in the Merger and
shall use all reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. Xetava also shall take any
action required to be taken under state blue sky or securities laws in
connection with the issuance of Common Stock pursuant to the Merger, and Avatex
and Xetava shall furnish all information concerning Avatex and Xetava and the
holders of Avatex Shares and shall take such other action as may be reasonably
requested by the SEC. Avatex shall prepare for inclusion in the Registration
Statement, shall file with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the time the Registration Statement
is filed as provided above, and shall use all reasonable efforts to have cleared
by the SEC, the Proxy Statement with respect to the special meeting of
stockholders of Avatex as provided in Section 3.2 below, and shall mail the
Proxy Statement to its stockholders as promptly as practicable after clearance
of the Proxy Statement with the SEC. The Proxy Statement shall include the
recommendation of the Board of Directors of Avatex in favor of adoption of this
Agreement.
SECTION 3.2. Stockholder Approval. (a) Avatex shall take all steps
necessary to call, give notice of in accordance with the DGCL, convene and hold
a special meeting of its stockholders entitled to vote (the "Stockholders'
Special Meeting") as soon as practicable for the purpose of adopting this
Agreement and for such other purposes as may be necessary or desirable.
(b) The Board of Directors of Avatex has determined that this
Agreement is advisable and in the best interests of its stockholders and shall
recommend to its stockholders the adoption of this Agreement and shall use its
best efforts to obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby.
SECTION 3.3. NYSE Listing. Xetava shall use its best efforts to
effect, at or before the Effective Time, approval for listing on the NYSE, upon
official notice of issuance, of the Common Stock to be issued pursuant to the
Merger.
SECTION 3.4. Fees and Expenses. Each party hereto shall pay all
costs and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
SECTION 3.5. Fairness Opinion. The Board of Directors of Avatex
shall use its reasonable best efforts to obtain an opinion of Gordian Group,
L.P., financial advisor to the Board of Directors of Avatex (the "Fairness
Opinion"), in form and substance satisfactory to the Board of Directors to the
effect that, as of the date hereof, the consideration to be received by the
holders of the Old Avatex Common Stock, the Convertible Preferred Stock and the
Series A Preferred Stock pursuant to the Merger is fair to such holders from a
financial point of view.
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ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF AVATEX
AND XETAVA
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
SECTION 4.1. Stockholder Approval. This Agreement shall have been
adopted by the affirmative vote of the holders (the "Stockholder Approval") of
at least a majority of the outstanding votes of shares of Old Avatex Common
Stock at a special meeting of Avatex stockholders and by written consent of the
sole stockholder of Xetava.
SECTION 4.2. Certain Proceedings. Neither Avatex nor Xetava shall be
subject to any writ, order, decree or injunction of a court of competent
jurisdiction prohibiting or restricting the consummation of the Merger.
SECTION 4.3. NYSE Listing. The Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
SECTION 4.4. Registration Statement. The Registration Statement
shall have been declared effective, shall be effective at the Effective Time,
and no stop order suspending such effectiveness shall have been issued or
proceedings for that purpose shall have been instituted.
SECTION 4.5. Blue Sky Laws. Xetava shall have received all Blue
Sky authorizations necessary to issue the Merger Consideration.
SECTION 4.6. Tax Opinion. Avatex and Xetava shall have received an
opinion of their counsel, Weil, Gotshal & ▇▇▇▇▇▇ LLP, to the effect that, for
federal income tax purposes, (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code; (ii) no gain or loss will be
recognized by Avatex or Xetava; (iii) no gain or loss will be recognized by a
holder of Avatex Shares upon the exchange of such shares solely for shares of
Common Stock pursuant to the Merger (except with respect to any cash received in
lieu of Fractional Shares and any Common Stock received on account of dividend
arrearages); (iv) the aggregate tax basis of the shares of Common Stock received
by a holder of Avatex Shares in the Merger will be the same as the aggregate tax
basis of the Avatex Shares surrendered in exchange therefor (increased by the
fair market value of any Common Stock received on account of dividend
arrearages), less the amount of such tax basis allocable to Fractional Shares
for which cash is received; (v) a holder's holding period in such shares of
Common Stock (other than to the extent received on account of dividend
arrearages) will include its holding period in such Avatex Shares,
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provided the Avatex Shares were held as a capital asset on the date of the
Merger; and (vi) no portion of the Common Stock received by a holder will be
treated as received on account of dividend arrearages, except, if the Merger is
treated as a recapitalization within the meaning of Section 368(a) of the Code,
to the extent (if any) that the fair market value at the Effective Time of any
Common Stock received in exchange for shares of Series A Preferred Stock or
Convertible Preferred Stock exceeds the issue price of such shares. In rendering
such opinion, Weil, Gotshal & ▇▇▇▇▇▇ LLP may receive and rely upon
representations contained in certificates.
SECTION 4.7. Fairness Opinion. The Fairness Opinion shall have been
received and shall not have been modified, withdrawn or revoked (i) as of the
time of the mailing of the Proxy Statement to the stockholders of Avatex or (ii)
before the Effective Time.
ARTICLE V
CLOSING
SECTION 5.1. Time and Place. The closing of the Merger (the
"Closing") shall take place at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on a date agreed to by Avatex and Xetava
following satisfaction or waiver by Avatex or Xetava, as the case may be, of the
conditions set forth in Article IV. The date on which the Closing actually
occurs is herein referred to as the "Closing Date."
SECTION 5.2. Filings at the Closing. Avatex and Xetava shall
immediately after the Closing (a) file with the Delaware Secretary of State a
certificate of merger in the form annexed as Exhibit A hereto and (b) take all
such other and further actions as may be required by law to make the Merger
effective.
ARTICLE VI
TERMINATION
SECTION 6.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after Stockholder Approval,
by the Board of Directors of either of Avatex or Xetava. In the event of
termination of the Merger pursuant to the foregoing sentence, this Agreement
shall terminate and the Merger shall be abandoned, without further action by any
of the parties hereto.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified or supplemented, before or after
Stockholder Approval, only by written agreement of Avatex and Xetava at any time
10
prior to the Effective Time with respect to any of the terms contained herein;
provided, however, that, after this Agreement is adopted by Avatex's
stockholders pursuant to Section 3.2, no such amendment or modification shall be
made that by law requires further approval by the stockholders of Avatex without
the further approval of such stockholders.
SECTION 7.2. Indemnification. (a) The Surviving Corporation shall
maintain, for a period of at least six years from the Effective Time, (i)
director and officer liability insurance providing at least the same amounts and
coverage with respect to Avatex's present and former officers and directors as
the current policies maintained by or on behalf of Avatex, and containing terms
and conditions which are no less advantageous with respect to matters existing
or occurring at or prior to the Effective Time, and in the event any claim is
made against present or former directors or officers of Avatex that is covered,
in whole or in part, or potentially so covered by insurance, the Surviving
Corporation shall not do anything that would forfeit, jeopardize, restrict or
limit the insurance coverage available for that claim until the final
disposition of that claim; provided, however, that if the cost of maintaining
such insurance exceeds twice the current cost related to providing such
insurance (the "Current Cost"), then the Surviving Corporation shall maintain
such director and officer liability insurance with the maximum amount of
coverage obtainable at twice such Current Cost, and (ii) provisions in its
certificate of incorporation and by-laws relating to indemnification,
exculpation and advancement of expenses no less favorable than the rights to
indemnification, exculpation and advancement of expenses now existing in favor
of the present and former directors and officers of Avatex and its subsidiaries
as provided in its certificate of incorporation or by-laws or otherwise in
effect on the date hereof; provided, however, that with respect to any claim
asserted, made or originated prior to the expiration of such six-year period
until the final disposition of such Claim (as hereinafter defined), and that
during such period, the Certificate of Incorporation and By-Laws of the
Surviving Corporation shall not be amended to reduce or limit the rights of
indemnity or advancement of expenses of the present and former directors or
officers of Avatex, or the ability of the Surviving Corporation to indemnify (or
advance expenses to) them, nor to hinder, delay or make more difficult the
exercise of such rights of indemnity or advancement of expenses or the ability
to indemnify or advance expenses.
(b) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date of this Agreement or who becomes prior to the
Effective Time, an officer or director of Avatex against all losses, claims,
damages, costs, expenses or liabilities, or in connection with any claim,
action, suit, proceeding or investigation (a "Claim"), arising out of the fact
that such person is or was an officer or director of Avatex (or out of any
action taken by any such person on behalf of Avatex), pertaining to any matter
existing or occurring at or prior to the Effective Time
11
(including, without limitation, the transactions contemplated by this
Agreement), whether asserted or claimed prior to, or at or after, the Effective
Time. In each case such indemnification shall be to the fullest extent that a
corporation is permitted under applicable law to indemnify its own directors and
officers, as the case may be (and the Surviving Corporation will pay expenses in
advance of the final disposition of any such action or proceeding to each such
present or former director or officer of Avatex seeking indemnification
hereunder to the full extent permitted by law).
(c) Without limiting the foregoing, in any case in which approval by
the Surviving Corporation is required to effectuate any indemnification under
this Section 7.2, it shall direct, at the election of the director or officer of
Avatex seeking indemnification hereunder, that the determination of any such
approval shall be made by independent counsel acceptable to the Surviving
Corporation selected by such present or former director or officer of Avatex
seeking indemnification hereunder.
(d) This Section 7.2 shall survive the consummation of the Merger.
The provisions of this Section 7.2 are intended to be for the benefit of, and
shall be enforceable by the present and former directors and officers of Avatex.
The rights provided under this Section 7.2 shall be in addition to, and not in
lieu of, any rights to which any party may have under the Certificate of
Incorporation or By-Laws of Avatex or the Surviving Corporation, any other
agreements or otherwise.
SECTION 7.3. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other party,
nor is this Agreement intended to confer upon any other person except the
parties hereto any rights or remedies hereunder.
SECTION 7.4. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Delaware principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
SECTION 7.5. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.6. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a limited
liability company, a
12
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof; and (ii) the term "subsidiary"
of any specified corporation shall mean any corporation of which the outstanding
securities having ordinary voting power to elect a majority of the board of
directors are directly or indirectly owned by such specified corporation.
SECTION 7.7. Entire Agreement. This Agreement, including the
exhibits hereto and the documents and instruments referred to herein embodies
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no covenants or undertakings, other
than those expressly set forth or referred to herein. This Agreement supersedes
all prior agreements and the understandings between the parties with respect to
such subject matter.
13
IN WITNESS WHEREOF, Avatex and Xetava have caused this Agreement to
be signed by their respective duly authorized officers on the date first above
written.
AVATEX CORPORATION
By:
Name: Abbey ▇. ▇▇▇▇▇▇
Title: Co-Chief Executive Officer
XETAVA CORPORATION
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Chief Executive Officer
14
EXHIBIT A
CERTIFICATE OF MERGER
OF
AVATEX CORPORATION
WITH AND INTO
XETAVA CORPORATION
Under Section 251
of
the Delaware General Corporation Law
XETAVA CORPORATION, a Delaware corporation, hereby certifies that:
FIRST: The name and the state of incorporation of each of the constituent
corporations is as follows:
Name State of Incorporation
---- ----------------------
Avatex Corporation ("Avatex") Delaware
Xetava Corporation ("Xetava") Delaware
SECOND: An Agreement and Plan of Merger, dated as of ________ 1998, (the
"Agreement of Merger") by and between Avatex and Xetava has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations named above in accordance with Section 251 (and, with respect to
Xetava, by the written consent of its sole stockholder in accordance with
Section 228) of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Xetava Corporation (the
"Surviving Corporation"), which upon consummation of the merger will change its
name to Avatex Corporation.
FOURTH: The Certificate of Incorporation of Xetava as in effect
immediately prior to the merger shall be amended to delete Article FIRST set
forth therein in its entirety and to substitute the following in lieu thereof:
"FIRST: The name of the Corporation is AVATEX CORPORATION." The Certificate of
Incorporation of
15
Xetava, as so amended, shall be the Certificate of Incorporation of the
Surviving Corporation.
FIFTH: The executed Agreement of Merger is on file at the principal place
of business of the Surviving Corporation at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
SIXTH: A copy of the Agreement of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of any
constituent corporation.
IN WITNESS WHEREOF, Xetava has caused this certificate to be executed as
of the day of April, 1998.
XETAVA CORPORATION
By:__________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
16
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
XETAVA CORPORATION
The undersigned, being a natural person for the purpose of
organizing a corporation under the General Corporation Law of the State of
Delaware (the "DGCL"), hereby certifies that:
FIRST: The name of the Corporation is XETAVA CORPORATION.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle, 19801. The name of its registered agent at
that address in the State of Delaware is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
DGCL. The Corporation shall have all powers that may now or hereafter be lawful
for a corporation to exercise under the DGCL.
FOURTH: The Corporation is to have perpetual existence.
FIFTH: The name and mailing address of the incorporator of the Corporation
are ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., c/o Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
SIXTH: SECTION 1. The total number of shares of capital stock that the
Corporation shall have authority to issue is 60,000,000, of which 50,000,000
shares shall be common stock, par value $0.01 per share (the "Common Stock") and
10,000,000 shares shall be preferred stock, par value $0.01 per share (the
"Preferred Stock"). The shares of Common Stock of the Corporation shall be of
one and the same class.
SECTION 2. The holders of Common Stock shall have one vote per share
of Common Stock on all matters on which holders of Common Stock are entitled to
vote.
SECTION 3. The Preferred Stock may be issued from time to time in
one or more series. The Board of Directors is hereby authorized to provide for
the issuance of shares of Preferred Stock in one or more series and, by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series and to fix the designations, powers, preferences and rights of the shares
of each such series and the qualifications, limitations and restrictions
thereof. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
17
(a) the designation of such series, and the number of shares
(which number may be decreased before the issuance thereof or
may be increased) that shall be included in such series;
(b) the dividend rate, the dividend dates (which shall be no more
frequent than quarterly) upon which dividends shall be
payable, and the date from which dividends shall be cumulative
on shares issued prior to the record date for the
determination of shareholders entitled to receive payment of
the first dividend on any shares of such series, together with
the limitations, if any, on dividends or other distributions
on common stock which are to obtain so long as any shares of
such series shall be outstanding;
(c) the price at which shares of such series are redeemable,
otherwise than for the purpose of a sinking fund applicable
thereto, and any limitations and restrictions with respect to
such redemption;
(d) the obligation, if any, of the Corporation to purchase and
retire or redeem shares of such series for the purpose of a
sinking fund, and the price at which, and the terms and
conditions on which, shares will be purchased or redeemed for
such sinking fund;
(e) the amount payable to the holder of each share of such series
in the event of a voluntary liquidation, dissolution or
winding up of the Corporation before any payment shall be made
to the holders of shares of Common Stock;
(f) the right, if any, of the holders of shares of such series to
convert the same into shares of any other class or series
within a class, and the conversion price or rate and the
method, if any, of adjusting the same; and
(g) the voting rights, if any, of the holders of shares of such
series.
SEVENTH: No holder of shares of capital stock of the Corporation of any
class, now or hereafter authorized, shall have any preferential or preemptive
right to purchase, subscribe for, or otherwise acquire any shares of capital
stock of the Corporation of any class, now or hereafter authorized, or any
securities or obligations now or hereafter authorized, convertible or
exchangeable for any such shares.
EIGHTH: SECTION 1. As used in this Article EIGHTH, the following terms
have the following respective meanings:
"Corporation Securities" means (i) shares of common stock of the
Corporation, (ii) warrants, rights, or options (within the meaning of Treasury
Regulation ss.1.382-4(d)(9)) to
18
purchase stock of the Corporation and (iii) any other interests that would be
treated as "stock" of the Corporation pursuant to Treasury Regulation
ss.1.382-2T(f)(18).
"Percentage Stock Ownership" means percentage stock ownership as
determined in accordance with Treasury Regulation ss.1.382-2 et seq.
"Five-Percent Shareholder" means a Person or group of Persons that is
identified as a "5-percent shareholder" of the Corporation pursuant to Treasury
Regulation ss.1.382-2T(g)(1).
"Person" means an individual, corporation, estate, trust, association,
company, partnership, joint venture or other entity.
"Prohibited Transfer" means any purported Transfer of Corporation
Securities to the extent that such Transfer is prohibited and void under this
Article EIGHTH.
"Restriction Release Date" means the earlier of December 31, 2013, the
repeal of Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code") (and any comparable successor provision) ("Section 382"), or the
beginning of a taxable year of the Corporation (or any successor thereof) to
which no Tax Benefits may be carried forward.
"Tax Benefits" means the net operating loss carryovers, capital loss
carryovers, general business credit carryovers, alternative minimum tax credit
carryovers and foreign tax credit carryovers, as well as any "net unrealized
built-in loss" within the meaning of Section 382, of the Corporation or any
direct or indirect subsidiary thereof.
"Transfer" means any direct or indirect sale, transfer, assignment,
conveyance, pledge, or other disposition (including by way of merger,
testamentary disposition, interspousal disposition pursuant to a domestic
relations proceeding or other action or otherwise by operation of law). A
Transfer also shall include the creation or grant of an option (within the
meaning of Treasury Regulation ss.1.382-4(d)(9)). A Transfer shall not include
an issuance or grant of Corporation Securities by the Corporation.
"Treasury Regulation ss.1.382" means the temporary income tax regulations
promulgated under Section 382, and any successor regulations. References to any
subsection of such regulations include references to any successor subsection
thereof.
SECTION 2. Any attempted Transfer of Corporation Securities prior to the
Restriction Release Date, or any attempted Transfer of Corporation Securities
pursuant to an agreement entered into prior to the Restriction Release Date,
shall be prohibited and void ab initio to the extent that, as a result of such
attempted Transfer (or any series of Transfers of which such attempted Transfer
is a part), either (1) any Person or group of Persons would become a
Five-Percent Shareholder, or (2) the Percentage Stock Ownership interest in the
Corporation of any Five-Percent Shareholder would be increased; provided,
however, that nothing herein contained shall preclude the settlement of any
transaction entered into through the facilities of the New York Stock Exchange,
Inc. in the Corporation Securities.
19
SECTION 3. The restrictions set forth in Section 2 of this Article EIGHTH
shall not apply to an attempted Transfer if the transferor or the transferee
obtains the prior written approval of the Board of Directors of the Corporation.
As a condition to granting its approval, the Board of Directors may, in its
discretion, require an opinion of counsel selected by the Board of Directors
that the Transfer shall not result in the application of any Section 382
limitation on the use of the Tax Benefits.
SECTION 4. (a) No employee or agent of the Corporation shall record any
Prohibited Transfer, and the purported transferee (the "Purported Transferee")
of such a Prohibited Transfer from a purported transferor (the "Purported
Transferor") shall not be recognized as a shareholder of the Corporation for any
purpose whatsoever in respect of the Corporation Securities which are the
subject of the Prohibited Transfer (the "Excess Securities"). Until the Excess
Securities are acquired by another Person in a Transfer that is not a Prohibited
Transfer, the Purported Transferee shall not be entitled with respect to such
Excess Securities to any rights of shareholders of the Corporation, including
without limitation, the right to vote such Excess Securities and to receive
dividends or distributions, whether liquidating or otherwise, in respect
thereof, if any. Once the Excess Securities have been acquired in a Transfer
that is not a Prohibited Transfer, the Securities shall cease to be Excess
Securities.
(b) If the Board of Directors determines that a Transfer of
Corporation Securities constitutes a Prohibited Transfer then, upon written
demand by the Corporation, the Purported Transferee and Purported Transferor
shall transfer or cause to be transferred any certificate or other evidence of
purported ownership of the Excess Securities within the Purported Transferee's
or Purported Transferor's possession or control, together with any dividends or
other distributions that were received by the Purported Transferee from the
Corporation with respect to the Excess Securities ("Prohibited Distributions"),
to an agent designated by the Board of Directors (the "Agent"). The Agent shall
thereupon sell to a buyer or buyers, which may include the Corporation, the
Excess Securities transferred to it in one or more arm's-length transactions
(over the New York Stock Exchange, if possible); provided, however, that the
Agent shall effect such sale or sales in an orderly fashion and shall not be
required to effect any such sale within any specific time frame if, in the
Agent's discretion, such sale or sales would disrupt the market for the
Corporation Securities or otherwise would adversely affect the value of the
Corporation Securities. If the Purported Transferee has purportedly resold the
Excess Securities before receiving the Corporation's demand to surrender the
Excess Securities to the Agent, the Purported Transferee shall be deemed to have
sold the Excess Securities for the Agent, and shall be required to transfer to
the Agent any Prohibited Distributions and the proceeds of such sale, except to
the extent that the Agent grants written permission to the Purported Transferee
to retain a portion of such sales proceeds not exceeding the amount that the
Purported Transferee would have received from the Agent pursuant to Section 4(c)
of this Article EIGHTH if the Agent rather than the Purported Transferee had
resold the Excess Securities.
(c) The Agent shall apply any proceeds of a sale by it of Excess
Securities and, if the Purported Transferee had previously resold the Excess
Securities, any amounts received by
20
it from a Purported Transferee, as follows: (1) first, such amounts shall be
paid to the Agent to the extent necessary to cover its costs and expenses
incurred in connection with its duties hereunder; (2) second, any remaining
amounts shall be paid to the Purported Transferee, up to the amount paid by the
Purported Transferee for the Excess Securities (or the fair market value,
calculated on the basis of the closing market price for Corporation Securities
on the day before the attempted Transfer, of the Excess Securities at the time
of the attempted Transfer to the Purported Transferee by gift, inheritance, or
similar Transfer), which amount (or fair market value) shall be determined in
the discretion of the Board of Directors; and (3) third, any remaining amounts
shall be paid to one or more organizations qualifying under Section 501(c)(3) of
the Code (and any comparable successor provision) ("Section 501(c)(3)") selected
by the Board of Directors, with no single organization receiving Excess
Securities in an amount that would provide it with greater than a 4.75
Percentage Stock Ownership in such class. The recourse of any Purported
Transferee in respect of any Prohibited Transfer shall be limited to the amount
payable to the Purported Transferee pursuant to clause (2) of the preceding
sentence. In no event shall the proceeds of any sale of Excess Securities
pursuant to this Article EIGHTH inure to the benefit of the Corporation.
(d) If the Purported Transferee or Purported Transferor fails to
surrender the purported evidence of the Excess Securities or the sums of money
required by Section 4(b) hereof to the Agent within 30 business days from the
date on which the Corporation makes a demand pursuant to Section 4(b) of this
Article EIGHTH, then the Corporation shall institute legal proceedings or take
other appropriate action to compel the surrender.
(e) The Corporation shall make the demand described in Section 4(b) of
this Article EIGHTH within 30 days of the date on which the Board of Directors
determines that the attempted Transfer would result in Excess Securities;
provided, however, that if the Corporation makes such demand at a later date,
the provisions of this Article EIGHTH shall apply nonetheless.
(f) Upon a request by the Corporation, a shareholder of the
Corporation shall disclose to the Corporation in writing such information with
respect to such shareholder's direct and indirect ownership of capital stock of
the Corporation as the Corporation deems necessary to ensure compliance with
this Article EIGHTH.
SECTION 5. (a) The Bylaws of the Corporation shall make appropriate
provisions to effectuate the requirements of this Article EIGHTH.
(b) All certificates representing Corporation Securities issued after
the effectiveness of this Article EIGHTH shall bear a conspicuous legend as
follows:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO
RESTRICTIONS PURSUANT TO ARTICLE EIGHTH OF THE CERTIFICATE OF
INCORPORATION OF XETAVA CORPORATION, AS SUCH ARTICLE EIGHTH OF THE
CERTIFICATE OF INCORPORATION MAY BE AMENDED
21
FROM TIME TO TIME, REPRINTED IN ITS ENTIRETY ON THE BACK OF THIS
CERTIFICATE.
(c) The Board of Directors of the Corporation shall have the power to
determine all matters necessary to determine compliance with this Article
EIGHTH, including without limitation (1) whether a new Five-Percent Shareholder
would be required to be identified in certain circumstances, (2) whether an
attempted Transfer would be a Prohibited Transfer, (3) the Percentage Stock
Ownership in the Corporation of any Five-Percent Shareholder, (4) whether an
instrument constitutes a Corporation Security, (5) the amount (or fair market
value) due to a Purported Transferee pursuant to clause (2) of Section 4(c) of
this Article EIGHTH, and (6) any other matters which the Board of Directors
determines to be relevant; and the good faith determination of the Board of
Directors on such matters shall be conclusive and binding for all the purposes
of this Article EIGHTH.
NINTH: The number of directors of the Corporation shall be fixed from time
to time solely by the Board of Directors of the Corporation, but shall not be
less than three. The initial number of directors of the Corporation shall be
seven. The directors shall be divided into three classes with the total number
of directors to be allocated among the three classes as equally as possible. The
initial term of office of the first class of directors shall expire at the 1999
annual meeting of stockholders; the initial term of office of the second class
of directors shall expire at the 2000 annual meeting of stockholders; and the
initial term of office of the third class of directors shall expire at the 2001
annual meeting of stockholders, in each case upon the election and qualification
of their successors. Commencing with the 1999 annual meeting of stockholders,
directors elected to succeed those directors whose terms have thereupon expired
shall be elected to a term of office to expire at the third succeeding annual
meeting of stockholders after their election, and upon the election and
qualification of their successors. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain or
attain the number of directors in each class as nearly equal as reasonably
possible, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. Newly-created directorships resulting from any
increase in the authorized number of directors or any vacancies on the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled solely by the affirmative
vote of a majority of the remaining directors then in office, even though less
than a quorum of the Board. Any director so chosen shall hold office until the
next election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. Notwithstanding the
foregoing, whenever the holders of any one or more series of Preferred Stock
shall have the right, voting separately as a class or series, to elect
directors, the election, removal, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of this
Certificate of Incorporation applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article NINTH unless
expressly provided by such terms. Notwithstanding any other provisions of this
Certificate of Incorporation or the by-laws of the Corporation, the affirmative
vote of the holders of 80% or more of the voting power of the shares of the then
outstanding voting stock, voting together as a single class, shall be required
to amend or repeal, or adopt any provisions inconsistent with this Article NINTH
of this
22
Certificate of Incorporation or any similar provision contained in the by-laws
of the Corporation.
TENTH: The Board of Directors shall have the power and authority at any
meeting to sell, lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate franchises, upon such
terms and conditions as a majority of the Board of Directors deems expedient and
for the best interests of the Corporation, provided such lease, sale or exchange
be authorized by the affirmative vote of the holders of record of at least
two-thirds of the total number of shares of the stock of the Corporation, at the
time issued and outstanding, having voting power, given at a stockholder's
meeting duly called for that purpose.
ELEVENTH: Notwithstanding the laws of the State of Delaware and other
provisions of this Certificate of Incorporation as to the affirmative vote of
the stockholders required to approve certain transactions, the transactions
hereinafter described shall under the circumstances hereinafter set forth
require a higher vote of the stockholders, all as hereinafter set forth:
SECTION 1. In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly provided in
Section 2 of this Article ELEVENTH or as otherwise prohibited by applicable law:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other
corporation (whether or not itself an Interested Stockholder)
which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested
Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or series of transactions) to,
or for the benefit of, any Interested Stockholder or any
Affiliate of the Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value of $1,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to, or for the
benefit of, any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
Fair Market Value of $1,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by, on behalf of, or
for the benefit of, an Interested Stockholder or any Affiliate
of any Interested Stockholder; or
23
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(vi) any agreement, contract or other arrangement providing for any
one or more of the actions specified in the foregoing clauses
(i) through (v);
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise. The term "Business Combination" as hereinafter
used in the Article ELEVENTH shall mean any transaction which is referred to in
any one or more of clauses (i) through (vi) of this Section 1.
SECTION 2. The provisions of Section 1 of this Article ELEVENTH shall not
be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law and
any other provision of this Certificate of Incorporation, if the conditions
specified in either of the following paragraphs (a) or (b) are met:
(a) The Business Combination shall have been approved by a majority of the
Continuing Directors (as hereinafter defined).
(b) All of the following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the
Business Combination of consideration other than cash to be received
per share by holders of Common Stock in such Business Combination
shall be at least equal to the highest of the following:
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of Common Stock
acquired by it (1) within the two-year period immediately prior to
the first public announcement of the proposal of the Business
Combination (the "Announcement Date") or (2) in the transaction in
which it became an Interested Stockholder, whichever is higher;
24
(B) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder
became an Interested Stockholder (such later date is referred to in
this Article ELEVENTH as the "Determination Date"), whichever is
higher; and
(C) (if applicable) the price per share equal to the Fair
Market Value per share of Common Stock determined pursuant to
paragraph b(i)(B) above, multiplied by the ratio of (1) the highest
per share price (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by the Interested Stockholder for
any shares of Common Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the Fair Market
Value per share of Common Stock on the first day in such two-year
period upon which the Interested Stockholder acquired any shares of
Common Stock.
(ii) The aggregate amount of the cash and the Fair Market Value as
of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of
shares of any other class of outstanding Voting Stock (other than
Institutional Voting Stock, as hereinafter defined) shall be at least
equal to the highest of the following (it being intended that the
requirement of this paragraph b(ii) shall be required to be met with
respect to every class of outstanding Voting Stock (other than
Institutional Voting Stock), whether or not the Interested Stockholder
has previously acquired any shares of a particular class of Voting
Stock):
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of such class of
Voting Stock acquired by it (1) within the two-year period
immediately prior to the Announcement Date or (2) in the transaction
in which it became an Interested Stockholder, whichever is higher;
(B) (if applicable) the highest preferential amount per share
to which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(C) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(D) (if applicable) the price per share equal to the Fair
Market Value per share of such class of Voting Stock determined
pursuant to paragraph b(ii)(C) above, multiplied by the ratio of (1)
the highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of Voting
25
Stock acquired by it within the two-year period immediately prior to
the Announcement Date to (2) the Fair Market Value per share of such
class of Voting Stock on the first date in such two-year period upon
which the Interested Stockholder acquired any shares of such class
of Voting Stock.
(iii) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in
cash or in the same form as the Interested Stockholder has previously
paid for shares of such class of Voting Stock. If the Interested
Stockholder has paid for shares of any class of Voting Stock with
varying forms of consideration, the form of consideration for such
class of Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock previously
acquired by it.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business
Combination: (a) there shall have been (1) no reduction in the annual
rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), except as approved by a
majority of the Continuing Directors, and (2) an increase in such
annual rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing the number
of outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the Continuing
Directors; and (b) such Interested Stockholder shall have not become
the Beneficial Owner of any additional shares of Voting Stock except
as part of the transaction which results in such Interested
Stockholder becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to public stockholders of the Corporation
at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information is required to
be mailed pursuant to such Act or subsequent provisions).
SECTION 3. As used in this Article ELEVENTH, the following terms have the
following respective meanings:
26
"Person" means an individual, corporation, estate, trust, association,
company, partnership, joint venture or other entity.
"Interested Stockholder" means any Person (other than the Corporation, any
Subsidiary, or any profit-sharing, employee stock ownership or other employee
benefit plan of the Corporation or any Subsidiary or any trustee or fiduciary
with respect to any such plan, or holding Voting Stock for the purpose of
funding any such plan or funding other employee benefits for employees of the
Corporation or any Subsidiary when acting in such capacity) who or which:
(i) is or has announced or publicly disclosed a plan or intention to
become the Beneficial Owner, directly or indirectly, of more than 10%
of the voting power of the outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
Beneficial Owner, directly or indirectly, of 10% or more of the voting
power of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
For the purposes of determining whether a Person is an Interested
Stockholder, the number of shares of Voting Stock deeded to be outstanding shall
include shares deemed owned through application of the definition of Beneficial
Owner but shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
"Beneficial Owner" of any Voting Stock means:
(i) which such Person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such Person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (b) the right to vote pursuant to any agreement, arrangement or
understanding (but neither such Person nor any such Affiliate or
Associate shall be deemed to be the beneficial owner of any shares of
Voting Stock solely by reason of a revocable proxy granted for a
particular meeting of stockholders pursuant to a public
27
solicitation of proxies for such meeting, and with respect to which
shares neither such Person nor any such Affiliate or Associate is
otherwise deemed the beneficial owner); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the parenthetical clause in (ii)(b) above) or
disposing of any shares of Voting Stock.
"Affiliate" or "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on April 7, 1998.
"Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in paragraph B of this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
"Continuing Director" means any member of the Board of Directors of the
Corporation (the "Board") who is unaffiliated with an Interested Stockholder and
was a member of the Board prior to the time that the Interested Stockholder
became an Interested Stockholder, and any director who (a) is thereafter elected
or is appointed to fill any vacancy or newly-created directorship, (b) is not an
Affiliate or Associate or representative of any Interested Stockholder and (c)
is recommended or elected, as the case may be, by a majority of the then
Continuing Directors. In order for a Business Combination or other action to be
approved, or a fact or other matter to be determined, "by a majority of the
Continuing Directors" hereunder, there must be one or more Continuing Directors
then serving on the Board of Directors.
"Fair Market Value" means: (i) in the case of cash, the amount thereof;
(ii) in the case of stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a share of such stock on
the Composite Tape for stocks listed on the New York Stock Exchange, or, if such
stock is not quoted on the Composite Tape, on the New York Stock Exchange, or,
if such stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined by the
Board in good faith; and (iii) in the case of property other than cash or stock,
the fair market value of such property on the date in question as determined by
a majority of the Continuing Directors, if any.
28
"Institutional Voting Stock" means any class of Voting Stock which was
issued to and continues to be held solely by one or more insurance companies,
pension funds, commercial banks, savings banks or similar financial institutions
or institutional investors.
SECTION 4. In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received" as used in
paragraphs (b)(i) and (ii) of Section 2 of this Article ELEVENTH shall include
the shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
SECTION 5. A majority of the Continuing Directors, if any, shall have the
power and duty to determine for the purposes of this Article ELEVENTH, on the
basis of information known to them after reasonable inquiry, all questions
arising under this Article ELEVENTH, including, without limitation, (A) whether
a Person is an Interested Stockholder, (B) the number of shares of Voting Stock
beneficially owned by any Person, (C) whether a Person is an Affiliate or
Associate of another, (D) whether a class of Voting Stock is Institutional
Voting Stock, (E) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more and (F)
whether the applicable conditions set forth in Section 2(b) of this Article
ELEVENTH have been met with respect to any Business Combination.
SECTION 6. Nothing contained in this Article ELEVENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
SECTION 7. The fact that any Business Combination complies with the
provisions of Section 2(b) of this Article ELEVENTH shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the stockholders of the Corporation, nor
shall such compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to evaluations of or
actions and responses taken with respect to such Business Combination.
SECTION 8. Notwithstanding any other provisions of this Certificate of
Incorporation or the by-laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of 80% or more of the voting power of the shares of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend or
repeal, or adopt any provisions inconsistent with, this Article ELEVENTH of this
Certificate of Incorporation.
TWELFTH: The Corporation shall have the power to create and issue, whether
or not in connection with the issue and sale of any shares of stock or other
securities of the Corporation, rights or options entitling the holders thereof
to purchase from the Corporation any shares of its capital stock of any class or
classes, such rights or options to be evidenced by or in such instrument or
instruments as shall be approved by the Board of Directors, which
29
instrument or instruments may contain such provisions against dilution of the
stock deliverable against said rights or options as may, in the judgment of the
Board of Directors, be deemed expedient or necessary, and may contain a
provision that if the Corporation shall offer to its stockholders of any class
or series as a class, rights to subscribe for shares of stock or other
securities, it shall offer to the holders of such rights or options the right to
subscribe for such stock or other securities on the terms and to the extent on
and to which the holders of such rights or options would be entitled to
subscribe were they the holders of record of the number of shares of stock then
deliverable against such rights or options. The terms upon which, the time or
times, which may be limited or unlimited in duration, at or within which, and
the price or prices at which any such shares may be purchased from the
Corporation upon the exercise of any such right or option, shall be such as
shall be fixed and stated in a resolution or resolutions adopted by the Board of
Directors providing for the creation and issue of such rights or options, and,
in every case, set forth or incorporated by reference in the instrument or
instruments evidencing such rights or options. The Corporation shall reserve and
have at all times available a sufficient number of its shares of stock or
securities or assets to satisfy the rights and privileges contained in all its
outstanding rights or options for the purpose of stock or other securities.
THIRTEENTH: In addition to the powers and authorities herein or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, however, to the provisions of the laws of the State of
Delaware, of this Certificate of Incorporation and of the by-laws of the
Corporation.
FOURTEENTH: In furtherance of and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeal the by-laws of the Corporation.
FIFTEENTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any written consent
in lieu of a meeting by such holders.
SIXTEENTH: A director of the Corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (A) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (B) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (C) under Section 174 of the DGCL or (D) for any transaction
from which the director derives an improper personal benefit. If the DGCL is
hereafter 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 DGCL as so amended. Any repeal or modification of this article shall not
adversely affect any right or protections of a director of the Corporation
existing at the time of such repeal or modification.
30
SEVENTEENTH: To the fullest extent permitted by Section 145 of the DGCL or
any successor provisions thereto, (A) the Corporation shall (1) indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding (a "proceeding"),
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation, or, while a
director or officer of the Corporation, is or was serving at the request of the
Corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding and (2) pay, upon receipt of any
undertaking to repay amounts advanced required by the DGCL, expenses incurred by
such person in defending a civil or criminal action, suit or proceeding in
advance of the final disposition of such action, suit or proceeding, and (B) the
Corporation may (1) indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was an employee or agent of the Corporation,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding and (2) pay expenses incurred by such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding. Notwithstanding clause (A)(1) of
the preceding sentence, the Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
Indemnitee was authorized by the Board of Directors of the Corporation. The
foregoing indemnification and advancement of expenses provisions shall not be
deemed exclusive of any other rights to indemnification or advancement of
expenses to which any such person may be entitled under any statute, by-law,
agreement, vote of stockholders or disinterested directors or otherwise and are
deemed to be contract rights with respect to each person entitled to the
benefits of such new provisions. Any change in law that purports to restrict the
ability of the Corporation to indemnify or advance expenses to any such person
shall not affect the Corporation's obligation or right to indemnify and advance
expenses to any such person with respect to any action, claim, suit or
proceeding that occurred or arose or that is based on events or acts that
occurred or arose, prior to such change in law.
EIGHTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, provided that in addition to any
other vote of stockholders required elsewhere in this Certificate of
Incorporation (including Article NINTH hereof), such amendment, alteration,
change or repeal is authorized by a resolution adopted by the affirmative vote
of the holders of record of at least two-thirds of the total number of shares of
capital stock of the Corporation at the time issued and outstanding having
voting powers given at a stockholders' meeting duly called for that purpose, and
all rights and powers conferred herein upon stockholders, directors and officers
are subject to this reserved power.
31
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Incorporation on this 8th day of April, 1998.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Sole Incorporator
32
EXHIBIT C
XETAVA CORPORATION
BY-LAWS
OFFICES
1. The principal office of XETAVA CORPORATION (the "Corporation")
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the name of the resident agent in charge thereof is the Corporation Trust
Company.
The Corporation may also have offices outside the State of Delaware at
such places as the Board of Directors may, from time to time, appoint or the
business of the Corporation may require.
SEALS
2. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed, reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. All the meetings of the stockholders shall be held at the office of
the Corporation in the City of Wilmington, County of New Castle, State of
Delaware, or at such other places as the Board of Directors may determine.
4. The annual meeting of the stockholders shall be held on the third
Wednesday of July of each year, commencing in 1999, if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 10:00 a.m.
(Daylight Savings Time, if in effect), or at such other date and time as the
Board of Directors may determine. At the annual meeting of stockholders, the
stockholders shall elect by a plurality vote, by ballot, a Board of Directors
and may transact any and all other business which may be brought before the
meeting.
5. The holders of forty percent (40%) in voting power of the issued
and outstanding stock of the Corporation entitled to vote, present in person or
represented by proxy, shall constitute a quorum, except as otherwise required by
the laws of Delaware, by the Certificate of Incorporation or by these By-laws.
In the event of lack of a quorum, the chairman of the meeting or a majority in
interest of the stockholders present in person or represented by proxy may
adjourn the meeting from time to time without notice other than an announcement
at the meeting until a quorum shall be obtained. At any such adjournment meeting
at which there is a quorum, any business may be transacted which might have been
transacted at the meeting originally called.
33
6. At each meeting of the stockholders every stockholder having the
right to vote shall be entitled to vote, in person or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date no more
than three (3) years prior to said meeting, unless said instrument provides for
a longer period. Except as otherwise provided in the Certificate of
Incorporation, each stockholder shall have one vote for each share of stock
having voting power registered in his name on the books of the Corporation on
the date fixed as the record date for the determination of stockholders entitled
to vote. The vote for directors, and, upon the demand of any stockholder the
vote upon any question before the meeting, shall be by ballot. Except for the
election of directors which shall be determined by a plurality vote under
Section 4 hereof, all questions and matters shall, unless otherwise provided by
the Certificate of Incorporation, these By-laws, the rules or regulations of any
stock exchange applicable to the Corporation, as otherwise provided by law or
pursuant to any regulation applicable to the Corporation, be decided by the
affirmative vote of the holders of a majority in voting power of the shares of
stock of the Corporation which are present in person or by proxy and entitled to
vote thereon. All proxies shall be filed with the Secretary.
Notwithstanding any other provision in these By-laws or the
Certificate of Incorporation, all proxies, consents, ballots and voting
tabulations that identify stockholders shall be kept confidential, except when
disclosure is mandated by applicable law or such disclosure with respect to a
proxy, consent, ballot or voting of particular stockholders is expressly
requested by such stockholders. The tabulators and inspectors of election in
respect to all proxies, consents, ballots and voting with respect to the
Corporation shall be independent and not be directors, officers or employees of
the Corporation.
7. Written notice of the annual meeting of stockholders shall be
mailed, postage prepaid, at least ten (10) days prior to the meeting to each
stockholder entitled to vote thereat at such address as appears on the stock
transfer books of the Corporation.
8. Each election of directors shall be conducted by one (1) inspector
or judge, who may or may not be a stockholder, appointed by the presiding
officer of the meeting. The inspector or judge shall be sworn to the faithful
performance of his duties and shall, in writing, certify to the returns. No
person who is a candidate for the office of director shall be an inspector or
judge.
9. A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order with the residence of each and the
number of voting shares held by each, shall be prepared by the Secretary and
filed in the office where the election is to be held or at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting, at least ten (10) days before every election, and shall at
all times during the usual hours for business and during the whole time of said
election be open to the examination of any stockholder.
10. Special meetings of the stockholders, for any purpose or purposes
unless otherwise prescribed by statute, may be called at any time by the Board
of Directors
34
and shall be called by the Chairman of the Board, or either Co-Chairman of the
Board, as the case may be, or the Secretary at the request in writing of
stockholders owning a majority in voting power of the issued and outstanding
capital stock of the Corporation. Such request shall state the purpose or
purposes of the proposed meeting.
11. Business transacted at all special meetings of stockholders shall
be confined to the matters stated in the call.
12. Written notice of each special meeting of stockholders, stating
the time and place and the purposes for which the meeting is called, shall be
mailed, postage prepaid, at least ten (10) days before such meeting, to each
stockholder entitled to vote thereat at such address as appears on the stock
transfer books of the Corporation.
12A. Written notice of the intent to make a nomination for election to
the Board of Directors or to have any other matter considered at a meeting of
stockholders, which is a proper matter for stockholder action at such meeting,
must be received by the Secretary of the Corporation not later than (a) with
respect to an annual meeting of stockholders, 45 days in advance of such
meeting; and (b) with respect to a special meeting of stockholders, the close of
business on the seventh day following the date on which notice of the meeting is
first given to stockholders. The notice must contain (a) the name and address of
the stockholder who intends to (i) make a nomination for election to the Board
of Directors and of the person or persons to be nominated or (ii) propose such
business, as the case may be; (b) a representation that the stockholder is a
holder of record of the Corporation's stock entitled to vote at the meeting and
the class and number of shares of the Corporation which are beneficially owned
by the stockholder; (c) in connection with consideration of any matter unrelated
to the election of directors, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder; (d) with
respect to nominations for election to the Board of Directors, a description of
all arrangements or understandings between the stockholders and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nominee or nominations are to be made by the stockholder; (e) with respect
to nominations for election to the Board of Directors, such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated, or intended
to be nominated, by the Board of Directors of the Corporation; and (f) with
respect to nominations for election to the Board of Directors, the consent of
each nominee to serve as a director of the Corporation if so elected.
DIRECTORS
13. To make a nomination for election to the Board of Directors at any
meeting of stockholders, a stockholder of the Corporation must comply with the
procedures set forth in Section 12A hereof. The property and business of this
Corporation shall be
35
managed by or under the direction of its Board of Directors. Directors need not
be stockholders.
14. The directors may hold their meetings, have one or more officers
and keep the books of the Corporation outside of Delaware at such place or
places as they may from time to time determine.
15. The Board of Directors shall have and exercise all the powers
belonging or pertaining to the Corporation as fully and in all respects and with
like effect as the stockholders in their corporate capacity could have and
exercise the same, excepting only as to such matters as by law, or the
Certificate of Incorporation or these By-laws require the action of the
stockholders. The Board of Directors shall have the power to create such offices
and appoint such officers, in addition to those prescribed by these By-laws, and
such other agents and officers, agents and employees, including the officers
provided for in these By-laws; to declare and pay such dividends out of the net
earnings of the Corporation as it deems proper; to fix from time to time the
amount to be reserved as working capital; to hold in reserve such part of the
earnings as it deems proper and to invest the same in any property necessary or
property in its judgment, to carry on, improve and enlarge the business and
property of the Corporation; to incur such indebtedness, to enter into such
contracts, to acquire such property, to sell, convey, transfer, mortgage and
exchange such portions of the property of the Corporation, and generally to
conduct, manage and control the business and property of the Corporation in such
manner as the directors, in their judgment, deem proper.
COMMITTEES
16. The Board of Directors may, by resolution, establish an Executive
Committee which shall consist of not less than two (2) members of the Board of
Directors. The Executive Committee shall consist of the Co-Chairmen of the Board
and such other members of the Board of Directors as may be appointed by such
resolution. Subject to the limitations imposed by the laws of Delaware, the
Certificate of Incorporation, these By-laws or a resolution of the Board of
Directors, the Executive Committee shall have the authority to exercise all of
the powers of the Board of Directors in the management and business affairs of
the Company. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
17. The Board of Directors may, by resolution, designate such
additional standing committees or special committees of the Board of Directors
as it may, from time to time, deem appropriate.
COMPENSATION OF DIRECTORS
18. Directors shall be compensated for their services in such manner
as the Board of Directors may determine, and in addition to such allowance they
shall be reimbursed for necessary traveling expenses incurred in attending the
meetings away from their respective homes. The Corporation shall not enter into
or extend any agreements or
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arrangements pursuant to which compensation would be paid to any director,
officer or employee of the Corporation contingent upon a change of control,
merger or acquisition of the Corporation, without the affirmative vote of a
majority of the issued and outstanding stock of the Corporation entitled to
vote.
19. Members of the Executive Committee or other special or standing
committees shall also be compensated in such manner as the Board of Directors
may determine.
MEETINGS OF THE BOARD
20. The newly elected Board may meet, at the place of holding and
immediately following the annual meeting of the stockholders at which they are
elected, for the purpose of organization, election of officers and transacting
such other business as shall be brought before the meeting, and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a majority of the whole Board shall be
present, or they may meet at such place and time as shall be fixed by the
Chairman of the Board or the majority of the directors on like notice as
hereinafter provided for the calling of special meetings of the Board.
21. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board. Special
meetings of the Board may be called by the Chairman of the Board, or either of
the Co-Chairmen of the Board, as the case may be, on five (5) days' notice to
each Director by mail or on one (1) day's notice to each Director by telephone
or telegram. Special meetings shall be called by the Chairman of the Board, or
either of the Co-Chairmen of the Board, as the case may be, or the Secretary in
like manner and on like notice on the written request of as majority of the
directors.
22. At all meetings of the Board the presence of a majority of the
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business and, except as may be otherwise specifically provided by
law or by the Certificate of Incorporation or by these By-laws, the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors.
OFFICERS
23. The officers of the Corporation shall be chosen by the Board of
Directors at the first meeting of the Board after each annual meeting of
stockholders and shall be a Chairman of the Board, or two Co-Chairmen of the
Board who shall be members of the Board, a Chief Executive Officer, who need not
be a member of the Board and a Secretary, who need not be a member of the Board.
The Board of Directors may also choose one or more Vice Chairmen, a Treasurer, a
Controller and such number of Assistant Secretaries, Assistant Treasurers and
Assistant Controllers as it shall deem necessary, who shall hold their offices
for such terms and shall have such authority, exercise such powers
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and perform such duties as shall be determined from time to time by the Board.
Any number of officers may be held by the same person.
24. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer, agent or employee
of the Corporation may be removed or suspended at any time by the affirmative
vote of a majority of the whole Board of Directors. If the office of any officer
or officers becomes vacant for any reason, the vacancy shall be filled by the
Board of Directors.
DUTIES AND POWERS OF OFFICERS AND DIRECTORS
THE CHAIRMAN OF THE BOARD/CHIEF EXECUTIVE OFFICER
25. The Chairman of the Board, or the Co-Chairmen of the Board, as the
case may be, shall preside at all meetings of the stockholders and of the Board
of directors. Under the direction of the Board of Directors, the Chief Executive
Officer of the Corporation shall have the general management and control,
subject to the approval of the Board of Directors, of the business and property
of the Corporation; shall direct all officers, employees and agents of the
Corporation; shall see that all orders and resolutions of the Board of Directors
are carried into effect; and shall perform all such other duties and exercise
all such other powers as are usually incident and pertain to the chief executive
officer of a corporation as well as such other duties and powers as the Board of
Directors may from time to time prescribed. He may, from time to time, delegate
to any other officer or officers any of his duties or powers.
26. Either of the Co-Chairmen of the Board, in the absence of the
other, shall perform the duties of the Chairman of the Board and shall perform
such other duties as the Board of Directors may prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
27. The Secretary shall attend all sessions of the Board of Directors
and all meetings of the stockholders and record all votes and the proceedings of
the meetings of the stockholders and directors in a book to be kept for that
purpose; and shall perform like duties for the Executive Committee and other
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors. He
shall keep in safe custody the seal of the Corporation and when authorized by
the Board of Directors or the Executive Committee affix the same to any
instrument requiring it, and when so affixed it shall be attested by his
signature. He shall be sworn to the faithful discharge of his duty.
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28. Any Assistant Secretary shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Board of Directors shall prescribed.
DUTIES OF OFFICERS MAY BE DELEGATED
29. In case of the absence of any officer of the Corporation, or for
any other reason the Board of Directors may deem sufficient, the Board may
delegate, for the time being, the powers or duties of such officer to any other
officer, or to any director, provided a majority of the entire Board of
Directors concur therein.
CERTIFICATES OF STOCK
30. The certificates for shares of capital stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall exhibit the holder's name and number of shares and shall
be signed by the Chairman of the Board, or either of the Co-Chairmen of the
Board, as the case may be, and by the Treasurer or the Secretary or an Assistant
Secretary. Any or all of the signatures on the certificates may be a facsimile.
31. The form of the stock certificates of the Corporation shall be
such as shall be prescribed and adopted by the Board of Directors from time to
time.
32. All certificates for shares of capital stock of the Corporation
shall be registered by a Registrar, selected by the Board of Directors and
certificates shall not be valid unless countersigned by such Registrar, which
signature of the Registrar may be a facsimile.
33. So long as the restrictions set forth in Article EIGHTH of the
Certificate of Incorporation of the Corporation shall not have lapsed, all share
certificates representing shares of capital stock shall bear a conspicuous
legend as follows:
"THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS
PURSUANT TO ARTICLE EIGHTH OF THE CERTIFICATE OF INCORPORATION OF THE
CORPORATION, AS SUCH ARTICLE EIGHTH OF THE CERTIFICATE OF
INCORPORATION MAY BE AMENDED FROM TIME TO TIME, REPRINTED IN ITS
ENTIRETY ON THE BACK OF THE CERTIFICATE."
TRANSFERS OF STOCK
34. Subject to Article EIGHTH of the Certificate of Incorporation of the
Corporation, transfers of capital stock shall be made on the books of the
Corporation only by the stockholder named in the certificate, in person or by
duly authorized attorney. No
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transfer shall be made unless and until the certificate previously issued for
the share or shares to be transferred shall have been properly endorsed and
surrendered for cancellation. All certificates shall be issued and all transfers
shall be made by a Transfer Agent selected by the Board of Directors and
certificates shall not be valid unless countersigned by such Transfer Agent,
which signature of the Transfer Agent may be a facsimile.
35. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of the stockholders 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 lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of such meeting, more than sixty (60) days prior to any other action,
and in such case only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at such
meeting, or to receive payment of such dividend or other distribution or
allotment of rights, or to exercise any rights in respect of any change,
conversion or exchange of stock, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
REGISTERED STOCKHOLDERS
36. The Corporation shall be entitled to treat the holder of record of
any share or shares of its capital stock as the absolute owner thereof for all
purposes and shall not be bound to recognize any equitable or other interest in
or claim to such shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
LOST CERTIFICATES
37. Any person requesting a certificate or evidence of stock to be
issued in place of one lost or destroyed shall be required to make an affidavit
of affirmation as to the loss or destruction in such manner as the Board of
Directors may require, and to give the Corporation and its Transfer Agents and
Registrars a bond in such sum, as they may require to indemnify the Corporation
and its Transfer Agents and Registrars against any claim that may be made
against them or either of them on account of the alleged loss of any such
certificate, and the Board of Directors, being satisfied as to the loss or
destruction of the missing certificate shall have power to order and direct a
new certificate of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed to be issued in lieu thereof, provided however,
that a new certificate may be issued without requiring any bond when, in the
judgment of the Board of Directors, it is proper to do so. The Board shall have
authority to make a general arrangement with its Transfer Agents and Registrars
to provide an open penalty bond of indemnity without the necessity of individual
bonds in each
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case and evidence of such loss or destruction may be presented to the Transfer
Agents and Registrars.
INSPECTION OF BOOKS
38. No stockholder shall have the right to inspect any account nor
book or document of the Corporation except as conferred by the laws of the State
of Delaware.
FISCAL YEAR
39. The fiscal year shall begin the first day of April in each year.
DIVIDENDS
40. Dividends upon the capital stock of the Corporation, subject to
the provision of the Certificate of Incorporation, if any, may be declared by
the Board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock.
NOTICES
41. Whenever under the provisions of these By-laws notice is required
to be given to any Director, officer or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
postage prepaid, addressed to such stockholder, officer or Director at such
address as appears on the books of the Corporation, or in default of other
address, to such Director, officer or stockholder, at the General Post Office in
the City of Wilmington, Delaware and such notice shall be deemed to be given at
the time when the same shall be thus mailed. Whenever any notice whatsoever is
required to be given under the provisions of these By-laws, or under the
provisions of the statutes of the State of Delaware, a waiver thereof in
writing, signed by the stockholder, Director or officer entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
AMENDMENTS
42. The Board of Directors, by a majority vote of the entire Board of
Directors, may amend, alter or repeal these By-laws but any such action of the
Board of Directors shall be subject to amendment or repeal by a majority vote of
the stockholders at any annual meeting or at any special meeting called for such
purposes. The stockholders may adopt a By-law or By-laws at any annual meeting
or at any special meeting called for such purposes.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
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43. To the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware (the "DGCL") or any successor
provisions thereto, (A) the Corporation shall (1) indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding ("proceeding"), whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Corporation, or, while a director or officer of
the Corporation, is or was serving at the request of the Corporation as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding and (2) pay, upon receipt of any undertaking to
repay amounts advanced required by the DGCL, expenses incurred by such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding, and (B) the Corporation may (1)
indemnify any person who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was an employee or agent of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding and (2) pay expenses incurred by such person in defending a
civil or criminal action, suit or proceeding in advance of the final disposition
of such action, suit or proceeding. Notwithstanding clause (A)(1) of the
preceding sentence, the Corporation shall be required to indemnify an indemnitee
in connection with a proceeding (or part thereof) commenced by such indemnitee
only if the commencement of such proceeding (or part thereof) by the Indemnitee
was authorized by the Board of Directors of the Corporation. The foregoing
indemnification and advancement of expenses provisions shall not be deemed
exclusive of any other rights to indemnification or advancement of expenses to
which any such person may be entitled under any statute, by-law, agreement, vote
of stockholders or disinterested directors or otherwise and are deemed to be
contract rights with respect to each person entitled to the benefits of such new
provisions. Any change in law that purports to restrict the ability of the
Corporation to indemnify or advance expenses to any such person shall not affect
the Corporation's obligation or right to indemnify and advance expenses to any
such person with respect to any action, claim, suit or proceeding that occurred
or arose or that is based on events or acts that occurred or arose, prior to
such change in law.
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