SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
5) Total fee paid:
______________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________________________________
2) Form, Schedule or Registration Statement No.:
______________________________________________________________________
3) Filing Party:
______________________________________________________________________
4) Date Filed:
______________________________________________________________________
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
907 WEST 5TH STREET
SUITE 203
AUSTIN, TEXAS 78703
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 24, 2001
To the Shareholders of American Absorbents Natural Products, Inc.
Notice is hereby given that a special meeting of shareholders of American
Absorbents Natural Products, Inc., a Utah corporation, will be held on August
24, 2001, at 10:00 a.m., local time, at Westwood Country Club, 3808 West 35th
Street, Austin, Texas 78703, for the following purposes:
1. To approve the proposal to change our state of incorporation from Utah
to Delaware and, in doing so, to change our name to Earful of Books,
Inc.
2. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Only shareholders of record at the close of business on August 1, 2001, are
entitled to notice of, and to vote at, the special meeting.
You are cordially invited and urged to attend the special meeting, but if
you are unable to attend, please sign and date the enclosed proxy and return it
promptly in the enclosed self-addressed stamped envelope. A prompt response
will be appreciated. If you attend the special meeting, you may vote in person,
if you wish, whether or not you have returned your proxy. In any event, a proxy
may be revoked at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
PAUL A. RUSH,
Chairman of the Board and
Chief Executive Officer
Austin, Texas
August 10, 2001
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AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
907 WEST 5TH STREET
SUITE 203
AUSTIN, TEXAS 78703
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 24, 2001
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting will be held on August 24, 2001, at 10:00 a.m., local
time, at Westwood Country Club, 3808 West 35th Street, Austin, Texas 78703.
SOLICITATION AND REVOCABILITY OF PROXIES
Your board of directors is soliciting your proxy as a holder of American
Absorbents Natural Products, Inc. common stock, $.001 par value (the "Common
Stock"), for use at our special meeting of shareholders.
Shares represented by a proxy in the form enclosed, duly signed, dated and
returned to us and not revoked, will be voted at the meeting in accordance with
the directions given, but in the absence of directions to the contrary, such
shares will be voted:
- for the proposal to reincorporate our company from Utah to Delaware
and to change our name to Earful of Books, Inc.; and
- in accordance with the best judgment of the persons voting on any
other proposals that may properly come before the meeting. The board
of directors knows of no other matters, other than those stated in the
foregoing notice, to be presented for consideration at the special
meeting or any adjournment(s) thereof. If, however, any other matters
properly come before the special meeting or any adjournment(s)
thereof, it is the intention of the persons named in the enclosed
proxy to vote such proxy in accordance with their judgment on any such
matters. The persons named in the enclosed proxy may also, if it is
deemed to be advisable, vote such proxy to adjourn the meeting from
time to time.
Any shareholder executing and returning a proxy has the power to revoke it
at any time before it is voted by delivering to 907 West 5th Street, Suite 203,
Austin, Texas 78703, attention: Secretary, a written revocation thereof or by
duly executing a proxy bearing a later date. Any shareholder attending the
special meeting of shareholders may revoke his proxy by notifying the secretary
at such meeting and voting in person if he desires to do so. Attendance at the
special meeting will not by itself revoke a proxy.
The approximate date on which this proxy statement and the form of proxy
are first sent to shareholders is August 10, 2001.
We will bear the cost of soliciting proxies. Solicitation may be made,
without additional compensation, by our directors, officers and regular
employees in person or by mail, telephone or telegram. We may also request
banking institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries to forward solicitation material to the beneficial owners of the
Common Stock held of record by such persons, and we will reimburse the
forwarding expense. We will bear all costs of preparing, printing and mailing
the form of proxy and the material used in the solicitation thereof.
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RECORD DATE AND VOTING SECURITIES
The close of business on August 1, 2001, is the record date (the "Record
Date") for determination of shareholders entitled to notice of and to vote at
the special meeting or any adjournment(s) thereof. Our only voting security
currently outstanding is the Common Stock, each share of which entitles the
holder thereof to one vote. At the Record Date, there were outstanding and
entitled to be voted 17,934,579 shares of Common Stock.
QUORUM AND VOTING
The presence at the special meeting, in person or by proxy, of the holders
of a majority of the Common Stock issued and outstanding is necessary to
constitute a quorum to transact business. Each share represented at the special
meeting, in person or by proxy, will be counted for purposes of determining
whether a quorum is present. In deciding all matters, a holder of Common Stock
on the Record Date shall be entitled to cast one vote for each share of Common
Stock then registered in such holder's name.
An abstention is not an affirmative vote and, therefore, will have the same
effect as a vote against a proposal. Brokers who hold shares in street name
only have the authority to vote on certain items when they have not received
instructions from beneficial owners. Any such "broker non-votes" will not be
considered to be present and entitled to vote and will have no voting effect.
RECENT EVENTS
We recently entered into a transaction that had the effect of a change of
control. Pursuant to an Agreement and Plan of Merger (the "Plan"), dated June
29, 2001, by and between us, a newly formed wholly owned subsidiary of ours and
Audiobooks of Texas, Inc. d/b/a Earful of Books, a Texas corporation ("Earful"),
the shareholders of Earful now own 76% of our issued and outstanding voting
securities. Paul A. Rush, the chairman of the board of directors, president,
chief executive officer, and the largest former shareholder of Earful became our
chairman of the board of directors and chief executive officer and now owns
approximately 8.4% of our issued and outstanding voting securities. Other
former directors of Earful that have become our directors now own the following
percentage of our issued and outstanding voting securities: Ken Anderson
(4.1%), Russell Grigsby (4.0%), Jim Peterson (5.5%), Goodhue Smith (4.3%), and
Roy Terracina (6.5%). Robert Bitterli, one of our directors and our former
chief executive officer now owns 3.4%. Pursuant to the Plan, all of our
directors and officers other than Mr. Bitterli have resigned and, pursuant to
our bylaws, Mr. Bitterli, as the remaining director, replaced the resigning
directors and officers as set forth below.
Paul A. Rush, chairman of the board of directors, chief executive officer
and director; Jeffrey L. Lindholm, president; Myron E. Sappington, chief
financial officer; Jay A. Ferguson, vice president of operations; Kenneth
W. Anderson, director; Russell A. Grigsby, director; Jim L. Peterson,
director; Goodhue W. Smith, III, director; Roy D. Terracina, director; and
Garrett Boone, advisory director.
Effective July 6, 2001, our newly formed wholly-owned subsidiary was merged
with and into Earful with Earful being the surviving corporation (the "Merger").
As a result, Earful is now our wholly-owned operating subsidiary. Pursuant to
the Merger, the issued and outstanding common stock and warrants of Earful were
converted into the right to receive our Common Stock and warrants. As such, all
of the issued and outstanding shares of common stock and warrants of Earful were
converted into a total of 13,531,480 shares of our Common Stock and warrants to
purchase 147,747 shares of our Common Stock. Such conversion resulted in the
sixty-nine (69) former shareholders of Earful now collectively owning
approximately 76% of the 17,934,579 issued and outstanding shares of our Common
Stock.
The former shareholders of Earful have obtained no loans or pledges for the
purpose of acquiring control. Following the replacement of certain of our
officers and directors in connection with the Plan, there are no arrangements or
understandings among Earful, us or any affiliates with respect to the election
of directors or other matters. We know of no arrangements, including any pledge
by any person of our securities, the operation of which may at a subsequent date
result in a change in control.
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SPECIAL REPORT ON FORM 8-K
We have included with the delivery of this proxy statement a copy of our
special report on Form 8-K filed with the Securities and Exchange Commission on
July 6, 2001, which describes in more detail the transaction discussed above. We
urge you to read the special report in its entirety.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information concerning (1) the only persons
known by us, based upon statements filed by such persons pursuant to Section
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to own beneficially in excess of 5% of our Common Stock as of August 1,
2001, and (2) the number of shares of Common Stock beneficially owned, as of
August 1, 2001, by each of our directors and each executive officer required to
be named pursuant to Item 402 of Regulation S-B under the Securities Act of
1933, as amended (the "Securities Act") and all of our executive officers and
directors as a group. Except as indicated, each individual has sole voting power
and sole investment power over all shares listed opposite his name.
SHARES BENEFICIALLY
OWNED
-------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ --------- --------
Directors and Named Executive Officers(1):
Paul A. Rush, Chairman of the Board, Chief Executive
Officer and Director(2) . . . . . . . . . . . . . . . 1,500,131 8.4%
Jeffrey L. Lindholm, President . . . . . . . . . . . . . 0 0
Myron E. Sappington, Chief Financial Officer(3). . . . . 0 0
Jay A. Ferguson, Vice-President of Operations. . . . . . 0 0
Kenneth L. Anderson, Director. . . . . . . . . . . . . . 734,250 4.1%
Russell Grigsby, Director. . . . . . . . . . . . . . . . 717,156 4.0%
Jim L. Peterson, Director. . . . . . . . . . . . . . . . 975,574 5.5%
Goodhue W. Smith, III, Director(4) . . . . . . . . . . . 975,574 5.4%
Roy D. Terracina, Director . . . . . . . . . . . . . . . 1,153,840 6.5%
Robert Bitterli, Director and former CEO . . . . . . . . 599,956 3.4%
Executive Officers and Directors as a Group (11 persons) 6,452,376 36.2%
Holders of 5% or More Not Named Above:
Dr. Jack Burrow
5927 Laurium Road
Charlotte, NC 28226 . . . . . . . . . . . . . . . . . . 1,050,000 5.9%
Donald J. Douglass
145 Oenoke Lane
New Canaan, CT 06840. . . . . . . . . . . . . . . . . . 1,014,855 5.7%
Jim Dicke, II
Crown Equipment Co.
Attn: Brad Smith
40-44 South Washington
New Bremen, OH 05849. . . . . . . . . . . . . . . . . . 882,508 5.0%
<FN>
- ----------------------
(1) The business address of each director and executive officer is care of
American Absorbents Natural Products, Inc., 907 West 5th Street, Suite 203,
Austin, TX 78703.
(2) The number of shares owned by Mr. Rush does not include warrants to
purchase 37,747 shares of Common Stock at an exercise price of $0.09 per
share, all of which will vest on December 31, 2001.
(3) The number of shares owned by Mr. Sappington does not include warrants to
purchase 110,000 shares of Common Stock at an exercise price of $0.73 per
share, all of which will vest on December 31, 2001.
(4) The number of shares owned by Mr. Smith includes 248,462 shares owned by a
Corporation in which Mr. Smith has a 50% interest. Mr. Smith disclaims
beneficial ownership of these shares.
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PROPOSAL ONE
REINCORPORATION IN DELAWARE AND THE ASSOCIATED
CHANGE OF OUR NAME TO EARFUL OF BOOKS, INC.
INTRODUCTION
For the reasons stated below, the board of directors believes that it is in
our best interests and in the best interests of our shareholders to change our
state of incorporation from Utah to Delaware and, in doing so, change our
name to Earful of Books, Inc. The board of directors has approved the
reincorporation, which, if approved by our shareholders, will be effected
pursuant to an agreement and plan of merger as described.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
As we plan for the future, the board of directors and management believe
that it is essential to be able to draw upon well established principles of
corporate governance in making legal and business decisions. The prominence and
predictability of Delaware corporate law provide a reliable foundation on which
our governance decisions can be based and we believe that shareholders will
benefit from the responsiveness of Delaware corporate law to their needs and to
those of the corporation they own. We also believe that reincorporation in
Delaware may reduce the cost and time involved in raising capital and engaging
in other business transactions because investors and other companies and their
counsel are generally more familiar with Delaware law.
For many years Delaware has followed a policy of encouraging incorporation
in that state. Consequently, Delaware has adopted comprehensive corporate laws
that are revised regularly to meet changing business circumstances. The
Delaware legislature is particularly sensitive to issues regarding corporate law
and is especially responsive to developments in modern corporate law. The
Delaware courts have developed considerable expertise in dealing with corporate
issues as well as a substantial body of case law construing Delaware's corporate
law. As a result of these factors, it is anticipated that Delaware law will
provide greater predictability in our legal affairs than is presently available
under Utah law.
In addition, there is substantial judicial precedent in the Delaware courts
as to the legal principles applicable to measures that may be taken by a
corporation and as to the conduct of the board of directors under the business
judgment rule. We believe that our shareholders will benefit from the well
established principles of corporate governance that Delaware law affords.
MECHANICS OF REINCORPORATION
The proposed reincorporation would be accomplished by our merging, pursuant
to an agreement and plan of merger in substantially the form attached as Exhibit
A to this proxy statement, into a newly-formed Delaware corporation that, just
before the merger, will be our wholly-owned subsidiary. The newly-formed
subsidiary will be the surviving corporation and will carry on our business.
After the reincorporation, the certificate of incorporation and bylaws of the
newly-formed subsidiary would be our governing corporate documents,
substantially in the form attached as Exhibit B and Exhibit C, respectively, to
this proxy statement. The name of the newly-formed Delaware subsidiary as set
forth in its certificate of incorporation is Earful of Books, Inc. ("Earful -
Delaware"). As such, upon the effective date of the reincorporation, the name
of our company will become Earful of Books, Inc.
On the effective date of the proposed reincorporation, each outstanding
share of our Common Stock will automatically convert into one share of common
stock of Earful - Delaware, and our shareholders will automatically become
shareholders of Earful - Delaware.
On the effective date of the reincorporation, the number of outstanding
shares of common stock of Earful - Delaware will be equal to the number of
shares of our Common Stock outstanding immediately prior to the effective date
of the reincorporation. In addition, each outstanding option or right to
acquire shares of our Common Stock will be converted into an option or right to
acquire an equal number of shares of common stock of Earful - Delaware, under
the same terms and subject to the same conditions as the original options or
rights. All of our employee benefit plans will be adopted and continued by
Earful - Delaware following the reincorporation. Shareholders should recognize
that approval of the proposed reincorporation will constitute approval of the
adoption and assumption of those plans by Earful - Delaware.
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No action need be taken by shareholders to exchange their stock
certificates now; this will be accomplished at the time of the next sale or
other transfer by the shareholder. Certificates for our shares will
automatically represent an equal number of shares in Earful - Delaware upon
completion of the reincorporation.
If approved by the shareholders, it is anticipated that the reincorporation
would be completed as soon thereafter as practicable. The reincorporation may
be abandoned or the merger agreement may be amended, either before or after
shareholder approval has been obtained, if in the opinion of the board of
directors, circumstances arise that make such action advisable; provided that
any amendment that would effect a material change from the provisions discussed
in this proxy statement would require further approval by the holders of a
majority of the outstanding voting shares.
NO CHANGE IN THE BUSINESS, MANAGEMENT, EMPLOYEE PLANS OR LOCATION OF PRINCIPAL
FACILITIES
The reincorporation will effect a change only in our name, legal domicile
and other changes of a legal nature as described in this proxy statement. The
board of directors and management believe that the name Earful of Books, Inc.
will result in a more appropriate image and brand for our company and will
better reflect our current business strategy (as discussed in the Special Report
on Form 8-K included herewith). The proposed reincorporation will not result in
any change in the business, management, assets or liabilities or location of our
principal facilities. All of our obligations will become the obligations of
Earful - Delaware. Our employee benefit arrangements will also be continued by
Earful - Delaware upon the terms and subject to the conditions currently in
effect. After the merger, the shares of common stock of Earful - Delaware will
continue to be traded, without interruption, in the same principal market as the
shares of our Common Stock are traded prior to the merger.
Prior to the effective date of the merger, we will obtain any consents
required for the merger from parties with whom we may have contractual
arrangements. As a result, our rights and obligations under our contractual
arrangements will continue and be assumed by Earful - Delaware.
FEDERAL SECURITIES LAW CONSEQUENCES
The issuance by Earful - Delaware of shares to our shareholders in
connection with the reincorporation constitutes an exchange offer under the
Securities Act. Nevertheless, the shares of common stock to be issued by Earful
- - Delaware in exchange for our shares of Common Stock are exempt from
registration under the Securities Act. Pursuant to Rule 145 promulgated under
the Securities Act, shares issued under a statutory merger are subject to
registration under the Securities Act unless the sole purpose of the transaction
is to change an issuer's domicile within the United States. Since the sole
purpose of the issuance and exchange is to effectuate the reincorporation, the
exchange and issuance is exempt from registration under Rule 145. Shares of
common stock of Earful - Delaware that will be issued in exchange for shares of
Common Stock that are currently restricted will remain restricted from transfer
unless such shares are subsequently registered or an exemption from registration
is available.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The reincorporation provided for in the merger agreement is intended to be
a tax free reorganization under the Internal Revenue Code of 1986, as amended.
Assuming the reincorporation qualifies as a reorganization, no gain or loss will
be recognized to the holders of our Common Stock as a result of consummation of
the reincorporation, and no gain or loss will be recognized by us or Earful -
Delaware. Each former holder of our Common Stock will have the same basis in
the common stock of Earful - Delaware received by such holder pursuant to the
reincorporation as such holder has in our Common Stock held by such holder at
the time of consummation of the reincorporation. Each shareholder's holding
period with respect to Earful - Delaware common stock will include the period
during which such holder held our corresponding Common Stock, provided the
latter was held by such holder as a capital asset at the time of consummation of
the reincorporation. We have not obtained a ruling from the Internal Revenue
Service or an opinion of legal or tax counsel with respect to the consequences
of the reincorporation.
The foregoing is only a summary of certain federal income tax consequences.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX
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CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF THE LAWS OF
ANY STATE OR OTHER JURISDICTION.
PROVISIONS OF THE CHARTER AND BYLAWS OF EARFUL - DELAWARE
The provisions of the Earful - Delaware certificate of incorporation and
bylaws are similar to those of our articles of incorporation and bylaws in most
respects. However, certain changes in the rights of shareholders and powers of
management will result from the application of Delaware law. See "Antitakeover
Implications" and "Significant Differences Between the Corporation Laws of Utah
and Delaware," below.
ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a number
of measures that are designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. We have not included these measures in the
certificate of incorporation or bylaws of Earful - Delaware. The
reincorporation proposal is not being proposed in order to prevent a change in
control, nor is it in response to any present attempt known to the board of
directors to acquire control of us or to obtain representation on the board of
directors.
The reincorporation proposal has antitakeover implications because, by
operation of law, Section 203 of the Delaware General Corporation Law restricts
"business combinations" with "interested stockholders" for three years following
the date that a person becomes an interested stockholder, unless the board of
directors approves the business combination.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF UTAH AND DELAWARE
The corporation laws of Utah and Delaware differ in many respects.
Although all the differences are not set forth in this proxy statement, the
differences that could materially affect the rights of shareholders are
discussed below.
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS. In recent years, a
number of states have adopted special laws designed to make certain kinds of
"unfriendly" corporate takeovers, or other transactions involving a corporation
and one or more of its significant shareholders, more difficult. Under the Utah
Control Shares Acquisitions Act, shares acquired in a "control share
acquisition" by a single shareholder or group of shareholders that give the
shareholder or group more than 20% of the voting power of certain public Utah
corporations cease to have voting rights until a resolution allowing the shares
to be voted is approved by a majority of the outstanding shares of the
corporation (excluding shares held by officers, directors and the acquiror).
The Utah Control Shares Acquisitions Act applies only to a corporation formed
under the laws of the State of Utah that has all of the following:
- 100 or more shareholders;
- its principal office or place of business, or substantial assets,
located in Utah; and
- any of (i) more than 10% of its shareholders resident in Utah, (ii)
more than 10% of its shares owned by Utah residents or (iii) 10,000
shareholders that are Utah residents.
We do not have our principal office, any place of business, or substantial
assets in the State of Utah or a significant number of shareholders who are Utah
residents. Accordingly, the protections and restrictions of the Control Shares
Act do not presently apply to us or our Common Stock.
Section 203 of the Delaware General Corporate Law prohibits a corporation
from engaging in a "business combination" with an "interested stockholder" for
three years following the date that the person becomes an interested
stockholder. The three-year moratorium imposed on business combinations by
Section 203 does not apply if:
- prior to the date on which the shareholder becomes an interested
stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming
an interested stockholder;
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- the interested stockholder owns 85% of the corporation's voting stock
upon consummation of the transaction which made him an interested
stockholder; or
- the business combination is approved by the board of directors and
approved at a shareholder meeting by the holders of two-thirds of the
voting stock not owned by the interested stockholder.
Section 203 only applies to Delaware corporations that have a class of voting
stock that is listed on a national securities exchange, are quoted on the Nasdaq
National Market or Small Cap Market, or are held of record by more than 2,000
shareholders. Earful - Delaware is not subject to Section 203 because it has
less than 2,000 stockholders and is quoted on the OTC - Bulletin Board.
INDEMNIFICATION AND LIMITATION OF LIABILITY. Utah and Delaware have similar
laws respecting indemnification by a corporation of its officers, directors,
employees and other agents. There are nonetheless differences between the laws
of the two states respecting indemnification and limitation of liability. In
general, Delaware law is somewhat broader in allowing corporations to indemnify
and limit the liability of corporate agents.
Utah law does not permit the elimination of monetary liability where
liability is based on:
- a financial benefit received by a director to which the director is
not entitled;
- an intentional infliction of harm on the corporation or its
shareholders;
- an unlawful distribution; or
- an intentional violation of criminal law.
Delaware law does not permit the elimination of monetary liability for:
- breaches of the director's duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law;
- the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or
- transactions in which the director received an improper personal
benefit.
Utah law permits indemnification of expenses incurred in derivative or
third-party actions, except that with respect to derivative actions no
indemnification may be made without court approval when a person is adjudged
liable to the corporation. Similarly, Delaware law allows indemnification of
expenses incurred during derivative and third-party actions; however, Delaware
law requires court approval of indemnification in both derivative and
third-party actions when a person is adjudged liable to the corporation.
DIVIDENDS AND REPURCHASE OF SHARES. Utah law dispenses with the concepts of par
value of shares as well as statutory definitions of capital, surplus and the
like. The concepts of par value, capital and surplus exist under Delaware law.
Under Utah law, a corporation may not make any distribution, or repurchase
its shares if, after giving effect to the distribution or repurchase:
- the corporation would not be able to pay its debts as they become due
in the normal course; or
- its total assets would be less than the sum of its total liabilities
plus the amount, if any, payable upon liquidation to holders of any
preferred stock with distribution rights superior to the rights of
holders of common stock.
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Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and the redemption or repurchase would not impair
the capital of the corporation.
To date, we have not paid any cash dividends on our outstanding shares of
Common Stock and do not anticipate doing so in the foreseeable future.
SHAREHOLDER VOTING. Both Utah and Delaware law generally require that the
holders of a majority of the shares of voting stock of both acquiring and target
corporations approve statutory mergers. Neither Utah nor Delaware law requires
a shareholder vote of the surviving corporation in a merger if:
- the merger agreement does not amend the existing certificate of
incorporation;
- each share of the stock of the surviving corporation outstanding
immediately before the merger is an identical outstanding share after
the merger; and
- either no shares of common stock of the surviving corporation and no
securities convertible into common stock are to be delivered under the
plan of merger, or the authorized unissued shares or the treasury
shares of common stock of the surviving corporation to be delivered
under the plan of merger plus those initially issuable upon conversion
of any other securities to be delivered under the plan do not exceed
20% of the shares of common stock outstanding immediately prior to the
merger.
Both Utah law and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by the holders of a
majority of the outstanding voting shares of the selling corporation.
Utah law also requires that mergers, reorganizations, sales of assets and
similar transactions be approved by a majority vote of each voting group
entitled to vote separately on the plan of merger, reorganization or sale. In
general, a class or series of stock is entitled to vote separately (or together
with similarly affected shares of different series of the same class) if the
proposed transaction would change the rights, preferences or limitations of the
respective class or series. In contrast, Delaware law generally does not
require class voting, except in certain transactions involving an amendment to
the certificate of incorporation that adversely affects a class of shares. As a
result, shareholder approval of transactions may be easier to obtain under
Delaware law for companies that have more than one class of shares outstanding.
APPRAISAL RIGHTS. Under both Utah law and Delaware law, a shareholder of a
corporation participating in major corporate transactions may be entitled to
appraisal rights under which the shareholder may receive cash in the amount of
the fair market value of his or her shares in lieu of the consideration he or
she would otherwise receive in the transaction. Fair market value is determined
exclusive of any element of value arising from the accomplishment or expectation
of the merger or consolidation. In determining fair market value, courts
generally apply various valuation methods commonly used in the financial
community. Under Delaware law, appraisal rights are not available with respect
to the sale, lease or exchange of all or substantially all of the assets of a
corporation, while Utah law provides for appraisal rights in these
circumstances. Utah and Delaware law both provide exemption from appraisal for
a transaction by a corporation the shares of which are either listed on a
national securities exchange or are held of record by more than 2,000 holders if
the shareholders receive only shares of the surviving corporation or shares of
any other corporation that are either listed on a national securities exchange
or held of record by more than 2,000 holders, plus cash in lieu of fractional
shares. Delaware and Utah law also provide an exemption to a corporation
surviving a merger if no vote of the shareholders of the surviving corporation
is required to approve the merger.
INSPECTION OF RECORDS. Delaware law allows stockholders and directors to
inspect the corporation's records and stockholder list for purposes reasonably
related to the person's interests as a stockholder or director upon written
demand. In contrast, under Utah law, directors or shareholders may inspect
10
certain corporate records for any purpose as long as the directors or
shareholders gives the corporation written notice five business days in advance.
Other records, including the shareholder list and minutes from meetings of the
board of directors, may be inspected only for a purpose reasonably related to
the shareholder's or director's interest.
MINIMUM NUMBER OF DIRECTORS. Both Delaware law and Utah law require a
minimum number of directors. Delaware law requires one director, while Utah law
requires at least three directors.
RIGHT TO DISSENT AND APPRAISAL RIGHTS OF SHAREHOLDERS
Pursuant to Part 13 of the Utah Revised Business Corporation Act (the
"URBCA"), holders of our Common Stock have the right to dissent from the
reincorporation and obtain payment of the fair value of their shares of Common
Stock. A shareholder who elects to dissent from the reincorporation and obtain
payment for his shares of Common Stock must cause us to receive, before August
24, 2001, written notice of such shareholder's intent to demand payment for his
shares of Common Stock and must not vote any of such shares in favor of the
reincorporation. Merely voting against the reincorporation will not satisfy the
dissent requirements. If you wish to dissent from the reincorporation you must
notify us in writing of such election by sending notice of your dissent to 907
W. 5th Street, Suite 203, Austin, Texas 78703, attn: Secretary. If we do not
receive your election before August 24, 2001, you will lose your right to
dissent and obtain payment for your shares as a result of the reincorporation.
You will not receive any further notification regarding the date upon which your
right to dissent will terminate.
Upon consummation of the reincorporation, we will send a dissenter's notice
to all shareholders who properly notified us of their intent to dissent and who
did not vote in favor of the reincorporation. The dissenter's notice will
contain instructions as to the method for demanding payment and delivering your
shares of Common Stock to us. You must comply with the instructions in the
dissenter's notice to be eligible for payment. Upon receipt of a demand for
payment pursuant to the dissenter's notice, we will pay to the shareholder the
fair value of his shares plus accrued interest. If the shareholder disagrees
with our determination of fair value, he must so notify us in writing within 30
days from the date of the offer or delivery of payment. If we have not agreed
with the shareholder upon the estimated fair value within 60 days from the date
of our receipt from a shareholder of a demand for payment other than what has
been offered, we will either pay the shareholder the difference in value
demanded by the shareholder or file with a court of competent jurisdiction a
petition for a determination of the fair value.
The foregoing summary is not a complete statement of the provisions of Part
13 of the URBCA and is qualified in its entirety by reference to Part 13 of the
URBCA, copies of which are attached hereto as Exhibit D.
SHAREHOLDERS ARE URGED TO CAREFULLY REVIEW THE DISSENTER'S RIGHTS STATUTE
ATTACHED AS EXHIBIT D AND IF THEY ELECT TO DISSENT FROM THE REINCORPORATION, TO
NOTIFY US IN WRITING OF SUCH ELECTION BEFORE AUGUST 24, 2001. IF THIS NOTICE IS
NOT RECEIVED BY US BEFORE AUGUST 24, 2001, YOU WILL LOSE YOUR RIGHT TO DISSENT
AND OBTAIN PAYMENT FOR YOUR SHARES AS A RESULT OF THE REINCORPORATION. YOU WILL
NOT RECEIVE ANY FURTHER NOTIFICATION REGARDING THE DATE UPON WHICH YOUR RIGHT TO
DISSENT WILL TERMINATE.
VOTE REQUIRED
Approval of the reincorporation proposal will require the affirmative vote
of a majority of the shares of common stock present in person or represented by
proxy and entitled to vote on the matter. Delaware law and the certificate of
incorporation and bylaws of Earful - Delaware differ from Utah law and our
existing charter and bylaws. Therefore, approval of the reincorporation
proposal will also have the effect of approving the certificate of incorporation
and bylaws of Earful - Delaware and changing our name to Earful of Books, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
REINCORPORATE IN DELAWARE AND TO CHANGE THE NAME OF THE COMPANY TO EARFUL OF
BOOKS, INC.
11
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2002 annual
meeting must be received in writing by us at our principal executive offices not
later than January 31, 2002. Our principal executive offices are located at 907
West 5th Street, Suite 203, Austin, Texas 78703.
By Order of the Board of Directors
Paul A. Rush
Chairman of the Board and
Chief Executive Officer
August 10, 2001
Austin, Texas
12
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER (the "Plan of Merger") is made and
entered into as of the _____th day of August, 2001, by and between American
Absorbents Natural Products, Inc., a Utah corporation ("Parent") and Earful of
Books, Inc., a Delaware corporation ("Subsidiary"), Parent and Subsidiary being
sometimes hereinafter together referred to as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, Parent is a corporation incorporated under the laws of Utah, with
authorized capital stock of 60,000,000 shares, composed of 50,000,000 shares of
common stock, par value $0.001 per share (the "Parent Common Stock"), of which
17,934,579 are issued and outstanding, and 10,000,000 shares of preferred stock,
par value $0.001 per share, of which 1,200,000 have been designated Series A
Preferred Stock, none of which are issued and outstanding;
WHEREAS, Subsidiary is a corporation incorporated under the laws of
Delaware with authorized capital stock of 60,000,000 shares, comprised of
50,000,000 shares of common stock, par value $0.001 per share (the "Subsidiary
Common Stock"), of which 17,934,579 shares are issued and outstanding and all of
which are owned by Parent and 10,000,000 shares of preferred stock, par value
$0.001 per share, of which none are designated or issued and outstanding;
WHEREAS, the Boards of Directors of Parent and Subsidiary deem it advisable
for the general welfare and to the benefit of the Constituent Corporations and
their shareholders that Parent merge with and into Subsidiary pursuant to
Section 253 of the Delaware General Corporation Law (the "DGCL") and Sections
16-10a-1105 and 16-10a-1107 of the Utah Revised Business Corporations Act (the
"URBCA");
WHEREAS, the Boards of Directors of Parent and Subsidiary have, by
resolutions duly adopted, approved this Plan of Merger and directed that it be
executed by the undersigned officers and the Board of Directors of Parent has
directed that it be submitted to the shareholders of Parent for approval;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree, in accordance with the applicable
provisions of the laws of the States of Utah and Delaware that the Constituent
Corporations shall be merged into a single Delaware corporation:
1. Merger of Parent into Subsidiary. At the Effective Time (as
------------------------------------
hereinafter defined) and upon the terms and conditions hereof, Parent shall
merge with and into Subsidiary in accordance with the DGCL and the URBCA and the
terms hereof (the "Merger"), and Subsidiary shall be the surviving corporation
(the "Surviving Corporation") and, as such, shall continue to be governed by the
laws of the State of Delaware.
2. Effectiveness of the Merger. The Merger shall become effective
------------------------------
immediately following the filing of (i) the Articles of Merger (the "Articles of
Merger") with the Utah Division of Corporations and (ii) the Certificate of
Ownership and Merger (the "Certificate of Ownership and Merger") with Secretary
of the State of Delaware (the "Effective Time").
3. Continuing of Corporate Existence. Except as may otherwise be set
-----------------------------------
forth herein, the corporate existence and identity of Subsidiary, with all its
purposes, powers, franchises, privileges, rights and immunities, shall continue
unaffected and unimpaired by the Merger, and the corporate existence and
identity of Parent, with all its purposes, powers, franchises, privileges,
rights and immunities, shall be merged with and into that of Subsidiary, and the
Surviving Corporation shall be vested fully therewith and the separate corporate
existence and identity of Parent shall thereafter cease except to the extent
continued by statute.
4. Corporate Governance.
---------------------
A-1
(a) The Certificate of Incorporation of Subsidiary, as in effect at
the Effective Time of the Merger, shall continue in full force and effect and
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Subsidiary, as in effect on the Effective Time of
the Merger, shall continue in full force and effect and shall be the Bylaws of
the Surviving Corporation.
(c) The members of the Board of Directors of Parent shall, from and
after the Effective Time of the Merger, be the members of the Board of Directors
of the Surviving Corporation, until their successors are duly elected and
qualified in accordance with the Bylaws of the Surviving Corporation.
(d) The officers of Parent shall be, from and after the Effective Time
of the Merger, the officers of the Surviving Corporation, until their successors
are duly elected and qualified in accordance with the Bylaws of the Surviving
Corporation.
5. Conversion of Shares. The mode of carrying into effect the Merger
----------------------
provided for herein, and the manner and basis of converting the shares of the
Constituent Corporations shall be as follows:
(a) Each share of Parent Common Stock which shall be issued and
outstanding at the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holder thereof, shall automatically be
converted into and become one (1) share of Subsidiary Common Stock.
(b) Each share of Subsidiary Common Stock which shall be issued and
outstanding at the Effective Time of the Merger, all of which are held
beneficially and of record by Parent, shall be cancelled and retired, all rights
in respect thereof shall cease to exist and no shares or other securities of the
Surviving Corporation shall be issuable with respect thereto.
(c) All of the Subsidiary Common Stock shall be validly issued, fully
paid and nonassessable.
(d) No fraction of a share of Subsidiary Common Stock will be issued,
but in lieu thereof each holder of shares of Parent Common Stock who would
otherwise be entitled to a fraction of a share of Subsidiary Common Stock (after
aggregating all fractional shares of Subsidiary Common Stock to be received by
such holder) shall receive from Subsidiary an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the high bid quotation for a share of Parent Common Stock on the OTC
Bulletin Board on the last full trading day prior to the Effective Time of the
Merger
6. Rights and Liabilities of the Surviving Corporation. At the
---------------------------------------------------------
Effective Time of the Merger, the Surviving Corporation shall have the following
rights and obligations:
(a) All rights, title and interests to all real estate and other
property owned by Subsidiary and Parent shall be allocated to and vested in the
Surviving Corporation without reservation or impairment, without further act or
deed, and without any transfer or assignment having occurred, but subject to any
existing liens or other encumbrances thereon.
(b) All liabilities and obligations of Subsidiary and Parent shall be
allocated to the Surviving Corporation, and the Surviving Corporation shall be
the primary obligor therefor and, except as otherwise provided by law or
contract, no other party to the merger, other than the Surviving Corporation,
shall be liable thereon.
(c) A proceeding pending by or against Parent may be continued as if
the Merger did not occur, or the Surviving Corporation to which the liability,
obligation, asset or right associated with such proceeding is allocated to and
vested in may be substituted in the proceeding.
(d) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of
a corporation organized under the laws of the State of Delaware.
A-2
7. Accounting Matters. The assets and liabilities of the Constituent
-------------------
Corporations, at the Effective Time of the Merger, shall be taken upon the books
of the Surviving Corporation at the amounts at which they shall be carried at
that time on the books of the respective Constituent Corporations, subject to
such adjustments or eliminations of inter-company items as may be appropriate in
giving effect to the Merger.
8. Approval of Shareholders. This Plan of Merger shall be submitted as
------------------------
promptly as practicable to the shareholders of Parent as provided by the URBCA.
After adoption and approval of the Merger by such shareholders, and provided
this Plan of Merger is not terminated and abandoned pursuant to the provisions
hereof, the Articles of Merger shall be filed with the Utah Division of
Corporations and the Certificate of Ownership and Merger shall be filed with the
Secretary of the State of Delaware.
9. Abandonment. This Plan of Merger may be abandoned at any time
-----------
before or after approval thereof by the shareholders of Parent notwithstanding
favorable action on the Merger by such shareholders but not later than the
Effective Time, by action of the Boards of Directors of Parent and Subsidiary
evidenced by appropriate resolutions. In the event of the termination and
abandonment of this Plan of Merger and the Merger pursuant to this Section 9,
this Plan of Merger shall become void and have no effect, without any liability
on the part of either of the Constituent Corporations or their shareholders or
directors or officers in respect thereof.
10. Amendment. Parent and Subsidiary, by mutual consent of their
---------
respective Boards of Directors, may amend this Plan of Merger in such manner as
may be agreed upon by it in writing and as is consistent with the DGCL and the
URBCA at any time before or after approval thereof by the shareholders of Parent
provided, however, that after such approval by such shareholders no such
amendment shall be made which shall affect the rights of such shareholders in a
manner which, in the judgment of the Board of Directors of Parent, is materially
adverse to the shareholders, without the further approval of such shareholders.
11. Further Assurances. If at any time the Surviving Corporation shall
------------------
consider or be advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect, or confirm, of record or
otherwise, in the Surviving Corporation, the title to any property or rights of
Subsidiary or Parent acquired or to be acquired by or as a result of the Merger,
the proper officers, or other appropriate representative of Subsidiary and
Parent, respectively, shall be and they hereby are severally and fully
authorized to execute and deliver such proper deeds, assignments and assurances
in law, and take such other action as may be necessary or proper in the name of
Subsidiary and Parent to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise carry out the purposes of this
Plan of Merger.
IN WITNESS WHEREOF, Parent and Subsidiary, each pursuant to requisite
approval and authority, have each caused this Plan of Merger to be executed by
its duly authorized officers, all as of the day and year first above written.
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
By: _____________________________________
Paul A. Rush, Chief Executive Officer
EARFUL OF BOOKS, INC.
By: _____________________________________
Paul A. Rush, President
A-3
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
EARFUL OF BOOKS, INC.
__________________________________________________
ARTICLE I
The name of the corporation is Earful of Books, Inc.
ARTICLE II
The address of the initial registered office of the corporation in the
State of Delaware is 615 South DuPont Highway, City of Dover, County of Kent,
19901. The name of the initial registered agent of the corporation at such
address is Capitol Services, Inc.
ARTICLE III
The purpose for which the corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
The duration of the corporation shall be perpetual.
ARTICLE V
The Board of Directors of the corporation is expressly authorized and
empowered to make, alter or repeal Bylaws, subject to the power of the
stockholders to alter or repeal the Bylaws made by the Board of Directors.
ARTICLE VI
The aggregate number of shares which the corporation shall have the
authority to issue is 60,000,000 shares, par value of $0.001 per share, of which
50,000,000 shares shall be designated "Common Stock" and 10,000,000 shares shall
be designated "Preferred Stock."
Shares of the Preferred Stock may be issued from time to time in one or
more series, the share of each series to have such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in a resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors of the corporation. The Board of Directors of the corporation is
hereby expressly authorized, subject to the limitations provided by law, to
establish and designate series of the Preferred Stock, to fix the number of
shares constituting each series, and to fix the designations and the relative
powers, rights, preferences and limitations as between series, and to increase
and to decrease the number of shares constituting each series.
ARTICLE VII
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the corporation shall
not be personally liable to the corporation or its stockholders for monetary
damages for breach of duty as a director. Without limiting the foregoing in any
respect, a director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
B-1
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended 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 Delaware General
Corporation Law, as so amended. Any repeal or modification of this provision
shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification.
The corporation shall indemnify to the fullest extent permitted by, and in
the manner permissible under, the laws of the State of Delaware any person (and
heirs, executors, administrators and estate of such person) made, or threatened
to be made, a party to any threatened, pending or completed action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he is or was a director or officer of the corporation, or
served another corporation, partnership, joint venture, trust or other
enterprise as a director, advisory director, officer, employee or agent at the
request 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. The
foregoing rights of indemnification shall not be deemed exclusive of any other
rights to which any such person may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise. The Board of Directors
in its discretion shall have the power on behalf of the corporation to indemnify
similarly any person, other than a director or officer, made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was an advisory director, employee or agent of the
corporation. The provisions of this Article VII shall be applicable to persons
who have ceased to be directors, advisory directors, officers, employees or
agents of the corporation and shall inure to the benefit of their heirs,
executors and administrators.
ARTICLE VIII
The name and mailing address of the person who is to serve as director
until the first annual meeting of stockholders or until his respective successor
or successors are duly elected and qualified is as follows:
Name Mailing Address
---- ----------------
Paul A. Rush 907 W. 5th Street, Suite 203
Austin, Texas 78703
ARTICLE IX
The corporation reserves the right to amend, alter or repeal any provision
in this Certificate of Incorporation in the manner now or hereafter prescribed
by the laws of the State of Delaware. All rights herein conferred are granted
subject to this reservation.
ARTICLE X
The name of the incorporator is David C. Giles and his mailing address is
Thompson & Knight L.L.P., 98 San Jacinto Blvd., Suite 1200, Austin, Texas 78701.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this Certificate, hereby declaring and certifying that this
is his act and deed and that the facts herein stated are true, and accordingly
has hereunto set his hand as of the _____th day of July, 2001
_______________________________________
David C. Giles, Incorporator
B-2
EXHIBIT C
BYLAWS
OF
EARFUL OF BOOKS, INC.
ARTICLE I
CORPORATE OFFICES
Section 1.1 Registered Office. The address of the Corporation's
------------------
registered office in the State of Delaware is 615 South DuPont Highway, in the
City of Dover, County of Kent, 19901. The name of its registered agent at such
address is Capitol Services, Inc.
Section 1.2 Other Offices. The Board of Directors may at any time
--------------
establish other offices at any place or places where the Corporation is
qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meetings. Meetings of stockholders shall be held
-----------------
at any place, within or outside the State of Delaware, or not at any place, but
may instead be held solely by means of remote communication, designated by the
Board of Directors. In the absence of any such designation, stockholders'
meetings shall be held at the registered office of the Corporation.
Section 2.2 Annual Meeting.
---------------
(a) The annual meeting of stockholders shall be held each year on a
date and at a time designated by the Board of Directors. At the meeting,
directors shall be elected and any other proper business may be transacted.
(b) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be transacted by the
stockholders may be made at an annual meeting of stockholders (i) pursuant to
the Corporation's notice with respect to such meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 2.2, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this Section 2.2.
(c) For nominations of persons for election as directors of the
Corporation or for other business to be properly brought before an annual
meeting by a stockholder pursuant to clause (iii) of paragraph (b) of this
Section 2.2, the stockholder must have given timely notice thereof in writing to
the secretary of the Corporation and such business must be a proper matter for
stockholder action under the Delaware General Corporation Law. To be considered
timely, a stockholder's notice must be delivered either in person or by United
States certified mail, postage prepaid, and received by the secretary at the
principal executive offices of the Corporation (i) not less than 120 calendar
days before the date of the corporation's proxy statement released to
stockholders in connection with the previous year's annual meeting or such other
time period as may be required or permitted by applicable law or (ii) if no
annual meeting was held in the previous year or the date of the applicable
meeting has been changed by more than 30 days from the date of the previous
year's annual meeting, not less than a reasonable time prior to the date the
corporation begins to print and mail its proxy materials, as determined by the
board of directors. Such stockholder's notice shall set forth (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
C-1
a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of such business, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made:
(A) The name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner; and
(B) The class and number of shares of capital stock of the
Corporation that are owned beneficially and of record by such stockholder and
such beneficial owner.
(d) Only such business shall be conducted at an annual meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 2.2. The chairman of the meeting shall
determine whether a nomination or any business proposed to be transacted by the
stockholders has been properly brought before the meeting and, if any proposed
nomination or business has not been properly brought before the meeting, the
chairman shall declare that such proposed business or nomination shall not be
presented for stockholder action at the meeting.
(e) For purposes of this Section 2.2, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or the filing of information with
the Securities and Exchange Commission via the EDGAR filing system.
(f) Nothing in this Section 2.2 shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 (or any successor rule) promulgated under the
Exchange Act.
Section 2.3 Special Meeting.
----------------
(a) A special meeting of the stockholders may be called at any time by
a majority of the Board of Directors, the chairman of the board or the Chief
Executive Officer of the Corporation.
(b) Nominations of persons for election to the Board of Directors may
be made at a special meeting of stockholders at which directors are to be
elected pursuant to such notice of meeting (i) by or at the direction of the
Board of Directors or (ii) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in Section
2.4, who shall be entitled to vote at the meeting and who complies with the
notice procedures set forth in Section 2.4.
Section 2.4 Notice of Stockholder's Meetings; Affidavit of Notice.
---------------------------------------------------------
(a) All notices of meetings of stockholders shall be in writing and
shall be sent or otherwise given in accordance with this Section 2.4 of these
Bylaws not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder entitled to vote at such meeting (or such longer
or shorter time as is required by Section 2.5 of these Bylaws, if applicable).
The notice shall specify the place, if any, date, and hour of the meeting, the
means of remote communications, if any, by which stockholders and proxy holders
may be deemed to be present in person and vote at such meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
(b) Written notice of any meeting of stockholders, if mailed, is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his or her address as it appears on the records of the
Corporation. An affidavit of the secretary or an assistant secretary or of the
transfer agent of the Corporation that the notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(c) Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation
under Chapter 1 of the Delaware Corporation Laws, the certificate of
C-2
incorporation, or the bylaws shall be effective if given by a form of electronic
transmission consented to by the stockholder to whom the notice is given. Any
such consent shall be revocable by the stockholder by written notice to the
Corporation. Any such consent shall be deemed revoked if (1) the Corporation is
unable to deliver by electronic transmission two consecutive notices given by
the Corporation in accordance with such consent and (2) such inability becomes
known to the secretary or an assistant secretary of the corporation or to the
transfer agent, or other person responsible for the giving of notice; provided,
however, the inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.
(d) Notice given pursuant to section (c) of this section shall be
deemed given: (1) if by facsimile telecommunication, when directed to a number
at which the stockholder has consented to receive notice; (2) if by electronic
mail, when directed to an electronic mail address at which the stockholder has
consented to receive notice; (3) if by a posting on an electronic network
together with separate notice to the stockholder of such specific posting, upon
the later of (A) such posting and (B) the giving of such separate notice; and
(4) if by any other form of electronic transmission, when directed to the
stockholder. An affidavit of the secretary or an assistant secretary or of the
transfer agent or other agent of the corporation that the notice has been given
by a form of electronic transmission shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
(e) For purposes of these Bylaws, "electronic transmission" means any
form of communication, not directly involving the physical transmission of
paper, that creates a record that may be retained, retrieved and reviewed by a
recipient thereof, and that may be directly reproduced in paper form by such a
recipient through an automated process.
Section 2.5 Quorum. The holders of a majority of the stock issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (a) the chairman of
the meeting or (b) a majority of the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed. If the
adjournment is for more than thirty (30) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2.6 List of Stockholders. It shall be the duty of the
----------------------
Secretary or other officer of the Corporation who has charge of the stock ledger
to prepare and make, at least ten (10) days before each meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in such stockholder's name. Such list shall be
produced and kept available at the times and places required by law. If the
meeting is to be held at a place, such list shall be produced and kept open at
the time and place of the meeting during the whole time thereof, and shall be
subject to the inspection of any stockholder who may be present. If the meeting
is to be held solely by means of remote communication, then the list shall also
be open to the examination of any stockholder during the whole time of the
meeting on a reasonably accessible electronic network, and the information
required to access such list shall be provided with the notice of the meeting.
Section 2.7 Conduct of Business. The chairman of any meeting of
---------------------
stockholders shall determine the order of business and the procedure at the
meeting, including the manner of voting and the conduct of business.
Section 2.8 Voting. The stockholders entitled to vote at any meeting
------
of stockholders shall be determined in accordance with the provisions of Section
2.9 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
Delaware General Corporation Law (relating to voting rights of fiduciaries,
pledgors and joint owners of stock and to voting trusts and other voting
agreements). Except as may be otherwise provided in the Certificate of
Incorporation, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
Section 2.9 Waiver of Notice. Whenever notice is required to be given
----------------
under any provision of the Delaware General Corporation Law or of the
Certificate of Incorporation or these Bylaws, a written waiver thereof, signed
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by the person entitled to notice, or a waiver by electronic transmission by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the Certificate of Incorporation or these
Bylaws.
Section 2.10 Record Date for Stockholder Notice. In order that the
-------------------------------------
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof 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) nor
less than ten (10) days before the date of such meeting, nor more than sixty
(60) days prior to any other action. If the Board of Directors does not so fix
a record date:
(a) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(b) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 2.11 Proxies. Each stockholder entitled to vote at a meeting
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of stockholders may authorize another person or persons to act for such
stockholder by a written proxy, signed by the stockholder and filed with the
secretary of the Corporation, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A proxy shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, typewriting, facsimile signature, electronic
transmission, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(e) of the Delaware General Corporation Law.
Section 2.11 Inspectors of Election. Either the Board of Directors or,
----------------------
in the absence of an appointment of inspectors by the Board, the Chairman of the
Board or the President shall, in advance of each meeting of the stockholders,
appoint one or more inspectors to act at such meeting and make a written report
thereof. In connection with any such appointment, one or more persons may, in
the discretion of the body or person making such appointment, be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at any meeting of stockholders, the chairman of such
meeting shall appoint one or more inspectors to act at such meeting. Each such
inspector shall perform such duties as are required by law and as shall be
specified by the Board, the Chairman of the Board, the President or the chairman
of the meeting. Each such inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability.
Inspectors need not be stockholders. No director or nominee for the office of
director shall be appointed such an inspector.
ARTICLE III
DIRECTORS
Section 3.1 Powers. Subject to the provisions of the Delaware General
------
Corporation Law and any limitations in the Certificate of Incorporation or these
Bylaws relating to action required to be approved by the stockholders, the
business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
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Section 3.2 Number of Directors. The number of directors constituting
-------------------
the initial Board of Directors shall be as set forth in the Certificate of
Incorporation. Subject to the limitations contained in the Certificate of
Incorporation, the number of directors of the Corporation shall be fixed from
time to time by resolution adopted by a vote of a majority of the entire Board
of Directors, provided that the number so fixed shall not be less than five (5)
nor more than fifteen (15).
Section 3.3 Election, Qualification and Term of Office of Directors.
---------------------------------------------------------
Except as provided in Section 3.4 of these Bylaws, directors shall be elected to
hold office until the annual meeting of stockholders. Directors need not be
stockholders unless so required by the Certificate of Incorporation, wherein
other qualifications for directors may be prescribed. Each director, including
a director elected to fill a vacancy, shall hold office until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. Elections of directors need not be by written ballot.
Section 3.4 Resignation and Vacancies. Any director may resign at any
-------------------------
time upon written notice or by electronic transmission to the attention of the
secretary of the Corporation. When one or more directors so resign and the
resignation is effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have the sole power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective. Subject to the rights of holders of
capital stock of the Corporation pursuant to any valid and binding agreement,
any vacancy occurring on the Board of Directors created by reason of newly
created directorships resulting from the issuance of any class or series of
capital stock of the Corporation or newly created directorships resulting from
any increase in the number of directors and any vacancy occurring on the Board
of Directors resulting from death, resignation, removal 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 of Directors, or by
a sole remaining director. Any such director elected to fill a vacancy on the
Board of Directors shall hold such office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
Unless otherwise provided in the Certificate of Incorporation or these
Bylaws, whenever any holders of a class or series of capital stock of the
Corporation have the right to elect one or more directors pursuant to the
Certificate of Incorporation or the provisions of any valid and binding
agreement, vacancies in directorships to which such right relates may be filled
by a majority of the directors elected by the holders of such class or classes
or series then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
Corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the Certificate of Incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the Delaware General Corporation Law.
Section 3.5 Place of Meetings; Meetings by Telephone.
---------------------------------------------
(a) The Board of Directors of the Corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
(b) Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 3.6 Regular Meetings. Regular meetings of the Board of
-----------------
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
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Section 3.7 Special Meetings; Notice.
--------------------------
(a) Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the chairman of the board, the president
or any two directors.
(b) Notice of the time and place of special meetings shall be
delivered to each director (i) personally, (ii) by telephone, (iii) by
facsimile, (iv) by electronic mail, or (v) sent by first-class mail, addressed
to each director at that director's address as it is shown on the records of the
Corporation. If the notice is mailed, it shall be deposited in the United States
mail at least four days before the time of the holding of the meeting. If the
notice is delivered personally, by telephone, by facsimile or by electronic
mail, it shall be delivered at least twenty-four (24) hours before the time of
the holding of the meeting. Any oral notice given personally or by telephone may
be communicated either to the director or to a person at the office of the
director who the person giving the notice has reason to believe will promptly
communicate it to the director. The notice need not specify the purpose or the
place of the meeting, if the meeting is to be held at the principal executive
office of the Corporation.
Section 3.8 Quorum. At all meetings of the Board of Directors, a
------
majority of the authorized number of directors shall constitute a quorum for the
transaction of business and 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, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, then the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
Section 3.9 Waiver of Notice. Whenever notice is required to be given
----------------
under any provision of the Delaware General Corporation Law or of the
Certificate of Incorporation or these Bylaws, a written waiver thereof, signed
by the person entitled to notice, or a waiver by electronic transmission by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the Certificate of Incorporation or these Bylaws.
Section 3.10 Board Action by Written Consent without a Meeting. Unless
-------------------------------------------------
otherwise restricted by the Certificate of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing or by electronic transmission and the writing or writings or
electronic transmission or transmissions are filed with the minutes of
proceedings of the Board of Directors or committee. Written consents
representing actions taken by the board or committee may be executed by telex,
telecopy or other electronic or facsimile transmission, and such facsimile or
electronic transmission shall be valid and binding to the same extent as if it
were an original.
Section 3.11 Fees and Compensation of Directors. Unless otherwise
--------------------------------------
restricted by the Certificate of Incorporation or these Bylaws, the Board of
Directors shall have the authority to fix the compensation of directors and no
such compensation shall preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor.
Section 3.12 Approval of Loans to Officers. The Corporation may lend
------------------------------
money to, or guarantee any obligation of, or otherwise assist any officer or
other employee of the Corporation or of its subsidiary, including any officer or
employee who is a director of the Corporation or its subsidiary, whenever, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the Corporation. The loan, guaranty or other assistance
may be with or without interest and may be unsecured, or secured in such manner
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as the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the Corporation. Nothing contained in this Section 3.12
shall be deemed to deny, limit or restrict the powers of guaranty or warranty of
the Corporation at common law or under any statute.
Section 3.13 Removal of Directors. Any director or the entire board of
--------------------
directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors; provided, that if
a director was elected by the holders of a particular class or series of stock,
only the holders of that class or series shall be entitled to remove such
director.
Section 3.14 Chairman of the Board of Directors. The Corporation may
-----------------------------------
also have, at the discretion of the Board of Directors, a chairman of the Board
of Directors who may also serve as an officer of the Corporation.
Section 3.15 Advisory Directors. The Board of Directors may appoint
-------------------
one or more advisory directors as it shall from time to time determine. Each
advisory director appointed shall hold office at the pleasure of the Board of
Directors. An advisory director may attend and be present at the meetings of
the Board of Directors at the invitation of the Board of Directors, although a
meeting of the Board of Directors may be held without notice to any advisory
director and no advisory director shall be considered in determining whether a
quorum of the Board of Directors is present. An advisory director shall advise
and counsel the Board of Directors on the business and operations of the
Corporation as requested by the Board of Directors; however, an advisory
director shall not be entitled to vote on any matter presented to the Board of
Directors. An advisory director, in consideration of such person serving as an
advisory director, shall be entitled to receive from the Corporation such fees
for attendance at meetings of the Board of Directors as the Board shall from
time to time determine. In addition, an advisory director shall be entitled to
receive from the Corporation reimbursement for the reasonable expenses incurred
by such person in connection with the performance of such person's duties as an
advisory director.
ARTICLE IV
COMMITTEES
Section 4.1 Committees of Directors. The Board of Directors may, by
-------------------------
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, with each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors or in the Bylaws of the Corporation, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority to (a) amend the Certificate
of Incorporation (except that committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Section 151(a) of the Delaware General
Corporation Law, fix the designations and any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), (b) adopt an agreement of merger or consolidation under Sections
251, 252, 254, 255, 256, 257, 258, 263 or 264 of the Delaware General
Corporation Law, (c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets, (d)
recommend to the stockholders a dissolution of the Corporation or a revocation
of a dissolution, or (e) amend the Bylaws of the Corporation; and, unless the
Board resolution establishing the committee, the Bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law.
Section 4.2 Committee Minutes. Each committee shall keep regular
------------------
minutes of its meetings and report the same to the Board of Directors when
required.
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Section 4.3 Meetings and Action of Committees. Meetings and actions of
---------------------------------
committees shall be governed by, and held and taken in accordance with, the
provisions of Section 3.5 (place of meetings and meetings by telephone), Section
3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8
(quorum), Section 3.9 (waiver of notice), and Section 3.10 (action without a
meeting) of these Bylaws, with such changes in the context of such provisions as
are necessary to substitute the committee and its members for the Board of
Directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the Board of Directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the Board of Directors and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The Board of Directors
may adopt rules for the governance of any committee not inconsistent with the
provisions of these Bylaws.
ARTICLE V
OFFICERS
Section 5.1 Officers. The officers of the Corporation shall be a chief
--------
executive officer, a president, a secretary and a chief financial officer. The
Corporation may also have, at the discretion of the Board of Directors, one or
more vice presidents, a treasurer, one or more assistant secretaries, one or
more assistant treasurers and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these Bylaws. Any number of
offices may be held by the same person.
Section 5.2 Appointment of Officers. The officers of the Corporation,
-----------------------
except such officers as may be appointed in accordance with the provisions of
Sections 5.3 or 5.5 of these Bylaws, shall be elected by the Board of Directors,
subject to the rights, if any, of an officer under any contract of employment.
Section 5.3 Subordinate Officers. The Board of Directors may appoint,
--------------------
or empower the chief executive officer or the president to appoint, such other
officers and agents as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these Bylaws or as the Board of Directors may from time to
time determine.
Section 5.4 Removal and Resignation of Officers. Subject to the
---------------------------------------
rights, if any, of an officer under any contract of employment, any officer may
be removed, either with or without cause, by an affirmative vote of the majority
of the Board of Directors at any regular or special meeting of the Board of
Directors or, except in the case of an officer chosen by the Board of Directors,
by any officer upon whom such power of removal may be conferred by the Board of
Directors.
Any officer may resign at any time by giving written notice to the
attention of the secretary of the Corporation. Any resignation shall take
effect at the date of the receipt of that notice or at any later time specified
in that notice; and, unless otherwise specified in that notice, the acceptance
of the resignation shall not be necessary to make it effective. Any resignation
is without prejudice to the rights, if any, of the Corporation under any
contract to which the officer is a party.
Section 5.5 Vacancies in Offices. Any vacancy occurring in any office
--------------------
of the Corporation shall be filled by the Board of Directors.
Section 5.6 Chief Executive Officer. Subject to such supervisory
-------------------------
powers, if any, as may be given by the Board of Directors to the chairman of the
board, if any, the chief executive officer of the Corporation shall, subject to
the control of the Board of Directors, have general supervision, direction and
control of the business and the officers of the Corporation. He or she shall
preside at all meetings of the stockholders and, in the absence or nonexistence
of a chairman of the board, at all meetings of the Board of Directors and shall
have the general powers and duties of management usually vested in the office of
chief executive officer of a corporation and shall have such other powers and
duties as may be prescribed by the Board of Directors or these Bylaws.
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Section 5.7 President. Subject to such supervisory powers, if any, as
---------
may be given by the Board of Directors to the chairman of the board (if any) or
the chief executive officer, the president shall have general supervision,
direction and control of the business and other officers of the Corporation. He
or she shall have the general powers and duties of management usually vested in
the office of the chief operating officer of a corporation and such other powers
and duties as may be prescribed by the Board of Directors or these Bylaws.
Section 5.8 Vice Presidents. In the absence or disability of the chief
---------------
executive officer and president, the vice presidents, if any, in order of their
rank as fixed by the Board of Directors or, if not ranked, a vice president
designated by the Board of Directors, shall perform all the duties of the
president and when so acting shall have all the powers of, and be subject to all
the restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the Board of Directors, these Bylaws, the chief executive
officer, the president or the chairman of the board.
Section 5.9 Secretary. The secretary shall keep or cause to be kept,
---------
at the principal executive office of the Corporation or such other place as the
Board of Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show
the time and place of each meeting, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the Corporation or at the office of the Corporation's transfer agent
or registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors required to be given by law or by
these Bylaws. He or she shall keep the seal of the Corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by these Bylaws.
Section 5.10 Chief Financial Officer. The chief financial officer
-------------------------
shall keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of accounts of the properties and business
transactions of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained earnings and shares.
The books of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He or she shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
president, the chief executive officer, or the directors, upon request, an
account of all his or her transactions as chief financial officer and of the
financial condition of the Corporation, and shall have other powers and perform
such other duties as may be prescribed by the Board of Directors or the Bylaws.
Section 5.11 Representation of Shares of Other Corporations. The
---------------------------------------------------
chairman of the board, the chief executive officer, the president, any vice
president, the chief financial officer, the secretary or assistant secretary of
this Corporation, or any other person authorized by the Board of Directors or
the chief executive officer or the president or a vice president, is authorized
to vote, represent, and exercise on behalf of this Corporation all rights
incident to any and all shares of any other corporation or corporations standing
in the name of this Corporation. The authority granted herein may be exercised
either by such person directly or by any other person authorized to do so by
proxy or power of attorney duly executed by the person having such authority.
Section 5.12 Authority and Duties of Officers. In addition to the
------------------------------------
foregoing authority and duties, all officers of the Corporation shall
respectively have such authority and perform such duties in the management of
the business of the Corporation as may be designated from time to time by the
Board of Directors or the stockholders.
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ARTICLE VI
RECORDS AND REPORTS
Section 6.1 Maintenance and Inspection of Records. The Corporation
----------------------------------------
shall, either at its principal executive offices or at such place or places as
designated by the Board of Directors, keep a record of its stockholders listing
their names and addresses and the number and class of shares held by each
stockholder, a copy of these Bylaws as amended to date, accounting books, and
other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal place of
business.
Section 6.2 Inspection by Directors. Any director shall have the right
-----------------------
to examine the Corporation's stock ledger, a list of its stockholders, and its
other books and records for a purpose reasonably related to his or her position
as a director. The Court of Chancery is hereby vested with the exclusive
jurisdiction to determine whether a director is entitled to the inspection
sought. The Court may summarily order the Corporation to permit the director to
inspect any and all books and records, the stock ledger, and the stock list and
to make copies or extracts therefrom. The Court may, in its discretion,
prescribe any limitations or conditions with reference to the inspection, or
award such other and further relief as the Court may deem just and proper.
Section 6.3 Annual Statement to Stockholders. The Board of Directors
---------------------------------
shall present at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the Corporation.
ARTICLE VII
GENERAL MATTERS
Section 7.1 Checks. From time to time, the Board of Directors shall
------
determine by resolution which person or persons may sign or endorse all checks,
drafts, other orders for payment of money, notes or other evidences of
indebtedness that are issued in the name of or payable to the Corporation, and
only the persons so authorized shall sign or endorse those instruments.
Section 7.2 Execution of Corporate Contracts and Instruments. The
----------------------------------------------------
Board of Directors, except as otherwise provided in these Bylaws, may authorize
any officer or officers, or agent or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the Corporation; such
authority may be general or confined to specific instances. Unless so
authorized or ratified by the Board of Directors or within the agency power of
an officer, no officer, agent or employee shall have any power or authority to
bind the Corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
Section 7.3 Stock Certificates; Partly Paid Shares. The shares of the
--------------------------------------
Corporation shall be represented by certificates, provided that the Board of
Directors of the Corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the Corporation by the chairman or vice chairman of the Board of
Directors, or the chief executive officer or the president or vice president,
and by the chief financial officer or an assistant treasurer, or the secretary
or an assistant secretary of the Corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
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signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue. The
Corporation may issue the whole or any part of its shares as partly paid and
subject to call for the remainder of the consideration to be paid therefor.
Upon the face or back of each stock certificate issued to represent any such
partly paid shares, upon the books and records of the Corporation in the case of
uncertificated partly paid shares, the total amount of the consideration to be
paid therefor and the amount paid thereon shall be stated. Upon the declaration
of any dividend on fully paid shares, the Corporation shall declare a dividend
upon partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.
Section 7.4 Special Designation on Certificates. If the Corporation is
-----------------------------------
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the Corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 7.5 Lost Certificates. Except as provided in this Section 7.5,
-----------------
no new certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the Corporation and canceled at
the same time. The Corporation may issue a new certificate of stock or
uncertificated shares in the place of any certificate previously issued by it,
alleged to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or the owner's legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
Section 7.6 Construction; Definitions. Unless the context requires
--------------------------
otherwise, the general provisions, rules of construction, and definitions in the
Delaware General Corporation Law shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
Section 7.7 Dividends. The directors of the Corporation, subject to
---------
any restrictions contained in (a) the Delaware General Corporation Law or (b)
the Certificate of Incorporation, may declare and pay dividends upon the shares
of its capital stock. Dividends may be paid in cash, in property, or in shares
of the Corporation's capital stock.
The directors of the Corporation may set apart out of any of the funds of
the Corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
Corporation, and meeting contingencies.
Section 7.8 Fiscal Year. The fiscal year of the Corporation shall be
------------
fixed by resolution of the Board of Directors and may be changed by the Board of
Directors.
Section 7.9 Seal. The Corporation may adopt a corporate seal, which
----
may be altered at pleasure, and may use the same by causing it or a facsimile
thereof, to be impressed or affixed or in any other manner reproduced.
Section 7.10 Transfer of Stock. Upon surrender to the Corporation or
------------------
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction in its books.
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Section 7.11 Stock Transfer Agreements. The Corporation shall have
---------------------------
power to enter into and perform any agreement with any number of stockholders of
any one or more classes of stock of the Corporation to restrict the transfer of
shares of stock of the Corporation of any one or more classes owned by such
stockholders in any manner not prohibited by the Delaware General Corporation
Law.
Section 7.12 Registered Stockholders. The Corporation shall be
------------------------
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends and to vote as such owner, shall be
entitled to hold liable for calls and assessments the person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of another
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VIII
AMENDMENTS
Section 8.1 By the Board of Directors. Unless otherwise provided in
---------------------------
the Certificate of Incorporation, the Bylaws may be altered, amended or repealed
or new bylaws may be adopted by the affirmative vote of a majority of the
directors present at any regular or special meeting of the Board of Directors at
which a quorum is present.
Section 8.2 By the Stockholders. Unless otherwise provided in the
---------------------
Certificate of Incorporation, these Bylaws may be altered, amended or repealed
or new bylaws may be adopted by the affirmative vote of the holders of a
majority of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at any regular or special meeting of
stockholders, provided notice of such alteration amendment, repeal or adoption
of new bylaws shall have been stated in the notice of such regular or special
meeting.
* * * * * * *
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EXHIBIT D
PART 13 OF THE UTAH REVISED BUSINESS CORPORATION ACT
16-10A-1301. DEFINITIONS. For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10A-1302 and who exercises that right when and
in the manner required by Sections 16-10A-1320 through 16-10A-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in Section
15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent the beneficial owner
is recognized by the corporation as the shareholder as provided in Section
16-10A-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10A-1302 RIGHT TO DISSENT.
(1) A shareholder, whether or not entitled to vote, is entitled to
dissent from, and obtain payment of the fair value of shares held by him in the
event of, any of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a
party if:
(i) shareholder approval is required for the merger by Section
16-10A-1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its
parent under Section 16-10A-1104;
(b) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under Subsection 16-10A-1202(1), but not
including a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote
upon the consent of the corporation to the disposition pursuant to
Subsection 16-10A-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the fair
value of his shares in the event of any other corporate action to the extent the
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articles of incorporation, bylaws, or a resolution of the board of directors so
provides.
(3) Notwithstanding the other provisions of this part, except to the
extent otherwise provided in the articles of incorporation, bylaws, or a
resolution of the board of directors, and subject to the limitations set forth
in Subsection (4), a shareholder is not entitled to dissent and obtain payment
under Subsection (1) of the fair value of the shares of any class or series of
shares which either were listed on a national securities exchange registered
under the federal Securities Exchange Act of 1934, as amended, or on the
National Market System of the National Association of Securities Dealers
Automated Quotation System, or were held of record by more than 2,000
shareholders, at the time of:
(a) the record date fixed under Section 16-10A-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at
which the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10A-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan
of merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or will be held of record by
more than 2,000 shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash
in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this part may not challenge the corporate action creating the entitlement
unless the action is unlawful or fraudulent with respect to him or to the
corporation.
16-10A-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and causes the
corporation to receive written notice which states the dissent and the name and
address of each person on whose behalf dissenters' rights are being asserted.
The rights of a partial dissenter under this subsection are determined as if the
shares as to which the shareholder dissents and the other shares held of record
by him were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
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(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each beneficial shareholder must certify to the corporation that
both he and the record shareholders of all shares owned beneficially by him have
asserted, or will timely assert, dissenters' rights as to all the shares
unlimited on the ability to exercise dissenters' rights. The certification
requirement must be stated in the dissenters' notice given pursuant to Section
16-10A-1322.
16-10A-1320 NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must be sent to all shareholders of the corporation as of the
applicable record date, whether or not they are entitled to vote at the meeting.
The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this part. The notice must be accompanied by a copy of
this part and the materials, if any, that under this chapter are required to be
given the shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as required by this subsection does not affect any action
taken at the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10A-704, any written or oral solicitation of a shareholder to execute
a written consent to the action contemplated by Section 16-10A-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy of this
part, and by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed action if
the proposed action were submitted to a vote at a shareholders' meeting.
Failure to give written notice as provided by this subsection does not affect
any action taken pursuant to Section 16-10A-704 for which the notice was to have
been given.
16-10A-1321 DEMAND FOR PAYMENT -- ELIGIBILITY AND NOTICE OF INTENT.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed
action is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10A-704, a shareholder who wishes to assert dissenters' rights may
not execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part,
unless otherwise provided in the articles of incorporation, bylaws, or a
resolution adopted by the board of directors, a shareholder must have been a
shareholder with respect to the shares for which payment is demanded as of the
date the proposed corporate action creating dissenters' rights under Section
16-10A-1302 is approved by the shareholders, if shareholder approval is
required, or as of the effective date of the corporate action if the corporate
action is authorized other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of Subsections
(1) through (3) is not entitled to payment for shares under this part.
16-10A-1322 DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
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their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10A-1302, and shall:
(a) state that the corporate action was authorized and the effective
date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment
demands and an address at which certificates for certificated shares must
be deposited;
(c) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment
demand and by which certificates for certificated shares must be deposited
at the address indicated in the dissenters' notice, which dates may not be
fewer than 30 nor more than 70 days after the date the dissenters' notice
required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10A-1303(3),
if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10A-1323 PROCEDURE TO DEMAND PAYMENT.
(1) A shareholder who is given a dissenters' notice described in
Section 16-10A-1322, who meets the requirements of Section 16-10A-1321, and
wishes to assert dissenters' rights must, in accordance with the terms of the
dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be
the payment demand form contemplated in Subsection 16-10A-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance
with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described
in Section 16-10A-1322, as contemplated by Section 16-10A-1327, certify in
writing, in or with the payment demand, whether or not he or the person on
whose behalf he asserts dissenters' rights acquired beneficial ownership of
the shares before the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10A-1302.
(2) A shareholder who demands payment in accordance with Subsection (1)
retains all rights of a shareholder except the right to transfer the shares
until the effective date of the proposed corporate action giving rise to the
exercise of dissenters' rights and has only the right to receive payment for the
shares after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice, is
not entitled to payment for shares under this part.
16-10A-1324 UNCERTIFICATED SHARES.
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(1) Upon receipt of a demand for payment under Section 16-10A-1323 from
a shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
of the shares until the proposed corporate action is taken or the restrictions
are released under Section 16-10A-1326.
(2) In all other respects, the provisions of Section 16-10A-1323 apply
to shareholders who own uncertificated shares.
16-10A-1325 PAYMENT.
(1) Except as provided in Section 16-10A-1327, upon the later of the
effective date of the corporate action creating dissenters' rights under Section
16-10A-1302, and receipt by the corporation of each payment demand pursuant to
Section 16-10A-1323, the corporation shall pay the amount the corporation
estimates to be the fair value of the dissenter's shares, plus interest to each
dissenter who has complied with Section 16-10A-1323, and who meets the
requirements of Section 16-10A-1321, and who has not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied
by:
(a) (i) (A) the corporation's balance sheet as of the end of
its most recent fiscal year, or if not available, a fiscal year
ending not more than 16 months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that
year and a statement of cash flow for that year, if the
corporation customarily provides such statements to shareholders;
and
(D) the latest available interim financial statements, if
any;
(ii) the balance sheet and statements referred to in Subsection
(i) must be audited if the corporation customarily provides audited
financial statements to shareholders;
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under
Section 16-10A-1328; and
(d) a copy of this part.
16-10A-1326 FAILURE TO TAKE ACTION.
(1) If the effective date of the corporate action creating dissenters'
rights under Section 16-10A-1302 does not occur within 60 days after the date
set by the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10A-1322, the corporation shall return all
deposited certificates and release the transfer restrictions imposed on
uncertificated shares, and all shareholders who submitted a demand for payment
pursuant to Section 16-10A-1323 shall thereafter have all rights of a
shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10A-1302 occurs more than 60 days after the date set by
the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10A-1322, then the corporation shall send a
new dissenters' notice, as provided in Section 16-10A-1322, and the provisions
of Sections 16-10A-1323 through 16-10A-1328 shall again be applicable.
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16-10A-1327 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT OF
PROPOSED CORPORATE ACTION.
(1) A corporation may, with the dissenters' notice given pursuant to
Section 16-10A-1322, state the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10A-1302 and state that a shareholder who
asserts dissenters' rights must certify in writing, in or with the payment
demand, whether or not he or the person on whose behalf he asserts dissenters'
rights acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not certify in writing, in or with the payment
demand that he or the person on whose behalf the dissenters' rights are being
asserted, acquired beneficial ownership of the shares before that date, the
corporation may, in lieu of making the payment provided in Section 16-10A-1325,
offer to make payment if the dissenter agrees to accept it in full satisfaction
of his demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10A-1325(2).
16-10A-1328 PROCEDURE FOR SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter who has not accepted an offer made by a corporation
under Section 16-10A-1327 may notify the corporation in writing of his own
estimate of the fair value of his shares and demand payment of the estimated
amount, plus interest, less any payment made under Section 16-10A-1325, if:
(a) the dissenter believes that the amount paid under Section
16-10A-1325 or offered under Section 16-10A-1327 is less than the fair
value of the shares;
(b) the corporation fails to make payment under Section 16-10A-1325
within 60 days after the date set by the corporation as the date by which
it must receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate
action creating dissenters' rights, does not return the deposited
certificates or release the transfer restrictions imposed on uncertificated
shares as required by Section 16-10A-1326.
(2) A dissenter waives the right to demand payment under this section
unless he causes the corporation to receive the notice required by Subsection
(1) within 30 days after the corporation made or offered payment for his shares.
16-10A-1330 JUDICIAL APPRAISAL OF SHARES -- COURT ACTION.
(1) If a demand for payment under Section 16-10A-1328 remains
unresolved, the corporation shall commence a proceeding within 60 days after
receiving the payment demand contemplated by Section 16-10A-1328, and petition
the court to determine the fair value of the shares and the amount of interest.
If the corporation does not commence the proceeding within the 60-day period, it
shall pay each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this state where the
corporation's principal office, or if it has no principal office in this state,
the county where its registered office is located. If the corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with, or whose shares were acquired by, the foreign
corporation was located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10A-1321, 16-10A-1323, and 16-10A-1328, whether or
not they are residents of this state whose demands remain unresolved, parties to
the proceeding commenced under Subsection (2) as an action against their shares.
All such dissenters who are named as parties must be served with a copy of the
petition. Service on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to Section 16-10A-1328.
If no address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section 16-10A-1323. If
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no address is stated in the payment demand, service may be made at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares. Service may also be made otherwise
as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair
value of his shares, plus interest, exceeds the amount paid by the
corporation pursuant to Section 16-10A-1325; or
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under Section 16-10A-1327.
16-10A-1331 COURT COSTS AND COUNSEL FEES.
(1) The court in an appraisal proceeding commenced under Section
16-10A-1330 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court. The
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds that the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Section
16-10A-1328.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 16-10A-1320 through 16-10A-1328; or
(b) against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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Attachment A
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
907 WEST 5TH STREET
SUITE 203
AUSTIN, TEXAS 78703
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of American Absorbents Natural Products, Inc.,
a Utah corporation (the "Company"), hereby appoints Paul A. Rush and Myron
Sappington, or either of them, the proxy or proxies of the undersigned, each
with full power of substitution, to vote all shares of common stock, par value
$0.001 per share, of the Company which the undersigned would be entitled to vote
at the Special Meeting of Shareholders to be held on August 24, 2001, at 10:00
a.m., local time at Westwood Country Club, 3808 West 35th Street, Austin, Texas
78703, or any adjournment thereof, according to the number of votes that the
undersigned would be entitled to if personally present upon the matters referred
to in this proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
1. PROPOSAL 1--Approval of the proposal to change our state of incorporation
from Utah to Delaware and, in doing so, to change our name to Earful of
Books, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
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(CONTINUED FROM OTHER SIDE)
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the proposals set forth herein.
The undersigned acknowledges receipt of Notice of Special Meeting of
Shareholders dated August 10, 2001, and the accompanying Proxy Statement.
Date: , ______.
_________________________________________
Signature
_________________________________________
Name(s) (typed or printed)
_________________________________________
_________________________________________
Address(es)
Please sign exactly as name appears on this Proxy. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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