<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/ / Definitive Information Statement
HTTP TECHNOLOGY, INC.
--------------------------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.001 per share
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
23,106,573
------------------------------------------------------------------------
(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:
In accordance with Rule 0-11(c)(1)(ii), because the proposed action is
for the sole purpose of changing the registrant's domicile, no fee is
required.
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
<PAGE>
HTTP TECHNOLOGY, INC.
46 BERKELEY SQUARE
LONDON, UNITED KINGDOM W1X 5DB
------------------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------------
This Information Statement of HTTP Technology, Inc., a Utah corporation (the
"Company"), is being furnished in connection with the taking of certain actions
by the holders of the majority of the outstanding eligible votes of the capital
stock of the Company. The Information Statement is being mailed on or about
November 27, 2000, to holders of record on November 21, 2000 (the "Record
Date"), of shares of the Common Stock, par value $.001 per share (the "Common
Stock") of the Company.
The Company's capital structure consists of 50,000,000 authorized shares of
Common Stock, of which 23,106,573 shares were issued and outstanding as of the
Record Date.
The following persons or entities (the "Majority Stockholders") own an
aggregate of 16,820,000 shares, and accordingly, have the ability to exercise
16,820,000 votes, or 72.8% of all eligible votes as of the Record Date:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED EQUITY BENEFICIALLY OWNED
------------------------ ------------------ -------------------------
<S> <C> <C>
Societe Privee, as Nominee(1).......................... 5,410,000 23.4%
22 Grosvenor Street, London,
United Kingdom W1X 9LF
Dr. Alexander Nill (2)................................. 2,770,000 12.0%
STG Holdings PLC....................................... 6,480,000 28.0%
16 Curzon Street,
Mayfair, London,
United Kingdom W1Y 7FF
T.H. Investments Ltd................................... 2,160,000 9.3%
Suite 2B, Centre Plaza,
Main Street, Gibraltar
</TABLE>
------------------------
(1) Consists of the holdings of 69 individuals and corporate entities none of
which: i) hold more than 3.6% of the issued and outstanding shares of the
Company; and ii) is an officer, director or control person or is related to
an officer, director, control person or an affiliate.
(2) Includes 150,000 shares issuable upon the exercise of employee stock options
within 60 days of the record date.
The Majority Stockholders have the ability to, and intend to, approve the
proposal described in this Information Statement on December 17, 2000 (the
"Consent Date"):
To approve and adopt an Agreement and Plan of Merger pursuant to which the
Company would (a) change its state of incorporation from Utah to Delaware,
through the merger of the Company into HTTP Technology, Inc., a Delaware
corporation ("HTTP Delaware"), with HTTP Delaware to be the surviving
corporation, and (b) increase its capital by increasing the number of authorized
shares of Common Stock to 100,000,000 shares.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP BY MANAGEMENT
The Company's capital structure consists of 50,000,000 authorized shares of
Common Stock, of which 23,106,573 shares were issued and outstanding as of the
Record Date. The Company believes there are approximately 5,000 beneficial
owners of its Common Stock. Each share of Common Stock is entitled to one vote
per share.
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of the record date, by:
- each person known by the Company to be the beneficial owner of more than
5% of the outstanding common stock;
- each person serving as a director of the Company; each person serving as
an executive officer of the Company; and
- all executive officers and directors of the Company as a group.
Beneficial ownership is determined in accordance with the rules of the
Commission. In general, a person who has voting power and/or investment power
with respect to securities is treated as a beneficial owner of those securities.
For purposes of this table, shares subject to outstanding warrants and options
exercisable within 60 days of the record date are considered as beneficially
owned by the person holding such securities. To our knowledge, except as set
forth in this table, we believe that the persons named in this table have sole
voting and investment power with respect to the shares shown. Except as
otherwise indicated, the address of each of the directors, executive officers
and 5% shareholders in this table is as follows: HTTP Technology, Inc., 46
Berkeley Square, London, UNITED KINGDOM, W1X 5DB.
Percentage beneficially owned is based upon 23,606,573 shares of common
stock issued and outstanding as of the record date including 500,000 shares of
common stock issuable upon the exercise of employee stock options granted under
the 2000 Combined Incentive and Nonqualified Stock Option Plan which are
exercisable within 60 days of the record date.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED EQUITY BENEFICIALLY OWNED
------------------------ ------------------ -------------------------
<S> <C> <C>
BENEFICIAL OWNERS
Societe Privee, as Nominee(1) ......................... 5,410,000 22.9%
22 Grosvenor Street, London,
United Kingdom W1X 9LF
STG Holdings PLC ...................................... 6,480,000 27.4%
16 Curzon Street, Mayfair,
London, United Kingdom W1Y 7FF
T.H. Investments Ltd. ................................. 2,160,000 9.1%
Suite 2B, Centre Plaza,
Main Street, Gibraltar
DIRECTORS
Stefan Allesch-Taylor(2)............................... 6,630,000 28.5%
Dr. Alexander Nill(3).................................. 2,770,000 12.0%
Jason E. Forsyth(4).................................... 125,000 *
Nicholas Thistleton.................................... 0 *
Sir Euan Calthorpe(5).................................. 6,480,000 27.4%
Giorgio L. Laurenti(6)................................. 110,000 *
Martin Lechner(7)...................................... 50,000 *
Dr. Stefan Fleissner................................... 3,000 *
Charles Schwab, Jr.(8)................................. 100,000 *
Total Officers and Directors as a Group (9 persons).... 10,638,000 44.1%
</TABLE>
------------------------
* Less than 1%.
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(1) Consists of the holdings of 69 individuals and corporate entities none of
which: i) hold more than 3.6% of the issued and outstanding shares of the
Company; and ii) is an officer, director or control person or is related to
an officer, director, control person or an affiliate.
(2) Consists of 6,480,000 shares of common stock directly owned by STG Holdings
PLC and 150,000 shares issuable upon the exercise of employee stock options
within 60 days of the record date. As a significant shareholder and a
director of STG, Mr. Allesch-Taylor may be deemed to control the investment
and voting decisions with respect to the stock held by STG in the Company.
(3) Includes 150,000 shares issuable upon the exercise of employee stock options
within 60 days of the record date.
(4) Includes 100,000 shares issuable upon the exercise of employee stock options
within 60 days of the record date.
(5) Consists of 6,480,000 shares of common stock directly owned by STG Holdings
PLC. As a significant shareholder and a director of STG, Sir Euan Calthorpe
may be deemed to control the investment and voting decisions with respect to
the stock held by STG in the Company.
(6) Includes 50,000 shares issuable upon the exercise of employee stock options
within 60 days of the record date.
(7) Consists of 50,000 shares issuable upon the exercise of employee stock
options within 60 days of the record date.
(8) Consists of 100,000 shares of common stock owned by Kensington Value Fund,
LLC ("KVF"). As Managing Director of KVF, Charles Schwab, Jr. may be deemed
to control the investments and voting decisions with respect to the
Company's stock held by KVF.
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DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY SERVING SINCE
---- -------- --------------------------------- -----------------
<S> <C> <C> <C>
Stefan Allesch-Taylor............ 31 Chief Executive Officer, December 22, 1999
President and Director
Dr. Alexander Nill............... 31 Executive Vice President May 12, 2000
and Director
Martin Lechner................... 31 Executive Vice President and May 12, 2000
Director
Jason E. Forsyth................. 30 Chief Financial Officer March 31, 2000
and Finance Director
Nicholas Thistleton.............. 31 Director December 22, 1999
Sir Euan Calthorpe............... 34 Director December 22, 1999
Giorgio L. Laurenti.............. 54 Director March 31, 2000
Dr. Stefan Fleissner............. 36 Director May 12, 2000
Charles Schwab, Jr............... 36 Director August 14, 2000
</TABLE>
Directors are elected in accordance with the Company's by-laws to serve
until the next annual shareholders meeting and until their successors are duly
elected in their stead. The Company does not currently pay compensation to
directors for services in that capacity. Officers are elected by the Board of
Directors and hold office until their successors are chosen and qualified, until
their death or until they resign or have been removed from office. All corporate
officers serve at the discretion of the Board of Directors. There are no family
relationships between any director or executive officer and any other director
or executive officer of the Company.
STEFAN ALLESCH-TAYLOR has served as the Company's President, Chief Executive
Officer and as a director since December 22, 1999. Mr. Allesch-Taylor is also
Chairman of the Board of STG Holdings PLC, a major shareholder of the Company.
Mr. Allesch-Taylor began his career as a stockbroker, becoming a Registered
Representative of the London Stock Exchange in 1988. He has considerable
commercial experience having served as a director of a wide variety of companies
over the last 7 years. In April 1997, he was appointed Chief Executive of
Worthing Premier Property PLC, a property investment company. The company name
was changed to STG Holdings PLC and a new Board of Directors was appointed.
Mr. Allesch-Taylor was made Chairman of the Board and has implemented a new
strategy to move the company operations from the real estate sector to the
investment sector. He continues to serve on the Boards of a number of companies
in a non-executive capacity.
DR. ALEXANDER NILL has served as the Company's Executive Vice President and
as a director since May 12, 2000. Dr. Nill has 5 years of experience in private
equity investment in the Internet and technology sectors. Between 1990 and 1996,
Dr. Nill achieved a BA from Maximilian University, an MBA from the European
University in Munich, and a PhD in Economics from Oxford University. In 1996,
Dr. Nill joined Sparta Beteiligungen AG where he built up and headed the private
equity division. He was appointed to the Board of Directors in 1997. In 1999,
Dr. Nill became President and Chief Executive Officer of Sparta UK Ltd in
London. Dr. Nill is the Chairman of the advisory board for Red Cube AG and Vice
Chairman of the advisory board for IQ Capital AG.
JASON FORSYTH has served as the Company's Chief Financial Officer since
February 9, 2000 and as a director since March 22, 2000. Mr. Forsyth has eight
years of experience in accounting and finance in both Europe and the United
States. He has worked in a variety of industries including software, telephony
and consumer products. He has extensive commercial and corporate strategy
experience and has been involved in corporate finance, seed financing, working
capital fund raising and mezzanine financing. From 1997 to 1998, Mr. Forsyth
implemented statistical forecasting mechanisms to reduce
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overheads and improve sales planning for LA Cellular (AT&T Wireless).
Mr. Forsyth has specialized in advising both start-up companies and more
established businesses throughout the United States, Europe, and the Middle
East. His most recent projects have focused exclusively on Internet and
Internet-related enterprises. Mr. Forsyth has passed the Certified Management
Accountant (CMA), Certified Financial Manager (CFM) and Certified Public
Accountant (CPA) examinations. He gained a BSc (Honors) in Accountancy and
Economics from Southampton University, England.
NICHOLAS THISTLETON has served as a director of the Company since
December 22, 1999. He is also a member of the Company's Stock Option Committee
and Audit Committee. Mr. Thistleton has been a technology consultant and analyst
for 6 years. His project work for Spectrum Strategy Consultants between 1994 and
1997 included strategic reviews of various telecommunications, pay-TV and
Internet markets in Europe and Asia for a series of large clients, and he was
involved in tracking closely the development and impact of the Internet from its
earliest years. More recently he has advised a number of UK Internet start-ups
on product strategy, site design and implementation during the early phases. In
addition, he has acted as technology advisor to STG Holdings PLC since 1997.
Mr. Thistleton was a scholar at Winchester College and gained an MA (Honors) in
French and Russian from Oxford University.
SIR EUAN CALTHORPE has served as a director of the Company since
December 22, 1999. He is also a member of the Company's Stock Option Committee
and Audit Committee. He has been the principal of the private Calthorpe Estates
group of companies for over 10 years. The core activity of this substantive
group is real estate investment and development, spanning a wide variety of
assets from leisure to retail shopping centers and serviced offices. Utilizing
significant financial and management expertise, the Group has diversified
investments in publishing, commerce and B2B information technology companies.
These investments have included a number of successful Internet and
telecommunications companies. He is a highly experienced private investor and
has worked with a wide range of companies from start-ups to established public
companies. He leads a team of professionals from offices in the United Kingdom
and has a broad network of business connections both in Europe and the United
States.
GIORGIO LAURENTI has served as a director of the Company since March 31,
2000. Mr. Laurenti has extensive commercial experience, having served in senior
management roles at Revlon for the last twelve years. He has served as President
of Revlon France and Euro International since October 1999 and President of
Revlon Euro International since February 1999. He was President of International
Business Development at Mac Andrews & Forbes, Revlon's parent company, with the
responsibility of overseeing International Mergers and Acquisitions and
Development. Prior to joining Revlon, Mr. Laurenti owned OTIC, a real estate and
property development company, from 1977 to 1988. He served as Chief Executive
Officer of Coricama, a manufacturer of high precision surgical instruments,
scissors and metal, where he was responsible for U.S. and International
Development.
MARTIN LECHNER has served as a director of the Company since May 12, 2000.
Mr. Lechner is a Co-Founder of IQ Capital AG and Executive Board Member of IQ
Capital SGA in Zurich. He has extensive investment banking and fund management
experience with Dresdner Kleinwort Benson (Frankfurt), Keppler Asset Management
(New York), and Foreign & Colonial (London). Mr. Lechner received his degree as
Dipl. Kfm. in Economics at the University of Passau. He currently serves on the
Supervisory Board of several U.S. and European growth companies including
TopTier Software (San Jose) and Open Mind Systems (Basel).
DR. STEFAN FLEISSNER has served as a director of the Company since May 12,
2000. He is also a member of the Company's Stock Option Committee and Audit
Committee. In 1991, Dr. Fleissner founded IMAGES Communications and New Media
AG, an Internet and multimedia design agency. He served as Chief Executive
Officer, focusing mainly on strategic planning, brand marketing and investor
relations. In 1999, he became an Executive Board member of IQ Capital AG with
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responsibilities for equity management, e-commerce and corporate planning.
Dr. Fleissner is a director of IQ Capital Asia PLC in Singapore and a member of
the advisory board of Internet-schule.com in Munich. He has an honors degree in
business management from Munich University and a doctorate in Economics from
Innsbruck University.
CHARLES SCHWAB, JR. is a manager and member of Kensington Value Fund LLC, a
private family financed investment vehicle ("KVF"). KVF focuses on financing
visionary entrepreneurs developing innovative ideas. KVF's Investments include
all aspects of the electronic economy and technology. KVF has over 20 companies
invested in its portfolio. Mr. Schwab has been managing capital for over
10 years for both domestic and international clients. He spent over four years
from 1990 through 1994 with Banque Paribas in their London and New York office
managing the Bank's proprietary capital. KVF began operations in late 1994.
Mr. Schwab earned a BA in economics and history from Northwestern University and
an MBA in accounting and finance from the University of Chicago Graduate School
of Business. He currently serves on several Boards, including Integration
Associates, which designs custom analog ASIC solutions, and cMore Medical
Solutions, a software developer of medical procedures.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than ten percent of the
Company's common stock are required to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission (the "Commission"). Specific due dates for
these reports have been established and the Company is required to disclose any
failure to file by these dates. Each of Dr. Alexander Nill, Dr. Stefan
Fleissner, Martin Lechner, Giorgio Laurenti, Jason E. Forsyth, Stefan
Allesch-Taylor, Nicholas Thistleton, Sir Euan Calthorpe, T.H. Investments Ltd.
and STG Holdings Plc has filed a Form 3 with the Commission. However, each such
person and entity did not file such form on a timely basis as required by
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") during the most recent fiscal year. Each such person and entity filed one
late report for one transaction. Furthermore, the failure of each such person
and entity to timely file a Form 3 with the Commission is considered a knowing
violation of Section 16(a) of the Exchange Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 20, 2000, the Company acquired from Muca Group Ltd. all of the
outstanding stock of Core Ventures Ltd. in exchange for 1,800,000 shares of the
Company's Common Stock. Dr. Alexander Nill, a director of the Company, is the
sole shareholder of Muca Group Ltd.
On October 5, 2000, the Company acquired all of the outstanding stock of
Ferman AG ("Ferman"), a Swiss investment company. The Company paid the purchase
price by issuing to the stockholders of Ferman an aggregate of 2,550,000 shares
of the Company's Common Stock. Dr. Alexander Nill and Martin Lechner, directors
of the Company, were principal shareholders of Ferman, and in consideration for
their combined 66 2/3% interest in Ferman, each received 850,000 shares of the
Company's Common Stock.
The foregoing transactions were approved by the disinterested members of the
Board of Directors of the Committee. Such disinterested directors have
determined that these transactions are on arms' length terms, equivalent to
those which are likely to have been applicable if the transactions were with
fully disinterested parties.
COMMITTEES AND MEETINGS
The Board of Directors has established a Stock Option Committee, composed of
Sir Euan Calthorpe, Nicholas Thistleton and Dr. Stefan Fleissner who are
responsible for administering the
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Company's 2000 Combined Incentive and Nonqualified Stock Option Plan. The
members of the Stock Option Committee are no longer eligible to participate in
the Stock Option Plan and qualify as disinterested persons for purposes of
Rule 16b-3(c)(2)(i) of the Exchange Act. The Stock Option Committee did not hold
a meeting in the last fiscal year.
The Board of Directors has also established an Audit Committee, also
composed of Sir Calthorpe, Mr. Thistleton and Dr. Fleissner. The Audit Committee
is responsible for reviewing the results and scope of the audit and other
services provided by the Company's independent auditors as well as reviewing
accounting and control procedures and policies. The Audit Committee held its
first meeting on May 12, 2000 to adopt its written charter. The Audit Committee
has not met with the independent auditors to discuss the matters required to be
discussed by SAS 61, as may be modified or supplemented, and have not received
written disclosures and letters from the independent auditors required by
Independence Standards.
The Board of Directors held one meeting during 1999. No director of the
Company during the last fiscal year failed to attend any of the meetings of the
Company's Board of Directors.
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EXECUTIVE COMPENSATION
The officers and directors of the Company did not receive compensation for
services rendered in 1999. Commencing on or after March 2000, the Company has
begun to award annual salaries to certain executive officers and directors of
the Company as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS
POSITION YEAR ($) ($) ($) ($) (#) ($)
---------------------------------- -------- -------- -------- ------------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Stefan Allesch-Taylor, President,
CEO and Director(a)............. 1999 $0 $0 $0 $0 0/0 $0
Christopher J. Wilkes, President,
CEO and Director(b)............. 1999 $0 $0 $0 $0 0/0 $0
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)
---------------------------------- -------------
<S> <C>
Stefan Allesch-Taylor, President,
CEO and Director(a)............. $0
Christopher J. Wilkes, President,
CEO and Director(b)............. $0
</TABLE>
------------------------------
(a) Mr. Allesch-Taylor will receive a salary of $202,620 in 2000.
(b) Mr. Wilkes served as the Company's President, CEO and Director from
September 30, 1996 to January 10, 2000.
Dr. Alexander Nill, Executive Vice President and a director of the Company,
received no salary in 1999, and will receive a salary of $50,000 in 2000. Jason
Forsyth, the Chief Financial Officer and a director of the Company, received no
salary in 1999, and will receive a salary of $155,320 in 2000.
EMPLOYMENT AGREEMENTS
To date, the Company has not entered into employment agreements with our
executive officers. However, it is anticipated that the Company will enter into
such employment agreements with our executive officers awarding the salaries set
forth above and other forms of compensation.
OPTIONS GRANTED
No options were granted to any directors, officers, or employees of the
Company in 1999.
PROPOSED REINCORPORATION OF THE COMPANY IN DELAWARE
INTRODUCTION
The Board of Directors believes that the best interests of the Company and
its shareholders will be served by changing the state of incorporation of the
Company from Utah to Delaware (the "Reincorporation"). In order to accomplish
the Reincorporation, the Company proposes to merge with and into its
wholly-owned subsidiary, HTTP Technology, Inc., a Delaware corporation ("HTTP
Delaware"). Under the terms of the merger, HTTP Delaware will be the surviving
corporation, and all shareholders of the Company will automatically become
shareholders of HTTP Delaware. The certificate of incorporation and by-laws of
HTTP Delaware will become the governing instruments of the surviving
corporation. The Board of Directors believes that the Reincorporation is in the
best interests of the Company and its shareholders because it will allow the
Company to benefit from the greater measure of flexibility and predictability in
corporate governance afforded by Delaware law.
EFFECTIVE DATE OF REINCORPORATION
The Reincorporation will become effective upon the filing with and
acceptance by the Delaware Secretary of State of the Certificate of Merger,
which is expected to be on or about December 17, 2000, unless the
Reincorporation is extended or abandoned by the Company.
THE MERGER
HTTP Delaware will be the surviving corporation of the merger with the
Company. The terms and conditions of the Reincorporation are set forth in the
Agreement and Plan of Merger (the "Merger Agreement") attached to this
Information Statement as Exhibit A, and the summary of the terms and
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conditions of the Reincorporation set forth below is qualified by reference to
the full text of the Merger Agreement. Upon consummation of the Reincorporation,
HTTP Delaware will continue to exist in its present form under the name "HTTP
Technology, Inc." and the Company will cease to exist. The Reincorporation will
change the legal domicile of the Company, but will not result in a change in the
principal offices, business, management, capitalization, assets or liabilities
of the Company. By operation of law, HTTP Delaware will succeed to all of the
assets and assume all of the liabilities of the Company. The Board of Directors
of HTTP Delaware will be comprised of the same individuals who presently are
members of the Board of Directors of the Company. It is anticipated that the
directors of HTTP Delaware will elect as officers of HTTP Delaware the same
individuals who presently serve as officers of the Company. The rights of
shareholders and the corporate affairs of HTTP Delaware will be governed by the
Delaware General Corporation Law ("DGCL") and by the certificate of
incorporation and bylaws of HTTP Delaware, instead of the Utah Revised Business
Corporation Act and the articles of incorporation and bylaws of the Company.
Certain material differences are discussed below under "Comparison of
Shareholders Rights under Delaware and Utah Corporate Law and Charter
Documents". The articles of incorporation and bylaws of the Company and the
certificate of incorporation and bylaws of HTTP Delaware are available for
inspection by shareholders of the Company at the principal offices of the
Company located at 46 Berkeley Square, London, UNITED KINGDOM W1X 5DB,
+44-20-7598-4070.
The Company's current Articles of Incorporation authorize the issuance of up
to 50,000,000 shares of common stock, par value $.001 per share. The Certificate
of Incorporation of HTTP Delaware increases the authorized number of shares of
common stock to 100,000,000 shares, par value $.001 per share.
Upon the effectiveness of the Reincorporation, each outstanding share of the
Company's Common Stock will be automatically converted into one fully paid and
nonassessable share of the Common Stock of HTTP Delaware. Also, each share of
HTTP Delaware Common Stock issued and outstanding immediately prior to the
merger shall be cancelled and returned to the status of authorized but unissued
shares. Each outstanding certificate representing shares of the Company's Common
Stock will represent the same number of shares of HTTP Delaware Common Stock.
Certificates evidencing shares of the Company's Common Stock may be exchanged
for certificates evidencing HTTP Delaware's Common Stock at any time after the
Reincorporation is completed.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Reincorporation pursuant to the Merger Agreement will be a tax-free
reorganization under the Internal Revenue Code of 1986, as amended. Accordingly,
a holder of the common stock of the Company will not recognize gain or loss with
respect to that stock as a result of the Reincorporation. The holder's basis in
a share of common stock of HTTP Delaware will be the same as the holder's basis
in the corresponding share of common stock of the Company held immediately prior
to the Reincorporation. The holder's holding period for each share of HTTP
Delaware will include the period during which the holder held the corresponding
share of common stock of the Company, provided the holder held the corresponding
share as a capital asset at the time of the Reincorporation. In addition,
neither the Company nor HTTP Delaware will recognize gain or loss as a result of
the Reincorporation, and HTTP Delaware will generally succeed, without
adjustment, to the tax attributes of the Company. Upon Reincorporation, however,
HTTP Delaware will be subject to Delaware franchise tax, which is based on the
total asset value of the corporation. The foregoing summary of federal income
tax consequences is included for general information only and does not address
all income tax consequences to all of the shareholders of the Company. The
shareholders of the Company are urged to consult their own tax advisors as to
the specific tax consequences of the Reincorporation with respect to the
application and effect of state, local and foreign income and other tax laws.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS
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REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE PROPOSAL TO REINCORPORATE
IN DELAWARE INCLUDING THE APPLICABILITY OF THE LAWS OF ANY STATE OR OTHER
JURISDICTION.
SECURITIES ACT CONSEQUENCES
Pursuant to Rule 145(a)(2) under the Securities Act of 1933, as amended (the
"Securities Act"), a merger that has the sole purpose of changing an issuer's
domicile within the United States does not involve a sale of securities for the
purposes of the Securities Act. Accordingly, separate registration of shares of
common stock of HTTP Delaware will not be required.
DESCRIPTION OF CAPITAL STOCK AND VOTING RIGHTS
The authorized capital stock of both the Company and HTTP Delaware at the
time the Reincorporation becomes effective will consist of 100,000,000 shares of
common stock, par value $.001 per share. As of the Record Date, 23,106,573
shares of the Company's common stock were issued and outstanding. Each share of
common stock has, for all purposes, one vote per share.
COMPARISON OF SHAREHOLDER RIGHTS UNDER DELAWARE AND UTAH CORPORATE LAW AND
CHARTER DOCUMENTS
GENERAL
Upon Reincorporation, the Company will change its domicile to Delaware and
shall thereafter be governed by Delaware law and by the Delaware Certificate of
Incorporation and the Delaware Bylaws (the "Delaware Charter Documents"). Upon
the filing with and acceptance by the Secretary of State of Delaware of a
Certificate of Merger in Delaware and upon the effective date of the Articles of
Merger, but not prior to the filing date with the Secretary of State of Utah,
the Company will cease to exist in the State of Utah and will become HTTP
Delaware and the outstanding shares of the common stock of the Company will be
deemed for all purposes to evidence ownership of, and to represent, shares of
the common stock of HTTP Delaware. The Delaware Charter Documents will replace
the Articles of Incorporation and Bylaws of the Company. If the Reincorporation
is consummated, holders of the common stock of the Company (and holders of
options, warrants or other securities exchangeable for or convertible into
common stock of the Company) will become holders of the common stock of HTTP
Delaware, which will result in their rights as shareholders being governed by
the laws of the State of Delaware and the Delaware Charter Documents. It is not
practical to describe all of the differences between the laws of Utah and
Delaware or the Utah and Delaware Charter Documents. The following is a summary
of some of the significant rights of the shareholders under Utah and Delaware
law and under the Utah and Delaware Charter Documents. This summary is qualified
in its entirety by reference to the full text of such documents and laws.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of HTTP Delaware, upon closing of the merger
with the Company, will consist of 100,000,000 shares of common stock, $0.001 par
value. Each share of the common stock of HTTP Delaware will have one vote per
share, and the right to notice of shareholders' meetings and to vote upon the
election of directors or upon any other matter as to which approval of the
common shareholders is required or requested. Shareholders will not have a right
to cumulate their votes for the election of directors.
VOTING RIGHTS WITH RESPECT TO EXTRAORDINARY CORPORATE TRANSACTIONS
DELAWARE. Approval of mergers and consolidations and sales, leases or
exchanges of all or substantially all of the property or assets of a
corporation, whether or not in the ordinary course of business, requires the
affirmative vote or consent of the holders of a majority of the outstanding
shares entitled to vote, except that, unless required by the certificate of
incorporation, no vote of shareholders of the corporation surviving a merger is
necessary if: (i) the merger does not amend the certificate of incorporation of
the corporation; (ii) each outstanding share immediately prior to the merger is
to be
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an identical share after the merger, and (iii) either no common stock of the
corporation and no securities or obligations convertible into common stock are
to be issued in the merger, or the common stock to be issued in the merger plus
that initially issuable on conversion of other securities issued in the merger
does not exceed 20% of the common stock of the corporation outstanding
immediately before the merger.
UTAH. A merger, share exchange or sale of all or substantially all of the
assets of a corporation (other than a sale in the ordinary course of the
corporation's business) requires the approval of a majority (unless the articles
of incorporation, the bylaws or a resolution of the Board of Directors requires
a greater number) of the outstanding shares of the corporation (voting in
separate voting groups, if applicable). No vote of the shareholders of the
surviving corporation in a merger is required if: (i) the articles of
incorporation of the surviving corporation will not be changed; (ii) each
shareholder of the surviving corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights, immediately after the merger; (iii) the number of voting shares
outstanding immediately after the merger, plus the number of voting shares
issuable as a result of the merger (either by the conversion of securities
issued pursuant to the merger or the exercise of rights and warrants issued
pursuant to the merger), will not exceed by more than 20% of the total number of
voting shares of the surviving corporation outstanding immediately before the
merger; and (iv) the number of participating shares (shares that entitle their
holder to participate without limitation in distributions) outstanding
immediately after the merger, plus the number of participating shares issuable
as a result of the merger (either by the conversion of securities issued
pursuant to the merger or the exercise of rights and warrants issued pursuant to
the merger), will not exceed by more than 20% the total number of participating
shares of the surviving corporation outstanding immediately before the merger.
Both Utah and Delaware law require that a sale of all or substantially all of
the assets of a corporation be approved by a majority of the outstanding voting
shares of the corporation transferring such assets. With certain exceptions,
Utah law also requires certains sales of assets and similar transactions be
approved by a majority vote of each class of shares outstanding. In contrast,
Delaware law generally does not require class voting, except in certain
transactions involving an amendment to the certificate of incorporation that
adversely affects a specific class of shares.
SHAREHOLDERS' CONSENT WITHOUT A MEETING
DELAWARE. Unless otherwise provided in the certificate of incorporation,
action requiring the vote of shareholders, including the removal and election of
directors, may be taken without a meeting, without prior notice and without a
vote, by the written consent of shareholders having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which all shares entitled to vote thereon were present and acted.
UTAH. Unless otherwise provided in the articles of incorporation, action
requiring the vote of shareholders may be taken without a meeting and without
prior notice by one or more written consents of the shareholders having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which all shares entitled to vote thereon were present and voted
(if shareholder action is by less than unanimous written consent, notice shall
be provided to the shareholders who did not consent at least ten days before the
consummation of the transaction, action or event authorized by the
shareholders). However, any written consent for the election of directors must
be unanimous and the shareholders of any corporation in existence prior to
July 1, 1992 are required to adopt a resolution permitting action by less than
unanimous written consent; otherwise, the shareholders are only permitted to act
by unanimous written consent. The Company's original charter pre-dates July 1,
1992 and on October 10, 2000, the shareholders of the Company elected to allow
shareholders to approve, ratify and effect actions of the Company by majority
written shareholder consent as permitted under Utah law.
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SHAREHOLDER VOTING REQUIREMENTS
DELAWARE. The certificate of incorporation or bylaws of any corporation
authorized to issue stock may specify the number of shares and/or the amount of
other securities having voting power, the holders of which shall be present or
represented by proxy at any meeting in order to constitute a quorum for, and the
votes that shall be necessary for, the transaction of any business. However, in
no event shall a quorum consist of less than one-third of the shares entitled to
vote at the meeting, except that, where a separate vote by a class or series or
classes or series is required, a quorum shall consist of no less than one third
of the shares of such class or series or classes or series. In the absence of
such specification in the certificate of incorporation or bylaws of the
corporation, a majority of the shares entitled to vote, present in person or
represented by proxy, shall constitute a quorum at a meeting of shareholders. In
all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Where a separate vote by a class or series or classes or
series is required, a majority of the outstanding shares of such class or series
or classes or series, present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter and
the affirmative vote of the majority of shares of such class or series or
classes or series present in person or represented by proxy at the meeting shall
be the act of such class or series or classes or series.
UTAH. Unless the articles or incorporation provide otherwise, a majority of
the votes entitled to be cast on a matter by the voting group constitutes a
quorum of that voting group for action on that matter. Once a share is
represented for any purpose at a meeting, including the purpose of determining
that a quorum exists, it is deemed present for quorum purposes for the remainder
of the meeting and for any adjournment of that meeting, unless a new record date
is or must be set for that adjourned meeting. Unless the articles of
incorporation provide otherwise, if a quorum exists, action on a matter, other
than the election of directors, by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast within the
voting group opposing the action. Unless otherwise provided in the articles of
incorporation, directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election, at a meeting of shareholders at which a
quorum is present. Shareholders do not have a right to cumulate their votes for
the election of directors unless the articles of incorporation provide for such
cumulation of votes. Shares entitled to vote cumulatively may be voted
cumulatively at each election of directors unless the articles of incorporation
provide alternative procedures for the exercise of cumulative voting.
DISSENTERS' RIGHTS
DELAWARE. Shareholders are entitled to demand appraisal of their shares in
the case of mergers or consolidations, except where: (i) they are shareholders
of the surviving corporation and the merger did not require their approval under
Delaware law; (ii) the corporation's shares are either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by The National Association of Securities
Dealers, Inc.; or (iii) the corporation's shares are held of record by more than
2,000 shareholders. Appraisal rights are available in either (i), (ii) or
(iii) above. However, if the shareholders are required by the terms of the
merger or consolidation to accept any consideration other than (a) stock of the
corporation surviving or resulting from the merger or consolidation, (b) shares
of stock of another corporation which are either listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or held
of record by more than 2,000 shareholders, (c) cash in lieu of fractional
shares, or (d) any combination of the foregoing, appraisal rights are not
available. Appraisal rights are not available in the case of a sale, lease,
exchange or other disposition by a corporation of all or substantially all of
its property and assets.
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UTAH. In connection with a merger, share exchange or sale, lease, exchange
or other disposition of all or substantially all of the assets of a corporation
(other than in the ordinary course of the corporation's business), a dissenting
shareholder, after complying with certain procedures, is entitled to payment
from the corporation of the fair value of the shareholder's shares. The fair
value is estimated by the corporation. However, if the shareholder is unwilling
to accept the corporation's estimate, the shareholder may provide the
corporation with an estimate of the fair value and demand payment of that
amount. If the corporation is unwilling to pay that amount, the corporation
shall apply for judicial determination of the fair value. Unless the articles of
incorporation, bylaws or a resolution of the Board of Directors provide
otherwise, shareholders are not entitled to dissenters' rights when the shares
are listed on a national securities exchange or the National Market System of
NASDAQ, or are held of record by more than 2,000 holders. However, this
exception does not apply if, pursuant to the corporate action, the shareholder
will receive anything except (i) shares of the surviving corporation,
(ii) shares of a corporation that is or will be listed on a national securities
exchange, the National Market System of NASDAQ, or held of record by more than
2,000 holders, (iii) cash in lieu of fractional shares or (iv) any combination
of the foregoing.
DIVIDENDS
DELAWARE. Dividends may be paid either (i) out of surplus (the excess at
any time of the net assets of the corporation over the amount of its capital),
or (ii) in case there is no surplus, out of the corporation's net profits for
the fiscal year in which the dividend is declared and/or its net profits for the
preceding fiscal year. A corporation may redeem or repurchase its shares only if
the capital of the corporation is not impaired and such redemption or repurchase
would not impair the capital of the corporation.
UTAH. A corporation is prohibited from making a distribution to its
shareholders if, after giving effect to the distribution, the corporation would
not be able to pay its debts as they become due in the usual course of business
or the corporation's total assets would be less than its total liabilities (plus
any amounts necessary to satisfy any preferential rights).
ANTI-TAKEOVER STATUTES
DELAWARE. Except under certain circumstances, Delaware law prohibits a
"business combination" between the corporation and an "interested shareholder"
within three years of the shareholder becoming an "interested shareholder."
Generally, an "interested shareholder" is a person or group that directly or
indirectly, controls 15% or more of the outstanding voting stock or is an
affiliate or associate of the corporation and was the owner of 15% or more of
such voting stock at any time within the previous three years. A "business
combination" includes a merger, consolidation, sale or other disposition of
assets having an aggregate value in excess of 10% of the aggregate market value
of the consolidated assets of the corporation or its outstanding stock, and
certain transactions that would increase the interested shareholders'
proportionate share ownership in the Board of Directors prior to the date the
interested shareholder became an interested shareholder under Delaware law. Such
business combinations between a corporation and an interested shareholder are
prohibited unless (a) prior to the date the person became an interested director
the Board of Directors approved either the business combination or the
transaction which resulted in the person becoming an interested shareholder;
(b) the interested shareholder acquired at least 85% of the outstanding voting
stock of the corporation in the transaction in which the shareholder became an
interested shareholder excluding, for purposes of determining the number of
shares outstanding, shares held by persons who are directors and also officers
and by employee stock plans in which participants do not have the right to
determine confidentially where shares held subject to the plan will be tendered;
(c) the business combination is approved by a majority of the Board of Directors
and by the affirmative vote of two-thirds of the votes entitled to be cast by
disinterested shareholders at an annual or special meeting, (d) the corporation
does not have a class of voting stock that is listed on a national securities
exchange, authorized for quotation on an interdealer quotation system of a
registered national securities association, or held by
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more than 2,000 shareholders unless any of the foregoing results from action
taken, directly or indirectly, by an interested shareholder or (e) the
corporation has opted out of this provision. The Delaware Certificate of
Incorporation opts HTTP Delaware out of this provision.
UTAH. The Utah Control Share Acquisitions Act, set forth in Sections 61-6-1
through 61-6-12 of the Utah Code Annotated, provides, among other things, that,
when any person obtains shares (or the power to direct the voting shares) of "an
issuing public corporation" such that the person's voting power equals or
exceeds any of three levels (20%, 33 1/3% or 50%), the ability to vote (or to
direct the voting of) the "control shares" is conditioned on approval by a
majority of the corporation's shares (voting in voting groups, if applicable),
excluding the "interested shares". Shareholder approval may occur at the next
annual meeting of the shareholders, or, if the acquiring person requests and
agrees to pay the associated costs of the corporation, at a special meeting of
the shareholders (to be held within 50 days of the corporation's receipt of the
request by the acquiring person). If authorized by the articles of incorporation
or the bylaws, the corporation may redeem "control shares" at the fair market
value if the acquiring person fails to file an "acquiring person statement" or
if the shareholders do not grant voting rights to control shares. If the
shareholders grant voting rights to the control shares, and if the acquiring
person obtained a majority of the voting power, shareholders may be entitled to
dissenters' rights under Utah law. An acquisition of shares does not constitute
a control share acquisition if (i) the corporation's articles of incorporation
or bylaws provide that this Act does not apply, (ii) the acquisition is
consummated pursuant to a merger in accordance with Utah law, or (iii) under
certain other specified circumstances.
QUORUM OF DIRECTORS
DELAWARE. Unless a greater or lesser number is required for a quorum by the
certificate of incorporation or bylaws (but in no event less than one-third of
the votes of the entire board or committee), a majority of the directors then in
office shall constitute a quorum. Under the Delaware Bylaws, the act of a
majority of directors present at a meeting duly held shall be the act of the
Board once a quorum is present.
UTAH. A quorum of the Board of Directors consists of a majority of the
fixed number of directors if the corporation has a fixed board size, or if the
corporation's bylaws provide for a variable board size, a majority of the number
of directors prescribed, or if no number is prescribed, the number in office.
However, the articles of incorporation or the bylaws may establish a higher or
lower number of directors to constitute a quorum, but in no event may the number
be less than one-third of the number of directors.
DERIVATIVE SUITS
DELAWARE. The plaintiff must have been a shareholder of the corporation at
the time of the transaction of which he complains or his stock thereafter must
have devolved upon him by operation of law.
UTAH. A shareholder may not commence a derivative action unless the
shareholder was a shareholder of the corporation at the time when the
transactions complained of occurred (unless the person became a shareholder
through transfer by operation of law from a p6rson who was a shareholder at the
time) and fairly and adequately represents the interests of the corporation. The
complaint must be verified and allege with particularity the demand made to on
the Board of Directors to obtain action. If a court finds that the proceeding
was commenced (i) without reasonable cause, the court may require the plaintiff
to pay the defendant's reasonable expenses, including counsel fees; (ii) with
reasonable cause, the court may order the corporation to pay the plaintiff's
reasonable expenses, including counsel fees.
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SPECIAL MEETING OF SHAREHOLDERS
DELAWARE. Shareholders generally do not have the right to call meetings of
shareholders unless such right is granted in the certificate of incorporation or
bylaws. However, if a corporation falls to hold its annual meeting within a
period of 30 days after the date designated therefor, or if no date has been
designated for a period of 13 months after its last annual meeting, the Delaware
Court of Chancery may order a meeting to be held upon the application of a
shareholder. The Delaware Bylaws permit a special meeting to be called at any
time by a majority of the Board of Directors, the Chairman of the Board, the
president of HTTP Delaware, or the holders of more than fifty percent (50%) of
HTTP Delaware's issued and outstanding Common Stock entitled to vote thereat.
UTAH. Special meetings of the shareholders may be called by: (i) the Board
of Directors, (ii) the person or persons authorized by the bylaws to call a
special meeting, or (iii) the holders of shares representing at least 10% of all
votes entitled to be cast on any issue proposed to be considered at the special
meeting. The corporation shall give notice of the date, time and place of the
meeting no fewer than 10 and no more than 60 days before the meeting. Notice of
a special meeting must include a description of the purposes for which the
special meeting is called.
AMENDMENTS TO CHARTER
DELAWARE. Amendments to the certificate of incorporation require the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote thereon except that if the certificate of incorporation requires the
vote of a greater number or proportion of the directors or of the holders of any
class of stock than is required by the DGCL with respect to any matter, the
provision of the certificate of incorporation may not be amended, altered or
repealed by HTTP Delaware except by such greater vote.
UTAH. The Board of Directors may propose amendments to the articles of
incorporation for submission to the shareholders. Notice of a regular or special
meeting at which a proposed amendment is to be considered must include a notice
of such purpose and be accompanied by a discussion or copy of the proposed
amendment. For an amendment to be adopted, (i) the Board of Directors must
recommend the amendment to the shareholders (unless the board determines that
because of a conflict of interest or other special circumstances it should not
make a recommendation and communicates the basis for its determination to the
shareholders), and (ii) unless the articles of incorporation, the bylaws (if
authorized by the articles of incorporation) or a resolution of the Board of
Directors require a greater number, the amendment must be approved by (a) a
majority of the votes entitled to be cast on the amendment by any voting group
as to which the amendment would create dissenters, rights, (b) a majority of the
votes entitled to be cast on the amendment by any voting group as to which the
amendment would materially and adversely affect the voting group's rights in
shares (including preferential rights, rights in redemption, preemptive rights,
voting rights or rights in certain reverse splits), and (c) a majority of the
votes cast for all other voting groups (voting separately, as applicable, with
shares constituting a quorum present for each voting group).
NOTICE, ADJOURNMENT AND PLACE OF SHAREHOLDERS' MEETINGS
DELAWARE. There is no specific statutory requirement under Delaware law
with regard to advance notice of director nominations and shareholder proposals.
Absent a bylaw restriction, director nominations and shareholder proposals may
be made without advance notice at the annual meeting. However, federal
securities laws generally provide that shareholder proposals that the proponent
wishes to include in HTTP Delaware's proxy materials must be received not less
than 120 days in advance of the date stated in the proxy statement released in
connection with the previous year's annual meeting.
UTAH. The Utah law and Utah Charter Documents require that notice of
shareholders, meetings be given between 10 and 60 days before a meeting unless
the shareholders waive or reduce the notice period by unanimous consent in
writing. Both Utah and Delaware law provide for adjournments of shareholders'
meetings. The Utah Charter Documents require notice of the adjournment if the
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adjournment is for 30 days or more or if a new record date is fixed. Delaware
law and the Delaware Charter Documents require that if the adjournment is for
more than 30 days or if a new record date is fixed, notice must be given to the
shareholders as for an original meeting. Both Delaware and Utah law permit
meetings of shareholders to be held at such place as is designated by or in the
manner provided in the Bylaws. If not so designated, Delaware law requires that
the meeting be held at the registered office of the Delaware corporation, while
Utah law provides for the principal office of the corporation.
DIRECTORS
DELAWARE. The Delaware Bylaws provide that the number of members of the
Delaware Board shall be not less than one nor more than fifteen. A majority of
the number of directors then in office constitutes a quorum for the transaction
of business. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum is present. The initial
directors shall serve until the 2001 annual meeting of shareholders or until
their successors and assigns have been duly elected and taken office. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
UTAH. The Utah Bylaws provide that the Board consists of not less than
three directors with the actual number being determined by resolutions adopted
by the Board or the holders of the Company's common stock. Currently, the
Company has nine directors. A majority of the number of directors constitutes a
quorum for the transaction of business. The Utah Bylaws provide that a vacancy
among the directors may be filled for the unexpired term by the affirmative vote
of a majority of the shareholders or a majority of the remaining directors in
office, though less than a quorum. Unless otherwise provided in the articles of
incorporation, directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election, at a meeting of shareholders at which a
quorum is present.
ELECTION AND REMOVAL OF DIRECTORS
DELAWARE. The Delaware Bylaws provide that directors shall hold office
until the next annual meeting of shareholders following their election. Any
director, or the entire Board, may be removed with or without cause, but only by
the vote of a majority of the voting power of the Company at a meeting called
for that purpose. The directors may fill vacancies on the board.
UTAH. The Utah Bylaws provide that each director shall hold office until
the next annual meeting of shareholders and until his or her successor shall
have been elected and qualified. Under Utah law and the Utah Charter Documents,
directors may be removed by a majority vote of shareholders, with or without
cause. The directors or the shareholders may fill vacancies on the board.
INSPECTION OF BOOKS AND RECORDS
DELAWARE. Under Delaware law, any shareholder of record, in person or by
attorney or other agent, shall, upon written demand under oath stating the
purpose thereof delivered to the company's principal place of business, have the
right during the usual hours for business to inspect for any proper purpose the
company's stock ledger, a list of its shareholders, 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 shareholder. In every
instance where an attorney or other agent shall be 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 shareholder.
UTAH. Upon providing the company with a written demand at least five
business days before the date the shareholder wishes to make an inspection, a
shareholder and his agent and attorneys are entitled to inspect and copy, during
regular business hours, (i) the articles of incorporation, bylaws, minutes of
shareholders meetings for the previous three years, written communications to
shareholders
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for the previous three years, names and business addresses of the officers and
directors, the most recent annual report delivered to the State of Utah, and
financial statements for the previous three years, and (ii) if the shareholder
is acting in good faith and directly connected to a proper purpose, excerpts
from the records of the Board of Directors and shareholders (including minutes
of meetings, written consents and waivers of notices), accounting records and
shareholder lists.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
DELAWARE. Under Delaware law, contracts or transactions in which a director
or officer is financially interested are not automatically void or voidable, if
approved by the shareholders or the directors under substantially the same
circumstances as in Utah. Approval by the shareholders, however, requires only a
simple majority. Board approval must be by a majority of the disinterested
directors, but interested directors may be counted for purposes of establishing
a quorum.
UTAH. Utah law provides that every director who, directly or indirectly, is
a party to, has beneficial interest in or is closely linked to a proposed
corporate transaction that is financially significant to the director is liable
to account to the corporation for any profit made as a consequence of the
corporation entering into such transaction unless such person (a) disclosed his
or her interest at the meeting of directors where the proposed transaction was
considered and thereafter the transaction was approved by a majority of the
disinterested directors; (b) disclosed his or her interest prior to a meeting or
written consent of shareholders and thereafter the transaction was approved by a
majority of the disinterested shares; or (c) can show that the transaction was
fair and reasonable to the corporation.
LIMITATION ON LIABILITY OF DIRECTORS; INDEMNIFICATION OF OFFICERS AND
DIRECTORS
DELAWARE. Delaware law permits a corporation to adopt provisions in its
certificate of incorporation eliminating or limiting the personal liability of a
director to the corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, with the following exceptions: (a) a breach of
the director's duty of loyalty; (b) payment of an unlawful stock dividend or
making an unlawful stock repurchase or redemption; (c) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law; or
(d) in any transaction in which the director derived an improper personal
benefit. The Delaware Certificate of Incorporation eliminates the liability of
directors of the corporation for monetary damages to the fullest extent
permissible under Delaware law. Delaware law permits a corporation to indemnify
its current and former directors, officers, employees and other agents under
circumstances similar to those for which the Utah Charter Documents provide. The
Delaware Bylaws require HTTP Delaware to indemnify all such persons whom it has
the power to indemnify to the fullest extent legally permissible by the Delaware
law. The Delaware Bylaws permit HTTP Delaware to advance expenses to any
indemnitee, provided that the indemnitee undertakes to repay amounts advanced if
it is ultimately determined that such person is not entitled to indemnification,
and subject to such other conditions as the Board may impose. Indemnification
rights under Delaware law are not exclusive. Accordingly, HTTP Delaware's Bylaws
specifically permit HTTP Delaware to indemnify its directors, officers,
employees and other agents pursuant to an agreement, bylaw provision,
shareholder vote or vote of disinterested directors or otherwise, any or all of
which may provide indemnification rights broader than those currently available
under the Utah or Delaware indemnification statutes.
UTAH. Utah law permits a corporation, if so provided in its articles of
incorporation, its bylaws or in a shareholder resolution, to eliminate or limit
the personal liability of a director to the corporation or its shareholders for
monetary damages due to any action taken or any failure to take action as a
director, except liability for: (a) improper financial benefits received by a
director; (b) intentional inflictions of harm on the corporation or its
shareholders; (c) payment of dividends to shareholders making the corporation
insolvent; and (d) intentional violations of criminal law. Under Utah law, a
corporation may indemnify its current and former directors, officers, employees
and other agents made party to any proceeding because of their relationship to
the corporation against expenses, judgments,
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fines, settlements and other amounts actually and reasonably incurred in
connection with such proceeding if that person acted in good faith and
reasonably believed his or her conduct to be in the corporation's best
interests, and, in the case of a criminal proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Utah law also permits a corporation to
indemnify its directors, officers, employees and other agents in connection with
a proceeding by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that the person is such an agent of the corporation,
against expenses actually and reasonably incurred by such person in connection
with the proceeding. Utah law prohibits the indemnification of an agent in
connection with a proceeding by or in the right of the corporation in which the
director, officer, employee or agent was adjudged liable to the corporation, or
in connection with any other proceeding in which the agent is adjudged liable on
the basis that the agent derived an improper personal benefit. The Utah Charter
Documents permit indemnification of all such persons whom it has the power to
indemnify to the fullest extent legally permissible under Utah law. Utah law
permits a corporation to advance expenses incurred by a director, officer,
employee or agent who is a party to a proceeding in advance of final disposition
of the proceeding if that person provides (a) a written affirmation of his good
faith belief that he acted in good faith, in the corporation's best interests
and, in the case of a criminal proceeding, had no reasonable cause to believe
his conduct was unlawful; (b) a written undertaking by or on behalf of that
person to repay the advance if it is ultimately determined that such person's
conduct did not meet the statutory standard required for indemnification; and
(c) the corporation determines under the facts then known that indemnification
would not be precluded. The Utah Charter Documents permit such advances. Both
the Delaware Charter Documents and Utah Charter Documents provide that HTTP
Delaware and the Company, respectively, may purchase insurance on behalf of
those persons entitled to be indemnified by the corporation.
DISSENTERS' RIGHTS AS A RESULT OF THE REINCORPORATION MERGER
Shareholders have dissenters' rights in Utah as a result of the proposed
Reincorporation. These rights are discussed above under "Comparison of
Shareholder Rights Under Delaware and Utah Corporate Law and Charter Documents"
at "Dissenters' Rights".
AMENDMENT TO THE MERGER AGREEMENT; TERMINATION
The Merger Agreement may be terminated and the Reincorporation abandoned,
notwithstanding shareholder approval, by the Board of Directors of the Company
at any time before consummation of the Reincorporation if (i) shareholders
dissent and seek appraisal rights; or (ii) the Board of Directors of the Company
determines that in its judgment the Reincorporation does not appear to be in the
best interests of the Company or its shareholders. In the event the Merger
Agreement is terminated, the Company would remain as a Utah corporation.
<TABLE>
<S> <C> <C>
Dated: November 27, 2000 BY ORDER OF THE BOARD OF DIRECTORS
By:
Stefan Allesch-Taylor
CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>
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