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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
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
FIBERNET TELECOM GROUP, INC.
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(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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
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FIBERNET TELECOM GROUP, INC.
570 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
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INFORMATION STATEMENT
DECEMBER , 1999
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TO STOCKHOLDERS OF
FIBERNET TELECOM GROUP, INC.
This Information Statement (the "Information Statement") is being delivered
by FiberNet Telecom Group, Inc., a Nevada corporation (the "Company"), and
relates to (i) the merger by the Company with and into FiberNet Telecom
Group, Inc., a Delaware corporation ("FiberNet Delaware"), in order to change
the Company's state of incorporation from Nevada to Delaware (the "Merger") and
(ii) the adoption of the 1999 Stock Option Plan of the Company, as amended.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
On December 10, 1999, by unanimous written consent, the Board of Directors
of the Company and the Board of Directors of FiberNet Delaware approved the
terms of the Merger as described in an Agreement and Plan of Merger (the "Plan
of Merger"). The Plan of Merger was also approved by the Company, which is the
sole stockholder of FiberNet Delaware, and by the stockholders of the Company
holding a majority of the voting shares of stock in the Company. Stockholder
approval of the Merger was obtained by written consent in lieu of a stockholders
meeting on December 10, 1999 ("Stockholders Consent"). 25,391,904 shares voted
in favor of the Plan of Merger out of a total of 36,536,425 shares entitled to
vote, constituting a majority of the voting shares of stock in the Company.
The Merger will be effective on or about January , 2000 (the "Effective
Date") upon the filing of a Certificate of Merger with the Secretary of State of
the State of Delaware and the Articles of Merger with the Secretary of State of
the State of Nevada.
In addition, the Board of Directors of the Company approved the 1999 Stock
Option Plan to provide for the issuance of options to employees, directors and
consultants to purchase an aggregate of 2,500,000 shares of common stock, $0.001
par value of the Company thereunder. The 1999 Stock Option Plan was also
approved by stockholders of the Company holding a majority of voting shares of
stock in the Company. Stockholder approval was obtained by written consent in
lieu of a stockholders meeting on December 10, 1999 (the "Initial Stock Option
Plan Stockholders Consent"). 25,391,904 shares voted in favor of the 1999 Stock
Option Plan out of a total of 36,536,425 shares entitled to vote, constituting a
majority of the voting shares of stock in the Company. An amendment
("Amendment") to the 1999 Stock Option Plan (as amended, the 1999 Stock Option
Plan shall be hereinafter referred to as the "Stock Option Plan") was approved
by the Board of Directors to increase the number of shares of Company Common
Stock reserved for issuance under the 1999 Stock Option Plan by 2,000,000
shares, to an aggregate of 4,500,000 shares. Stockholder approval was obtained
by written consent in lieu of a stockholders meeting on December 16, 1999
(together with the Initial Stock Option Plan Stockholders Consent, such approval
shall hereinafter be collectively referred to as the "Stock Option Plan
Stockholders Consent"). 25,391,904 shares voted in favor of the Amendment out of
a total of 36,536,425 shares entitled to vote, constituting a majority of the
voting shares of stock in the Company.
This Information Statement is being mailed on or about December , 1999.
The Board of Directors of the Company has fixed the close of business on
December 17, 1999 as the record date (the "Record Date") for determining the
stockholders entitled to receive this Information Statement.
This Information Statement is being furnished to stockholders of the Company
solely to provide you with certain information concerning the Merger and the
Stock Option Plan in accordance with the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the regulations promulgated
thereunder, including particularly Regulation 14C. The costs of this Information
Statement are being borne by the Company.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
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REINCORPORATION IN DELAWARE
The Board of Directors believes that it is in the best interest of the
Company and its stockholders for the Company to change its state of
incorporation from Nevada to Delaware. The reincorporation will be accomplished
by the Merger and pursuant to the Plan of Merger, under which the Company will
be merged with and into FiberNet Delaware. The terms and conditions of the
Merger are set forth in the Plan of Merger entered into between the Company and
FiberNet Delaware and attached to this Information Statement as EXHIBIT A. The
Plan of Merger was approved by written consent of a majority of the stockholders
of the Company dated December 10, 1999 (the "Stockholders Consent"). FiberNet
Delaware is a wholly owned subsidiary of the Company. It currently has no
operations. FiberNet Delaware was incorporated for the sole purpose of
reincorporating the Company in Delaware without any interruption in the
operations of the Company. Upon completion of the Merger on the Effective Date,
the Company will cease to exist and FiberNet Delaware will continue the business
of the Company under the name of FiberNet Telecom Group, Inc.
EFFECT OF THE MERGER
The Plan of Merger provides, in part, that: (i) each share of Company Common
Stock will be exchanged for one share of common stock, par value $0.001
("FiberNet Delaware Common Stock"), of FiberNet Delaware; (ii) each share of
Series C Convertible Preferred Stock, par value $0.001 ("Series C Preferred
Stock"), of the Company will be exchanged for one share of Series C Preferred
Stock, par value $0.001, of FiberNet Delaware; (iii) each share of Series D
Preferred Stock, par value $0.001 ("Series D Preferred Stock"), of the Company
will be exchanged for one share of Series D Preferred Stock, par value $0.001,
of FiberNet Delaware; (iv) each share of Series E Preferred Stock, par value
$0.001 ("Series E Preferred Stock"), of the Company will be exchanged for one
share of Series E Preferred Stock, par value $0.001, of FiberNet Delaware;
(v) each share of Series F Preferred Stock, par value $0.001 ("Series F
Preferred Stock" and together with the Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, the "Company Preferred Stock"), of
the Company will be exchanged for one share of Series F Preferred Stock, par
value $0.001, of FiberNet Delaware; (vi) each outstanding warrant to purchase
Company Common Stock shall become a warrant to purchase FiberNet Delaware Common
Stock on the basis of one share of FiberNet Delaware Common Stock for each share
of Company Common Stock at an exercise price per share equal to the exercise
price per share in effect prior to the Merger; and (vii) each outstanding option
to purchase Company Common Stock, including options granted under the Company's
Employee Equity Participation Program and the Stock Option Plan, will be
automatically assumed by FiberNet Delaware and will represent an option to
acquire shares of FiberNet Delaware Common Stock on the basis of one share of
FiberNet Delaware Common Stock for each share of Company Common Stock at an
exercise price equal to the exercise price of the option granted by the Company.
Each certificate representing issued and outstanding shares of the Company
Common Stock will represent the number of shares of FiberNet Delaware Common
Stock into which such shares are converted by virtue of the Merger.
The rights, privileges, powers and preferences of each series of the Company
Preferred Stock and Company Common Stock shall remain unchanged, except that the
rights of holders thereof shall be governed by the Delaware General Corporation
Law.
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF FIBERNET DELAWARE;
HOWEVER, STOCKHOLDERS MAY EXCHANGE THEIR CERTIFICATE IF THEY SO CHOOSE.
Holders of Company Common Stock who wish to exchange their certificates may
do so by contacting the transfer agent of the Company, Interwest Transfer
Company, P.O. Box 17136, Salt Lake
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City, Utah 84117, (801) 272-9294, Attention: FiberNet Telecom Group, Inc.
service representative. Holders of shares of any series of Company Preferred
Stock who wish to exchange their certificates may do so by contacting the
Company at its principal executive offices, 570 Lexington Avenue, New York, New
York 10022, (212) 405-6200, Attention: Vice President of Finance.
As a result of the Merger, FiberNet Delaware will succeed to all of the
assets and liabilities of the Company. FiberNet Delaware will also assume and
continue any and all of the Company's stock option plans, including the Employee
Equity Participation Program, the Stock Option Plan and all other employee
benefit plans of the Company.
SHARE PRICE
The bid and ask price per share at market close for shares of Common Stock
of the Company on December , 1999 was $ (bid) and $ (ask),
respectively as reported on Bloomberg L.P.
DESCRIPTION OF STOCK OF THE COMPANY AND FIBERNET DELAWARE
As of the Record Date, there were approximately 25,932,464 shares of Company
Common Stock, 133,333 shares of Series C Preferred Stock, 309,143 shares of
Series D Preferred Stock, 291,926 shares of Series E Preferred Stock and 345,515
shares of Series F Preferred Stock issued and outstanding. There are no shares
of the Company's Series A Convertible Cumulative Preferred Stock, $0.001 par
value ("Series A Preferred Stock"), or Series B Voting Preferred Stock, $0.001
par value ("Series B Preferred Stock"), issued and outstanding as of the Record
Date.
As of the Record Date, there were 10 shares of FiberNet Delaware Common
Stock issued and outstanding, all of which are held by the Company. Pursuant to
the Plan of Merger, as of the Effective Date of the Merger, shares of FiberNet
Delaware Common Stock issued and outstanding immediately prior thereto shall be
cancelled and returned to the status of authorized but unissued shares. Each
share of the respective series or class of stock of the Company will become an
equivalent series or class of stock of FiberNet Delaware pursuant to the Merger
and will have the same rights, powers, privileges, preferences and designations
as currently exist in the series or class of stock of the Company currently
outstanding.
ADDRESS OF THE COMPANY AND FIBERNET DELAWARE; ADDRESS OF TRANSFER AGENT
The principal executive offices of the Company are, and for FiberNet
Delaware will continue to be, located at 570 Lexington Avenue, New York, New
York 10022 with the same telephone number of (212) 405-6200. The transfer agent
for FiberNet Delaware will continue to be Interwest Transfer Company, located at
P.O. Box 17136, Salt Lake City, Utah, 84117 with the telephone number of
(801) 272-9294.
TERMINATION
The Plan of Merger is subject to termination at the option of either the
Company or FiberNet Delaware prior to the Effective Date.
APPROVALS
A Certificate of Merger must be filed with the State of Delaware, and
Articles of Merger must be filed with the State of Nevada to effect the Merger.
Except for these filings, no federal or state regulatory requirements must be
complied with or approvals obtained in connection with the Merger.
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PRINCIPAL REASONS FOR REINCORPORATION
As the Company plans 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 the Company's governance decisions can be based. The Company believes that
stockholders will benefit from the responsiveness of Delaware corporate law to
their needs and to those of the corporation they own. Although the Nevada
Revised Statutes are relatively similar to the General Corporation Law of the
State of Delaware, Delaware law is widely regarded as the most extensive and
well-defined body of corporate law in the United States. Many corporations have
initially chosen Delaware for their state of incorporation or have subsequently
changed their corporate domicile to Delaware in a manner similar to that of the
Company. Because of Delaware's prominence as the state of incorporation for many
major corporations, both the legislature and courts in Delaware have
demonstrated an ability and willingness to act quickly and effectively to meet
changing business needs. Moreover, the Delaware courts have developed
considerable expertise in dealing with corporate issues and a substantial body
of case law has been developed construing Delaware law and establishing public
policies with respect to corporate legal affairs.
COMPARISON OF RIGHTS UNDER NEVADA LAW AND DELAWARE LAW; THE CHARTER AND BY-LAWS
OF THE COMPANY AND FIBERNET DELAWARE
Upon completion of the Merger, the stockholders of the Company, a Nevada
corporation, will become stockholders of FiberNet Delaware, a Delaware
corporation, and the rights of such stockholders will be governed by applicable
Delaware law, including the Delaware General Corporation Law (hereinafter
referred to as "Delaware Law"), the FiberNet Delaware Certificate of
Incorporation (the "FiberNet Delaware Certificate"), a copy of which is attached
hereto as EXHIBIT B and incorporated herein by this reference, and the By-laws
of FiberNet Delaware (the "FiberNet Delaware By-laws"), a copy of which is
attached hereto as EXHIBIT Cand incorporated herein by this reference.
The following discussion summarizes certain important differences between
the rights of stockholders of the Company under the Nevada Revised Statutes
("Nevada Law" or "Nevada Revised Statutes"), the Company's Articles of
Incorporation (the "Company Articles") and the By-laws of the Company (the
"Company By-laws"), and the rights of stockholders of FiberNet Delaware under
Delaware Law, the FiberNet Delaware Certificate, and the FiberNet Delaware
By-laws. The discussion of the FiberNet Delaware By-laws and the FiberNet
Delaware Certificate below is qualified by reference to EXHIBITS B and C,
respectively.
(1) AUTHORIZED CAPITAL STOCK
Under the Company Articles, the Company currently has authority to issue
50,000,000 shares of Common Stock, $0.001 par value, and 5,000,000 shares of
Preferred Stock, $0.001 par value. The Board of Directors of the Company has
authorized the issuance of 1,000,000 shares of Series A Preferred Stock, 80,000
shares of Series B Preferred Stock, 133,333 shares of Series C Preferred Stock,
500,000 shares of Series D Preferred Stock, 750,000 shares of Series E Preferred
Stock and 500,000 shares of Series F Preferred Stock.
Under the FiberNet Delaware Certificate, FiberNet Delaware currently has
authority to issue 150,000,000 shares of Common Stock, par value $0.001 per
share, and 20,000,000 shares of preferred stock, par value $0.001 per share,
which preferences and characteristics are to be determined by the Board of
Directors of FiberNet Delaware. The Board of Directors of FiberNet Delaware has
authorized the issuance of 133,333 shares of Series C Preferred Stock, $0.001
par value, 500,000 shares of Series D Preferred Stock, $0.001 par value, 750,000
shares of Series E Preferred Stock, $0.001 par value, and 500,000 shares of
Series F Preferred Stock, $0.001 par value, by filing a Certificate of
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Designation for each such series of preferred stock with the Secretary of State
of the State of Delaware.
The rights, powers, privileges, preferences and designations of the
Company's Common Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock and Series F Preferred Stock will remain unchanged,
except insofar as the rights of the holders thereof will be governed by Delaware
Law rather than Nevada Law upon the Effective Date of the Merger.
(2) STOCKHOLDER ACTION BY WRITTEN CONSENT
Under Delaware Law, unless otherwise provided in a corporation's certificate
of incorporation, any action required to be taken at an annual or special
meeting of the stockholders may be taken in the absence of a meeting, without
prior notice and without a vote. Such action may be taken by the written consent
of stockholders in lieu of a meeting setting forth the action so taken and
signed by the holders of outstanding stock representing the number of shares
necessary to take such action at a meeting at which all shares entitled to vote
were present and voted. Prompt notice of the taking of a corporate action
without a meeting by less than unanimous written consent must be given to those
stockholders who have not consented in writing. FiberNet Delaware has not
prohibited the taking of stockholder actions by written consent in the FiberNet
Delaware Certificate.
Under Nevada Law, unless otherwise provided in a corporation's articles of
incorporation or by-laws, any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if a written consent
thereto is signed by stockholders holding at least a majority of the voting
power, except that if a different proportion of voting power is required for
such an action at a meeting, then that proportion of written consents is
required. The Company By-laws do not contain a prohibition on the taking of
stockholder actions by written consent.
(3) SPECIAL MEETINGS OF STOCKHOLDERS
Under Delaware Law, special meetings of stockholders may be called by the
Board of Directors or by such other person or persons as may be authorized to do
so by the corporation's certificate of incorporation or by-laws. The FiberNet
Delaware By-laws provide that a special meeting of the stockholders may be
called by the President or by the Board of Directors. The stockholders do not
have the right to call a special meeting of the stockholders of FiberNet
Delaware under the FiberNet Delaware By-laws.
Under Nevada Law, special meetings of stockholders may be held in the manner
provided by the by-laws of the corporation. The Company By-laws provide that
special meetings of the stockholders may be called by the President at the
request of the holders of not less than ten percent of all the outstanding
shares of the Company entitled to vote at a meeting or by the Board of
Directors.
(4) BOARD OF DIRECTORS
SIZE OF BOARD OF DIRECTORS. Under the FiberNet Delaware By-laws, the
FiberNet Delaware Board of Directors is composed of a number of directors as
fixed from time to time by the Board of Directors, but shall be no less than
one. Directors need not be stockholders. Under the Company By-laws, the Company
Board of Directors is composed of a number of directors as established by the
Company Board of Directors, but shall be no less than one.
ELECTION OF DIRECTORS. Delaware Law permits a Delaware corporation to
classify its Board of Directors into as many as three classes. FiberNet Delaware
does not have a classified Board of Directors. Nevada Law also permits a
corporation to classify its Board of Directors provided that at least one-fourth
of the total number of directors is elected annually. The Company By-laws do not
provide for a classified Board of Directors.
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VACANCIES. Under Delaware Law, subject to the rights, if any, of any series
of holders of preferred stock to elect directors and to fill vacancies on the
Board of Directors, vacancies on the Board of Directors will be filled by the
affirmative vote of a majority of the remaining directors then in office, even
if such number is less than a quorum. Any director so appointed will hold office
for the remainder of the full term of the directorship so vacated. Similarly,
Nevada Law provides that vacancies may be filled by a majority of the remaining
directors, even if such number is less than a quorum, unless the articles of
incorporation provide otherwise.
The Company By-laws provide that vacancies on the Board of Directors may be
filled by the majority of directors then in office. The FiberNet Delaware
By-laws provide that, except as any certificate of designation or subsequent
amendment to the FiberNet Delaware Certificate filed by FiberNet Delaware
provides otherwise, vacancies on the Board of Directors may be filled by the
majority of the directors then in office.
(5) RESTRICTIONS ON BUSINESS COMBINATIONS/CORPORATE CONTROL
Both Delaware Law and Nevada Law contain provisions restricting the ability
of a corporation to engage in business combinations with an interested
stockholder. Under Delaware Law, except under certain circumstances, a
corporation is not permitted to engage in a business combination with any
"interested stockholder" for three years following the date that such
stockholder became an interested stockholder. Similarly, Nevada Law does not
permit business combinations with interested stockholders for three years
following the date such stockholder became an interested stockholder without
board approval. Nevada Law defines an interested stockholder, generally, as a
person who owns 10% or more, rather than 15% or more as under Delaware Law, of
the outstanding shares of the corporation's voting stock.
In addition, Nevada Law generally disallows the exercise of voting rights
with respect to "control shares" of an "issuing corporation" held by an
"acquiring person", unless such voting rights are conferred by a majority vote
of the disinterested stockholders. "Acquiring person" means (subject to certain
exceptions) any person who individually or in association with others, acquires
or offers to acquire, directly or indirectly, a controlling interest in the
issuing corporation. "Control shares" are the voting shares of an issuing
corporation acquired in connection with the acquisition of a "controlling
interest". "Controlling interest" is defined in terms of threshold levels of
voting share ownership of outstanding voting shares of an issuing corporation
sufficient to enable the acquiring person, individually or in association with
others, directly or indirectly, to exercise (i) one-fifth or more but less than
one-third, (ii) one-third or more but less than a majority or (iii) a majority
or more of the voting power of the issuing corporation in the election of
directors, and voting rights must be conferred by a majority of the
disinterested stockholders as each threshold is reached and/or exceeded. The
Delaware Law does not contain a similar control shares statute.
(6) STOCKHOLDER VOTE FOR MERGERS AND OTHER CORPORATE REORGANIZATIONS
In general, both jurisdictions require authorization by an absolute majority
of outstanding shares entitled to vote thereon, as well as approval by the Board
of Directors with respect to the terms of a merger or a sale of substantially
all of the assets of the corporation. Neither Nevada Law nor Delaware Law
requires stockholder approval by the stockholders of a surviving corporation in
a merger or consolidation so long as the surviving corporation issues no more
than 20% of its voting stock in the transaction.
(7) APPRAISAL RIGHTS; DISSENTERS RIGHTS
Both Delaware Law and Nevada Law provide that stockholders have the right,
in some circumstances, to dissent from certain corporate reorganizations and to
instead demand payment of
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cash in the amount of the fair market value of their shares in lieu of the
consideration such stockholder would otherwise receive in the transaction. Under
Delaware Law and Nevada Law, a stockholder wishing to exercise appraisal rights
must submit a written demand for appraisal of such stockholder's shares to the
corporation prior to the event which triggers such appraisal rights and comply
with other filing requirements more fully set forth in the Delaware Law and
Nevada Law.
Under Delaware Law, such appraisal rights are not available to
(i) stockholders with respect to a merger or consolidation by a corporation, the
shares of which are either listed on a national securities exchange or are held
of record by more than 2,000 holders if such stockholders 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 or (ii) stockholders of a corporation surviving merger if no vote of the
stockholders of the surviving corporation is required to approve the merger
because, among other things, the number of shares to be issued in the merger
does not exceed 20% of the shares of the surviving corporation outstanding
immediately prior to the merger and if certain other conditions are met.
Nevada Law also limits dissenters rights when the shares of the corporation
are listed on a national securities exchange or are held by at least 2,000
stockholders unless the stockholders are required to accept in exchange for
their shares anything other than (i) cash, (ii) shares in the surviving
corporation, (iii) shares in another entity that is publicly listed or held by
more than 2,000 stockholders or (iv) any combination of cash or shares in an
entity described in (ii) or (iii).
Stockholders of the Company are entitled under Nevada Law to obtain payment
of the fair market value of their shares if they dissent from the consummation
of the Plan of Merger. See "--Appraisal Rights" below for a summary of the
appraisal rights available to stockholders of the Company in connection with the
Merger.
(8) INDEMNIFICATION OF OFFICERS AND DIRECTORS AND ADVANCEMENT OF EXPENSES
Delaware and Nevada have very similar provisions regarding indemnification
by a corporation of its officers, directors, employees and agents for claims
against such persons as a result of their positions. Delaware Law and Nevada Law
differ slightly in their provisions for advancement of expenses incurred by an
officer or director in defending a civil or criminal action, suit, or
proceeding. Delaware Law generally permits indemnification of expenses incurred
in the defense or settlement of a derivative or third party action, provided
there is a determination by a disinterested quorum of the directors, by
independent legal counsel, or by a majority vote of a quorum of the stockholders
that the person seeking indemnification acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation. Without court approval, however, no indemnification may be made in
respect of any derivative action in which such person is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Delaware Law requires indemnification of expenses when the
individual being indemnified has successfully defended the action on the merits
or otherwise.
Delaware Law provides that expenses incurred by an officer or director in
defending any civil, criminal, administrative, or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined that
he or she is not entitled to be indemnified by the corporation. Nevada Law
provides for similar advancement of expenses at the discretion of the Board of
Directors. In addition, however, the articles of incorporation, by-laws or an
agreement made by the corporation may require the corporation to advance
expenses as they are incurred before the final `disposition of the action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined
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that he or she is not entitled to be indemnified by the corporation. The Company
Articles and Company By-laws do not permit or require the advancement of
expenses.
(9) LIMITATION ON PERSONAL LIABILITY OF DIRECTORS
Nevada Law is similar to Delaware Law regarding the adoption of provisions
limiting personal liability, but differs in two respects. First, the Nevada Law
provision applies to both directors and officers. Second, the Delaware Law
provision excepts from limitation on liability a breach of the duty of loyalty.
The Nevada Law counterpart does not contain this exception. The Company Articles
provide for the elimination of personal liability for the directors and officers
of the Company for damages for breach of fiduciary duty except for acts or
omissions involving intentional misconduct, fraud or a knowing violation of law
or for the payment of dividends in violation of Nevada Law.
The FiberNet Delaware Certificate similarly eliminates the liability of
directors to the fullest extent permissible under Delaware Law, as such law
exists currently or as it may be amended in the future. Under Delaware Law, such
provision may not eliminate or limit director monetary liability for:
(i) breaches of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (iii) the payment of unlawful dividends
or unlawful stock repurchases or redemptions; or (iv) transactions in which the
director received an improper personal benefit.
Under Delaware Law and Nevada Law, provisions with respect to limitation of
liability may not limit a director's liability for violation of, or otherwise
relieve a corporation or its directors from the necessity of complying with,
federal or state securities laws, or affect the availability of non-monetary
remedies such as injunctive relief or rescission.
VOTE REQUIRED--ADOPTION OF PLAN OF MERGER
On the date of the Stockholders Consent, the outstanding voting securities
of the Company were 36,536,425 shares of Company Common Stock, par value $0.001
per share. Each share of Common Stock held of record counts as one vote and each
share of Series C Preferred Stock counts as 117.03 votes. 25,391,904 votes (the
"Majority Vote"), or more than a majority, voted in favor of adoption of the
Plan of Merger.
APPRAISAL RIGHTS
The following is a summary of appraisal rights available to the stockholders
of the Company, which summary is not intended to be a complete statement of the
applicable Nevada Law and is qualified in its entirety by reference to Chapters
92A.300 through 92A.500 of the Nevada Revised Statutes attached hereto as
EXHIBIT D.
Since the Merger was approved by the required vote of the stockholders by
majority written consent, the Company is required to mail a notice (the
"Dissenter's Notice") to all stockholders of the Company as of the Record Date,
a form of which is attached hereto as EXHIBIT E. In accordance with Nevada Law,
the Dissenter's Notice states that any stockholder wishing to exercise the right
to dissent must (i) properly complete and send the attached form of demand for
payment (the "Demand for Payment") to the Company at 570 Lexington Avenue, New
York, New York 10022 and (ii) deposit such stockholder's certificate(s)
representing the stock held by such stockholder, if any, with the Company's
transfer agent, Interwest Transfer Company, P.O. Box 17136, Salt Lake City,
Utah, 84117. The dissenting stockholder must timely mail the Demand for Payment
so that it is received by the Company on or before the date of delivery of the
Dissenter's Notice.
In accordance with Nevada Law, the Demand for Payment requires that the
dissenting stockholder certify that he, she or it acquired beneficial ownership
of the stock on or before the date of this
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Information Statement. The stockholder who demands payment retains all other
rights of a stockholder until those rights are canceled or modified by the
taking of the proposed corporate action. A stockholder who fails to timely mail
the Demand for Payment as set forth above is not entitled to receive payment for
his, her or its shares under Chapter 92A of the Nevada Revised Statutes.
The Company is required, except with respect to dissenters who were not
beneficial owners of Company Common Stock before the date of this Information
Statement, to pay to each dissenter who properly asserted his or her right to
dissent the amount the Company estimates to be the fair value of such
stockholder's shares plus accrued interest. The dissenting stockholder may seek
to enforce the Company's obligations in the district court located in the county
where the Company's registered office is located or, at the election of any
dissenter residing or having its registered office in Nevada, of the county in
which the dissenter resides or has its registered office.
In accordance with Nevada Law, any payments made by the Company to
dissenting stockholders will be accompanied by (i) the Company's balance sheet
dated December 31, 1998, a statement of income for that year, a statement of
changes in the stockholders' equity for that year and the latest available
interim financial statements, if any, (ii) a statement of the Company's estimate
of the fair value of the shares, (iii) an explanation of how the interest was
calculated, (iv) a statement of the dissenter's rights to demand payment under
the Nevada Revised Statutes and (v) a copy of Chapter 92A.300 through 92A.500 of
the Nevada Revised Statutes.
A dissenter may notify the Company in writing, within 30 days after the
Company made or offered payment for such stockholder's shares, of its, his or
her own estimate of the fair value of its, his or her shares and the amount of
interest due, and demand payment of its, his or her estimate (less any payment
already made by the Company), if it, he or she believes that the amount paid the
Company is less than the fair value of its, his or her shares or that the
interest due is incorrectly calculated.
If a demand for payment by a dissenting stockholder remains unpaid for
60 days after receiving the demand, the Company shall petition the court to
determine the fair value of the shares and accrued interest. If the Company does
not commence this proceeding within the 60-day period, it is required to pay
each dissenter whose demand remains unsettled the amount demanded. The Nevada
Revised Statutes specify the court in which such petition may be brought and
other procedural requirements.
In addition, the Nevada Revised Statutes provide for the assessment of the
costs and expenses of the proceeding against the Company, except that the court
may assess such amounts against the dissenters, as the court deems equitable, to
the extent the court finds that the dissenters acted arbitrarily, vexatiously or
not in good faith in demanding payment. Similarly, the Nevada Revised Statutes
provide that the court may assess the fees and expenses of the counsel and
experts for the respective parties in the amounts that the court finds
equitable, in the case of the Company's failure to substantially comply with the
requirements of the Nevada Revised Statutes, against the Company, and, in the
case of a party that acted arbitrarily, vexatiously or not in good faith,
against such party.
FEDERAL TAX CONSEQUENCES OF THE MERGER
The Merger is intended to constitute a tax-free reorganization under
Section 368(a) (1) (F) of the Internal Revenue Code of 1986, as amended (the
"Code"). For federal income tax purposes, no gain is expected to be recognized
by Company stockholders (including holders of rights to acquire stock in the
Company) as a result of the Merger, to the extent that such stockholders receive
solely FiberNet Delaware stock (or rights to acquire stock in FiberNet
Delaware). ALL COMPANY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER.
9
<PAGE>
1999 STOCK OPTION PLAN
The Company's Stock Option Plan provides for the issuance of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Code or
nonstatutory stock options ("NSOs") to employees and NSOs to consultants and
directors. The Stock Option Plan has been approved by the Board of Directors of
the Company and approved by a majority of the stockholders pursuant to the Stock
Option Plan Stockholders Consent. The discussion below is qualified by reference
to the Stock Option Plan attached to this Information Statement as EXHIBIT F.
GENERAL
The Stock Option Plan provides for the grant of ISOs and NSOs (collectively,
"Options"). All employees are eligible to receive ISOs or NSOs, and directors
and consultants are eligible to receive NSOs. The Stock Option Plan is
administered either by the Board of Directors or the Compensation Committee of
the Board of Directors (the "Administrator"). Options are granted in the
discretion of the Administrator and may be granted to the Company's or any of
its subsidiaries' officers, directors, employees, and other persons as
determined by the Administrator. Options may be conditionally granted to persons
who are prospective employees, directors, officers of the Company or any of its
subsidiaries. The exercise price of NSOs granted is determined by the
Administrator at the time of grant, and the exercise price of ISOs granted is no
less than the fair market value of the Company Common Stock on the date of
grant.
There are four executive officers, five non-employee directors and
approximately 30 other employees of the Company currently employed by the
Company, all of whom (as well as all future employees) are eligible to
participate in the Stock Option Plan. A maximum of 4,500,000 shares of Company
Common Stock (subject to adjustment in the event of stock split or other changes
in the Company Common Stock as provided in the Stock Option Plan) may be awarded
under the Stock Option Plan, which reflects the Amendment, increasing the number
of shares of Company Common Stock reserved for issuance under the Stock Option
from 2,500,000 shares to 4,500,000 shares. The Amendment was adopted by the
Board of Directors and by the stockholders pursuant to the Stock Option Plan
Stockholders Consent. To the extent Options expire or terminate prior to
exercise, such Options will again be available for award under the Stock Option
Plan. The unvested portion of any Option made to a director, officer or employee
of the Company will be null and void if such person is terminated or resigns
from the Company within three months of the date of the Option.
Each Option will be evidenced by a resolution of the Compensation Committee
or the Board of Directors (each, a "Resolution") approving the option grant
contained in an employment agreement or a stock option agreement, each dated as
of the date of grant and executed by the Company and the optionee, which
Resolution shall set forth the number of options granted, the option price, the
option term and such other terms and conditions as may be determined appropriate
by the Administrator. Shares of Company Common Stock issued under the Stock
Option Plan will be "restricted" as defined under Securities and Exchange
Commission ("SEC") Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), until such time as the Company determines in its discretion,
if at all, to register such shares under the Securities Act.
PURPOSE
The purpose of the Stock Option Plan is to advance the growth and success of
the Company by enabling employees, directors and consultants to acquire a
proprietary interest in the Company.
THE ADMINISTRATOR
The Administrator of the Stock Option Plan will be the Board of Directors or
the Compensation Committee of the Board of Directors. The Compensation Committee
must be made up of two or more
10
<PAGE>
"non-employee directors" (as defined under Rule 16b-3 under the Exchange Act).
The Administrator has full authority and discretion in the administration of the
Stock Option Plan, including the designation of those persons receiving Options,
the number of shares to be covered by options, stock appreciation rights or
stock options, the exercise price and other terms of options, and the other
terms of stock appreciation rights or other tandem options. Further, the
Administrator may specify additional terms and conditions which may be placed
upon receiving an Option. The Administrator's decisions in the administration of
the Stock Option Plan shall be final and binding on all persons for all
purposes.
OPTIONS
ISOs may be granted under the Stock Option Plan only to employees of the
Company and must be at a price per share not less than 100% of the fair market
value of the Company Common Stock at the date of the grant (110% for optionees
holding 10% of more of the Company Common Stock). The Stock Option Plan limits
grants of ISOs that may be exercised for the first time by the holder during any
calendar year to $100,000 in market value (determined at the time of the grant).
Each ISO, unless sooner terminated, expires within ten years from the date of
the grant (or five years from the date of grant for optionees holding more than
10% of the Company Common Stock). NSOs issued under the Stock Option Plan are
not subject to the requirements of the Code and, therefore, may not contain the
same restrictions as ISOs issued under the Stock Option Plan and may be granted,
at the discretion of the Administrator, below fair market value (as such term is
used in the Stock Option Plan). To date, the Company has issued 2,540,359 NSOs
and 380,474 ISOs under the Stock Option Plan. No Options granted under the Stock
Option Plan have been exercised to date.
The exercise period for NSOs is set by the Administrator in its discretion,
but in no case may the exercise period be greater than 10 years after the date
they are granted. The exercise price for Options must be paid to the Company in
cash or shares of Company Common Stock (valued at fair market value (as defined
in the Stock Option Plan)). Generally, an unexercised portion of an ISO may be
exercised within three months after the holder's termination of employment
(twelve months if due to disability) and an unexercised portion of an NSO may be
exercised not later than ten years after such grant unless the Administrator
determines otherwise. Options may be exercised no later than one year following
an employee's death unless the Administrator determines otherwise. In no event
may an Option be exercised by any person after the expiration of its term. An
Option is terminated immediately upon termination of an employee's employment
for cause, as defined in the Stock Option Plan. Except for ISOs, Options
generally are transferable only to a holder's family member, a trust for the
benefit of the holder or family member, a charity, by will, or by the laws of
descent and distribution. ISOs are exercisable during an optionee's lifetime
only by such optionee and are transferable only upon death by will or the laws
of descent or distribution.
AMENDMENTS
The Board of Directors may amend and modify the Stock Option Plan at any
time, subject to the approval of stockholders under certain conditions. The
Stock Option Plan shall terminate on May 7, 2004, however, as required by law,
any Options then outstanding under the Stock Option Plan shall remain
outstanding until they expire by their terms.
FEDERAL TAX ASPECTS OF THE STOCK OPTION PLAN
Options granted under the Stock Option Plan may be either ISOs or NSOs. The
recipient of an ISO does not incur ordinary taxable income at the time of grant
or exercise of the option provided that the recipient exercise such ISO in
accordance with the applicable provisions of the Code. However, the optionee may
incur alternative minimum tax upon exercise of the option. The Company is not
entitled to a tax deduction at the time of exercise of an ISO regardless of the
applicability of the alternative minimum tax. Upon the sale or exchange of the
shares at least one year after receipt of shares by the
11
<PAGE>
optionee and two years after grant of the ISO, any gain is generally taxed as a
long-term capital gain. If these holding periods are not satisfied, the optionee
recognizes ordinary taxable income equal to the difference between the exercise
price and the lower of the fair market value of the stock at the date of the
option exercise or the sale price of the stock. In turn, the Company is entitled
to a tax deduction for the amount of the ordinary income recognized by the
optionee.
Options which do not qualify as ISOs are NSOs. An optionee generally does
not recognize taxable income at the time of grant of a NSO. However, upon
exercise, the optionee does recognize ordinary taxable income equal to the
excess of the fair market value of the shares at the time of exercise over the
exercise price. The income recognized by an optionee who is also an employee of
the Company is subject to income tax withholding. THIS INFORMATION STATEMENT IS
NOT INTENDED TO BE USED BY EMPLOYEES OR OPTIONEES FOR ANY PURPOSES OTHER THAN
INFORMATIONAL.
NEW PLAN BENEFITS--1999 STOCK OPTION PLAN
As of December 17, 1999, the Company has granted Options to purchase
2,920,833 shares under the Stock Option Plan. The Stock Option Plan was adopted
by the Board of Directors of the Company on May 7, 1999. Prior to May 7, 1999,
the Company granted stock options under its Employee Equity Participation
Program, which was terminated on May 7, 1999. None of the current executive
officers held such positions prior to May 7, 1999. The former executive officers
who held such positions prior to May 7, 1999 were granted stock options under
the Employee Equity Participation Program.
The following table and the accompanying notes set forth certain information
concerning outstanding Options under the Stock Option Plan granted to (i) all
current executive officers as a group, (ii) all current directors who are not
executive officers as a group, (iii) all employees who are not executive
officers as a group and (iv) the current executive officers required to be
disclosed hereunder.
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF UNITS
- ----------------- ---------------
<S> <C>
Michael S. Liss (1)......................................... 1,005,000(2)
President and Chief Executive Officer
Les Hankinson (3)........................................... 300,000(4)
Senior Vice President--Sales and Marketing
Executive Officer Group (5)................................. 1,970,000
Non-Executive Officer Director Group........................ 200,000
Non-Executive Officer Employee Group........................ 725,833
</TABLE>
- ------------------------
(1) Mr. Liss has served as President and Chief Executive Officer since May 11,
1999.
(2) Includes 125,000 Options for shares exercisable at $4.00 per share, 440,000
Options for shares exercisable at $3.75 per share and 440,000 Options for
shares exercisable at $6.00 per share.
(3) Mr. Hankinson has served as Senior Vice President--Sales and Marketing on or
about November 8, 1999 pursuant to an employment agreement with the Company
dated as of October 4, 1999.
(4) Includes 137,208 Options for shares exercisable at $5.375 per share and
167,792 Options for shares exercisable at $4.50 per share.
(5) Includes Options granted to Roy (Trey) D. Farmer III, who has served as
Executive Vice President of the Company since May 11, 1999, Joel W.
Zimmermann, who has served as Senior Vice President--Engineering and Network
Operations since July 21, 1999, and Messrs. Liss and Hankinson.
Based on the closing price of the Company Common Stock as of December 17,
1999, the market value per share of the Company Common Stock underlying the
Options was $ , as reported on Bloomberg L.P.
12
<PAGE>
EXECUTIVE COMPENSATION
DIRECTORS COMPENSATION
The Company does not pay any remuneration to its directors except for normal
and customary reimbursement of expenses.
SUMMARY OF EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company and Mr. Liss are parties to an employment agreement dated
May 7, 1999 (the "ML Agreement") and terminating on May 7, 2001. Under the ML
Agreement, Mr. Liss will receive an annual base salary of $250,000, 125,000
Options under the Stock Option Plan and a bonus, if declared by the Board of
Directors (or a committee thereof). See "1999 Stock Option Plan--New Plan
Benefits." Mr. Liss can be terminated with or without Cause (as defined in the
ML Agreement). If Mr. Liss' employment is terminated prior to the scheduled
termination date without Cause or voluntarily by Mr. Liss under certain
circumstances, including a Change of Control (as defined in the ML Agreement) or
the relocation of the Company's principal offices outside the New York
metropolitan area, (i) Mr. Liss shall have the right to receive twelve months
severance and (ii) all Options granted under the ML Agreement shall vest, among
other things. Upon the termination of Mr. Liss for Cause, Mr. Liss is entitled
to receive his salary to the date of his termination plus any declared but
unpaid bonus and shall be entitled to exercise all vested Options for a period
of 30 days after such termination.
The Company and Mr. Hankinson are parties to an employment agreement dated
October 4, 1999 (the "LH Agreement") and terminating on October 4, 2001.
Mr. Hankinson commenced employment on or about November 8, 1999. His
compensation under the LS Agreement includes a $225,000 annual base salary, a
$30,000 signing bonus, a $80,000 guaranteed annual bonus and 300,000 Options
under the Stock Option Plan. See "1999 Stock Option Plan--New Plan Benefits." If
Mr. Hankinson voluntarily terminates his employment under certain circumstances,
including (i) a material change of his authority or responsibilities,
(ii) reduction of base salary and (iii) a sale of all or substantially all of
the Company's assets or a merger, consolidation or combination of the Company
with another entity where the purchaser does not assume the LH Agreement, or if
Mr. Hankinson's employment is terminated prior to the scheduled termination date
without Cause (as defined in the LH Agreement), (i) Mr. Hankinson shall have the
right to receive his base salary for the lesser of six months or the date
Mr. Hankinson executes an employment agreement or commences employment with a
third party employer and (ii) all Options granted under the LH Agreement shall
vest, among other things. Upon the termination of Mr. Hankinson for Cause,
Mr. Hankinson is entitled to receive his salary to the date of his termination
plus any declared but unpaid bonus and shall be entitled to exercise all Options
granted under the LH Agreement which have vested up to such date for a period of
30 days after such termination. Upon the termination of Mr. Hankinson's
employment on or prior to February 4, 2000 with Cause or voluntarily by
Mr. Hankinson, 50% of the NSOs granted under the LH Agreement shall be
cancelled.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation paid
by the Company, for services rendered for the last three complete fiscal years
to the officers, directors and the four other most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 during the
fiscal year ended 1998. For the fiscal years ended December 31, 1996 and 1997,
the only named executive officers of the Company were Santo Petrocelli, Sr., who
served as President and Chief Executive Officer and Lawrence S. Polan, who
served as Vice President and Chief Financial Officer. No compensation was paid
to any named executive officer for the fiscal year ended December 31, 1996.
13
<PAGE>
For the fiscal year ended December 31, 1997, only Mr. Petrocelli received
compensation for his services.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------ -------------------------
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- --------------------------- -------- -------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Santo Petrocelli, Sr. ................... 1998 $150,000 -- -- -- --
Chairman(1) 1997 120,000 -- -- 190,000(2)
1996 -- -- --
Frank Chiaino............................ 1998 125,000 -- -- 300,000(4) --
President and Chief Executive
Officer(3)
Lawrence S. Polan........................ 1998 -- -- -- -- --
Vice President and Chief Financial 1997 -- -- -- 190,000(2) --
Officer(5) 1996 -- -- -- -- --
</TABLE>
- ------------------------
(1) Mr. Petrocelli resigned as President and Chief Executive Officer on
January 1, 1998. The Company entered into a three-year employment agreement
with Mr. Petrocelli on January 1, 1998 to serve as Chairman of the Company.
On May 7, 1999, Mr. Petrocelli resigned as Chairman of the Company.
(2) Represents options granted under the Company's Employee Equity Participation
Program, which was terminated on May 7, 1999, all of which vested on May 7,
1999 and are exercisable at $1.95 per share with a term of three years.
(3) On January 1, 1998, the Company entered into a three-year employment
agreement with Frank Chiaino to serve as the Company's President and Chief
Executive Officer. On May 7, 1999, Mr. Chiaino resigned as President and
Chief Executive Officer of the Company.
(4) Represents options granted under the Company's Employee Equity Participation
Program, 150,000 of which were cancelled on May 7, 1999 and 150,000 of which
vested on May 7, 1999 and are exercisable at $1.95 per share with a term of
three years.
(5) Mr. Polan resigned from the positions of Vice President and Chief Financial
Officer in 1998. He did not receive compensation for the fiscal years ended
December 31, 1996, 1997 and 1998.
Michael S. Liss commenced service as the President and Chief Executive
Officer of the Company on May 7, 1999 pursuant to the ML Agreement. See
"Executive Compensation--Summary of Employment Agreements with Executive
Officers." Under the ML Agreement, Mr. Liss is entitled to receive an annual
base salary of $250,000 plus a bonus and 125,000 Options under the Stock Option
Plan. As of December 17, 1999, Mr. Liss has received 125,000 Options under the
Stock Option Plan exercisable at $4.00 per share, 440,000 Options exercisable at
$3.75 per share and 440,000 Options exercisable at $6.00 per share. Les
Hankinson commenced service as the Senior Vice President--Sales and Marketing of
the Company on or about November 8, 1999 pursuant to the LH Employment
Agreement. See "Executive Compensation--Summary of Employment Agreements with
Executive Officers." Pursuant to the LH Agreement, Mr. Hankinson is entitled to
receive an annual base salary of $225,000, a $30,000 signing bonus and a $80,000
guaranteed annual bonus. Since October 21, 1999, Mr. Hankinson has been granted
Options for (i) 137,208 shares exercisable at $5.375 per share and (ii) 162,792
shares exercisable at $4.50 per share. Mr. Hankinson has received no Options
under the Stock Option Plan other than those granted under the LH Agreement. The
expiration dates for the Options granted to Messrs. Liss and Hankinson are ten
years from the date of grant for ISOs and ten years from the date of grant for
NSOs, as provided under the Stock Option Plan.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following tables set forth certain information concerning grants to
purchase shares of Company Common Stock to each of the officers named in the
summary compensation table above who were granted stock options by the Company
during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE PRICE
UNDERLYING OPTIONS/ EMPLOYEES PER EXPIRATION
NAME SARS GRANTED DURING PERIOD SHARE DATE
(A) (B) (C) (D) (E)
- ------------------------------ ------------------- ---------------- -------------- ----------
<S> <C> <C> <C> <C>
Frank Chiaino(1).............. 300,000 52.8 $1.95 1/1/2001
</TABLE>
- ------------------------
(1) Represents options granted to Mr. Chiaino on January 1, 1998 under the
Company's Employee Equity Participation Program, of which 150,000 options
vested on May 7, 1999 and are exercisable at $1.95 per share for three
years, and the remainder of which were cancelled on May 7, 1999.
15
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the Company Common Stock as of December 17, 1999, by (i) each
person (or group of affiliated persons) who is known by the Company to
beneficially own more that 5% of the outstanding shares of the Company Common
Stock, (ii) each director and executive officer of the Company and (iii) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES(1) CLASS(1)
- ------------------------------------ ---------- ----------
<S> <C> <C>
Signal Equity Partners, L.P.(1)(2).......................... 17,547,218 35.6%
Trident Telecom Partners LLC(1)(3).......................... 16,716,744 33.9%
Concordia Telecom Management, L.L.C.(1)(4).................. 13,236,866 26.8%
Metromedia Fiber Network Services, Inc.(5).................. 5,000,000 10.1%
Timothy P. Bradley(1)(6).................................... 17,580,551 35.6%
Michael S. Liss(1)(7)....................................... 14,241,866 28.7%
Roy (Trey) D. Farmer III(7)................................. 540,000 1.1%
Charles J. Mahoney(8)....................................... 100,000 *
Richard Sayers(9)........................................... 363,626 *
Steven G. Chrust(11)........................................ 100,000 *
William Vrattos(10)......................................... -- *
Les Hankinson(7)............................................ 300,000 *
Joel W. Zimmermann(7)....................................... 325,000 *
All directors and executive officers as a group (9
persons)(12).............................................. 21,859,931 46.3%
</TABLE>
- ------------------------
* Less than one percent.
(1) Includes 11,691,112 shares beneficially owned by Signal Equity Partners,
L.P. ("Signal"), Trident Telecom Partners LLC ("Trident") and Concordia
Telecom Management, L.L.C. ("Concordia" and together with Signal and
Trident, the "Managers") which are subject to proxies ("Proxies") dated as
of May 7, 1999 given by each of SMFS, Inc., LTJ Group, Inc. and LPS
Consultants, Inc. to the Managers, pursuant to which the Managers may
exercise voting rights and other rights connected with such shares for the
earlier of three years from May 7, 1999 or the occurrence of other events.
(2) The address of Signal is 10 E. 53rd Street, 32nd Floor, New York, New York
10022.
(3) The address of Trident is 445 Park Avenue, 6th Floor, New York, New York
10022.
(4) Includes shares beneficially owned by Concordia. Mr. Liss is the sole member
of Concordia. The address of Concordia is c/o FiberNet Telecom Group, Inc.,
570 Lexington Avenue, New York, New York 10022.
(5) The address of Metromedia Fiber Network Services, Inc. is 1 North Lexington
Avenue, White Plains, New York 10601.
(6) Includes shares beneficially owned by Signal and Signal Equity Management
Corp. ("Signal Equity"). Mr. Bradley is a Managing Partner of Signal and the
President of Signal Equity. The address of Mr. Bradley is c/o Signal Equity
Partners, L.P., 10 E. 53rd Street, 32nd Floor, New York, New York 10022.
(7) The address of Messrs. Liss, Farmer, Hankinson, Zimmermann is c/o FiberNet
Telecom Group, Inc., 570 Lexington Avenue, New York, New York 10022.
(8) The address of Mr. Mahoney is c/o Tishman Speyer Properties, 520 Madison
Avenue, New York, New, York 10022.
16
<PAGE>
(9) Includes shares owned by Taurus Telecommunications Inc., which is controlled
by Mr. Sayers. The address for Mr. Sayers is c/o 3625 Ridge Run,
Canandaigua, New York 14424.
(10) The address of Mr. Vrattos is c/o Waterview Partners, LP, 1114 Avenue of
the Americas, New York, New York 10036.
(11) The address of Mr. Chrust is c/o SGC Advisory Services, 1786 Bedford
Street, Stamford, Connecticut 06905.
(12) Includes the shares beneficially owned by Messrs. Bradley and Liss, which
are subject to the Proxies, through their respective positions in Signal and
Concordia.
17
<PAGE>
EXHIBIT LIST
<TABLE>
<S> <C>
Exhibit A Agreement and Plan of Merger between FiberNet Telecom Group,
Inc., a Nevada corporation and FiberNet Telecom Group, Inc.,
a Delaware corporation
Exhibit B Certificate of Incorporation of FiberNet Telecom Group,
Inc., a Delaware corporation
Exhibit C By-laws of FiberNet Telecom Group, Inc., a Delaware
corporation
Exhibit D Chapters 92A.300 through 92A.500 of the Nevada Revised
Statutes
Exhibit E Dissenter's Notice of Right to Demand Payment to certain
Shareholders of FiberNet Telecom Group, Inc., a Nevada
corporation
Exhibit F 1999 Stock Option Plan (as amended) of FiberNet Telecom
Group, Inc., a Nevada corporation
</TABLE>
18
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 10, 1999 (this
"AGREEMENT"), between FIBERNET TELECOM GROUP, INC., a Nevada corporation ("FN
NV"), and FIBERNET TELECOM GROUP, INC., a Delaware corporation ("FN DE"), such
corporations being sometimes referred to herein together as the "CORPORATIONS"
and each a "CORPORATION".
WHEREAS, pursuant to the Merger (as defined below), FN NV is being merged
with and into FN DE, and FN DE shall be the surviving corporation of the Merger;
WHEREAS, FN NV was incorporated under the laws of the State of Nevada on
July 20, 1995 as Desert Native Designs, Inc., and the authorized capital stock
of FN NV on the date hereof consists of (i) 50,000,000 shares of common stock,
$.001 par value ("FN NV COMMON STOCK"), of which 20,932, 464 shares of FN NV
Common Stock are issued and outstanding and (ii) 5,000,000 shares of preferred
stock, $.001 par value ("FN NV PREFERRED STOCK"), of which (a) 1,000,000 shares
were designated Series A Convertible Cumulative Preferred Stock ("FN NV
SERIES A PREFERRED"), of which no shares are issued and outstanding, (b) 80,000
shares were designated Series B Voting Preferred Stock ("FN NV SERIES B
PREFERRED"), of which no shares are issued and outstanding, (c) 133,333 shares
were designated Series C Convertible Preferred Stock, $.001 par value ("FN NV
SERIES C PREFERRED"), of which 133,333 shares are issued and outstanding,
(d) 500,000 shares were designated Series D Preferred Stock, $.001 par value
("FN NV SERIES D PREFERRED"), of which 309,143 shares are issued and
outstanding, (e) 750,000 shares were designated Series E Preferred Stock, $.001
par value ("FN NV SERIES E PREFERRED"), of which 291,926 shares are issued and
outstanding and (f) 500,000 shares were designated Series F Preferred Stock,
$.001 par value ("FN NV SERIES F PREFERRED") of which 345,515 are issued and
outstanding;
WHEREAS, FN DE was incorporated under the laws of the State of Delaware on
December 9, 1999, under the name "FIBERNET TELECOM GROUP, INC." Immediately
prior to the Effective Date (as defined below), the authorized capital stock of
FN DE consists of (i) 100,000,000 shares of common stock, $.001 par value ("FN
DE COMMON STOCK"), and (ii) 20,000,000 shares of preferred stock, $.001 par
value ("FN DE PREFERRED STOCK"), of which (a) 133,333 shares were designated
Series C Preferred Stock, $.001 par value ("FN DE SERIES C PREFERRED"),
(b) 500,000 shares were designated Series D Preferred Stock, $.001 par value
("FN DE SERIES D PREFERRED"), (c) 750,000 shares were designated Series E
Preferred Stock, $.001 par value ("FN DE SERIES E PREFERRED"), and (d) 500,000
shares were designated Series F Preferred Stock, $.001 par value ("FN DE
SERIES F PREFERRED"), and of which 10 shares of FN DE Common Stock and no shares
of FN DE Preferred Stock are issued and outstanding;
WHEREAS, the respective Boards of Directors of each of the Corporations have
determined that it is in the best interests of each of the Corporations that FN
NV merge with and into FN DE (the "MERGER"), pursuant to the provisions of the
Nevada Revised Statutes (the "NRS") and the provisions of the General
Corporation Law of the State of Delaware (the "DGCL"), with FN DE to be the
surviving corporation of the Merger and to continue in existence under the DGCL;
WHEREAS, FN DE will continue the business of FN NV and otherwise shall be
entitled to engage in any lawful act or activity for which corporations may be
organized under the DGCL;
WHEREAS, the respective Boards of Directors of each of the Corporations, by
resolutions duly adopted by Unanimous Written Consent, have approved and adopted
this Agreement and the stockholders of FN NV have approved and adopted this
Agreement by written consent in lieu of a stockholders meeting dated
December 10, 1999;
<PAGE>
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the Corporations hereby agree as follows:
ARTICLE I
MERGER
1.1 MERGER. On the Effective Date, and in accordance with the provisions
of the NRS and the DGCL, FN NV shall be merged with and into FN DE, which shall
be the surviving corporation of the Merger.
1.2 EFFECTIVE DATE. If this Agreement is not abandoned or terminated as
permitted by Article IV, a Certificate of Merger shall be signed, verified and
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL and a Certificate of Merger shall be signed, verified and filed with
the Secretary of State of the State of Nevada in accordance with the NRS. The
Merger shall become effective upon the date of filing of a Certificate of Merger
with the Secretary of State of the State of Nevada, or a Certificate of Merger
with the Office of the Secretary of State of the State of Delaware, whichever
occurs later (the "EFFECTIVE DATE").
ARTICLE II
CONVERSION OF STOCK AND OTHER INSTRUMENTS
2.1 FN NV PREFERRED STOCK AND FN DE PREFERRED STOCK. Upon the Effective
Date of the Merger:
(a) Each share of FN NV Series C Preferred, which shall be issued and
outstanding on the Effective Date, and all rights in respect thereof shall
forthwith be changed and converted into one share of FN DE Series C Preferred by
virtue of the Merger and without any action on the part of any party.
(b) Each share of FN NV Series D Preferred, which shall be issued and
outstanding on the Effective Date, and all rights in respect thereof shall
forthwith be changed and converted into one share of FN DE Series D Preferred by
virtue of the Merger and without any action on the part of any party.
(c) Each share of FN NV Series E Preferred, which shall be issued and
outstanding on the Effective Date, and all rights in respect thereof shall
forthwith be changed and converted into one share of FN DE Series E Preferred by
virtue of the Merger and without any action on the part of any party.
(d) Each share of FN NV Series F Preferred, which shall be issued and
outstanding on the Effective Date, and all rights in respect thereof shall
forthwith be changed and converted into one share of FN DE Series F Preferred by
virtue of the Merger and without any action on the part of any party.
2.2 FN DE COMMON STOCK. Upon the Effect Date of the Merger, each share of
FN DE Common Stock issued and outstanding immediately prior thereto shall, by
virtue of the Merger and without any action by FN DE, the holder of such shares,
be canceled and returned to the status of authorized but unissued shares.
2.3 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of FN NV Common Stock
and/or FN NV Preferred Stock may be asked to surrender the same for cancellation
to a transfer agent, whose name will be delivered to holders prior to any
requested exchange ("TRANSFER AGENT"), and each such holder shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of the appropriate class and series of FN DE's capital stock
into which the surrendered shares were converted
2
<PAGE>
as provided herein. Until so surrendered, each outstanding certificate
theretofore representing shares of FN NV capital stock shall be deemed for all
purposes to represent the number of whole shares of the appropriate class and
series of FN DE's capital stock into which such shares of FN NV were converted
in the Merger.
The registered owner on the books and records of FN DE or the Transfer Agent
of any such outstanding certificate shall, until such certificate shall have
been surrendered for transfer or conversion or otherwise accounted for to FN NV
or the Transfer Agent, have and be entitled to exercise any voting and other
rights with respect to and to receive dividends and other distributions upon the
shares of capital stock of FN DE represented by such outstanding certificate as
provided above.
Each certificate representing capital stock of FN DE so issued in the Merger
shall bear the same legends, if any, with respect to the restrictions on
transferability as the certificates of FN NV so converted and given in exchange
therefor, unless otherwise determined by the Board of Directors of FN DE in
compliance with applicable laws.
2.4 FN NV OPTIONS, WARRANTS AND OTHER CONVERTIBLE SECURITIES. Upon the
Effective Date of the Merger, FN DE shall assume the obligations of FN NV under
FN NV's Employee Equity Participation Program and 1999 Stock Option Plan and any
other option, warrant, right to purchase or security convertible into the FN NV
Common Stock which shall be outstanding on the Effective Date (a "RIGHT"), and
all rights in respect thereof shall forthwith be changed and converted into an
option, warrant, right to purchase or security convertible into FN DE Common
Stock by virtue of the Merger and without any action of the party on the basis
of one share of FN DE Common Stock for each one share of FN NV Common Stock, on
the same terms and conditions and at an exercise price equal to the exercise
price applicable to a FN NV Right at the Effective date of the Merger.
ARTICLE III
EFFECT OF THE MERGER
3.1 GENERAL. On the Effective Date, the separate existence of FN NV shall
cease to exist. FN NV and FN DE shall be a single corporation and FN DE shall
possess all the rights, privileges, powers and franchises, as well of a public
as of a private nature, and shall be subject to all the restrictions,
disabilities and duties of each of the Corporations; and all of the rights,
privileges, powers and franchises of each of the Corporations, and all property,
real, personal and mixed, and all debts due to either of the Corporations on
whatever account, as well for stock subscriptions as all other things in action
or belonging to or due to each of the Corporations, shall be taken and deemed to
be transferred to and vested in FN DE without further act or deed; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of FN DE as they were
of the Corporations, and title to any real estate or interest therein, vested by
deed or otherwise, in either of the Corporations, shall not revert or be in any
way impaired by reason of the Merger, but all rights of creditors and any liens
upon the property of either of the Corporations shall be preserved unimpaired
and all debts, liabilities and duties of each of the Corporations shall
thenceforth attach to FN DE, and may be enforced against it to the same extent
as if such debts, liabilities and duties had been incurred or contracted by it.
Any action or proceeding, whether civil, criminal or administrative, pending by
or against either of the Corporations, shall be prosecuted as if the Merger had
not taken place, or FN DE may be substituted in such action or proceeding in
place of either of the Corporations.
3.2 ACTIONS. From time to time after the Effective Date, the last acting
officers of FN NV or the corresponding officers of FN DE may, in the name of,
and on behalf of, FN NV, execute and deliver all such proper deeds, assignments
and other instruments and take or cause to be taken all such further or other
actions, as FN DE, or its successors or assigns, may deem necessary or desirable
in order to vest in, or perfect or confirm to, FN DE and its successors and
assigns, title to, and possession of, all of
3
<PAGE>
the property, rights, privileges, powers and franchises referred to in
Section 3.1 and otherwise to carry out the intent and purposes of this
Agreement.
3.3 OTHER MATTERS. All corporate acts, plans, policies, approvals,
resolutions and authorizations of FN NV, its stockholders, Board of Directors,
committees elected or appointed by its Board of Directors, officers and agents,
which are valid and effective immediately prior to the Effective Date, shall be
taken for all purposes as the acts, plans, policies, approvals, resolutions and
authorizations of FN DE and shall be as effective and binding on FN DE as they
were with respect to FN NV.
3.4 CHARTER DOCUMENTS; DIRECTORS AND OFFICERS. From and after the
Effective Date, (a) the Certificate of Incorporation of FN DE shall be, unless
and until it is thereafter duly altered, amended or repealed, as provided
therein or by law, binding, and (b) the persons serving as the directors and
officers of FN DE immediately prior to the Effective Date shall be the directors
and officers of FN DE immediately after the Effective Date, until their
respective successors shall have been elected and shall have been duly qualified
or until their earlier death, resignation or removal.
ARTICLE IV
TERMINATION
This Agreement may be terminated and the Merger abandoned by FN NV or FN DE
by appropriate resolution of its respective Board of Directors and for any
reason whatsoever, at any time prior to the Effective Date. In the event that
this Agreement is terminated, it shall become void and shall have no effect and
no liability shall be imposed upon either of the Corporations or the directors,
officers or stockholders or shareholders thereof.
ARTICLE V
AMENDMENT AND WAIVER
Prior to the Effective Date, this Agreement may be amended or modified in
any manner as may be determined in the judgment of the respective Boards of
Directors of the Corporations to be necessary, desirable or expedient in order
to clarify the intention of the parties hereto or to effect or facilitate the
filing, recording or official approval of this Agreement and the Merger in
accordance with the purposes and intent of this Agreement. Any failure of either
of the Corporations to comply with any of the agreements set forth herein may be
expressly waived in writing by the other Corporation.
4
<PAGE>
IN WITNESS WHEREOF, each of the Corporations has caused this Agreement and
Plan of Merger to be certified, executed and acknowledged on its behalf by an
officer thereunto duly authorized as of the date first set forth above. This
Agreement may be executed in two or more counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
<TABLE>
<S> <C> <C>
FIBERNET TELECOM GROUP, INC.
(a Nevada corporation)
By: /s/ MICHAEL S. LISS
----------------------------------------
Name: Michael S. Liss
Title: President and Chief Executive
Officer
FIBERNET TELECOM GROUP, INC.
(a Delaware corporation)
By: /s/ MICHAEL S. LISS
----------------------------------------
Name: Michael S. Liss
Title: President and Chief Executive
Officer
</TABLE>
5
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
FIBERNET TELECOM GROUP, INC.
ARTICLE I
The name of the corporation (herein called the "CORPORATION") is FiberNet
Telecom Group, Inc.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 9 East Loockerman Street, City of Dover, County of Kent, Delaware
19901. The name of the registered agent of the Corporation at such address is
National Registered Agents, Inc.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware ("DELAWARE GENERAL CORPORATION LAW").
ARTICLE IV
(a) The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 170,000,000 shares, of which 150,000,000 shall
be designated common stock, $.001 par value ("COMMON STOCK") and 20,000,000
shall be designated preferred stock, $.001 par value ("PREFERRED STOCK").
(b) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in this Certificate of Incorporation, to determine or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
any wholly unissued series of Preferred Stock and the number of shares
constituting any such series and the designation thereof, or any of them.
ARTICLE V
The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
- ---- ---------------
<S> <C>
Joy A. Huibonhoa c/o O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 24th Floor
New York, New York 10112
</TABLE>
ARTICLE VI
The number of directors of the Corporation shall be fixed from time to time
in the manner provided in the By-laws of the Corporation (the "BY-LAWS"). The
election of directors of the Corporation need not be by ballot unless the
By-laws so require.
ARTICLE VII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law,
or (d) for any transaction from which the director derived
<PAGE>
any improper personal benefit. If the Delaware General Corporation Law is
amended after the date of incorporation of the Corporation 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 the foregoing paragraph by the stockholders of
the Corporation shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
The Corporation shall indemnify its officers, directors, employees and
agents to the extent permitted by the General Corporation Law of Delaware.
ARTICLE IX
(a) The Board of Directors of the Corporation is expressly authorized to
make, alter or repeal the By-laws of the Corporation.
(b) From time to time any of the provisions of this Certificate of
Incorporation may be altered, amended or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this Certificate of Incorporation are granted subject to the provisions of this
paragraph (b).
ARTICLE X
Whenever a compromise or arrangement is proposed between the Corporation and
its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of the Delaware General Corporation Law or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of the Delaware General
Corporation Law order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree on any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
*********
2
<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the sole incorporator named
herein, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, DO HEREBY CERTIFY, under penalties of
perjury, that this is my act and deed and that the facts stated herein are truly
set forth and, accordingly, I have hereunto set my hand as of December 9, 1999.
--------------------------------------
Joy A. Huibonhoa
Sole Incorporator
3
<PAGE>
EXHIBIT C
BY-LAWS OF
FIBERNET TELECOM GROUP, INC.
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE.
The registered office of FiberNet Telecom Group, Inc., a Delaware
corporation (the "CORPORATION"), in the State of Delaware shall be at 9 East
Loockerman Street, City of Dover, County of Kent 19901, and the registered agent
in charge thereof shall be National Registered Agents, Inc.
1.2 OTHER OFFICES.
The Corporation may also have an office or offices at any other place or
places within or without the State of Delaware.
ARTICLE II
MEETING OF STOCKHOLDERS; STOCKHOLDERS'
CONSENT IN LIEU OF MEETING
2.1 ANNUAL MEETINGS.
The annual meeting of the stockholders for the election of directors, and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, date and hour as shall be fixed by the
Board of Directors (the "BOARD") and designated in the notice or waiver of
notice thereof, except that no annual meeting need be held if all actions,
including the election of directors, required by the General Corporation Law of
the State of Delaware (the "DELAWARE STATUTE") to be taken at a stockholders'
annual meeting are taken by written consent in lieu of meeting pursuant to
Section 2.12 of this Article II. If the annual meeting is not held on the date
designated, it may be held as soon thereafter as convenient and shall be called
the annual meeting.
2.2 OTHER MEETINGS
Meetings of stockholders for any purpose other than the election of
directors may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting.
2.3 SPECIAL MEETINGS.
A special meeting of the stockholders for any purpose or purposes may be
called by the Board or by the President.
2.4 NOTICE OF MEETINGS.
Except as otherwise required by statute, the Certificate of Incorporation of
the Corporation (the "CERTIFICATE") or these By-laws, notice of each annual or
special meeting of the stockholders shall be given to each stockholder of record
entitled to vote at such meeting not less than 10 nor more than 60 days before
the day on which the meeting is to be held, by delivering written notice thereof
to each stockholder personally, or by mailing a copy of such notice, postage
prepaid, directly to each stockholder at such stockholder's address as it
appears in the records of the Corporation, or by transmitting such notice
thereof to such stockholder at such address by telegraph, cable or other
telephonic transmission. Every such notice shall state the place, the date and
hour of the meeting, and, in case of a special meeting, the purpose or purposes
for which the meeting is called. Except as otherwise provided in these By-laws,
neither the business to be transacted at, nor the purpose of, any
<PAGE>
meeting of the stockholders need be specified in any such notice or waiver of
notice. Notice of any adjourned meeting of stockholders shall not be required to
be given, except when expressly required by law.
2.5 QUORUM.
At each meeting of the stockholders, except where otherwise provided by the
Certificate or these By-laws, the holders of a majority of the issued and
outstanding shares of Common Stock of the Corporation entitled to vote at such
meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business. In the absence of a quorum, a majority in
interest of the stockholders present in person or represented by proxy and
entitled to vote, or, in the absence of all the stockholders entitled to vote,
any officer entitled to preside at, or act as secretary of, such meeting, shall
have the power to adjourn the meeting from time to time, until stockholders
holding the requisite amount of stock to constitute a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
as originally called.
2.6 PLACE OF MEETINGS.
Annual meetings, special meetings and other meetings of stockholders may be
held at any place within or without the State of Delaware as may be selected
from time to time by the President or Board.
2.7 ORGANIZATION.
(a) Unless otherwise determined by the Board, at each meeting of the
stockholders, one of the following shall act as chairman of the meeting and
preside thereat, in the following order of precedence:
(i) the President;
(ii) any director, officer or stockholder of the Corporation
designated by the Board to act as chairman of such meeting and to preside
thereat if the President shall be absent from such meeting; or
(iii) a stockholder of record who shall be chosen chairman of such
meeting by a majority in voting interest of the stockholders present in
person or by proxy and entitled to vote thereat.
(b) The Secretary or, if he shall be presiding over such meeting in
accordance with the provisions of this Section 2.7 or if the Secretary shall
be absent from such meeting, the person (who shall be an Assistant
Secretary, if an Assistant Secretary has been appointed and is present) whom
the chairman of such meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof.
2.8 ORDER OF BUSINESS.
The order of business at each meeting of the stockholders shall be
determined by the chairman of such meeting.
2.9 VOTING.
Except as otherwise provided by law, the Certificate or these By-laws, at
each meeting of the stockholders, every stockholder of the Corporation shall be
entitled to one vote in person or by proxy for each share of Common Stock of the
Corporation held by such stockholder and registered in such
2
<PAGE>
stockholder's name on the books of the Corporation on the date fixed pursuant to
Section 6.7 of Article VI as the record date for the determination of
stockholders entitled to vote at such meeting. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held. A person whose
stock is pledged shall be entitled to vote, unless, in the transfer by the
pledgor on the books of the Corporation, such person has expressly empowered the
pledgee to vote thereon, in which case only the pledgee or his proxy may
represent such stock and vote thereon. If shares or other securities having
voting power stand in the record of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary shall be given
written notice to the contrary and furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect:
(a) if only one votes, his act binds all;
(b) if more than one votes, the act of the majority so voting binds all;
and
(c) if more than one votes, but the vote is evenly split on any
particular matter, such shares shall be voted in the manner provided by law.
If the instrument so filed shows that any such tenancy is held in unequal
interests, a majority or even-split for the purposes of this Section 2.9 shall
be a majority or even-split in interest. The Corporation shall not vote directly
or indirectly any share of its own capital stock. Any vote of stock may be given
by the stockholder entitled thereto in person or by his proxy appointed by an
instrument in writing, subscribed by such stockholder or by his attorney
thereunto authorized, delivered to the secretary of the meeting; PROVIDED,
HOWEVER, that no proxy shall be voted after three years from its date, unless
said proxy provides for a longer period. At all meetings of the stockholders,
all matters (except where other provision is made by law, the Certificate or
these By-laws) shall be decided by the vote of a majority in interest of the
stockholders present in person or by proxy at such meeting and entitled to vote
thereon, a quorum being present. Unless demanded by a stockholder present in
person or by proxy at any meeting and entitled to vote thereon, the vote on any
question need not be by ballot. Upon a demand by any such stockholder for a vote
by ballot upon any question, such vote by ballot shall be taken. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy,
if there be such proxy, and shall state the number of shares voted.
2.10 INSPECTION.
The chairman of the meeting may at any time appoint one or more inspectors
to serve at any meeting of the stockholders. Any inspector may be removed, and a
new inspector or inspectors appointed, by the chairman of the meeting at any
time. Such inspectors shall decide upon the qualifications of voters, accept and
count votes, declare the results of such vote, and subscribe and deliver to the
secretary of the meeting a certificate stating the number of shares of stock
issued and outstanding and entitled to vote thereon and the number of shares
voted for and against the question, respectively. The inspectors need not be
stockholders of the Corporation, and any director or officer of the Corporation
may be an inspector on any question other than a vote for or against his
election to any position with the Corporation or on any other matter in which he
may be directly interested. Before acting as herein provided, each inspector
shall subscribe an oath faithfully to execute the duties of an inspector with
strict impartiality and according to the best of his ability.
2.11 LIST OF STOCKHOLDERS.
It shall be the duty of the Secretary or other officer of the Corporation
who shall have charge of its stock ledger to prepare and make, at least 10 days
before every meeting of the stockholders, a complete list of the stockholders
entitled to vote thereat, arranged in alphabetical order, and showing
3
<PAGE>
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to any such meeting, during ordinary
business hours, for a period of at least 10 days prior to such meeting, either
at a place within the city where such meeting is to be held, which place shall
be specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. Such list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
2.12 STOCKHOLDERS' CONSENT IN LIEU OF MEETING.
Any action required by the Delaware Statute to be taken at any annual or
special meeting of the stockholders of the Corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, by a consent in
writing, as permitted by the Delaware Statute.
ARTICLE III
BOARD OF DIRECTORS
3.1 GENERAL POWERS.
The business, property and affairs of the Corporation shall be managed by or
under the direction of the Board, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Certificate directed or required to be exercised or done by the stockholders.
3.2 NUMBER AND TERM OF OFFICE.
The number of directors shall be fixed from time to time by the Board, but
shall be no less than one. Directors need not be stockholders. Each director
shall hold office until such director's successor is elected and qualified, or
until such director's earlier death or resignation or removal in the manner
hereinafter provided.
3.3 ELECTION OF DIRECTORS.
At each meeting of the stockholders for the election of directors at which a
quorum is present, the persons receiving the greatest number of votes, up to the
number of directors to be elected, of the stockholders present in person or by
proxy and entitled to vote thereon shall be the directors; PROVIDED, HOWEVER,
that for purposes of such vote no stockholder shall be allowed to cumulate his
votes. Unless an election by ballot shall be demanded as provided in
Section 2.9 of Article II, election of directors may be conducted in any manner
approved at such meeting.
3.4 RESIGNATION, REMOVAL AND VACANCIES.
(a) Any director may resign at any time by giving written notice to the
Board or the President. Such resignation shall take effect at the time
specified therein or, if the time be not specified, upon receipt thereof;
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
(b) When one or more directors so resigns 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 power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall
hold office as provided in this section in the filling of other vacancies.
4
<PAGE>
(c) Unless otherwise provided in the Certificate, a certificate of
designations or these By-laws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by
a majority of the directors then in office, although less than a quorum,
or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of
the Certificate or any certificate of designation, vacancies and newly
created directorships of such class or classes or series may be filled by
a majority of the directors elected by such class or classes or series
thereof in office, or by a sole remaining director so elected.
(d) Unless otherwise restricted by statute, by the Certificate or by
these By-laws, any director or the entire Board may be removed, with or
without cause, at any time by vote of the holders of a majority of the
shares then entitled to vote at an election of directors or by written
consent of the stockholders pursuant to Section 2.12 of Article II.
3.5 MEETINGS.
(a) ANNUAL MEETINGS. As soon as practicable after each annual election
of directors, the Board shall meet for the purpose of organization and the
transaction of other business, unless it shall have transacted all such
business by written consent pursuant to Section 3.6 of this Article III.
(b) OTHER MEETINGS. Other meetings of the Board shall be held at such
times and places as the Board, the President or any director shall from time
to time determine.
(c) NOTICE OF MEETINGS. Notice shall be given to each director of each
meeting, including the time, place and purpose of such meeting. Notice of
each such meeting shall be mailed to each director, addressed to such
director at such director's residence or usual place of business, at least
two days before the date on which such meeting is to be held, or shall be
sent to such director at such place by telegraph, cable, wireless or other
form of recorded communication, or be delivered personally or by telephone
not later than the day before the day on which such meeting is to be held,
but notice need not be given to any director who shall attend such meeting.
A written waiver of notice, signed by the person entitled thereto, whether
before or after the time of the meeting stated therein, shall be deemed
equivalent to notice.
(d) PLACE OF MEETINGS. The Board may hold its meetings at such place or
places within or outside the State of Delaware as the Board may from time to
time determine, or as shall be designated in the respective notices or
waivers of notice thereof.
(e) QUORUM AND MANNER OF ACTING. A majority of the total number of
directors then in office shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at
such meeting, and the vote of a majority of those directors present at any
such meeting at which a quorum is present shall be necessary for the passage
of any resolution or act of the Board, except as otherwise expressly
required by law or these By-laws. In the absence of a quorum for any such
meeting, a majority of the directors present thereat may adjourn such
meeting from time to time until a quorum shall be present.
(f) ORGANIZATION. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside thereat, in the following
order of precedence:
(i) the President (if a director); or
(ii) any director designated by a majority of the directors present.
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The Secretary or, in the case of his absence, an Assistant Secretary, if an
Assistant Secretary has been appointed and is present, or any person whom the
chairman of the meeting shall appoint shall act as secretary of such meeting and
keep the minutes thereof.
3.6 DIRECTORS' CONSENT IN LIEU OF MEETING.
Any action required or permitted to be taken at any meeting of the Board may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by all
the directors then in office and such consent is filed with the minutes of the
proceedings of the Board.
3.7 ACTION BY MEANS OF CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT.
Any one or more members of the Board may participate in a meeting of the
Board by means of conference telephone or similar communications equipment by
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
3.8 COMMITTEES.
The Board may, by resolution or resolutions passed by a majority of the
whole Board, designate one or more committees, each such committee to consist of
one or more directors of the Corporation, which to the extent provided in said
resolution or resolutions shall have and may exercise the powers of the Board 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 which may require it,
such committee or committees to have such name or names as may be determined
from time to time by resolution adopted by the Board. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings, unless the Board shall otherwise provide. The Board shall
have power to change the members of any such committee at any time, to fill
vacancies and to discharge any such committee, either with or without cause, at
any time.
3.9 PAYMENT OF EXPENSES.
By resolution of the Board, directors may be paid their expenses, if any, of
attendance at each meeting of the Board. Directors may be paid also either a
fixed sum for attendance at each meeting of the Board or a stated salary as a
director. Such payment will not preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
4.1 EXECUTIVE OFFICERS.
The principal officers of the Corporation shall be a Chief Executive
Officer, a President and a Secretary, and may include such other officers as the
Board may appoint pursuant to Section 4.3 of this Article IV. Any two or more
offices may be held by the same person.
4.2 AUTHORITY AND DUTIES.
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By-laws or, to the extent so provided, by the Board.
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4.3 OTHER OFFICERS.
The Corporation may have such other officers, agents and employees as the
Board may deem necessary, including one or more Assistant Secretaries, one or
more Assistant Treasurers and one or more Vice Presidents, each of whom shall
hold office for such period, have such authority and perform such duties as the
Board or the President may from time to time determine. The Board may delegate
to any principal officer the power to appoint and define the authority and
duties of, or remove, any such officers, agents or employees.
4.4 TERM OF OFFICE, RESIGNATION AND REMOVAL.
(a) All officers shall be elected or appointed by the Board and shall hold
office for such term as may be prescribed by the Board. Each officer shall hold
office until his successor has been elected or appointed and qualified or until
his earlier death or resignation or removal in the manner hereinafter provided.
The Board may require any officer to give security for the faithful performance
of his duties.
(b) Any officer may resign at any time by giving written notice to the
Board, the President or the Secretary. Such resignation shall take effect at the
time specified therein or, if the time be not specified, at the time it is
accepted by action of the Board. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
(c) All officers and agents elected or appointed by the Board shall be
subject to removal at any time by the Board or by the stockholders of the
Corporation with or without cause.
4.5 VACANCIES.
Any vacancy occurring in any office of the Corporation shall be filled by
the Board.
4.6 THE CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall be responsible for the general direction
of the business and affairs of the Corporation, subject to the authority of the
Board, and shall perform such other duties as may from time to time be assigned
to the Chief Executive Officer by the Board, or as prescribed by law or these
By-laws.
4.7 THE PRESIDENT.
The President shall be the chief operating and administrative officer of the
Corporation, subject to the authority of the Board and the Chief Executive
Officer. After the Chief Executive Officer, the President shall direct the
policies and management of the Corporation. The President shall perform such
other duties as from time to time may be assigned to the President by the Board
or the Chief Executive Officer, or as otherwise prescribed by law of these
By-laws.
4.8 THE SECRETARY.
The Secretary shall, to the extent practicable, attend all meetings of the
Board and all meetings of the stockholders and shall record all votes and the
minutes of all proceedings in a book to be kept for that purpose. The Secretary
may give, or cause to be given, notice of all meetings of the stockholders and
of the Board, and shall perform such other duties as may be prescribed by the
Board or the President, under whose supervision he shall act. The Secretary
shall keep in safe custody the seal of the Corporation and affix the same to any
duly authorized instrument requiring it and, when so affixed, it shall be
attested by the Secretary's signature or, if appointed, an Assistant Secretary,
Treasurer or an Assistant Treasurer. The Secretary shall keep in safe custody
the certificate books and stockholder records and such other books and records
as the Board may direct, and shall perform all other duties
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incident to the office of Secretary and such other duties as from time to time
may be assigned to the Secretary by the Board or the President.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
5.1 EXECUTION OF DOCUMENTS.
The Board shall designate, by either specific or general resolution, the
officers, employees and agents of the Corporation who shall have the power to
execute and deliver deeds, contracts, mortgages, bonds, debentures, checks,
drafts and other orders for the payment of money and other documents for and in
the name of the Corporation, and may authorize such officers, employees and
agents to delegate such power (including authority to redelegate) by written
instrument to other officers, employees or agents of the Corporation; unless so
designated or expressly authorized by these By-laws, no officer, employee or
agent shall have any power or authority to bind the Corporation by any contract
or engagement, to pledge its credit or to render it liable pecuniarily for any
purpose or amount.
5.2 DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation or otherwise as the Board or any
other officer of the Corporation to whom power in this respect shall have been
given by the Board, shall select.
5.3 PROXIES WITH RESPECT TO STOCK OR OTHER SECURITIES OF OTHER CORPORATIONS.
The Board shall designate the officers of the Corporation who shall have
authority from time to time to appoint an agent or agents of the Corporation to
exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in any
other corporation, and to vote or consent with respect to such stock or
securities. Such designated officers may instruct the person or persons so
appointed as to the manner of exercising such powers and rights, and such
designated officers may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal or otherwise, such
written proxies, powers of attorney or other instruments as they may deem
necessary or proper in order that the Corporation may exercise its powers and
rights.
ARTICLE VI
SHARES AND THEIR TRANSFER; FIXING RECORD DATE
6.1 CERTIFICATES FOR SHARES.
Every owner of stock of the Corporation shall be entitled to have a
certificate certifying the number and class of shares owned by him in the
Corporation, which shall be in such form as shall be prescribed by the Board.
Certificates shall be numbered and issued in consecutive order and shall be
signed by, or in the name of, the Corporation by the President or any Vice
President, and by the Secretary (or an Assistant Secretary, Treasurer or
Assistant Treasurer, if appointed). In case any officer or officers who shall
have signed any such certificate or certificates shall cease to be such officer
or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be adopted by
the Corporation and be issued and delivered as though the person or persons who
signed such certificate had not ceased to be such officer or officers of the
Corporation.
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6.2 RECORD.
A record in one or more counterparts shall be kept of the name of the
person, firm or corporation owning the shares represented by each certificate
for stock of the Corporation issued, the number of shares represented by each
such certificate, the date thereof and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in whose
name shares of stock stand on the stock record of the Corporation shall be
deemed the owner thereof for all purposes regarding the Corporation.
6.3 TRANSFER AND REGISTRATION OF STOCK.
(a) 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.
(b) 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.
6.4 ADDRESSES OF STOCKHOLDERS.
The Corporation shall, either at its principal place of business or at such
place or places as designated by the Board, keep a record of its stockholders
listing their names and addresses and the number and class of shares held by
each stockholder.
6.5 LOST, DESTROYED AND MUTILATED CERTIFICATES.
The holder of any shares of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of the certificate therefor,
and the Board may, in its discretion, cause to be issued to such holder a new
certificate or certificates for such shares, upon the surrender of the mutilated
certificates or, in the case of loss or destruction of the certificate, upon
satisfactory proof of such loss or destruction, and the Board may, in its
discretion, require the owner of the lost or destroyed certificate or such
holder's legal representative to give the Corporation a bond in such sum and
with such surety or sureties as it may direct to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
destruction of any such certificate.
6.6 REGULATIONS.
The Board may make such rules and regulations as it may deem expedient, not
inconsistent with these By-laws, concerning the issue, transfer and registration
of certificates for stock of the Corporation.
6.7 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) 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,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall be not more than 60 nor less than 10 days before the
date of such meeting. If no record date is fixed by the Board, 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
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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. 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 may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which date shall
be not more than 10 days after the date upon which the resolution fixing the
record date is adopted by the Board. If no record date has been fixed by the
Board, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
is required by the Delaware Statute, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board and prior action by the Board is required by the
Delaware Statute, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board adopts the resolution taking such
prior action.
(c) In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than 60 days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
7.1 INDEMNIFICATION.
(a) As provided in the Certificate, to the fullest extent permitted by the
Delaware Statute as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or its stockholders for
breach of fiduciary duty as a director.
(b) Without limitation of any right conferred by paragraph (a) of this
Section 7.1, each person who was or is made a party or is threatened to be made
a party to or is otherwise involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer or employee of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "Indemnitee"), whether the basis of such Proceeding is alleged
action in an official capacity while serving as a director, officer or employee
or in any other capacity while serving as a director, officer or employee, shall
be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware Statute, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss (including
attorneys' fees, judgments, fines, excise taxes or amounts paid in settlement)
reasonably incurred or suffered by such
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Indemnitee in connection therewith and such indemnification shall continue as to
an Indemnitee who has ceased to be a director, officer or employee and shall
inure to the benefit of the Indemnitee's heirs, testators, intestates, executors
and administrators; PROVIDED, HOWEVER, that such person acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and with respect to a criminal action or
Proceeding, had no reasonable cause to believe his conduct was unlawful;
PROVIDED FURTHER, HOWEVER, that no indemnification shall be made in the case of
an action, suit or Proceeding by or in the right of the Corporation in relation
to matters as to which it shall be adjudged in such action, suit or Proceeding
that such director, officer, employee or agent is liable to the Corporation,
unless a court having jurisdiction shall determine that, despite such
adjudication, such person is fairly and reasonably entitled to indemnification;
PROVIDED FURTHER, HOWEVER, that, except as provided in Section 7.1(c) of this
Article VII with respect to Proceedings to enforce rights to indemnification,
the Corporation shall indemnify any such Indemnitee in connection with a
Proceeding (or part thereof) initiated by such Indemnitee only if such
Proceeding (or part thereof) initiated by such Indemnitee was authorized by the
Board of the Corporation. The right to indemnification conferred in this
Article VII shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such Proceeding in
advance of its final disposition (hereinafter an "Advancement of Expenses");
PROVIDED, HOWEVER, that, if the Delaware Statute requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such Indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "Undertaking"), by or on behalf of such Indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "Final
Adjudication") that such Indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise.
(c) If a claim under Section 7.1(b) of this Article VII is not paid in full
by the Corporation with 60 days after a written claim has been received by the
Corporation, except in the case of a claim for an Advancement of Expenses, in
which case the applicable period shall be 20 days, the Indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to the
terms of any Undertaking, the Indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right to an Advancement of Expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking the Corporation
shall be entitled to recover such expenses upon a Final Adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware Statute. Neither the failure of the Corporation (including the Board,
independent legal counsel, or the stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the Indemnitee is
proper in the circumstances because the Indemnitee has met the applicable
standard of conduct set forth in the Delaware Statute, nor an actual
determination by the Corporation (including the Board, independent legal counsel
or the stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an Advancement of Expenses hereunder,
or by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such Advancement of Expenses, under this
Section or otherwise shall be on the Corporation.
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(d) The rights to indemnification and to the Advancement of Expenses
conferred in this Article VII shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Charter,
agreement, vote of stockholders or disinterested directors or otherwise.
7.2 INSURANCE.
The Corporation may purchase and maintain insurance, at its expense, to
protect itself and any person who is or was a director, officer, employee or
agent of the Corporation or any person who is or was serving at the request of
the Corporation as a director, officer, employer or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware Statute.
ARTICLE VIII
AMENDMENT
Any by-law (including these By-laws) may be adopted, amended or repealed by
the vote of the holders of a majority of the shares then entitled to vote or by
the stockholders' written consent pursuant to Section 2.12 of Article II, or by
the vote of the Board or by the directors' written consent pursuant to
Section 3.6 of Article III.
ARTICLE IX
GENERAL PROVISIONS
9.1 BOOKS AND RECORDS; EXAMINATION.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account, and minute books, may be
kept on, or be in any form of information storage, provided that the records can
be converted into clearly legible form within a reasonable time. The books and
records of the Corporation may be kept outside of the State of Delaware. Except
as may otherwise be provided by the Delaware Statute, the Board will have the
power to determine from time to time whether and to what extent and at what
times and places and under what conditions any of the accounts, records and
books of the corporation are to be open to the inspection of any stockholder.
9.2 DIVIDENDS.
Subject to the provisions, if any, of the Delaware Statute and the
Certificate of Incorporation, dividends on the capital shares of the Corporation
may be declared by the Board at any regular or special meeting. Dividends may be
paid in cash, in property or in shares of the capital stock. Before payment of
any dividend, the Board may set aside out of any funds of the Corporation
available for dividends such reserves for any purpose that the directors will
think conducive to the interests of the Corporation.
9.3 SEAL.
The Board may provide a corporate seal, which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of
incorporation of the Corporation and the words and figures "Corporate
Seal--Delaware."
9.4 FISCAL YEAR.
The fiscal year of the Corporation shall be the calendar year unless
otherwise determined by the Board.
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EXHIBIT D
NEVADA REVISED STATUTES CHAPTERS 92A.300-92A.500
RIGHTS OF DISSENTING OWNERS
92A.300 DEFINITIONS.--As used in NRS 92A.300 to 92A.500, inclusive, unless
the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
92A.305 "BENEFICIAL STOCKHOLDER" DEFINED.--"Beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
92A.310 "CORPORATE ACTION" DEFINED.--"Corporate action" means the action of
a domestic corporation.
92A.315 "DISSENTER" DEFINED.--"Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.410 to
92A.480, inclusive.
92A.320 "FAIR VALUE" DEFINED.--"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 he objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable.
92A.325 "STOCKHOLDER" DEFINED.--"Stockholder" means a stockholder of record
or a beneficial stockholder of a domestic corporation.
92A.330 "STOCKHOLDER OF RECORD" DEFINED.--"Stockholder of record" means the
person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "SUBJECT CORPORATION" DEFINED.--"Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340 COMPUTATION OF INTEREST.--Interest payable pursuant to NRS 92A.300
to 92A.500, inclusive, must be computed from the effective date of the action
until the date of payment, at the average rate currently paid by the entity on
its principal bank loans or, if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.--A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY
COMPANY.--The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.--1.
Except as otherwise provided in subsection 2 and unless otherwise provided in
the articles or bylaws, any member of any constituent domestic nonprofit
corporation who voted against the merger may, without prior notice, but within
30 days after the effective date of the merger, resign
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from membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS AND
TO OBTAIN PAYMENT FOR SHARES.--1. Except as otherwise provided in NRS 92A.370 to
92A.390, a stockholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation
is a party:
(1) If approval by the stockholders is required for the merger by
NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and
he is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent under NRS 92A. 180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests
will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event that the articles of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under NRS
92A.300 to 92A.500, inclusive, may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to him
or the domestic corporation.
92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES OR
SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.--1. There is no
right of dissent with respect to a plan of merger or exchange in favor of
stockholders of any class or series which, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting at
which the plan of merger or exchange is to be acted on, were either listed on a
national securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held by at least 2,000
stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan
of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a least
2,000 holders of owner's interests of record; or
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(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of
paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY TO
SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.--1. A
stockholder of record may assert dissenter's rights as to fewer than all of the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the subject corporation in
writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.--1. If a
proposed corporate action creating dissenters' rights is submitted to a vote at
a stockholders' meeting, the notice of the meeting must state that stockholders
are or may be entitled to assert dissenters' rights under NRS 92A.300 to
92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken BY WRITTEN
CONSENT OF THE STOCKHOLDERS OR without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Last amended by Ch. 208, L. '97, eff.
10-1-97.)
- ------------------------
Ch. 208, L. '97, eff. 10-1-97, added matter in italic.
92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.--1. If a proposed
corporate action creating dissenters' rights is submitted to a vote at a
stockholders' meeting, a stockholder who wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the
proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 is
not entitled to payment for his shares under this chapter.
92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS.--1. If a proposed corporate action creating dissenters' rights
is authorized at a stockholders' meeting, the subject corporation shall deliver
a written dissenter's notice to all stockholders who satisfied the requirements
to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
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(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand
for payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the
date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF RIGHTS
OF STOCKHOLDER.--1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, BEFORE THE PROPOSED CORPORATE ACTION IS TAKEN retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter. (Last amended by Ch. 208,
L. '97, eff. 10-1-97.)
- ------------------------
Ch. 208, L. '97, eff. 10-1-97, added matter in italic.
92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER DEMAND
FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.--1. The subject corporation may
restrict the transfer of shares not represented by a certificate from the date
the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.--1. Except as otherwise
provided in NRS 92A.470, within 30 days after receipt of a demand for payment,
the subject corporation shall pay each dissenter who complied with NRS 92A.440
the amount the subject corporation estimates to be the fair value of his shares,
plus accrued interest. The obligation of the subject corporation under this
subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement
of income for that year, a statement of
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<PAGE>
changes in the stockholders' equity for that year and the latest available
interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF DISSENTER'S
NOTICE.--1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.--1. A dissenter may notify the
subject corporation in writing of his own estimate of the fair value of his
shares and the amount of interest due, and demand payment of his estimate, less
any payment pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470
and demand payment of the fair value of his shares and interest due, if he
believes that the amount paid pursuant to NRS 92A.460 or offered pursuant to NRS
92A.470 is less than the fair value of his shares or that the interest due is
incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within
30 days after the subject corporation made or offered payment for his shares.
92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.--1. If a demand for payment
remains unsettled, the subject corporation shall commence a proceeding within
60 days after receiving the demand and petition the court to determine the fair
value of the shares and accrued interest. If the subject corporation does not
commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication 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 a decision on the question of
fair value. The appraisers have the powers described in
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<PAGE>
the order appointing them, or any amendment thereto. The dissenters are entitled
to the same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment
pursuant to NRS 92A.470.
92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS AND
FEES.--1. The court in a proceeding to determine fair value shall determine all
of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject 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 the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with
the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter 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 NRS 92A.300 to 92A.500, inclusive.
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 subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
6
<PAGE>
EXHIBIT E
FIBERNET TELECOM GROUP, INC.
570 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 405-6200
DISSENTER'S NOTICE OF RIGHT TO DEMAND PAYMENT
Pursuant to Nevada Revised Statutes 92A.300 to 92A.500 inclusive
To Stockholders of FiberNet Telecom Group, Inc.
NOTICE IS HEREBY GIVEN to stockholders of FiberNet Telecom Group, Inc., a
Nevada corporation (the "Company"), of corporate action wherein stockholders of
the Company owning a majority of the Company's outstanding shares approved by
written consent a merger of the Company into its wholly owned subsidiary,
FiberNet Telecom Group, Inc., a Delaware Corporation ("FiberNet Delaware"), in
order to change the Company's state of incorporation from Nevada to Delaware
(the "Merger"). The date of the corporate action approving such matters was
December 10, 1999. The effective date of the Merger will be on or about January
, 2000.
NOTICE IS ALSO GIVEN that the Board of Directors of the Company has created
the 1999 Stock Option Plan of the Company, as amended (the "Stock Option Plan")
providing for 4,500,000 shares of common stock to be reserved for issuance
thereunder and which the stockholders owning a majority of the Company's
outstanding shares approved by written consent such Stock Option Plan on
December 10, 1999. The purpose of the Stock Option Plan is to advance the growth
and success of the Company by enabling employees, directors and consultants to
acquire a proprietary interest in the Company.
NOTICE IS ALSO GIVEN that demand for payment must be made on the enclosed
form supplied herewith, and must be received no later than January , 2000 in
order to be entitled to payment. Such demand and the certificates representing
the shares with respect to which such demand is made must be sent to and
deposited with the transfer agent for the Company, addressed as follows:
Interwest Transfer Co., Inc.
P.O. Box 17136
Salt Lake City, Utah 84107
(801) 272-9294
Beneficial stockholders may assert dissenter's rights only with respect to
all shares which they beneficially own and only if they submit the attached
Letter of Transmittal executed by the stockholder of record as evidence of
consent.
<TABLE>
<S> <C> <C>
By Order of the Board of Directors of
FiberNet Telecom Group, Inc.
Dated: December , 1999 By: /s/ MICHAEL S. LISS
---------------------------------
Michael S. Liss, President and Chief
Executive Officer
</TABLE>
<PAGE>
STOCKHOLDER'S DEMAND FOR PAYMENT
The undersigned stockholder of FiberNet Telecom Group, Inc., a Nevada
corporation (the "Company"), pursuant to the provisions of Nevada corporate law
and a Dissenter's Notice from the Company dated December , 1999, which the
stockholder has received, hereby dissents from the corporate action described
therein, and demands payment of the fair value with respect to shares of common
stock of the Company (the "Shares") which are held in the name of the
undersigned on the transfer records of the Company.
Under penalties of perjury, the undersigned hereby certifies to the Company
that:
1. (Check applicable box)
[ ] the undersigned acquired beneficial ownership of the Shares before
December , 1999.
[ ] the undersigned acquired beneficial ownership of the Shares on or
after December , 1999.
2. The Shares with respect to which the undersigned is demanding payment
include all shares of the Company beneficially owned by the undersigned,
and if any of the Shares are beneficially owned by any other person or
persons, the Shares with respect to which the undersigned is demanding
payment include all shares of the Company beneficially owned by each such
person, and each such person has consented to and directed the
undersigned to demand payment.
IN WITNESS WHEREOF, the undersigned has executed this document the day of
, .
<TABLE>
<S> <C>
---------------------------------------------
Signature
---------------------------------------------
Print Name of Stockholder (exactly as it
appears on the certificates)
</TABLE>
<PAGE>
THE ATTACHED LETTER OF TRANSMITTAL MUST BE RECEIVED BY THE COMPANY ON OR
BEFORE JANUARY, , 2000 OR ALL RIGHTS INHERENT IN SAID SHARES SHALL BE
EXTINGUISHED
<PAGE>
TO: FIBERNET TELECOM GROUP, INC.
C/O INTERWEST TRANSFER CO., INC.
P.O. BOX 17136
SALT LAKE CITY, UTAH 84107
(801) 272-9294
Please accept this Letter of Transmittal to Tender Shares of Common Voting
Stock ("Shares") of the Company pursuant to the Company's Notice to Stockholders
dated December , 1999, ("Notice").
CERTIFICATES FOR ALL SHARES TENDERED MUST BE ENCLOSED HEREWITH.
The undersigned hereby represents that the undersigned has full power to
submit the Shares tendered hereby, and that when the same are accepted by the
Company, the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, and encumbrances and such Shares shall not be
subject to any adverse claims. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Company to be necessary or
desirable to complete the assignment and transfer of the Shares tendered hereby.
ALL STOCKHOLDERS TENDERING SHARES MUST SIGN BELOW
<TABLE>
<S> <C>
- ---------------------------------------- ----------------------------------------
Signature of Registered Holder or Signature of Registered Holder or
Authorized Signatory Authorized Signatory (if more than one)
- ---------------------------------------- ----------------------------------------
Type or Print Name Type or Print Name
Dated: Dated:
</TABLE>
Tax Identification or Social Security No(s):______________________________
Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Shares. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or
other person acting in a fiduciary or representative capacity, please provide
evidence of authority to act in such capacity.
<PAGE>
EXHIBIT F
FIBERNET TELECOM GROUP, INC.
1999 STOCK OPTION PLAN
(AS AMENDED)
PLAN SUMMARY
The purpose of this FIBERNET TELECOM GROUP, INC. 1999 Stock Option Plan
("Plan") is to advance the growth and success of FiberNet Telecom Group, Inc.
(the "Company") by enabling Employees (as defined herein), directors and
consultants to acquire a proprietary interest in the Company. It provides that
an aggregate of 4,500,000 of the aggregate outstanding shares of common stock,
$0.001 par value, of the Company (the "Common Stock") may be optioned to
Employees, consultants or directors. Options (as defined herein) granted under
this Plan may be either Incentive Stock Options (as defined herein), which
qualify for favorable Federal income tax treatment, or Nonstatutory Stock
Options (as defined herein). All Employees are eligible to receive Incentive
Stock Options or Nonstatutory Stock Options, and directors and consultants are
eligible to receive Nonstatutory Stock Options.
To meet one of the statutory requirements for Incentive Stock Options under
Section 422 of the Code (as defined herein), this Plan provides that the
purchase price of the optioned stock must be fixed at no less than the Fair
Market Value (as defined herein) of the Common Stock as of the time the
Incentive Stock Option is granted (or in the case of an Optionee who
beneficially owns more than ten percent (10%) of the Company's outstanding
shares of Common Stock, no less than one hundred ten percent (110%) of the Fair
Market Value of the Common Stock as of the time the Incentive Stock Option is
granted). To the extent that the aggregate Fair Market Value of the Shares
(measured at the time of grant) with respect to which Options designated as
Incentive Stock Options are exercisable by an Optionee for the first time in any
one (1) calendar year exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. Incentive Stock Options granted under this Plan are
nontransferable (other than by will or the laws of descent and distribution) and
Incentive Stock Options may not be exercised more than ten (10) years (five (5)
years in the case of an Optionee who beneficially owns more than ten percent
(10%) of the Company's outstanding shares of the Common Stock) after the date
they are granted.
The Company will receive no cash consideration for granting Options under
this Plan. However, when an Option is exercised, the holder is required to pay
the Option Price (as defined herein) for the number of shares of the Common
Stock to be issued under the exercised Option.
This Plan will be administered by the Administrator and will terminate five
(5) years after the earlier of the date it is adopted by the Board or the date
it is approved by the Company's stockholders.
ARTICLE 1
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set forth:
"Act" means the Securities Act of 1933, as amended.
"Administrator" means the Board or the Compensation Committee, whichever
shall be administering this Plan from time to time in the discretion of the
Board, as described in Section 3 of this Plan.
"Board" means the Board of Directors of the Company.
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<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation Committee" means the committee appointed by the Board in
accordance with Section 3 of this Plan.
"Employee" means an individual who is employed (within the meaning of
Section 3401 of the Code and the regulations thereunder) by the Company or a
Subsidiary.
"Employment Agreement" means an agreement between the Company or any of its
Subsidiaries and an Employee pursuant to which such Employee is employed by the
Company or any of its Subsidiaries.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of Shares shall mean (i) if the Shares are not publicly
traded on the day in question, the fair market value of the Shares on the day in
question as determined and set forth in writing by the Administrator (who, in
making such determination, shall make a good faith effort to establish the true
fair market value of the Shares as of such date using such methods as the
Administrator may deem appropriate and taking into consideration any
requirements set forth in the Code or the regulations thereunder and whose
determination shall be conclusive and binding on all Optionees) or (ii) if the
Shares are publicly traded on the day in question, the closing sales price for
the Shares, if applicable, or the average of the last bid and asked prices on
the date of the grant on or before 4:00 p.m. as reported by Bloomberg L.P.
"Incentive Stock Option" means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
"Nonstatutory Stock Option" shall mean an Option not described in Section
422(b), 423(b) or 424(c)(3)(B) of the Code.
"Option" means an option to purchase a Share pursuant to the provisions of
this Plan.
"Optionee" means an Employee, director or consultant to whom an Option has
been granted hereunder.
"Option Price" means the price per share of the Shares subject to each
Option as provided in Section 6.3 hereof.
"Option Term" means the period of time during which an Option may be
exercised.
"Outstanding Stock" shall have the meaning assigned to it in Section
4.2(b) hereof.
"Share" or "Shares" means shares of Common Stock of the Company.
"Stock Option Agreement" means the written agreement between the Company and
the Optionee, containing such terms and conditions and in such form, not
inconsistent with the Plan, under which the Optionee may purchase Shares
hereunder.
"Subsidiary" means FiberNet Telecom, Inc., FiberNet Equal Access, L.L.C. or
Local Fiber, L.L.C. and any other wholly-owned or majority-owned or controlled
entity of the Company created hereafter.
"Total and Permanent Disability" means the inability of an Employee or
officer to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which (i) can be expected to result
in death or which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months and (ii) the Administrator, based upon
medical evidence, has expressly determined is a Total and Permanent Disability.
2
<PAGE>
ARTICLE II
THE PLAN
2.1 NAME.
This Plan shall be known as the "1999 Stock Option Plan".
2.2 PURPOSE.
The purpose of this Plan is to advance the growth and success of the Company
and its stockholders by affording Employees, directors and consultants of the
Company an opportunity to acquire or increase their proprietary interest in the
Company by the grant to such individuals of Options under the terms set forth
herein. By encouraging such individuals to acquire or increase their proprietary
interest in the Company, the Company seeks to attract, motivate and retain those
highly competent individuals upon whose judgment, initiative, leadership, and
continued efforts the success of the Company in large measure depends.
2.3 INTENTION.
It is intended that the Options issued to Employees under this Plan may
qualify as Incentive Stock Options and the terms of this Plan shall be
interpreted in accordance with such intention if they are issued in accordance
with the rules set forth herein applicable to Incentive Stock Options.
ARTICLE III
ADMINISTRATION
3.1 ADMINISTRATION.
This Plan shall be administered, in the discretion of the Board from time to
time, by the Board or by the Compensation Committee acting as the Administrator.
The Compensation Committee shall be appointed by the Board, in a manner
consistent with the Company's By-Laws, and shall consist of not less than two
(2) non-Employee directors of the Company within the meaning of Rule 16b-3 of
the Exchange Act. The Board may from time to time remove members from, or add
members to, the Compensation Committee. Vacancies on the Compensation Committee,
however caused, shall be filled by the Board. The Board may appoint one (1) of
the members of the Compensation Committee as Chairman. The Administrator shall
hold meetings at such times and places as it may determine. Acts of a majority
of the Administrator at which a quorum is present, or acts reduced to or
approved in writing by the unanimous consent of the members of the
Administrator, shall be the valid acts of the Administrator.
3.2 DUTIES.
The Administrator shall from time to time at its discretion (i) select the
Employees, directors or consultants who are to be granted Options, (ii)
determine the number of Shares subject to Options to be granted to each Optionee
and designate such Options either as Incentive Stock Options or Nonstatutory
Stock Options, (iii) determine the Option Price of any Options granted
hereunder, and (iv) determine the terms and conditions, not inconsistent with
the terms of this Plan, of the award of any Options granted hereunder, including
the vesting of any Option or the acceleration of vesting or waiver of a
forfeiture restructure, based in each case on such factors as the Administrator
shall determine, in its sole discretion. The interpretation and construction by
the Administrator of any provisions of this Plan or of any Option granted
thereunder shall be final. No member of the
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<PAGE>
Administrator shall be liable for any action or determination made in good faith
with respect to this Plan or any Option granted hereunder.
ARTICLE IV
PARTICIPATION
4.1 ELIGIBILITY.
The Optionees shall be such persons as the Administrator may select from
among the Employees (who may be officers), consultants and directors of the
Company or of a Subsidiary subject to the terms and conditions of Section 4.2
below. Options may be conditionally granted to persons who are prospective
Employees, directors, officers or managers or agents of, or consultants,
advisors or contractors to, the Company or any of its Subsidiaries, to take
effect when such position is finalized; PROVIDED, that any such conditional
grant of an Incentive Stock Option to a prospective Employee shall, by its
terms, become effective no earlier than the date on which such person actually
becomes an Employee.
4.2 TEN-PERCENT STOCKHOLDERS.
An Optionee who owns, directly or indirectly (within the meaning of Sections
422(b)(6) and 424(d) of the Code), capital stock possessing more than ten
percent (10%) of the total combined voting power of all classes of the stock of
the Company or any of its Subsidiaries (a "10% Holder") shall not be eligible to
receive an Incentive Stock Option unless (i) the Option Price of the Shares
subject to such Option is at least one hundred ten percent (110%) of the Fair
Market Value of such Shares on the date of grant and (ii) such Option by its
terms is not exercisable after the expiration of five (5) years from the date of
grant.
ARTICLE V
SHARES SUBJECT TO PLAN
5.1 SHARES AVAILABLE FOR OPTIONS.
Subject to adjustment pursuant to the provisions of Section 5.2 hereof, the
total number of Shares which may be issued upon the exercise of all Options
shall not exceed 4,500,000 of the aggregate outstanding Shares. Such Shares may
be either authorized and unissued Shares or issued Shares which have been
reacquired by the Company. If any Option shall expire or terminate for any
reason without having been exercised in full, new Options may be granted
covering Shares originally set aside for the exercise of such expired or
terminated Option.
5.2 ADJUSTMENTS.
(a) Subject to any required action by the Board and/or stockholders, the
number of Shares covered by this Plan as provided in Section 5.1 hereof, the
number of Shares covered by each outstanding Option and the Option Price thereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a subdivision or consolidation of Shares or the
payment of a stock dividend (but only if paid in Shares), a stock split or any
other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.
(b) Subject to any required action by the Board and/or stockholders, if the
Company shall merge with another corporation and the Company is the surviving
corporation in such merger and under the terms of such merger the Shares
outstanding immediately prior to the merger remain outstanding and unchanged,
each outstanding Option shall continue to apply to the Shares subject thereto
and shall also
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pertain and apply to any additional securities and other property, if any, to
which a holder of the number of Shares subject to the Option would have been
entitled as a result of the merger.
(c) To the extent that the foregoing adjustments relate to securities of the
Company, such adjustments shall be made by the Administrator, whose
determination shall be conclusive and binding on all persons. In computing any
adjustment under this Section 5.2, any fractional Share which might otherwise
become subject to an Option shall be eliminated.
ARTICLE VI
OPTIONS
6.1 OPTION GRANT AND AGREEMENT.
Each Option grant shall be evidenced by a resolution of the Compensation
Committee or the Board (each, a "Resolution") approving the Option grant
contained in (i) an Employment Agreement or (ii) a Stock Option Agreement, each
dated as of the date of grant (or including a reference thereto) and executed by
the Company and the Optionee, which Employment Agreement or Stock Option
Agreement and Resolution shall set forth the number of Options granted, the
Option Price, the Option Term and such other terms and conditions as may be
determined appropriate by the Administrator; PROVIDED, and that such terms and
conditions are consistent with this Plan.
6.2 INCENTIVE STOCK OPTION CONDITIONS.
Each Incentive Stock Option shall be subject to the following conditions,
which conditions shall be stated within the Employment Agreement or Stock Option
Agreement. Any Incentive Stock Option granted under this Plan which does not
comply with these provisions shall not be considered an Incentive Stock Option
and shall automatically be treated as a Nonstatutory Stock Option:
(a) To the extent that the aggregate Fair Market Value of Shares (measured
at the time of grant) with respect to which Options designated as Incentive
Stock Options are exercisable for the first time by an Optionee during any
calendar year under this Plan and all similar plans maintained by the Company,
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this provision, Incentive Stock Options shall be taken
into account in the order in which they were granted.
(b) Incentive Stock Options granted to an Optionee may be exercised in any
order, so that an Optionee may exercise an Incentive Stock Option if another
Incentive Stock Option, granted to him or her at an earlier time, remains
outstanding.
(c) No Incentive Stock Option may be assigned or transferred by an Optionee
other than by will or by the laws of descent and distribution. During the
lifetime of an Optionee, the Incentive Stock Option may be exercised only by the
Optionee. Transfer of an Incentive Stock Option by will or by the laws of
descent and distribution shall not be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and an
authenticated copy of the will or such other evidence as the Board may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee of the terms and conditions of such Option.
6.3 OPTION PRICE.
The Option Price shall be determined by the Administrator, subject to any
limitations imposed by this Plan, but the Option Price of Incentive Stock
Options shall not be less than the Fair Market Value of Shares on the date the
Incentive Stock Option is granted and, in the case of an Incentive Stock Option
granted to an Optionee described in Section 4.2 hereof, the Option Price shall
not be less than one hundred ten percent (110%) of the Fair Market Value on the
date of grant.
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6.4 OPTION TERM.
The Option Term shall be determined by the Administrator, subject to any
limitations imposed by this Plan, but with respect to Incentive Stock Options
shall not be more than ten (10) years from the date such Option is granted and,
in the case of an Option granted to an Optionee described in Section 4.2 hereof,
shall not be more than five (5) years from the date such Option is granted.
Options may be subject to earlier termination as provided in this Plan.
6.5 LIMITATIONS ON EXERCISE OF OPTIONS.
Notwithstanding anything contained in this Plan to the contrary:
(a) Options may not be exercised until this Plan has been ratified by the
stockholders of the Company as provided in Section 9.5 hereof.
(b) Options shall be exercised in full or in such equal or unequal
installments as the Administrator shall determine and as set forth in the Stock
Option Agreement or Employment Agreement; PROVIDED, that if an Optionee does not
purchase all of the Shares which the Optionee is entitled to purchase on a
certain date or within an established installment period, the Optionee's right
to purchase any unpurchased Shares shall continue during the Option Term (taking
into account any early termination of such Option Term which may be provided for
under this Plan).
(c) No Option granted under this Plan shall be assignable or otherwise
transferable by the Optionee except by will or by the laws of descent and
distribution; PROVIDED, that the Administrator may, in its sole discretion,
grant transferable Nonstatutory Stock Options specifying (i) the manner in which
such Nonstatutory Stock Options are transferable and (ii) that such transfer
shall be subject to applicable securities laws and the Code.
(d) Except as otherwise provided in such Employment Agreement or Stock
Option Agreement, as applicable, the Options shall vest and become exercisable
by the Optionee at the rate of 33.33% per year for three (3) years, according to
the following schedule:
(i) Commencing on the date one (1) year after the date of the grant of
the Option, the Option may be exercised to the extent of 33.33% of the
Shares subject to the Option.
(ii) Commencing on the date two (2) years after the date of the grant of
the Option, the Option may be exercised to the extent of 66.66% of the
Shares subject to the Option to the extent that it has not previously been
exercised.
(iii) Commencing on the date three (3) years after the date of the grant
of the Option, the entire Option may be exercised to the extent that it has
not previously been exercised.
6.6 METHOD OF EXERCISING OPTIONS; WITHHOLDING TAX.
(a) Options shall be exercised by a written notice, delivered to the Company
at its principal office in New York, New York, specifying the number of Shares
to be purchased and tendering payment in full for such Shares. Payment may be
tendered in cash or by certified, bank, cashier's or teller's check or by Shares
(valued at Fair Market Value as of the date of tender), or some combination of
the foregoing. In the event all or part of the Option Price is paid in Shares,
any excess of the value of such Shares over the Option Price will be returned to
the Optionee as follows: (i) any whole Share remaining in excess of the Option
Price will be returned in kind, and may be represented by one or more share
certificates; and (ii) any partial Shares remaining in excess of the Option
Price will be returned in cash.
(b) In the event the Company determines that it is required to withhold
state or Federal income tax as a result of the exercise of an Option, as a
condition to the exercise thereof, the Optionee may be
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required to make arrangements satisfactory to the Company to enable it to
satisfy such withholding requirements. Payment of such withholding requirements
may be made, in the discretion of the Administrator, (i) in cash, (ii) by
delivery of Shares registered in the name of the Optionee, (iii) by the Company
not issuing such number of Shares subject to the Option as have a Fair Market
Value at the time of exercise equal to the amount to be withheld or (iv) any
combination of (i), (ii) and (iii) above. If (A) any Shares are registered under
Section 12 of the Exchange Act, (B) the Optionee is an officer or director (as
defined in Section 16 of the Exchange Act) of the Company subject to Section
16(b) of the Exchange Act and (C) such payment is made with Shares acquired by
the Optionee upon the exercise which gives rise to such withholding, an election
under the preceding sentence (1) must be irrevocable and with respect to all
Shares covered by the Option subject to the election, PROVIDED that such
election may be changed through another irrevocable election that takes effect
at least six (6) months after the prior election or (2) may be made during the
period beginning on the third business day following the date of release of
quarterly and annual summary statements of sales and earnings as provided by
Rule 16b-3(e)(3) of the Securities and Exchange Commission and ending on the
twelfth (12th) business day following such date and only if such period occurs
before the date the Company requires payment of the withholding tax. The
election need not be made during the ten (10) day window period if counsel to
the Company determines that compliance with such requirement is unnecessary.
6.7 RIGHTS IN THE EVENT OF SALE, MERGER OR OTHER REORGANIZATION.
Except as expressly provided in Section 5.2 hereof and this Section 6.7, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger or consolidation or spin-off of assets
or stock of another corporation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
including, without limitation, pursuant to an initial public offering, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or Option Price of Shares subject to an Option. The grant of an Option
pursuant to this Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets. In any
such event (other than a merger of the type described in Section 5.2(b) hereof),
all rights of the Optionee with respect to the unexercised portion of any Option
shall wholly and completely terminate and all Options shall be canceled at the
time of any merger, consolidation, sale or transfer of assets, liquidation or
dissolution, except to the extent that any agreement or undertaking of any party
to any such merger, consolidation, or sale or transfer of assets, or any plan
pursuant to which such liquidation or dissolution is effected, shall make
specific provision with respect to the Plan and the rights of Optionees with
respect to Options granted thereunder. Notwithstanding the foregoing, the holder
of any such Option or right theretofore granted and still outstanding shall have
the right immediately prior to the effective date of such merger, consolidation,
sale or transfer of assets, liquidation or dissolution to exercise such Option
in whole or in part (without regard to any installment provision as set forth in
Section 6.5(d) that may have been made a part of the terms and conditions of
such Option or right). In no event, however, may any Incentive Stock Option
which becomes exercisable pursuant to this Section 6.7 be exercised, in whole or
in part, later than the date preceding the tenth anniversary date of the grant
thereof.
6.8 RIGHTS IN THE EVENT OF DEATH.
If an Optionee's employment or service with the Company is terminated on
account of death, the person or persons who shall have acquired the right, by
will or by the laws of descent and distribution, to exercise the Optionee's
Options shall continue to have (subject to Sections 6.2 and 6.5 above) the
right, for a period which shall not exceed the earlier of the remaining Option
Term (taking into account
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any earlier termination date provided by this Plan) or one (1) year from the
date of such Optionee's death, to exercise any Options which such Optionee would
have been entitled to exercise on the date of such Optionee's death. At the
expiration of such one (1) year period, or such earlier time as may be
applicable, any such Options which remain unexercised shall expire. In no event
may any Options be exercised that could not have been exercised by an Optionee
on the date of such Optionee's death.
6.9 RIGHTS IN THE EVENT OF TOTAL AND PERMANENT DISABILITY.
If an Optionee's employment or service with the Company is terminated on
account of Total and Permanent Disability, the Optionee shall have (subject to
Sections 6.2 and 6.5 above) the right, for a period which shall not exceed the
earlier of the remaining Option Term (taking into account any earlier
termination date provided by this Plan) or one (1) year from the date of such
Optionee's Total and Permanent Disability, to exercise any Options which such
Optionee would have been entitled to exercise on the date of such Optionee's
Total and Permanent Disability. At the expiration of such one (1) year period,
or such earlier time as may be applicable, any such Options which remain
unexercised shall expire. In no event may any Options be exercised that could
not have been exercised by an Optionee on the date of such Optionee's Total and
Permanent Disability.
6.10 RIGHTS IN THE EVENT OF TERMINATION OF SERVICE OR EMPLOYMENT.
In the event that an Optionee's service or employment with the Company
terminates, other than by reason of death or Total and Permanent Disability or
termination for cause, the Optionee shall have (subject to Sections 6.2 and 6.5
above) the right for a period which shall not exceed the earlier of: (a) three
(3) months from the date the Optionee ceases to be an Employee of the Company to
exercise any unexercised portion of Incentive Stock Options granted hereunder,
which unexercised Incentive Stock Options shall be treated as Nonstatutory Stock
Options after such three-month period; PROVIDED, that if the Optionee shall die
during such three-month period, the time of termination of the unexercised
portion of the Incentive Stock Options shall be the expiration of 12 months from
the date of such termination of service or employment of the Optionee; or (b)
the remaining Option Term (taking into account any earlier termination date
provided by this Plan) to exercise any unexercised portion of the Nonstatutory
Stock Options. In no event may any Options be exercised that could not have been
exercised by an Optionee on the date of such Optionee's termination of service
or employment. Notwithstanding the foregoing, if an Optionee's service or
employment is terminated for cause, the Company may notify the Optionee that any
Options not exercised prior to such termination are canceled. For purposes
hereof, a termination of service or employment for cause shall include, but not
be limited to, dismissal as a result of (i) Optionee's conviction of any crime
or offense involving money or other property of the Company or its subsidiaries
or affiliates or which constitutes a felony in the jurisdiction involved, (ii)
Optionee's gross negligence, gross incompetence or willful misconduct in the
performance of his or her duties or (iii) Optionee's willful failure or refusal
to perform his or her duties.
ARTICLE VII
SHARES ISSUED PURSUANT TO AN OPTION
7.1 ISSUANCE OF CERTIFICATES.
The Company shall not be required to issue or deliver any certificate for
Shares purchased upon the exercise of any Option, or any portion thereof, prior
to fulfillment of all of the following applicable conditions:
(a) The admission of such Shares to listing on all stock exchanges or
markets on which the Shares are then listed to the extent such admission is
necessary.
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(b) The completion of any registration or other qualification of such Shares
under any Federal or state securities laws or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Board shall in its sole discretion deem necessary or advisable,
or the determination by the Board in its sole discretion that no such
registration or qualification is required.
(c) The obtaining of any approval or other clearance from any Federal or
state governmental agency which the Board shall, in its sole discretion,
determine to be necessary or advisable.
(d) The lapse of such reasonable period of time following the exercise of
the Option as the Board from time to time may establish for reasons of
administrative convenience.
7.2 COMPLIANCE WITH SECURITIES AND OTHER LAWS.
In no event shall the Company be required to sell, issue or deliver Shares
pursuant to Options if in the opinion of the Board the issuance thereof would
constitute a violation by either the Optionee or the Company of any provision of
any law or regulation of any governmental authority or any securities exchange.
As a condition of any sale or issuance of Shares pursuant to Options, the
Company may place legends on the Shares, issue stop-transfer orders and require
such agreements or undertakings from the Optionee as the Company may deem
necessary or advisable to assure compliance with any such law or regulation,
including if the Company or its counsel deems it appropriate, representations
from the Optionee that the Optionee is acquiring the Shares solely for
investment and not with a view to distribution and that no distribution of the
Shares acquired by the Optionee will be made unless registered pursuant to
applicable Federal and state securities laws or unless, in the opinion of
counsel to the Company, such registration is unnecessary.
7.3 FURTHER ASSURANCES.
At any time and from time to time, upon written request of the Company, each
Optionee shall promptly and duly execute and deliver such further instruments
and documents and take such further action as the Company may reasonably request
for the purpose of obtaining or preserving the full benefits of this Agreement
and the rights and powers herein granted.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
8.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN.
(a) The Board may at any time modify and amend the Plan in any respect;
PROVIDED, that the approval of a majority of stockholders of the Company
entitled to vote shall be obtained prior to any such amendment becoming
effective if such approval is required by law or is necessary to comply with
regulations promulgated by the Securities and Exchange Commission under Section
16(b) of the Exchange Act or Section 422 of the Code or the regulations
promulgated by the Treasury Department thereunder.
(b) The Plan shall terminate five years from the date it is adopted by the
Board or, if earlier, five years from the date it is approved by stockholders of
the Company, and no Option shall be granted under this Plan after such date.
8.2 EFFECT OF TERMINATION, AMENDMENT OR MODIFICATION OF PLAN.
Notwithstanding Section 8.1 hereof, no termination, amendment or
modification of this Plan shall in any manner affect any Option theretofore
granted under this Plan without the consent of the
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Optionee or a person who shall have acquired the right to exercise the Option by
will or the laws of descent and distribution.
ARTICLE IX
MISCELLANEOUS
9.1 NO EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any Stock Option Agreement shall confer
upon any Optionee any right with respect to the continuation of his or her
employment by or service with the Company or any of its Subsidiaries or
interfere in any way with the right of the Company or any such Subsidiary at any
time to terminate such employment or service or to increase or decrease the
compensation of an Optionee from the rate in existence at the time of the grant
of an Option.
9.2 BINDING EFFECT.
This Plan shall be binding upon the successors and assigns of the Company
and upon persons who acquire the right to exercise Options issued hereunder by
will or through the laws of descent and distribution.
9.3 SINGULAR, PLURAL, GENDER.
Whenever used herein, except where the context clearly indicates to the
contrary, nouns in the singular shall include the plural, and the masculine
pronoun shall include the feminine gender.
9.4 HEADINGS.
Headings of the Sections hereof are inserted for convenience and reference
and constitute no part of this Plan.
9.5 EFFECTIVE DATE; RATIFICATION BY STOCKHOLDERS.
This Plan shall become effective upon its adoption by the Board but is
subject to the ratification and approval by the affirmative vote of the holders
of a majority of the Company's outstanding shares of voting capital stock within
twelve (12) months following such adoption. If this Plan is not so approved by
the stockholders this Plan shall become null and void and of no force or effect.
Any Options granted pursuant to this Plan may not be exercised until this Plan
shall have been ratified and approved by the stockholders pursuant to this
Section 9.5.
9.6 RIGHTS AS STOCKHOLDER.
An Optionee shall have no rights as a stockholder with respect to any Shares
subject to such Option prior to the purchase of such Shares by exercise of such
Option as provided herein.
9.7 APPLICABLE LAW.
This Plan and the Options granted hereunder shall be interpreted,
administered and otherwise subject to the laws of the State of New York
(disregarding choice-of-law provisions).
As adopted by the Board of Directors of
FIBERNET TELECOM GROUP, INC.
on December 17, 1999
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