SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment no. 1)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
EDnet, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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EDNET, INC.
Notice of Annual Meeting of Shareholders
to be held December 10, 1998
The Annual Meeting of Shareholders of EDnet, Inc. (the "Company") will
be held at the Hotel Rex, located at 562 Sutter Street, San Francisco, CA 94102,
on Thursday, December 10, 1998 at 2:00 p.m. for the following purposes:
1. To elect seven (7) directors to the Company's Board of Directors to
serve until the next annual meeting of stockholders and until their respective
successors have been elected and qualified or until their earlier resignation or
removal. The Board of Directors intends to nominate the following individuals
for election to the Board: Tom Kobayashi, David Gustafson, Robert Wussler, Alan
Saperstein, Randy Selman, Brian K. Service, and Eric Jacobs.
2. To approve adoption of the Company's 1998 Stock Option Plan and to
reserve 3,000,000 shares of the Company's Common Stock for issuance thereunder.
3. To approve a proposal to change the state of incorporation of the
Company from Colorado to Delaware and to make certain other changes concerning
the charter and bylaws of the Company.
4. To ratify the appointment of Burr, Pilger & Mayer as the Company's
certified public accountants for the current fiscal year; and
5. To transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Shareholders should note that the proposed Reincorporation of the
Company in Delaware is a transaction giving rise to shareholder dissenters'
rights under Section 102 of the Colorado Corporation Code, Article 113, Title 7
of the Colorado Revised Statutes. Shareholders may be entitled to assert
dissenters' rights thereunder. Accordingly, copies of the relevant provisions of
<PAGE>
the Colorado Corporation Code are provided to shareholders as an Exhibit to the
accompanying Proxy Statement.
Only shareholders of record at the close of business on October 29,
1998 shall be entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ TOM KOBAYASHI
Tom Kobayashi
Chief Executive Officer
San Francisco, California
November 3, 1998
IMPORTANT: PLEASE DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE ENCLOSED RETURN ENVELOPE TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. If you attend the meeting, you may vote in person if you wish to do so
even though you have already sent in your proxy.
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PROXY STATEMENT TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS.......................................1
SUMMARY INFORMATION..........................................................iii
Meeting Date and Location....................................................iii
Purposes.....................................................................iii
Proposal No. 1: Election of Directors.......................................iii
Proposal No. 2: Approval of the Company's April 1998 Stock Option Plan.......iv
Proposal No. 3: Reincorporation of the Company in Delaware...................iv
Proposed Transaction....................................................iv
Reasons for the Reincorporation..........................................v
Federal Income Tax Consequences..........................................v
Comparison of Common Stock of the Company with
Common Stock of EDnet Delaware........................................v
Proposal No. 4: Appointment of the Company's Certified Public Accountants....vi
PROXY STATEMENT................................................................1
Solicitation Of Proxies........................................................1
Voting Rights, Outstanding Shares, and Record Date.............................1
Revocability of Proxies........................................................1
Proposal No. 1: Election of Directors.........................................2
Structure of Board of Directors..........................................2
Nominees.................................................................2
Board of Directors' Recommendation.......................................5
Board of Directors Meetings and Committees.....................................5
Security Ownership Of Management And Certain Beneficial Owners.................6
Director and Executive Officer Compensation....................................7
Compensation of Directors................................................7
Non-Qualified Stock Option Plan..........................................8
Compensation of Executive Officers.......................................8
Certain Relationships and Transactions...................................9
Proposal No. 2: Approval of the Company's April 1998 Stock Option Plan.......10
Description of the April 1998 Option Plan...............................10
Tax Consequences to the Company of the April 1998 Option Plan...........11
Board of Directors'Recommendation.......................................11
Proposal No. 3: Reincorporation Of The Company In Delaware...................11
General.................................................................11
Reasons for the Reincorporation.........................................12
Certain Differences Between Delaware and Colorado Corporation
Law and Between the Delaware and Colorado Charter Documents .........13
Summary of Federal Income Tax Consequences of the Reincorporation.......15
Summary of State Tax Consequences of the Reincorporation................15
Shareholders'Dissenters'Rights..........................................16
Vote Required For Reincorporation and Board of Directors'
Recommendation.......................................................16
Board of Directors' Recommendation......................................17
Proposal No. 4: Appointment of Certified Public Accountants..................17
Board of Directors' Recommendation......................................17
Transaction of Other Business.................................................17
EXHIBITS:.....................................................................18
ii
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SUMMARY INFORMATION
The following is a summary of certain information contained in this
Proxy Statement. This summary is provided for convenience, should not be
considered complete, and is qualified in its entirety by the more detailed
discussion contained elsewhere in this Proxy Statement, and in the various
Exhibits attached hereto.
Meeting Date and Location
The Annual Meeting of Shareholders of EDnet, Inc., a Colorado
Corporation ("EDnet" or the "Company") will be held at the Hotel Rex, located at
562 Sutter Street, San Francisco, CA 94102, on Thursday, December 10, 1998, at
2:00 p.m.
Purposes
At the meeting, the shareholders will consider proposals (i) to elect
directors of the Company to serve until the next annual meeting of shareholders
(as directors of the Company and, after the Reincorporation, of the Delaware
Subsidiary, as discussed below); (ii) to ratify and approve the Company's April,
1998 Stock Option Plan; (iii) to approve the proposed reincorporation of the
Company in the State of Delaware (the "Reincorporation"); and, (iv) to ratify
and approve the appointment of Burr, Pilger & Mayer as the Company's certified
public accountants for fiscal year 1999.
Proposal No. 1: Election of Directors
At the meeting, shares represented by the accompanying proxy will be
voted for the election of the seven (7) nominees recommended by the Company's
management unless the Proxy is marked in such a manner as to withhold authority
to so vote. Each nominee will hold office until the earlier to occur of the next
annual meeting of shareholders and the election and qualification of a
successor, (ii) the effective date of Reincorporation, as described below, or
(iii) his or her resignation or the vacancy of his or her office as a result of
death, removal, or other cause in accordance with the bylaws of the Company. In
the event the Reincorporation Proposal is approved, the nominees named below
will serve as the directors of the new Delaware corporation that is designed to
effect the Reincorporation of the Company in Delaware through a merger of the
Company into a Delaware wholly-owned subsidiary (see "Proposal No. 3:
Reincorporation of the Company in Delaware").
Two of the nominees, Mr. Kobayashi and Mr. Gustafson, are officers of
the Company and have served on the Company's Board of Directors since inception.
Robert Wussler joined the Board of Directors in November, 1995. Nominees Mr.
Selman, Mr. Saperstein, and Mr. Service, are officers or affiliates of Visual
Data Corporation ("VDC"), the entity that recently acquired a majority interest
in the Company's stock, who have served on the Board since the closing of the
transaction in which
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VDC acquired that stock in July, 1998. Mr. Jacobs is a VDC officer who was
elected to the Board on October 29, 1998 to replace former director David
Goodman who resigned on the same date.
Proposal No. 2: Approval of the Company's April 1998 Stock Option Plan
The Board of Directors has adopted a new stock option plan (the "1998
Option Plan"), under which the Company may grant either incentive stock options
or nonqualified stock options to qualified employees, board members or
consultants in order to motivate them to maintain their commitment to the
Company. Options under this Plan may be either Incentive Stock Options or
Nonstatutory Stock Options and may be exercised no later than five (5) years
from the date of their grant. The Plan is administered by the Board of Directors
of the Company. The Board has directed the officers of the Company to reserve
three million (3,000,000) shares of Common Stock for issuance upon exercise of
options granted pursuant to the Plan.
For the Company to grant options under the 1998 Option Plan, or for the
effectiveness of options granted thereunder, shareholder approval of the 1998
Option Plan is required.
Proposal No. 3: Reincorporation of the Company in Delaware
Proposed Transaction
The Board of Directors of the Company have approved a proposed
Reincorporation of the Company in Delaware. Under the proposed transaction, the
Company will change its state of incorporation to Delaware by merging into a
wholly owned Delaware subsidiary to be formed for purposes of the
Reincorporation which subsequently will change its name to "EDnet, Inc.", as
described in the Agreement and Plan of Merger attached to this Proxy Statement
as Exhibit "C". The Reincorporation requires shareholder approval, and it is a
transaction giving rise to shareholders' dissenters' rights under the Colorado
Corporation Code (See "PROPOSED REINCORPORATION OF THE COMPANY IN DELAWARE -
Shareholder Dissenters' Rights"). The Reincorporation is proposed to be
effective as of January 1, 1999.
If the shareholders approve the Reincorporation, the Company will be
merged into the Delaware subsidiary ("EDnet Delaware"), which subsequently will
change its name to EDnet, Inc. Each outstanding share of stock of the Company
will be converted into one share of stock of EDnet Delaware. Shares of the
Common Stock of EDnet Delaware will be traded on the National Association of
Securities Dealer's Automated Quotation System's Over-the-Counter Bulletin
Board, as shares of the Company's Common Stock now are traded. EDnet Delaware
will assume the obligations of the Company pursuant to the Agreement and Plan of
Merger. (See "REINCORPORATION OF THE COMPANY IN DELAWARE - General.")
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Reasons for the Reincorporation
The Board of Directors of the Company believes that the Reincorporation
will provide the Company with the benefits of Delaware's modern and flexible
corporation law, which is frequently revised to meet changing business
conditions and which, because it has been interpreted in a wide variety of
circumstances, will provide predictability for the Company in the operation of
its business. The Board of Directors believes that Colorado's corporation law
does not provide the same degree of predictability that may be afforded the
Company by Delaware's law, and, because of this, the Company may be able to
obtain officers and directors liability insurance more easily and at lower cost
than would be the case if the Company remained incorporated under the law of
Colorado. In addition, Delaware law permits the Company to expand the scope of
indemnification of its officers and directors. The Board of Directors believes
that such indemnification is necessary to attract and retain talented and
qualified individuals to serve as the Company's officers and directors. (See
"REINCORPORATION OF THE COMPANY IN DELAWARE - Certain Differences Between
Delaware and Colorado Corporation Law.")
Federal Income Tax Consequences
The Board of Directors of the Company believes that, for federal income
tax purposes, no gain or loss will be recognized by the holders of the Company's
stock as a result of the Reincorporation, and no gain or loss will be recognized
by the Company or by EDnet Delaware. Each former holder of shares of the
Company's stock will have the same basis in the EDnet Delaware shares held by
him at the time of the Reincorporation, and his holding period with respect to
such EDnet Delaware shares (if his shares of the Company's common stock were
subject to a holding period under Rule 144 of the Securities Act or another
applicable securities law or regulation) will include the period during which he
held the corresponding shares of the Company's stock, provided the latter were
held by him as capital assets at the time of the Reincorporation. (See
"REINCORPORATION OF THE COMPANY IN DELAWARE - Summary of Tax Consequences.")
Comparison of Common Stock of the Company with Common Stock of EDnet Delaware
EDnet Delaware will have the same number of outstanding shares of stock
as the Company, and it will have the same number of authorized shares of stock.
However, under the General Corporation Law of the State of Delaware and under
the certificate of incorporation and bylaws of EDnet Delaware, the shareholders
may have somewhat different rights and privileges after the Reincorporation.
(See "REINCORPORATION OF THE COMPANY IN DELAWARE - Certain Differences Between
Delaware and Colorado Corporation Law.")
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v
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Proposal No. 4: Appointment of the Company's Certified Public Accountants
Subject to approval by the shareholders, the Board of Directors has
authorized the appointment of the firm Burr, Pilger & Mayer as the certified
public accountants for the Company for the current fiscal year.
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vi
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PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of EDnet,
Inc., a Colorado corporation (the "Company"), for use at the Annual Meeting of
Shareholders to be held on December 10, 1998 at 2:00 p.m., or at any adjournment
thereof.
Solicitation Of Proxies
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers, or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
Voting Rights, Outstanding Shares, and Record Date
Only shareholders of record of Common Stock at the close of business on
October 29, 1998 will be entitled to notice of and to vote at the Annual Meeting
of Shareholders. Currently, there are 16,791,014 shares of the Company's Common
Stock issued and outstanding. Each shareholder is entitled to one vote for each
share of Common Stock held by him. There are no shares of Preferred Stock
outstanding.
All votes will be tabulated by the inspector of elections appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes will be
considered present at the Annual Meeting for the purpose of establishing a
quorum. Abstentions may be specified on the proposal to reincorporate the
Company in the State of Delaware and will have the effect of a negative vote.
Brokerage firms who hold shares in "street name" for customers will not
have authority to vote shares with respect to the proposal to reincorporate the
Company in Delaware; the failure of a broker to vote shares in the absence of
instructions (a "broker non-vote") will have the effect of a vote against such
proposal.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, One
Union Street, San Francisco, CA 94111, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by
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<PAGE>
attending the meeting and voting in person. Attendance at the meeting will not,
by itself, revoke a proxy.
If no direction is indicated, the shares will be voted (i) FOR the
election of Directors as listed in this proxy statement; (ii) FOR the approval
of the Company's 1998 Stock Option Plan; (iii) FOR the proposal described herein
to reincorporate the Company in the State of Delaware; and (iv) FOR the
appointment of Burr, Pilger & Mayer as the Company's certified public
accountants for the current fiscal year.
Proposal No. 1: Election of Directors
The first matter for shareholder action at the Company's annual meeting
of shareholders will be the election of seven directors to the Company's Board
of Directors. The nominees for director are listed below.
Structure of Board of Directors
The Company's Board currently has seven (7) members. At the meeting,
shares represented by the accompanying proxy will be voted for the election of
the seven (7) nominees recommended by the Company's management unless the Proxy
is marked in such a manner as to withhold authority to so vote. If any nominee
for any reason is unable to serve or for good cause will not serve, the proxies
may be voted for such substitute nominee as the proxy holder may determine. The
Company is not aware of any nominee who will be unable to, or for good cause
will not, serve as a Director.
The Colorado bylaws provides for a Board of Directors of not less than
three (3) nor more than seven (7) directors. The Delaware articles and Delaware
bylaws provide for the same number of directors. Each of the Company's nominees
is currently a Director of the Company. Two of these nominees, Mr. Kobayashi and
Mr. Gustafson, have served on the Company's Board of Directors since the
inception of the Company. Mr. Wussler has served on the Board since November,
1995. Of the remaining four nominees, Mr. Selman, Mr. Saperstein, and Mr.
Service have been nominated by VDC and have served on the board for the interim
period following the close in July, 1998, of the purchase by VDC of shares of
the Company's Common Stock constituting a majority of the issued and outstanding
shares. VDC has also nominated Mr. Jacobs, also a VDC affiliate, who was elected
to the Board on October 28, 1998 to replace VDC affiliate David Goodman, who
stepped down on the same date.
Nominees
Each nominee will hold office until the earlier to occur of the next
annual meeting of shareholders and the election and qualification of a
successor, (ii) the effective date of Reincorporation, as described below, or
(iii) his or her resignation or the vacancy of his or her
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office as a result of death, removal, or other cause in accordance with the
bylaws of the Company. In the event the Reincorporation Proposal is approved,
the nominees named below will serve as the directors of the new Delaware
corporation that is designed to effect the Reincorporation of the Company in
Delaware through a merger of the Company into a Delaware wholly-owned subsidiary
(see "Proposal No. 3: Reincorporation of the Company in Delaware").
<TABLE>
The following table indicates the name of each nominee/director, and
certain information about them, including each nominee's age, principal
occupation or employment, and the year in which each nominee first became a
director of the Company, if such person has previously served on the Company's
board of directors.
<CAPTION>
Principal Occupation Director
Nominee During the Last Five Years Age Since
------- -------------------------- --- -----
<S> <C> <C> <C>
Tom Kobayashi Founder of the Company, CEO 69 1992
and Director of the Company since
inception.
David Gustafson President of the Company, 51 1992
Director of the Company
Robert Wussler President and CEO, Affiliate 60 1995
Enterprises, Inc., company formed
by ABC Television affiliates for
emerging technology businesses
Randy Selman Chairman, CEO of Visual Data 42 1998
Corporation ("VDC")
since inception.
Alan Saperstein Senior Vice President, Secretary 39 1998
and Producer, VDC.
Eric Jacobs Director, VDC, former 40 1998
manager VDC subsidiary
HotelView Corporation, chairman
Miami Beach Chamber of Commerce
Brian Service International business consultant 51 1998
</TABLE>
Mr. Kobayashi has served as Chief Executive Officer and a Director of
the Company from 1992 to the present. From June 1992 to July, 1998, Mr.
Kobayashi served as the Chairman of the Board of Directors of the Company. From
1986 to 1993, he was Vice President and
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General Manager of Skywalker Sound division of LucasArts. During his tenure at
Skywalker, the sending of digital audio over fiber optic telephone lines was
developed and the idea for an entertainment digital network was formulated. In
1992, with George Lucas's approval, Mr. Kobayashi utilized the technology first
developed at Skywalker to found the Company. Mr. Kobayashi will continue to
serve as the Company's Chief Executive Officer.
Mr. Gustafson has served as the President and Chief Operating Officer
of the Company from March 1996 to present, and as Vice President, Marketing and
Sales, from July 1992 to March 1996. He has served as a Director of the Company
since 1992. Previously, he was President and Chief Operating Officer of SLT,
Inc., a private New York-based apparel manufacturer; Corporate Vice President
and Director of Wacoal America, Inc., a $35 million division of the $1 billion
Wacoal Corp., a multi-national consumer products company based in Kyoto, Japan,
where his responsibilities included Merchandising and Design, Sales, Marketing
and Advertising; Vice President of Marketing and Merchandising for the Olga
Company; Management Information Systems Consultant with Deloitte, Haskins &
Sells in Los Angeles; and a computer Systems Engineer and Manager at EDS Corp.,
working in New York, Miami and Dallas.
Mr. Wussler has served as a Director of the Company since 1995. From
1994 to the present, he has been the President and Chief Executive Officer of
Affiliate Enterprises, Inc., the company formed by ABC Television affiliates to
pursue new business opportunities, including emerging technology applications.
From 1990 to 1993, he was President and Chief Executive Officer of COMSAT Video
Enterprises, where he managed the acquisition of the NBA Denver Nuggets.
Previously, from 1980 to 1990, he was Senior Vice President of Turner
Broadcasting, where he oversaw the launch of CNN, Headline News and TNT, in
addition to serving as President of SuperStation TBS, and from 1974 to 1978, he
was the President of the CBS Television Network and CBS Sports.
Mr. Selman has served as the Chairman of the Board of Directors of
EDnet since July 10, 1998. Mr. Selman also has served as the Chief Executive
Officer, President, and Chairman for Visual Data Corp. (VDC) since its inception
in May 1993, and since September 1996, as VDC's acting Chief Financial Officer.
From March 1985 through May 1993, Mr. Selman was Chairman of the Board,
President and Chief Executive Officer of SK Technologies Corporation
(SKTC-Nasdaq Small Cap Market), a publicly-traded software development company.
SKTC develops and markets software for point-of-sale with complete back office
functions such as inventory, sales analysis and communications. Mr. Selman
founded SKTC in 1985 and was involved in the company's initial public offering
in 1989. Mr. Selman's responsibilities included management of SKTC, public and
investor relations, finance, high level sales and general overall
administration.
Mr. Saperstein has served as Director of EDnet since July 10, 1998. Mr.
Saperstein also has served as the Senior Vice President, Executive Producer,
Secretary and a director of VDC since its inception in May 1993. From March 1989
until May 1993, Mr. Saperstein was a free-lance producer of video film projects.
Mr. Saperstein has provided consulting services for corporations which have set
up their own sales and training video departments. From 1983
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through 1989, Mr. Saperstein was the Executive Director/Entertainment Division
of NFL Films where he was responsible for supervision of all projects, budgets,
screenings and staffing.
Eric Jacobs became a member of the Board of Directors EDnet, Inc. on
October 30, 1998 replacing David Goodman, who resigned on October 29, 1998. Mr.
Jacobs is presently a member of the Board of Visual Data Corporation and Vice
President and General Manager of that corporation's wholly owned subsidiary,
ResortView Corporation. From March 1996 until August 1997, Mr. Jacobs was Vice
President and General Manager of Visual Data's wholly owned subsidiary,
HotelView(R) Corporation. Since 1976, Mr. Jacobs has served as the Chairman of
the Miami Beach Visitor and Convention Authority and since September 1993 as
Chairman of the Greater Miami and the Beaches Hotel Association. Since 1972 Mr.
Jacobs has been a member of Miami Beach Chamber of Commerce and has served as
its Chairman since September 1996. From 1972 through October 1993, Mr. Jacobs
was the owner, President, and General Manager of the Tarleton Hotel, Miami
Beach, Florida.
Mr. Service has served as Executive Director of EDnet since July 10,
1998. Mr. Service also is an international business consultant with clients in
North and South America, the United Kingdom, Asia, Australia and New Zealand.
From October 1992 to October 1994 Mr. Service was CEO and Managing Director of
Salmond Smith Biolad, a New Zealand publicly-traded company. From October 1986
to October 1992 he was CEO and Executive Chairman of Milk Products Holding
(North America) Inc., a wholly-owned subsidiary of the New Zealand Dairy Board
in Santa Rosa California, which was the sole marketer of New Zealand dairy
products in North America. Mr. Service has served as a member of the Board of
Directors and of the audit committee of VDC since July 1997.
Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES FOR DIRECTOR.
Board of Directors Meetings and Committees
There are currently three committees of the Board of Directors, which
were established by the Board of Directors on August 6, 1998. Those committees,
and the Directors who currently serve on them, are as follows:
1. Audit Committee Brian Service and Robert Wussler
2. Remuneration Committee Brian Service and Alan Saperstein
3. Executive Committee Brian Service, Tom Kobayashi, David Gustafson.
Prior to the acquisition of a controlling interest in the Company's
stock by Visual Data Corporation in June, 1998 (see "Certain Relationships and
Transactions"), the sole committee of the Board of Directors was its
compensation committee. The directors who served on the
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compensation committee were Mr. Wussler and former director Avi Fogel. Mr. Fogel
resigned from the Board of Directors as of July 10, 1998.
During the Company's 1998 fiscal year (June 30, 1997 through June 30,
1998), the Board of Directors met six times, held four meetings by
teleconference and approved two Actions by Written Consent. During that time, no
incumbent Director attended fewer than 83% of the aggregate of the total number
of meetings of the Board of Directors (held during the period for which he has
been a Director).
Security Ownership Of Management And Certain Beneficial Owners
<TABLE>
The following table sets forth information, as of September 7, 1998,
regarding shares of Common Stock (a) held of record and (b) that the named owner
has the right to acquire within sixty days from options, warrants, rights,
conversion privilege or similar obligations by: (i) officers or directors of the
Company; (ii) all officers and directors as a group; and (iii) each shareholder
who owns more than 5% of any class of the Company's securities, including those
shares subject to outstanding options and warrants. Unless indicated otherwise,
each shareholder exercises sole voting and investment power with respect to
shares owned.
<CAPTION>
Amount Owned or
Title Name and Address Right to Acquire Percent
of Class of Owner Within 60 Days of Class (1)
-------- -------- -------------- ------------
<S> <C> <C> <C>
Common Tom Kobayashi 637,473(2) 3.80%
One Union Street
San Francisco, CA 94111
Common David Gustafson 388,684(3) 2.32%
One Union Street
San Francisco, CA 94111
Common Tom Scott 322,802(4) 1.93%
One Union Street
San Francisco, CA 94111
Common Robert Wussler 180,000(5) 1.07%
One Union Street
San Francisco, CA 94111
Common Randy Selman 180,000(6) 1.07%
1291 SW 29th Avenue
Pompano Beach, FL 33069
Common Alan Saperstein 180,000(7) 1.07%
1291 SW 29th Avenue
Pompano Beach, FL 33069
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Common Brian K Service 410,000(9) 2.45%
BKS International Consulting
123 Red Hill Circle
Tiburon, CA 94920
Common Liviakis Financial 880,000 5.25%
Communications, Inc.
2118 "P" Street, Suite C
Sacramento, CA 95816
Common T Bar W Ranch Investments 1,476,000(10) 8.81%
101 E Brand
Mineola, TX 75773
Common Visual Data Corporation 8,563,417 51.00%
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Common All officers and
directors as a group (3) 78,959 14.78%
<FN>
(1) Based upon 16,762,376 shares of Common Stock issued and outstanding as of June 30, 1998.
(2) Includes right to acquire 212,426 shares within 60 days from options.
(3) Includes right to acquire 252,923 shares within 60 days from options.
(4) Includes right to acquire 157,917 shares within 60 days from options.
(5) Includes right to acquire 180,000 shares within 60 days from options.
(6) Includes right to acquire 180,000 shares within 60 days from options, excludes VDC shares.
(7) Includes right to acquire 180,000 shares within 60 days from options, excludes VDC shares.
(8) Includes right to acquire 410,000 shares within 60 days from options and warrants,
excludes VDC shares.
(9) Includes right to acquire 738,000 shares within 60 days from warrants.
</FN>
</TABLE>
Director and Executive Officer Compensation
Compensation of Directors
With the exception of Mr. Service, who has a one year consulting
contract under which he receives $ 6,000 per month, Directors of the Company do
not receive any compensation for their services as directors other than
reimbursement by the Company of reasonable out-of-pocket travel expenses
incurred in connection with attending director meetings in person.
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Non-Qualified Stock Option Plan
On September 19, 1995, the Company granted a total of 263,420
Non-Qualified Stock Options to employees and directors to purchase common stock
at $0.10 per share. As a result of the Company's merger with AP Office
Equipment, these options were converted into options to purchase Common Stock at
a conversion of .87495 per share for each Company share, resulting in 230,479
options outstanding on June 30, 1998 at a price of $.11 per share. These fully
vested options expire on September 29, 2000. There were no options exercised
during the last fiscal year.
Compensation of Executive Officers
The five highest paid executive officers of the Company are Mr.
Kobayashi, the Chief Executive Officer, Mr. Gustafson, President and Secretary,
Thomas Scott, Vice President-Chief Technology Officer, Mark Wallin, President
and Chief Operating Officer of the Company's wholly-owned subsidiary Internet
Business Solutions, Inc. ("IBS"), and Jeffrey Dobkins, Vice President of Sales
of IBS.
The compensation of each of the five most highly compensated executive
officers of the Company whose cash compensation exceeded $60,000, and of all
executive officers of the Company as a group, during Fiscal 1998, was as
follows:
Name and title of individual Year Salary Bonus Additional
or identity of group remuneration
Tom Kobayashi 1998 $131,000(1) -- (see notes)
Chief Executive Officer 1997 $125,000 -- (see notes)
and Director 1996 $125,000 -- (see notes)
David Gustafson 1998 $131,000(2) -- (see notes)
President C.O.O 1997 $125,000 -- (see notes)
and Director 1996 $125,000 -- (see notes)
Jeffrey Dobkins 1998 $ 92,572(3) --
Vice President of Sales, IBS
Mark Wallin 1998 $ 99,500(4) --
President and Chief
Operating Officer, IBS
Tom Scott 1998 $ 90,000(5) -- (see notes)
Vice President, 1997 $ 90,000 -- (see notes)
Chief Technical Officer 1996 $ 90,000 -- (see notes)
Total of above 1998 $544,072
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(1) Mr. Kobayashi has an Employment Agreement with the Company which
provides for a five-year term expiring December 31, 2000, with a base salary of
$10,416 per month from September 1, 1995 to February 28, 1996, with an increase
to market rate at March 1, 1996 and every year thereafter. FY 1998 compensation
includes $6,000 of auto allowance.
(2) Mr. Gustafson has an Employment Agreement with the Company which
provides for a five-year term expiring December 31, 2000, with a base salary of
$10,416 per month from September 1, 1995 to February 28, 1996, with an increase
to market rate at March 1, 1996 and every year thereafter. FY 1997 compensation
includes $6,000 of auto allowance.
(3) Mr. Dobkins has an Employment Agreement with the Company which
provides for a three-year term expiring January 31, 2000, with a base salary of
$7,714 per month plus commissions. IBS did not become a wholly owned subsidiary
of the Company until June 24, 1997, the end of the prior fiscal year (ending
June 30, 1997).
(4) Mr. Wallin has an Employment Agreement with the Company which
provides for a two-year term expiring January 31, 2000, with a base salary of
$7,917 per month. FY 1998 compensation includes $4,500 of commission. IBS did
not become a wholly owned subsidiary of the Company until June 24, 1997, the end
of the prior fiscal year (ending June 30, 1997).
(5) Mr. Scott has an Employment Agreement with the Company which
provides for a three-and-one-half-year term expiring December 31, 2000, with a
base salary of $7,500 per month.
The Board has also authorized the grant of options to certain of its
directors and employees, under the Company's 1998 Stock Option Plan, subject to
approval of that plan by the shareholders at the annual meeting (See description
of proposal for approval of 1998 Stock Option Plan, below).
Certain Relationships and Transactions
From June 30, 1997 to the present, there have been no transactions
involving more than $60,000 between the Company and any executive officer, any
Director, any security holder known to the Company to be a 5% beneficial owner
of the Company's common stock or any member of the immediate family of any of
the foregoing persons, in which any of the foregoing individuals or entities had
a material interest, except as indicated in "Director and Executive Officer
Compensation" and "Stock Option Plans" above and pursuant to the Company's
Employee Stock Purchase Plan in which all full time employees of the Company are
eligible to participate, and except as follows:
Four of the Current directors and nominees, Mr. Selman, Mr. Saperstein,
Mr. Goodman and Mr. Service are executive officers or affiliates of Visual Data
Corporation ("VDC"), the Pompano Beach, Florida multimedia development and
production corporation that made an investment in a controlling interest in the
Company's Common Stock at the close of the 1998
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fiscal year. Following a search for a suitable strategic partner willing to make
a substantial investment in EDnet, the Company entered into a securities
purchase agreement as of June 20, 1998 with VDC, under which VDC acquired a
majority interest in the Company's outstanding shares of common stock for
$698,004.32 in cash, 75,000 shares of VDC common stock and warrants to purchase
up to 50,000 shares of VDC common stock (valued at $418,250.00); and a
promissory note in the principal amount of $283,745.68, secured by certain real
property in Florida, for a total acquisition price of $1.4 million.1 In
consideration thereof, the Company issued to VDC 8,563,417 million shares of its
Common Stock, equal to a 51% interest in the Company. As a result, the Company
has approximately 16.7 million shares outstanding. In order to ensure that VDC
retain ownership of a majority interest in the Company's Common Stock, VDC was
also given an option which mirrors each option and/or warrant outstanding for
EDnet common stock as of the closing date, whereby, for every outstanding option
and/or warrant existing at the closing date subsequently exercised, VDC can
purchase one additional share of common stock at $0.10 per share. As a term of
the securities purchase agreement, VDC was given the right to name four
directors to the Company's Board.
Proposal No. 2: Approval of the Company's April 1998 Stock Option Plan
Description of the April 1998 Option Plan
The Board of Directors adopted the Company's 1998 Stock Option Plan
(the "1998 Plan") in April of this year, subject to approval by the
shareholders. Upon approval of the 1998 Plan by the shareholders, the Company's
initial nonqualified stock option plan will be terminated. A copy of the 1998
Option Plan is attached to this Proxy Statement as Exhibit "B".
The Company may grant stock options under the 1998 Plan to qualified
employees, board members or consultants in order to motivate them to maintain
their commitment to the Company. Options under this 1998 Plan may be either
Incentive Stock Options or Nonstatutory Stock Options and may be exercised no
later than five (5) years from the date of their grant. The 1998 Plan is
administered by the Board of Directors of the Company. The Board has directed
the officers of the Company to reserve three million (3,000,000) shares of
Common Stock for issuance upon exercise of options granted pursuant to the 1998
Plan.
As of June 30, 1998, and subject to approval of the 1998 Plan by the
shareholders, the Company had granted options under the 1998 Plan to purchase a
total of 2,041,500 shares of Common Stock at a price of $.10 per share, subject
to approval by the shareholders of the Company at the annual meeting of
shareholders. There were no options exercised during this period.
Since each Director is eligible to receive options under the 1998 Plan,
each such Director has a personal interest in the adoption of the 1998 Plan.
- ------------------------
(1) The Securities Purchase Agreement between the Company and VDC is
attached as an exhibit to the Company's current annual report on Form 10-KSB.
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Tax Consequences to the Company of the April 1998 Option Plan
The Company will be entitled to a deduction in connection with the
exercise of a Non-Qualified Stock Option under the 1998 Plan by a domestic
optionee, to the extent that the optionee recognizes ordinary income. The
Company will be entitled to a deduction in connection with the disposition of
Incentive Stock Option Shares only to the extent that the optionee recognizes
ordinary income on a disqualifying disposition of the Incentive Stock Option
Shares.
Board of Directors' Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE 1998 STOCK OPTION PLAN.
Proposal No. 3: Reincorporation Of The Company In Delaware
General
The Board of Directors has unanimously approved an Agreement and Plan
of Merger (the "Reincorporation") by which the Company's state of incorporation
will be changed from Colorado to Delaware. The proposed Reincorporation would be
accomplished by merging the Company into a newly formed Delaware corporation
which, just before the merger, would be a wholly-owned subsidiary of the Company
("EDnet Delaware"), pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), a copy of which is attached to this Proxy Statement as Exhibit "C".
Upon the effective date of the merger, EDnet Delaware's name would be changed to
EDnet, Inc. The Reincorporation will not result in any changes in the Company's
business, assets or liabilities, will not cause its corporate headquarters to be
moved and will not result in any relocation of management or other employees.
Following the effective date of the proposed Reincorporation, each
outstanding share of Common Stock of the Company would automatically convert
into one share of Common Stock of EDnet Delaware, and shareholders of the
Company would automatically become shareholders of EDnet Delaware. On the
effective date of the Reincorporation, the number of outstanding shares of
Common Stock of EDnet Delaware would be equal to the number of shares of Common
Stock of the Company outstanding immediately prior to the effective date of the
Reincorporation. In addition, each outstanding option, warrant or right to
acquire shares of Common Stock of the Company would convert automatically into a
right to acquire an equal number of shares of Common Stock of EDnet Delaware on
the same terms and conditions as applicable to the original options, warrants or
rights. All of the Company's employee benefit plans would be continued by EDnet
Delaware following the Reincorporation.
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No action need be taken now or at the time of the Reincorporation by
the shareholders to exchange their stock certificates; this will be accomplished
at the time of future transfers by individual shareholders. Certificates for
shares in the Company will automatically represent an equal number of shares in
EDnet Delaware upon completion of the merger.
Reasons for the Reincorporation
The Board of Directors has determined that the Reincorporation is in
the best interests of the Company and its shareholders for several reasons. The
Board believes the Reincorporation will provide the Company with the benefits of
Delaware's modern and flexible corporation law, which is frequently revised to
meet changing business conditions and which, because it has been interpreted in
a wide variety of circumstances, will provide predictability for the Company in
the operation of its business. The Board of Directors also believes that the
Reincorporation will enhance the Company's ability to attract and retain
qualified directors as well as to encourage directors to continue to make
independent decisions in good faith on behalf of the Company. While the Company
is not experiencing difficulty in retaining directors currently, the Company
believes that the more favorable corporate environment of the State of Delaware
will enable it to compete more effectively with other public companies, most of
which are incorporated in Delaware, to attract new directors and to retain
current directors.
For many years, Delaware has followed a policy of encouraging
incorporation within the state. Delaware's comprehensive body of cooperate law
is revised regularly to meet changing business circumstances. The Delaware
legislature is particularly sensitive to issues regarding corporate law and is
especially responsive to developments in modern corporate law. The Delaware
courts have developed considerable expertise in dealing with corporate issues as
well as a substantial body of case law construing Delaware's corporate law. As a
result, the Board of Directors believes Delaware law will provide greater
predictability in the Company's legal affairs than is currently available under
Colorado law.
The Company's corporate affairs generally are governed at present by
the corporate law of the State of Colorado, the Company's state of
incorporation, and by the Colorado Articles and the Colorado Bylaws, which have
been adopted pursuant to Colorado law. The Colorado Articles and the Colorado
Bylaws are available for inspection during business hours at the principal
executive offices of the Company. In addition, copies may be obtained by writing
to the Company at EDnet, Inc., One Union Street, San Francisco, CA 94111.
Attention: Shareholder Relations. If the Reincorporation Proposal is adopted,
the Company will merge into, and its business will be continued by, the Delaware
Company. Following the merger, issues of corporate governance and control would
be controlled by Delaware law rather than Colorado law. The Colorado Articles
and the Colorado Bylaws will, in effect, be replaced by the Certificate of
Incorporation of EDnet Delaware (the "Delaware Certificate") and the Bylaws of
EDnet Delaware (the "Delaware Bylaws"), copies of which are attached to this
Proxy Statement as Exhibits "D" and "E," respectively.
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The are several differences among Colorado and Delaware corporations
law and between the charter documents of the Colorado and Delaware corporations
that are relevant to shareholders' decisions whether to approve the
Reincorporation Proposal. Those differences are discussed below. Shareholders
should review the information discussed in this Section of the Proxy Statement
in conjunction with the Merger Agreement, the Delaware Certificate and the
Delaware Bylaws, attached hereto.
Certain Differences Between Delaware and Colorado Corporation Law and Between
the Delaware and Colorado Charter Documents
Indemnification of Directors and Employees
The primary differences of import to shareholders in considering
whether to approve the Reincorporation proposal are the differences in the laws
in Colorado and Delaware respecting indemnification by a corporation of its
directors, employees and other agents. Under both Colorado and Delaware law,
corporations may limit the liability of directors, except in connection with the
following instances: (a) beaches of a director's duty of loyalty to the
corporation or its shareholders; (b) acts or omissions not in good faith, or
involving intentional misconduct or knowing violations of law; (c) the payment
of unlawful dividends or unlawful stock repurchases or redemptions, or (d)
transactions in which a director received an improper personal benefit. Such
limitation of liability provision also may not limit directors' liability for
violation of, or otherwise relieve the Company or its directors form the
necessity of complying with, federal or state securities laws or affect the
availability of non-monetary remedies such as injunctive relief or rescission.
In 1986, Delaware amended its corporate law to allow corporations to
limit the personal monetary liability of its directors for their conduct as
directors under certain circumstances. Colorado amended its cooperate law in
1987 in a manner similar to that of Delaware to permit a Colorado corporation to
limit the personal monetary liability of its directors for their conduct as
directors under certain circumstances, and the Company's articles of
incorporation were drafted to take advantage of these provisions of Colorado
law. The Colorado Articles eliminate the liability of directors to the
corporation to the fullest extent permissible under Colorado law. Similarly, the
Board of Directors has included provisions in the Delaware Certificate and the
Delaware Bylaws which allow the Company to limit the personal monetary liability
of its directors for their conduct as directors under certain circumstances. Yet
the Board of Directors believes that the protection from liability for directors
is somewhat greater under Delaware law than under Colorado law and therefore the
Reincorporation will enhance the Company's ability to recruit and retain
qualified directors.
The indemnification and limitation of liability provisions of Colorado
law, and not Delaware law, will apply to actions of the directors and officers
made prior to the proposed Reincorporation. Nevertheless, the Board of Directors
has recognized in considering the
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Reincorporation Proposal that the individual directors have a personal
interest in obtaining the application of Delaware law to such indemnity and
limitation of liability issues affecting them and the Company in the event they
arise from a potential future case, and that the application of Delaware law, to
the extent that any director or officer is actually indemnified in circumstances
where indemnification would not be available under Colorado law, would result in
expense to the Company that the Company would not incur if the Company were not
reincorporated. Additionally, shareholders should note that such differences in
the corporation law of the two states inure to the benefit of the directors, and
the interest of the Board of Directors in recommending the Reincorporation may
therefore be in conflict with the interests of the shareholders. The Board of
Directors believes, however, that the overall effect of reincorporating is to
provide a corporate legal environment that enhances the Company's ability to
attract and retain high quality outside directors and thus benefits the
interests of the Company and its shareholders.
Removal of Directors.
While Colorado law and Delaware law vary somewhat with respect to
removal of directors, there will be no difference with respect to the rights of
the Company's shareholders to remove directors following the Reincorporation.
Under Colorado law, shareholders may remove directors without cause if the
corporation's Articles of Incorporation do not provide otherwise and if the
number of votes cast in favor of removal exceed the number of votes cast against
removal. The Colorado Articles do not so provide, and the Colorado Bylaws
provide that the shareholders may remove any director or the entire Board with
or without cause, by a vote of the holders of the majority of the shares
entitled to vote. Under Delaware law, shareholders may not remove directors in
some circumstances unless the corporation's certificate of incorporation
provides for removal without cause. The Delaware Certificate provides for
removal without cause, and the Delaware Bylaws similarly provide that
shareholders may remove any director or the entire Board with or without cause,
by a vote of the holders of the majority of the shares entitled to vote.
Calling of Special Meetings of Shareholders
Under Colorado law, a special meeting of the shareholders may be called
by the Board of Directors, by a person authorized by the Board of Directors or
the Bylaws, or by shareholders holding shares representing at least ten percent
(10%) of all shares entitled to vote at such a meeting. The Colorado Bylaws
authorize the President or the Board of Directors to call a special meeting, and
the President is required to call a special meeting at the request of holders of
not less than ten percent (10%) of the outstanding shares entitled to vote at
the meeting.
Under Delaware law, a special meeting of stockholders may be called by
the Board of Directors or by any other person authorized to do so in the
Certificate of Incorporation or in the Bylaws. The Delaware Certificate
similarly requires that the President or Secretary call a special meeting of the
stockholders for any purpose at the request in writing of stockholders holding
ten percent (10%) or more of the outstanding stock of the Company entitled to
vote.
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Loans to Officers Directors and Employees
Colorado law provides that a corporation may not authorize any loan or
guaranty for the benefit of any director until at least ten days after providing
written notice of the proposed authorization to shareholders who would be
entitled to vote thereon if the issue of the loan or guaranty were submitted to
a vote of the shareholders.
Under Delaware law, a corporation may make loans to, or guarantee the
obligations of, officers or other employees when in the judgment of the Board of
Directors, the loan or guaranty may reasonably be expected to benefit the
corporation. Both Colorado law and Delaware law permit such loans or guarantees
to be unsecured and without interest.
Summary of Federal Income Tax Consequences of the Reincorporation
The Reincorporation provided for in the Merger Agreement is intended to
be a tax free reorganization under the Internal Revenue Code of 1986, as amended
(the "IRC"). Assuming the Reincorporation qualifies as a reorganization, no gain
or loss will be recognized to the holders of capital stock of the Company as a
result of the consummation of the Reincorporation, and no gain or loss will be
recognized by the Company or by EDnet Delaware. Each former holder of capital
stock of the Company will have the same basis in the capital stock of EDnet
Delaware received by such holder pursuant to the Reincorporation as such holder
has in the capital stock of the Company held by such holder at the time of
consummation of the Reincorporation. Each shareholder's holding period with
respect to EDnet Delaware's capital stock will include the period during which
such holder held the corresponding Company capital stock, providing the latter
was held by such holder as a capital asset at the time of consummation of the
Reincorporation. The Company has not obtained a ruling from the Internal Revenue
Service or any opinion of legal or tax counsel with respect to the consequences
of the Reincorporation.
The foregoing is only a summary of certain federal income tax
consequences. Shareholders should consult their own tax advisers regarding the
specific tax consequences to them of the merger, including the applicability of
the laws of any state or other jurisdiction.
Summary of State Tax Consequences of the Reincorporation
There will be expense directly associated with the Reincorporation in
the form of fees required for the creation of the new corporation in Delaware
and fees required for the filing of the Agreement of Merger in both Colorado and
Delaware. Following the Reincorporation, the Directors do not believe that the
operation of the Company as a Delaware corporation will represent any
substantially greater state tax obligation to the Company and its shareholders
than the tax obligations of operating the Company as a Colorado corporation.
The foregoing discussion is an attempt to summarize the more important
differences in the corporation laws of Delaware and Colorado and does not
purport to be an exhaustive discussion of all the differences. Such differences
can be determined in full by reference to the
15
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Colorado Corporations Code and to the Delaware General Corporation Law. In
addition, both Colorado and Delaware law provide that some of the statutory
provisions as they affect various rights of holders of shares may be modified by
provisions in the charter or bylaws of the corporation.
Shareholders' Dissenters' Rights
The proposed Reincorporation is a transaction giving rise to
shareholder dissenters' rights under Article 113, Section 102 of the Colorado
Business Corporation Act.2 Shareholders may be entitled to assert dissenters'
rights thereunder.
Under Section 113-102, a shareholder is entitled to dissent and obtain
payment for the fair value of the shareholder's shares in the event of the
consummation of a plan of merger to which the corporation is a party, if the
approval by the shareholders of the corporation is required for the merger. In
order to assert dissenters' rights, a shareholder (i) must cause the Company to
receive, before the vote on the Reincorporation is taken at the annual meeting,
written notice of the shareholder's intention to demand payment for the
shareholder's shares if the proposed Reincorporation is effectuated; and (ii)
must not vote his or her shares in favor of the proposed Reincorporation.
Colorado Corporation Code Section 113-202.
Shareholders are directed to, and advised to review, the copies of the
relevant provisions of the Colorado Business Corporation Act statutes of the
Colorado Corporation Code, attached as an Exhibit to this Proxy Statement.
Vote Required For Reincorporation and Board of Directors'
Recommendation
Under the Colorado Articles and Colorado Bylaws, the affirmative vote
of at least fifty percent (50%) of the outstanding shares of the Company's
Common Stock is required for approval of the Reincorporation. If approved by the
shareholders, it is anticipated that the Reincorporation will be completed as
soon thereafter as possible, with a proposed effective date of January 1, 1999.
The Reincorporation may be abandoned or the Merger Agreement may be amended
(with certain exceptions), either before or after shareholder approval has been
obtained if, in the option of the Board of Directors, circumstances arise that
make such action advisable; provided, that any amendment that would effect a
material change from the charter provisions discussed in this Proxy Statement
would require further approval by the holders of at least fifty percent (50%) of
the outstanding shares of Common Stock.
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(2)The Colorado Business Corporation Act is codified at Articles 101 to
117 of the Colorado Corporation Code, Title 7 of the Colorado Revised Statutes,
as amended.
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Board of Directors' Recommendation
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
THE REINCORPORATION PROPOSAL.
Proposal No. 4: Appointment of Certified Public Accountants
The Board of Directors of the Company has selected the firm of Burr
Pilger & Mayer as the certified public accountants of the Company for fiscal
year 1999. Burr Pilger & Mayer has acted in such capacity since its appointment
in 1997. A representative of Burr Pilger & Mayer will be present at the Annual
Meeting, will be given the opportunity to make a statement if he so desires, and
will be available to respond to appropriate questions.
In the event the ratification by the shareholders of the appointment of
Burr Pilger & Mayer as the Company's independent certified public accountants is
not obtained, the Board of Directors will reconsider such appointment. Even if
its selection is ratified, the Board in its discretion may direct the
appointment of a different independent auditing firm at any time during the year
if the Board believes that such a change would be in the best interest of the
Company and its stockholders.
Board of Directors' Recommendation
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THIS PROPOSAL.
Transaction of Other Business
As of the date of this Proxy Statement, the only business which the
Board of Directors of the Company intends to present or knows that others will
present at the meeting is as hereinabove set forth. If any other matter or
matters are properly brought before the meeting, or any adjournment thereof, it
is the intention of the persons named in the accompanying form of Proxy to vote
the Proxy on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ David Gustafson
----------------------------------
David Gustafson
Secretary
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EXHIBIT A
ARTICLE 113
Dissenters' Rights
PART 1
RIGHT OF DISSENT -
PAYMENT FOR SHARES
7-113-101. Definition.
7-113-102. Right to dissent.
7-113-103. Dissent by nominees and beneficial owner.
PART 2
PROCEDURE FOR EXERCISE
OF DISSENTERS' RIGHTS
7-113-201. Notice of dissenters' rights.
7-113-202. Notice of intent to demand payment
7-113-203. Dissenters' notice.
7-113-204. Procedure to demand payment.
7-113-205. Uncertificated shares.
7-113-206. Payment.
7-113-207. Failure to take action.
7-113-208. Special provisions relating to shares acquired after announcement
of proposed corporate action.
7-113-209. Procedure if dissenter is dissatisfied with payment or offer.
PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301. Court action.
7-113-302. Court costs and counsel fees.
1
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PART 1
RIGHT OF DISSENT -
PAYMENT FOR SHARES
7-113-101. Definitions. For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
7-113-102. Right to dissent.
(1) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party if:
(I) Approval by the shareholders of that corporation is required for the
merger by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102 (1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of an entity controlled by the corporation if
the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102 (2).
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(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares, pursuant to
the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the plan
of merger or share exchange either will be listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, or on the national market system of the national association of
securities dealers automated quotation system, or will be held of record by more
than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
a reverse split that reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
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(2) A beneficial shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
PART 2
PROCEDURE FOR EXERCISE
OF DISSENTERS' RIGHTS
7-113-201. Notice of dissenters' rights.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting, the notice of the
meeting shall be given to all shareholders, whether or not entitled to vote. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (2).
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7-113-202. Notice of intent to demand payment.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice of
dissenters' rights has been given to such shareholder in connection with the
action pursuant to section 7-113-201(1), a shareholder who wishes to assert
dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection with the action pursuant to section 7-113-201(2), a shareholder
who wishes to assert dissenters' rights shall not execute a writing consenting
to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or
(2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
7-113-203. Dissenters' notice.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized, the corporation shall give a written dissenters' notice
to all shareholders who are entitled to demand payment for their shares under
this article.
(2) The dissenters' notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action:
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must be
deposited:
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received:
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made:
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and (g) Be accompanied by a copy of this article.
7-113-204. Procedure to demand payment.
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
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(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203 (2) (d), duly completed,
or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the demand
for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7-113-205. Uncertificated shares.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206. Payment.
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the 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 right to demand payment under section
7-113-209; and
(e) A copy of this article.
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7-113-207. Failure to take action.
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the corporation must receive the payment demand
as provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.
7-113-208. Special provisions relating to shares acquired after announcement
of proposed corporate action.
(1) The corporation may, in or with the dissenters' notice given pursuant to
section 7-113-203, state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section 7-113-204,
whether or not the dissenter (or the person on whose behalf dissenters' rights
are asserted) acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206 (2).
7-113-209. Procedure if dissenter is dissatisfied with payment or offer.
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section unless
the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
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PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301. Court action.
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may within sixty days after receiving the payment demand, commence a
proceeding and petition the court to determine the fair value of the shares and
accrued interest. If the corporation does not commence the proceeding within the
sixty-day period, it shall pay to each dissenter whose demand remains unresolved
the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where the
corporation's principal office is located or, if the corporation has no
principal office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section 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 the
order appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings.
(5) Each dissenter made a party to the proceeding commenced under subsection
(2) of this section is entitled to judgment for the amount, if any, by which the
court finds the fair value of the dissenter's shares, plus interest, exceeds the
amount paid by the corporation, or for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold payment under
section 7-113-208.
7-113-302. Court costs and counsel fees.
(1) The court in an appraisal proceeding commenced under section 7-113-301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 7-113-209.
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(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
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EXHIBIT B
EDNET, INC.
1998 STOCK OPTION PLAN
1. Introduction
This Stock Option Plan (the "Plan") has been adopted effective as of
April 3, 1998 to encourage stock ownership by directors and employees of EDnet,
Inc. (the "Company"), a Colorado corporation, and its subsidiaries
(collectively, the "Subsidiaries" and individually, a "Subsidiary"), in order to
increase their proprietary interest in the success of the Company and to
encourage them to provide future services to the Company. Options granted under
this Plan may be either Incentive Stock Options (as defined and provided for in
Section 5(a) of this Plan) or Nonstatutory Stock Options (as defined and
provided for in Section 5(b) of this Plan). The term "option" when used
hereinafter shall refer to either Incentive Stock Options or Nonstatutory Stock
Options, or both. The term "Award" when used hereinafter shall refer to options
awarded under the Plan.
2. Administration
(a) This plan shall be administered by the Board of Directors of the
Company (the "Board") or, if the Board so determines, by a duly appointed
committee of the Board (the "Committee"), provided that except as otherwise
provided below, in the case of any Awards to directors or officers that are or
become subject to Section 16 of the Securities Exchange Act of 1934, the
Committee shall have exclusive responsibility for and authority to administer
the Plan unless the Board expressly determines otherwise. Subject to the
foregoing and to the express provisions of this Plan, the Board or the
Committee, as applicable, shall have plenary authority, in its sole discretion:
(i) To determine the time or times at which, and the
directors and employees to whom, options shall be awarded under this Plan;
(ii) To determine, as the case may be, the Incentive Stock
Option Price or Nonstatutory Stock Option Price (both as defined herein) of, and
the number of shares of Stock (as defined herein) to be covered by, options
granted under this Plan;
(iii) To determine the time or times at which each option
granted under this Plan may be exercised, including whether such option may be
exercised in whole or in installments; provided, however, that options granted
hereunder must be exercisable at the rate of at least 20% per year over 5 years
from the date of grant;
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(iv) To determine the restrictions, if any, applicable to
shares of Stock obtained upon the exercise of any option granted hereunder;
provided, however, that if such restrictions restrict the transfer of such
shares and give the Company the right to repurchase all (but not less than all)
of such shares upon a Grantee's termination of employment, the following
restrictions shall apply:
(1) If the repurchase price is equal to the higher of
the original Option Price or the fair market value of the shares of Stock on the
date of termination of employment, the right to repurchase must be exercised for
cash or cancellation of purchase money indebtedness within 90 days of
termination of employment or exercise of the option, whichever is later, and
such right must terminate when the Stock becomes publicly traded; or
(2) If the repurchase price is equal to the original
Option Price, the right to repurchase shall be nontransferable by the Company
and must lapse at the rate of at least 20% per year over 5 years from the date
the option is granted (without respect to the date the option was exercised or
became exercisable), and must be exercised for cash or cancellation of purchase
money indebtedness within 90 days of termination of employment or exercise of
the option, whichever is later.
(v) To interpret this Plan and to prescribe, amend and
rescind rules and regulations relating to it; and
(vi) To make all other determinations which the Board or
Committee shall deem necessary or advisable for the administration of this Plan.
(b) The membership of the Committee shall at all times consist of not
less than two members of the Board and shall be constituted to permit the Plan
to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), or any successor rule ("Rule 16b-3"), if the Board
determines it to be in the best interests of the Company to qualify the Plan for
the exemptions from Section 16 of the Exchange Act afforded by Rule 16b-3.
Without limiting the foregoing, from and after the date the Board determines to
bring the Plan into compliance with Rule 16b-3, no director shall serve on the
Committee at any time within one year following such director's receipt of any
grant or award of an equity security of the Company or any related entity if
such grant or award prevents such director from qualifying as a "disinterested
person" within the meaning of Rule 16b-3(c)(2).
The Committee shall have all of the powers and duties set forth herein,
as well as such additional powers and duties as the Board may delegate to it;
provided, however, that the Board expressly retains the right (i) to determine
whether the shares of Stock reserved for issuance upon the exercise of options
awarded under this Plan shall be issued shares or unissued shares, (ii) to
appoint the members of the Committee, and (iii) to terminate or amend this Plan.
The Board may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed, may fill vacancies in the
Committee, however caused, and may discharge the Committee. Duly authorized
actions of the Committee shall constitute actions of the Board for the purposes
of this Plan and the administration thereof.
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3. Stock
Except as provided in Section 9 of this Plan, the number of shares
which may at any time be made subject to options, or which may be issued upon
the exercise of options granted under this Plan, shall be limited to three
million (3,000,000) shares of the Common Stock, of the Company (the "Stock").
The shares reserved for issuance pursuant to this Plan may consist either of
authorized but previously unissued shares of Stock, or of issued shares of Stock
which have been reacquired by the Company, as determined from time to time by
the Board.
Except as otherwise provided in Section 9 of this Plan, if any option
granted under this Plan expires, terminates or is canceled for any reason
without having been exercised in full, the shares of Stock allocable to the
unexercised portion of such option may again be made subject to an option award
under this Plan.
4. Eligibility
Awards may be granted under this Plan to such directors and employees
of the Company or a Subsidiary as shall be designated by the Board or the
Committee in accordance with Section 2 of this Plan, provided that Incentive
Stock Options, as defined below, may be awarded only to regular full time
employees of the Company or a Subsidiary (including, but not limited to,
employees who serve as officers or directors). Any person granted an Award under
this Plan shall remain eligible to receive one or more additional grants
thereafter, notwithstanding that options previously granted to such person
remain unexercised in whole or in part.
5. Terms of Options
This Plan is intended to authorize the Board or the Committee to grant,
in its discretion, options that qualify as incentive stock options pursuant to
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
(such qualifying options being referred to herein as "Incentive Stock Options")
or options that do not so qualify (such nonqualifying options being referred to
herein as "Nonstatutory Stock Options"). Each option granted under this Plan
shall be evidenced by a written option agreement which shall be executed and
delivered as provided in Section 11 of this Plan and which shall specify whether
the option granted therein is an Incentive Stock Option or a Nonstatutory Stock
Option.
(a) Terms of Incentive Stock Options. Each stock option agreement
covering an Incentive Stock Option granted under this Plan and any amendment
thereof, other than an amendment to convert an Incentive Stock Option into a
Nonstatutory Stock Option, shall conform to the provisions of Section 5(a)(i) -
(iv) below, and may contain such other terms and provisions consistent with the
requirements of this Plan as the Board or the Committee shall deem appropriate:
(i) Incentive Stock Option Price. The purchase price of each
of the shares of Stock subject to an Incentive Stock Option (the "Incentive
Stock Option Price") shall be a stated
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price which is not less than the fair market value of such share of Stock,
determined in accordance with Section 7 of this Plan, as of the date such
Incentive Stock Option is granted; provided, however, that if an employee, at
the time an Incentive Stock Option is granted to him, owns stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company or of the parent corporation (as defined in Section 424(e) of the Code),
if any, of the Company, or any of the Subsidiaries (or, under Section 424(d) of
the Code, is deemed to own stock representing more than 10% of the total
combined voting power of all such classes of stock, by reason of the ownership
of such classes of stock, directly or indirectly, by or for any brother, sister,
spouse, ancestor, or lineal descendent of such employee, or by or for any
corporation, partnership, estate or trust of which such employee is a
shareholder, partner or beneficiary), then the Incentive Stock Option Price of
each share of Stock subject to such Incentive Stock Option shall be at least
110% of the fair market value of such share of Stock, as determined in the
manner stated above.
(ii) Term of Incentive Stock Options. Incentive Stock Options
granted under this Plan shall be exercisable for such periods as shall be
determined by the Board or the Committee at the time of grant of each such
Incentive Stock Option, but in no event shall an Incentive Stock Option be
exercisable after the expiration of 10 years from the date of grant; provided,
however, that an Incentive Stock Option granted to any employee as to whom the
Incentive Stock Option Price of each share of stock subject thereto is required
to be 110% of the fair market value of such share of Stock pursuant to Section
5(a)(i) above, shall not be exercisable after the expiration of 5 years from the
date of grant. Each Incentive Stock Option granted under this Plan shall also be
subject to earlier termination as provided in this Plan.
(iii) Vesting of Incentive Stock Options. Notwithstanding any
other provision of this Plan, no employee shall be granted an Incentive Stock
Option in any calendar year which causes such employee's "annual vesting amount"
to exceed $100,000. An employee's "annual vesting amount" is the aggregate fair
market value of the shares of Stock subject to Incentive Stock Options
(determined in accordance with Section 7 of this Plan as of the respective dates
of grant of individual options) with respect to which such options are first
exercisable during the calendar year. For purposes of the foregoing, the
aggregate fair market value of shares of Stock with respect to which Incentive
Stock Options are first exercisable during the calendar year shall be determined
by taking into account all Incentive Stock Options granted to the employee under
all current stock option plans of the Company, and its parent corporation (as
defined in Section 424(e) of the Code), if any.
(iv) Exercise of Incentive Stock Options.
(A) Subject to the provisions of Sections
5(a)(iv)(E), 8 and 9 of this Plan, Incentive Stock Options granted under this
Plan may be exercised in whole or in installments, to such extent, and at such
time or times during the terms thereof, as shall be determined by the Board or
the Committee at the time of grant of each such option.
(B) Incentive Stock Options granted under this Plan
shall be exercisable only by delivery to the Company of written notice of
exercise, which notice shall state the
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number of shares with respect to which such Incentive Stock Option is exercised,
the date of grant of the Incentive Stock Option, the aggregate purchase price
for the shares with respect to which the Incentive Stock Option is exercised and
the effective date of such exercise, which date shall not be earlier than the
date the notice is received by the Company nor later than the date upon which
such Incentive Stock Option expires. The written notice of exercise shall be
sent together with the full Incentive Stock Option Price of the shares
purchased, which may be paid (i) in cash, (ii) in shares of any class of issued
and outstanding stock of the Company held for more than six months by the option
holder, whether preferred or common, (iii) by the delivery of any other lawful
consideration approved by the Board or the Committee, or (iv) by any combination
of the foregoing. If any portion of the Incentive Stock Option Price is paid in
shares of stock of the Company, such shares shall be valued at their fair market
value, as determined in accordance with Section 7 of this Plan, as of the
effective date of exercise of the Incentive Stock Option.
(C) Except as provided to the contrary in Section 8
of this Plan, an Incentive Stock Option granted hereunder shall remain
outstanding and shall be exercisable only so long as the person to whom such
Incentive Stock Option was granted remains an officer or employee of the
Company, the parent corporation, if any, of the Company, or any of the
Subsidiaries.
(D) All Incentive Stock Options granted under this
Plan shall be nontransferable, except by will or the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
granted only by such person (or his duly appointed, qualified, and acting
personal representative).
(E) No Incentive Stock Option may be exercised as to
fewer than 100 shares of Stock at any one time without the consent of the Board
or the Committee, unless the number of shares to be purchased upon such exercise
is the total number of shares at the time available for purchase under such
Incentive Stock Option.
(b) Terms of Nonstatutory Stock Options. Each stock option agreement
covering a Nonstatutory Stock Option granted under this Plan and any amendment
thereof shall conform to the provisions of Section 5(b)(i) - (iii) below, and
may contain such other terms and provisions consistent with the requirements of
this Plan as the Board or the Committee shall deem appropriate:
(i) Nonstatutory Stock Option Price. The purchase price of
each of the shares of Stock subject to a Nonstatutory Stock Option (the
"Nonstatutory Stock Option Price") shall be a stated price which is not less
than 85% of the fair market value of such share of Stock, determined in
accordance with Section 7 of this Plan, as of the date such Nonstatutory Option
is granted; provided, however, that if an employee or director at the time a
Nonstatutory Stock Option is granted to him, owns stock representing more than
10% of the total combined voting power of all classes of stock of the Company or
of the parent corporation (as defined in Section 424(e) of the Code), if any, of
the Company, or any of the Subsidiaries (or, under Section 424(d) of the Code,
is deemed to own stock representing more than 10% of the total combined voting
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power of all such classes of stock, by reason of the ownership of such classes
of stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor, or lineal descendent of such employee, or by or for any corporation,
partnership, estate or trust of which such employee is a shareholder, partner or
beneficiary), then the Nonstatutory Stock Option Price of each share of Stock
subject to such Nonstatutory Stock Option shall be at least 110% of the fair
market value of such share of Stock, as determined in the manner stated above.
(ii) Term of Nonstatutory Stock Options. Nonstatutory Stock
Options granted under this Plan shall be exercisable for such periods as shall
be determined by the Board or the Committee at the time of grant of each such
Nonstatutory Stock Option, but in no event shall a Nonstatutory Stock Option be
exercisable after the expiration of 10 years from the date of grant. Each
Nonstatutory Stock Option granted under this Plan shall also be subject to
earlier termination as provided in this Plan.
(iii) Exercise of Nonstatutory Stock Options.
(A) Subject to the provisions of Sections
5(b)(iii)(E), 8 and 9 of this Plan, Nonstatutory Stock Options granted under
this Plan may be exercised in whole or in installments, to such extent, and at
such time or times during the terms thereof, as shall be determined by the Board
or the Committee at the time of grant of each such option.
(B) Nonstatutory Stock Options granted under this
Plan shall be exercisable only by delivery to the Company of written notice of
exercise, which notice shall state the number of shares with respect to which
such Nonstatutory Stock Option is exercised, the date of grant of the
Nonstatutory Stock Option, the aggregate purchase price for the shares with
respect to which the Nonstatutory Stock Option is exercised and the effective
date of such exercise, which date shall not be earlier than the date the notice
is received by the Company nor later than the date upon which such Nonstatutory
Stock Option expires. The written notice of exercise shall be sent together with
the full Nonstatutory Stock Option Price of the shares purchased, which may be
paid (i) in cash, (ii) in shares of any class of issued and outstanding stock of
the Company held for more than six months by the option holder, whether
preferred or common, (iii) by the delivery of any other lawful consideration
approved by the Board or the Committee, or (iv) by any combination of the
foregoing. If any portion of the Nonstatutory Stock Option Price is paid in
shares of stock of the Company, such shares shall be valued at their fair market
value, as determined in accordance with Section 7 of this Plan, as of the
effective date of exercise of the Nonstatutory Stock Option.
(C) Except as provided to the contrary in Section 8
of this Plan, a Nonstatutory Stock Option granted hereunder shall remain
outstanding and shall be exercisable only so long as the person to whom such
Nonstatutory Stock Option was granted remains either a director or employee of
the Company, the parent corporation, if any, of the Company, or any of the
Subsidiaries.
(D) All Nonstatutory Stock Options granted under this
Plan shall be nontransferable, except by will or the laws of descent and
distribution, and shall be exercisable
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during the lifetime of the person to whom granted only by such person (or his
duly appointed, qualified, and acting personal representative).
(E) No Nonstatutory Stock Option may be exercised as
to fewer than 100 shares at any one time without the consent of the Board or the
Committee, unless the number of shares to be purchased upon such exercise is the
total number of shares at the time available for purchase under such
Nonstatutory Stock Option.
6. Rights of Grantees
No holder of an option shall be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any shares of Stock subject to
such option unless and until his option shall have been exercised pursuant to
the terms thereof, the Company shall have issued and delivered to the holder of
the option the shares of Stock as to which he has exercised his option, and his
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, such person shall have full voting and other ownership
rights with respect to such shares of Stock.
7. Determination of Fair Market Value
For the purposes of this Plan, the fair market value of a share of
stock of the Company shall be determined as follows: (i) if on the date as of
which such determination is made the class of stock being valued is admitted to
trading on a national securities exchange or exchanges for which actual sale
prices are regularly reported, or actual sales prices are otherwise regularly
published for such stock, the fair market value of a share of such stock shall
be deemed to be equal to the average of the closing sale prices reported for
such stock on each of the five (5) trading dates immediately preceding the date
as of which such determination is made; or (ii) if on the date as of which such
determination is made no such closing sales prices are reported, but quotations
for the class of stock being valued are regularly listed on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or
another comparable system, the fair market value of a share of such stock shall
be deemed to be equal to the mean of the average of the closing bid and asked
prices for such stock quoted on such system on each of the five (5) trading
dates immediately preceding the date as of which such determination is made; or,
(iii) if no such quotations or actual sales prices are available, the fair
market value of a share of such stock shall be deemed to be the average of the
closing bid and asked prices furnished by a professional securities dealer
making a market in such shares, as selected by the Board of Directors, for the
trading date as of which such determination is made (or the immediately
preceding trading date if the date of determination is not a trading date);
provided, however, that if none of Sections (i) through (iii) above are
applicable, or the Board or the Committee determines in good faith that the
approach specified in those Sections does not properly reflect the fair market
value of such stock, the Board or the Committee may determine the fair market
value of a share of stock of the Company on the basis of such factors as it
shall deem appropriate.
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8. Retirement, Termination of Employment or Death of Holders of Options
(a) Death, Retirement or Disability. If an employee to whom an Award
has been granted under this Plan dies while providing services to the Company or
a Subsidiary, retires from employment with the Company or a Subsidiary after
attaining his retirement date (as may be prescribed by the Company), or
terminates employment with the Company or a Subsidiary as a result of "permanent
and total disability" (as that term is defined by Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended), any restrictions then applicable to
such Award shall continue as if the employee had not terminated employment and
such Award shall thereafter be exercisable, in whole or in part, by the person
to whom granted (or by his duly appointed, qualified, and acting personal
representative, his estate, or by a person who acquired the right to exercise
such option by bequest or inheritance from the Grantee) in the manner set forth
in Section 5 of this Plan, at any time within the remaining term of such Award.
(b) Other Termination of Service or Employment. Except as otherwise
provided in Section 8(a) above, if a person to whom an option has been granted
under this Plan ceases to be either a director or employee of the Company or a
Subsidiary, such option shall continue to be exercisable to the same extent that
it was exercisable on the last day on which such person was either a director or
employee for a period of 30 days thereafter, or for such longer period as may be
determined by the Board or the Committee at the time of grant, whereupon such
option shall terminate and shall not thereafter be exercisable. No Award made
under this Plan shall be affected by any change of duties or position of the
person to whom such Award was made or by any temporary leave of absence granted
to such person by the Company or any of its Subsidiaries.
(c) Termination with Board Approval. If a Grantee ceases to be either a
director or employee of the Company or a Subsidiary for any reason covered by
Section 8(b) above, and the Board or the Committee expressly determines that for
purposes of this Section 8(c) such termination of service or employment is in
the best interests of the Company, then notwithstanding anything herein to the
contrary, an option awarded to such Grantee hereunder shall be exercisable by
such Grantee or by the estate of such Grantee, or by a person who acquired the
right to exercise such option by bequest or inheritance from the Grantee, for
such additional period following termination of service or employment as shall
be determined by the Board or the Committee, but in no event later than the date
upon which such option would have expired absent such termination of service or
employment. Any such extended option shall be exercisable only to the extent and
in the manner exercisable by such Grantee at the time of such termination of
service or employment.
9. Adjustment Upon Changes in Capitalization
(a) In the event of any change in the number of shares of the
outstanding Stock of the Company effected without the receipt of full and
adequate consideration by the Company, as a consequence of a stock split, stock
dividend, combination or reclassification of shares, recapitalization, merger,
or similar event, the Board or the Committee shall adjust proportionally the
number and kind of shares subject to this Plan, and the number, kind, and per
share Incentive
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Stock Option Price or Nonstatutory Stock Option Price (as the case may be) of
shares then subject to Awards outstanding under the Plan. Any such adjustment
shall be made without a change in the aggregate purchase price of the shares of
Stock subject to the unexercised portion of any option. In the event of any
other change affecting any class of stock of the Company subject to Awards made
under the Plan or any distribution (other than normal cash dividends) to holders
of such stock, such adjustments as may be deemed equitable by the Board or the
Committee, including adjustments to avoid fractional shares, shall be made to
give proper effect to such event.
(b) Upon the effective date of the dissolution or liquidation of the
Company, or of a reorganization, merger or consolidation of the Company with one
or more other corporations in which the Company is not the surviving
corporation, or of the transfer of all or substantially all of the assets or
shares of the Company to another person or entity (any such transaction being
referred to hereinafter as a "Terminating Event"), this Plan and any Award
theretofore made hereunder shall terminate unless provision is made in writing
in connection with such Terminating Event for the continuance of this Plan and
for the assumption of Awards theretofore granted hereunder, or the substitution
for such Awards of new awards issued by the successor corporation, or a parent
or subsidiary thereof, with such appropriate adjustments as may be determined or
approved by the Board or the Committee, in which event this Plan and the Awards
theretofore granted or substituted therefor shall continue in the manner and
under the terms so provided.
10. Effectiveness of the Plan
This Plan shall become effective upon its adoption by the Board;
provided, however, that the effectiveness of this Plan shall be subject to the
approval of the stockholders of the Company by the affirmative vote of not less
than the holders of a majority of the shares of the Company's Voting Stock
present in person or represented by proxy at a duly held meeting at which a
quorum is present (or by such greater vote as may be required by applicable law,
regulation or provision of the Certificate of Incorporation or Bylaws of the
Company), or by written consent.
11. Manner of Grant
Nothing contained in this Plan or in any resolution heretofore or,
except as provided in this Plan, hereafter adopted by the Board or any committee
thereof or by the stockholders of the Company with respect to this Plan shall
constitute the granting of an Award under this Plan. The granting of an Award
under this Plan shall be deemed to occur only upon the date on which the Board
or the Committee shall approve the grant of such Award. All Awards granted under
this Plan shall be evidenced by a written agreement, in such form as shall be
determined by the Board or the Committee, signed by a representative of the
Board or the Committee and the recipient thereof.
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12. Compliance with Law and Regulations
The obligation of the Company to sell and deliver any shares of Stock
under this Plan shall be subject to all applicable laws, rules and regulations,
and the obtaining of all approvals by or permits from governmental agencies
deemed necessary or appropriate by the Board or the Committee. Except as
otherwise provided in Section 2 and Section 15 herein, the Board may make such
changes in the Plan and the Board or the Committee may include such terms in any
Award agreement as may be necessary or appropriate, in the opinion of counsel to
the Company, to comply with the rules and regulations of any governmental
authority, or to obtain for employees granted Incentive Stock Options the tax
benefits under the applicable provisions of the Code and the regulations
thereunder.
13. Tax Withholding
The company for whom services are performed (whether the Company or a
Subsidiary) by a director or employee granted an Award under this Plan shall
have the right to deduct or otherwise effect a withholding of any amount
required by federal or state laws to be withheld with respect to the grant,
vesting or exercise of any Award or the sale of stock acquired upon the exercise
of an Incentive Stock Option in order for such company to obtain a tax deduction
otherwise available as a consequence of such grant, vesting, exercise or sale,
as the case may be.
14. Nonexclusivity of the Plan
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options, stock appreciation rights or restricted stock
otherwise than under this Plan, and such arrangements may be either applicable
generally or only in specific cases.
15. Amendment
The Board at any time, and from time to time, may amend this Plan,
subject to any required regulatory approvals and subject to the limitation that,
except as provided in Section 9 hereof, no amendment shall be effective unless
approved within 12 months after the date of the adoption of such amendment by
the affirmative vote of the holders of a majority of the shares of the Company's
Voting Stock present in person or represented by proxy at a duly held meeting at
which a quorum is present (or by such greater vote as may be required by
applicable law, regulation or provision of the Certificate of Incorporation or
Bylaws of the Company), or by written consent, if such amendment would, in the
absence of shareholder approval, cause Awards that would otherwise qualify as
Incentive Stock Options to fail to qualify as such or cause the Plan to fail to
comply with the requirements of Rule 16b3 after the Board determines to bring
the Plan into compliance with the requirements of such Rule.
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Except as provided in Section 9 hereof, rights and obligations under
any Awards granted before amendment of this Plan shall not be altered or
impaired by amendment of this Plan, except with the consent of the person to
whom the Award was granted.
16. Termination or Suspension
The Board at any time may suspend or terminate this Plan. This Plan,
unless sooner terminated, shall terminate on the 10th anniversary of its
adoption by the Board, but such termination shall not affect any Award
theretofore granted. No Award may be granted under this Plan while this Plan is
suspended or after it is terminated.
Except as otherwise expressly provided herein, no rights or obligations
under any Award granted while this Plan is in effect shall be altered or
impaired by suspension or termination of this Plan, except with the consent of
the person to whom the Award was granted. Any Award granted under this Plan may
be terminated by agreement between the holder thereof and the Company and, in
lieu of the terminated Award, a new Award may be granted.
17. Continuation of Employment
Nothing contained in this Plan (or in any written Award agreement)
shall obligate the Company or any Subsidiary to continue for any period to elect
any individual as a director or to employ an employee to whom an Award has been
granted, or interfere with the right of the Company or any Subsidiary to vary
the terms of such person's service or employment or reduce such person's
compensation.
18. Exculpation and Indemnification
To the extent permitted by applicable law and regulation, the Company
shall indemnify and hold harmless the members of the Board and the members of
the Committee from and against any and all liabilities, costs, and expenses
incurred by such persons as a result of any act, or omission to act, in
connection with the performance of such persons' duties, responsibilities, and
obligations under this Plan, other than such liabilities, costs and expenses as
may result from the negligence, gross negligence, bad faith, willful misconduct,
or criminal acts of such persons.
19. Provision of Information to Award Recipients
The Company shall provide each holder of an Award with Company
financial statements at least annually, except that the Company need not provide
such information to a holder of an Award who is an employee of the Company whose
duties insure that such holder of an Award has access to equivalent information.
20. Headings
Headings are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Plan.
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EXHIBIT C
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as
of , 1998, by and between EDnet, Inc., a Colorado corporation ("EDnet") and
EDnet Delaware, Inc., a Delaware corporation ("EDnet Delaware"); (EDnet and
EDnet Delaware collectively, the "Constituent Corporations").
WHEREAS, the authorized capital stock of EDnet consists of 50,000,000
shares of Common Stock, $0.001, par value per share, and 5,000,000 shares of
Preferred Stock, $0.001 par value per share; the authorized capital stock of
EDnet Delaware consists of 50,000,000 shares of Common Stock, $0.001 par value
per share, and 5,000,000 shares of Preferred Stock, $0.001 par value per share;
and,
WHEREAS, the directors of the Constituent Corporations deem it
advisable and to the advantage of the Constituent Corporations that EDnet merge
with and into EDnet Delaware upon the terms and conditions provided herein,
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that EDnet shall merge
with and into EDnet Delaware on the following terms, conditions and other
provisions:
1. TERMS AND CONDITIONS.
1.1 Merger. EDnet shall be merged with and into EDnet Delaware (the
"Merger"), and EDnet Delaware shall be the surviving corporation (the "Surviving
Corporation") effective at 12:01 p.m., Eastern Standard Time, January 1, 1999
(the "Effective Date").
1.2 Name Change. On the Effective Date, the name of EDnet Delaware
shall be EDnet, Inc.
1.3 Succession. On the Effective Date, EDnet Delaware shall continue
its separate corporate existence under the laws of the State of Delaware, and
the separate existence and corporate organization of EDnet, Inc. (the Colorado
corporation), except insofar as it may be continued by operation of law, shall
be terminated and cease.
1.4 Transfer of Assets and Liabilities. On the Effective Date, the
rights, privileges, and powers, both of a public and a private nature, of each
of the Constituent Corporations shall be vested in and possessed by the
Surviving Corporation, subject to all
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of the disabilities, duties and restrictions of or upon each of the Constituent
Corporations; and all rights, privileges, and powers of each of the Constituent
Corporations, and all property, real, personal and mixed, of each of the
Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the Constituent Corporations shall be transferred to and vested in the
Surviving Corporation; and all property, rights, privileges and powers, and all
and every other interest, thereafter shall be the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger;
provided, however, that the liabilities of the Constituent Corporations and of
their stockholders, directors and officers shall not be affected and all rights
of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and any claim existing or action or
proceeding pending by or against either of the Constituent Corporations may be
prosecuted to judgment as if the Merger had not been consummated, except as they
may be modified with the consent of such creditors, and all debts, liabilities
and duties of or upon each of the Constituent Corporations shall attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by it.
1.5 Common Stock of EDnet and EDnet Delaware. On the Effective Date, by
virtue of the Merger and without any further action on the part of the
Constituent Corporation or their respective stockholders, (i) each share of
Common Stock of EDnet issued and outstanding immediately prior thereto shall be
combined, changed and converted into one (1) share of Common Stock of EDnet
Delaware, in each case fully paid and nonassessable, and (ii) each share of
Common Stock of EDnet Delaware issued and outstanding immediately prior thereto
shall be canceled and returned to the status of authorized but unissued shares.
1.6 Stock Certificates. On and after the Effective Date, all of the
outstanding certificates that, prior to that time, represented shares of Common
Stock of EDnet shall be deemed for all purposes to evidence ownership of and to
represent the shares of EDnet Delaware into which the shares of EDnet
represented by such certificates have been converted as herein provided and
shall be so registered on the books and records of the Surviving Corporation or
its transfer agents. The registered owner of any such certificate shall, until
such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or its transfer agent, have
and be entitled to exercise any voting and other rights with respect to and to
receive any dividend and other distribution upon the shares of EDnet Delaware
evidenced by such outstanding certificate as above provided.
1.7 Options. On the Effective Date, if any options or rights granted to
purchase shares of Common Stock of EDnet under the 1998 Stock Option Plan and
the 1995 nonstatutory option plan remain outstanding, then the Surviving
Corporation will assume outstanding and unexercised portions of such options and
such options shall
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be changed and converted into options to purchase Common Stock of EDnet
Delaware, such that an option to purchase one (1) share of Common Stock of EDnet
shall be converted into an option to purchase one (1) share of Common Stock of
EDnet Delaware. No other changes in the terms and conditions of such options
will occur.
1.8 Purchase Rights. On the Effective Date, the Surviving Corporation
will assume the outstanding obligations of EDnet to issue Common Stock or other
capital stock pursuant to contractual purchase rights granted by EDnet, and the
outstanding and unexercised portions of all outstanding contractual rights to
purchase Common Stock or other capital stock of EDnet shall be changed and
converted into contractual rights to purchase Common Stock or other capital
stock, respectively, of EDnet Delaware such that a contractual right to purchase
one share of Common Stock or other capital stock of EDnet shall be converted
into a contractual right to purchase one share of Common stock or other capital
stock, respectively, of EDnet Delaware. No other changes in the terms and
conditions of such contractual purchase rights will occur.
1.9 Employee Benefit Plans. On the Effective Date, the Surviving
Corporation shall assume all obligation of EDnet under any and all employee
benefit plans in effect as of such date with respect to which employee rights or
accrued benefits are outstanding as of such date. On the Effective Date, the
Surviving Corporation shall adopt and continue in effect all such employee
benefit plans upon the same terms and conditions as were in effect immediately
prior to the Merger.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of EDnet Delaware in effect on the Effective Date shall continue
to be the Certificate of Incorporation of the Surviving Corporation without
change or amendment until further amended in accordance with the provisions
thereof and applicable law. The Bylaws of EDnet Delaware in effect on the
Effective Date shall continue to be the Bylaws of the surviving Corporation
without change or amendment until further amended in accordance with the
provisions thereof and applicable law.
2.2 Directors. The directors of EDnet preceding the Effective Date
shall become the directors of the Surviving Corporation on and after the
Effective Date to serve until expiration of their terms and until their
successors are elected and qualified.
2.3 Officers. The officers of EDnet preceding the Effective Date shall
become the officers of the Surviving Corporation on and after the Effective Date
to serve at the pleasure of its Board of Directors.
3. MISCELLANEOUS
3.1 Further Assurances. From time to time, and when required by the
Surviving Corporation or by its successors and assigns, the Surviving
Corporation shall execute and
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deliver, or cause to be executed and delivered, such deeds and other
instruments, and the Surviving Corporation shall take or cause to be taken such
further and other action as shall be appropriate or necessary in order to vest
or perfect or to conform of record or otherwise, in the Surviving Corporation
the title to and possession of all the property, interests, assets, rights,
privileges, immunities, powers, franchises and authority of EDnet and otherwise
to carry out the purposes of this Merger Agreement, and the officers and
directors of the Surviving Corporation are authorized fully in the name and on
behalf of EDnet Delaware or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the stockholders
of EDnet, this Merger Agreement may be amended in any manner (except that, after
the approval of the Merger Agreement by the stockholders of EDnet, the principal
terms may not be amended without further approval of the stockholders of EDnet)
as may be determined in the judgment of the respective Board of Directors of
EDnet Delaware and EDnet to be necessary, desirable, or expedient in order to
clarify the intention of the parties hereto or to effect or facilitate the
purpose and intent of this Merger Agreement.
3.3 Conditions to Merger. The obligation of the Constituent
Corporations to effect the transactions contemplated hereby is subject to
satisfaction of the following conditions (any or all of which may be waived by
either of the Constituent Corporations in its sole discretion to the extent
permitted by law):
(a) the merger shall have been approved by the stockholders of EDnet in
accordance with applicable provisions of the Colorado Business
Corporation Act; and
(b) EDnet, as sole stockholder of EDnet Delaware, shall have approved
the Merger in accordance with the General Corporation Law of the State
of Delaware; and
(c) any and all consents, permits, authorizations, approvals, and
orders deemed in the sole discretion of EDnet to be material to
consummation of the Merger shall have been obtained.
3.4 Abandonment or Deferral. Notwithstanding the approval of this
Merger Agreement by the Stockholders of EDnet or EDnet Delaware, at any time
before the Effective Date, (a) this Merger Agreement may be terminated and the
Merger may be abandoned by the Board of Directors of either EDnet or EDnet
Delaware or both or (b) the consummation of the Merger may be deferred for a
reasonable period of time if, in the opinion of the Boards of Directors of EDnet
and EDnet Delaware, such action would be in the best interests of such
corporations. In the even of termination of this Merger Agreement, this Merger
Agreement shall become void and of no effect and there shall be no liability on
the part of either Constituent Corporation or their respective Board of
Directors or stockholders with respect thereto, except that EDnet shall pay all
expenses
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incurred in connection with the Merger or in respect to this Merger Agreement or
relating thereto.
3.5 Counterparts. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Board of Directors of EDnet and EDnet Delaware, hereby is
executed on behalf of each such corporation and attested to by their respective
officers thereunto duly authorized.
EDNET, INC.
A Colorado Corporation
By:
----------------------------
Chief Executive Officer
And By:
----------------------------
Secretary
EDNET DELEWARE, INC.
A Delaware Corporation
By:
----------------------------
Chief Executive Officer
And By:
----------------------------
Secretary
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EXHIBIT D
CERTIFICATE OF INCORPORATION
OF
EDNET DELAWARE, INC.
* * * * *
l. The name of the corporation is EDnet Delaware, Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. (a) This corporation is authorized to issue two classes of shares of stock
to be designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares that the Corporation is authorized to issue is fifty-five
million (55,000,000) shares, of which the number of shares of Common Stock
authorized is fifty million (50,000,000) shares and the number of shares of
Preferred Stock authorized is five million (5,000,000) shares, and the par value
of each of such shares is one-tenth of one cent ($0.001), amounting in the
aggregate to fifty thousand dollars ($50,000 U.S.).
(b) The shares of Preferred Stock authorized by this certificate of
incorporation may be issued from time to time in one or more series. For any
wholly unissued series of Preferred Stock, the board of directors is hereby
authorized to fix and alter the dividend right, dividend rates, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), redemption prices, and liquidation preferences, the number of
shares constituting any such series and the designation thereof, or any of them.
(c) For any series of Preferred Stock having issued and outstanding
shares, the board of directors is hereby authorized to increase or decrease the
number of shares of such series when the number of shares of such series was
originally fixed by the board, but such increase or decrease shall be subject to
the limitations and restrictions stated in the resolution of the board of
directors originally fixing the number of shares of such series. If the number
of shares of any series is so decreased, then the shares constituting such
decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
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5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
- ---- ---------------
Jonathan T. Rubens Niesar & Diamond LLP
90 New Montgomery Street, 9th Floor
San Francisco, California 94105
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
- ---- ---------------
Tom Kobayashi One Union Street, Ste 210
San Francisco, CA 94111
David Gustafson One Union Street, Ste 210
San Francisco, CA 94111
Robert Wussler One Union Street, Ste 210
San Francisco, CA 94111
Randy Selman One Union Street, Ste 210
San Francisco, CA 94111
Eric Jacobs One Union Street, Ste 210
San Francisco, CA 94111
Alan Saperstein One Union Street, Ste 210
San Francisco, CA 94111
Brian Service One Union Street, Ste 210
San Francisco, CA 94111
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized:
To make, amend, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
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To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or by-laws, expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with law, to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws of
the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
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Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this 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 this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this 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 this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as 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 this corporation, as the case may be, and also on this
corporation.
9. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. 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 (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby declaring and certifying
that this is his act and deed and the facts herein stated are true, and
accordingly has hereunto set his hand this ____ day of _______, 1998.
-------------------------
Jonathan T. Rubens
Niesar & Diamond LLP
90 New Montgomery Street, 9th Floor
San Francisco, California 94105
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EXHIBIT E
* * * * *
EDNET DELAWARE, INC.
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office of the corporation in the State of
Delaware shall be in the City of Wilmington, County of New Castle.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section l. All meetings of the stockholders for the election of
directors shall be held in the City of San Francisco, State of California, at
such place as may be fixed from time to time by the board of directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose 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 or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on such date
and at such time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing 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 the meeting, during ordinary business hours, for a period of at least
ten
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(10) days prior to the meeting, either at a place within the city where the
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.
The 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.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a at least ten
percent (10%) of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or
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by proxy for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of 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, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than three (3) nor more than seven (7). The directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
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MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the president
on four (4) days' notice to each director, either personally or by mail or by
facsimile communication; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors unless the board consists of only one director; in which case special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of the sole director.
Section 8. At all meetings of the board, four (4) directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
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COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) of the General Corporation Law of Delaware fix any
of the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation) adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of
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directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by-law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile telecommunication.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a chief executive officer, a
vice-president, a secretary and a treasurer, or chief financial officer. The
board of directors may also choose additional vice-presidents, and one or more
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, or chief financial officer.
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Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE CHIEF EXECUTIVE OFFICER
Section 6. The chief executive officer of the corporation, shall preside
at all meetings of the stockholders and the board of directors, shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect. Except where by law the signature of the President is required or unless
the Board of Directors shall rule otherwise, the chief executive officer shall
possess the same power as the President to sign all certificate contracts and
other instruments of the corporation which may be authorized by the Board of
Directors.
THE PRESIDENT
Section 7. The President shall be the Chief Operating Officer of the
corporation. He shall be responsible for the general day-to-day supervision of
the business and affairs of the corporation. He shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors
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or president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, or chief financial officer, shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the board
of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
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ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president, and by the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or
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destroyed. When authorizing such issue of a new certificate or certificates or
uncertificated shares, the board of directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. 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 upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. 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, and to hold liable for calls and
assessments a 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 any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal, if any, shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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<PAGE>
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
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<PAGE>
APPENDIX A
PROXY PROXY
EDNET, INC.
ONE UNION STREET, SAN FRANCISCO, CALIFORNIA 94111
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -
DECEMBER 10, 1998
The undersigned hereby constitutes and appoints Tom Kobayashi and David
Gustafson, and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of EDnet, Inc. to be held at the Hotel Rex, located at
562 Sutter Street, San Francicsco, California, 94102, on December 10, 1998, at
2:00 p.m. local time, and at any postponements, continuations and adjournments
thereof, on all matters coming before said meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS. The persons named herein as agents and
proxies cannot vote your shares unless you sign and return this card.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
EDNET INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY.
1. Directors recommend a vote for election of
the following Directors: For All
Tom Kobayashi, David Gustafson For Withheld Except
Robert Wussler, Randy Selman 0 0 0
Eric Jacobs, Alan Saperstein,
Brian Service
------------------------------------
(Except nominee(s) written above.)
2. Approval of the adoption of the For Withheld Abstain
1998 Stock Option Plan. 0 0 0
3. Approval of plan of Reincorporation For Withheld Abstain
in the State of Delaware 0 0 0
4. Ratification of Selection of Independent For Withheld Abstain
Accountants. 0 0 0
5. In their discretion, upon such other For Withheld Abstain
matters as may properly come before the 0 0 0
meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. If no direction is made, this proxy will be voted FOR
Proposals 1 through 4.
__________________________________
[Shareholder Name Printed Here]
__________________________________
__________________________________
[Shareholder Address Printed Here]
Dated: _________________________________________________________, 1998
Signature(s)______________________________________________________________
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC. SHOULD GIVE A TITLE AS SUCH. IF THE SIGNER IS A
CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER.
