SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
___ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MAKEPEACE CAPITAL CORP.
(Name of Registrant as Specified in Its Charter)
MAKEPEACE CAPITAL CORP.
(Name of Person(s) Filing Proxy Statement)
<PAGE>
PRELIMINARY COPY
MAKEPEACE CAPITAL CORP.
Suite 134-554
4835 North O'Conner Boulevard
Irving, Texas 75062
________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 17, 2000
_________________________________________________
Notice is hereby given that a Special Meeting of Stockholders of
Makepeace Capital Corp. will be held on Tuesday, October 17, 2000, at 10:00
a.m., Central Time, at the offices of Thurman & Andres, 1200 Main Street,
Suite 1200, Dallas, Texas 75202, and at any and all adjournments thereof, to
consider the following matters:
1. Merging with a newly-formed Delaware subsidiary for the purpose of
changing the Company's domicile from Texas to Delaware, changing the name to
"NetSalon Corporation" and effecting a one for two (1 for 2) reverse split of
the outstanding shares of the Company's common stock.
2. The transaction of such other business as may properly come before
the meeting or at any adjournment or adjournments thereof.
Said meeting may be adjourned from time to time without notice other than
by announcement at said meeting, or at any adjournment thereof, and any and
all business for which said meeting is hereby noticed may be transacted at any
such adjournment.
Only holders of the Company's $.001 par value common stock of record at
the close of business on September 22, 2000, will be entitled to notice of and
to vote at the meeting and at any adjournment or adjournments thereof. The
proxies are being solicited by the Board of Directors of the Company.
All Shareholders, whether or not they expect to attend the Special
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Jan R. Thurman, CEO
Irving, Texas
September 22, 2000
<PAGE>
MAKEPEACE CAPITAL CORP.
Suite 134-554
4835 North O'Conner Boulevard
Irving, Texas 75062
__________________________________________________
PROXY STATEMENT
__________________________________________________
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 17, 2000
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Makepeace Capital Corp., a Texas corporation (the "Company"), for
use at the Company's Special Meeting of Shareholders to be held at the offices
of Thurman & Andres, 1200 Main Street, Suite 1200, Dallas, Texas 75202, on
Tuesday, October 17, 2000, at 10:00 a.m., Central Time, and at any and all
adjournments thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's Shareholders on or about
September 26, 2000.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to Shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
The securities entitled to vote at the Special Meeting consist of all of
the issued and outstanding shares of the Company's $.001 par value common
stock (the "Common Stock"). The close of business on September 22, 2000, has
been fixed by the Board of Directors of the Company as the record date. Only
Shareholders of record as of the record date may vote at the Special Meeting.
As of the record date, there were 39,261,053 shares of Common Stock issued and
outstanding.
Each Shareholder of record as of the record date will be entitled to one
vote for each share of Common Stock held as of the record date. Cumulative
voting is not permitted. The presence at the Special Meeting of the holders
of a majority of the number of shares of the Common Stock outstanding as of
the record date will constitute a quorum for transacting business.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 22, 2000, as
to the shares of the Common Stock beneficially owned by each person who is the
beneficial owner of more than five percent (5%) of the Company's Common Stock,
each of the Company's Directors and by all of the Company's Directors and
Executive Officers as a group. Each person has sole voting and investment
power with respect to the shares shown except as noted.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Mark Manuel 18,447,925 46.6%
9220 Edgemont Drive
NRH, Texas 76180
Jan R. Thurman 3,300,000 8.3%
2320 Chimney Hill Drive
Arlington, Texas 76012
Societe Financiere 2,000,000 5.1%
du Seujet SA
Road Town, Pasea Estate
Tortola, BVI
All directors and officers 25,264,592 63.8%
as a group (4 persons)
PROPOSED PLAN OF MERGER TO CHANGE THE STATE OF
INCORPORATION OF THE COMPANY FROM TEXAS TO DELAWARE,
TO CHANGE THE NAME OF THE COMPANY AND
TO EFFECT A REVERSE STOCK SPLIT
The Board of Directors of the Company has unanimously adopted a
resolution approving a plan of merger of the Company into a wholly-owned
subsidiary of the Company and directing that the plan of merger be submitted
to shareholders for approval at the Special Meeting. The primary purpose of
the merger is to change the state of incorporation of the Company from Texas
to Delaware so that the Company will have the benefit of the Delaware General
Corporation Law and the substantial body of judicial decisions interpreting
and applying that statute. The merger will also result in a change of the
name of the Company to "NetSalon Corporation," and effect a one for two
reverse split of the outstanding common stock of the Company.
The principal effects of the merger will be that:
1. The affairs of the Company will cease to be governed by Texas
corporation laws and will become subject to Delaware corporation laws.
However, the corporate headquarters of the Company will continue to be located
in Irving, Texas.
2. Each two (2) shares of issued and outstanding Common Stock will be
automatically converted into one (1) share of common stock in the Delaware
corporation.
2
<PAGE>
3. The Delaware corporation will succeed to all of the rights, privileges
and powers of the Company, will possess all of the properties of the Company,
and will assume all of the debts, liabilities and obligations of the Company.
The terms of the merger are contained in a Plan and Agreement of Merger
(the "Plan of Merger"). The Plan of Merger provides that the Company will be
merged into a wholly-owned subsidiary of the Company organized under the
Delaware General Corporation Law for the purpose of changing the Company's
state of incorporation (the "Merger"). This subsidiary, NetSalon Corporation,
which is referred to in this proxy statement as "NetSalon", will be the
surviving corporation in the Merger. The Merger will not involve a change in
the business or management of the Company. Upon the effectiveness of the Plan
of Merger, each two (2) outstanding shares of Common Stock of the Company will
automatically be converted into one (l) share of Common Stock of NetSalon. No
fractional shares will be issued, and any shareholder entitled to a fraction
of a share will receive one full share in lieu of such fraction.
The approval by the holders of two-thirds of the outstanding shares of
Common Stock of the Company is required to approve the Plan of Merger.
The Plan of Merger provides that it may be terminated and the Merger
abandoned by resolution of the Board of Directors of the Company.
REASONS FOR CHANGING THE COMPANY'S STATE OF INCORPORATION
Although the Company has operated as a Texas corporation since 1994,
comparatively few corporations whose securities are publicly traded are
incorporated in Texas, and the body of judicial decisions construing Texas
corporation law is comparatively small. Many corporations whose securities are
publicly traded are incorporated under the Delaware General Corporation Law
with the result that a substantial body of judicial decisions interpreting and
applying that statute has developed.
The development of a substantial body of judicial decisions construing
the Delaware General Corporation Law has brought about greater predictability
of the legal consequences of actions taken by Delaware corporations, their
officers, and their directors. By changing the Company's state of
incorporation from Texas to Delaware, the Board of Directors of the Company
will have the advantage of greater certainty concerning the legal consequences
of the decisions that the Board of Directors makes in directing the management
of the business and affairs of the Company. Because this change will not
affect the location of the corporate headquarters of the Company or the
location of its principal properties or places of business, possible future
legal disputes involving the Company will not be confined to the courts of the
State of Delaware. However, after the effective time of the Merger, the
internal affairs of the Company, including the rights, powers and duties of
its directors and shareholders and matters pertaining to its shares, will be
governed by Delaware law rather than Texas law.
Both the Texas Corporation Laws and the Delaware Corporation Laws permit
directors of public corporations to be excused from liability in certain
situations where their conduct is alleged to breach fiduciary duties. However,
while the substantive rules of law are similar, the applicable Delaware
provisions relating to directors' liabilities have been more widely construed
than the corresponding Texas provisions. As a result, potential director
candidates may believe that the scope or their potential liabilities is more
predictable under Delaware law. The Board of Directors of the Company
3
<PAGE>
therefore believes that after the merger, it will be better able to obtain and
retain qualified directors because of the reduced risk of unfavorable
interpretation of applicable directors' liability laws. A comparison of the
Texas and Delaware provisions is contained herein under "Principal Effects of
the Merger Limitation of Liability of Directors."
PRINCIPAL EFFECTS OF THE MERGER
CONVERSION OF SHARES OF COMMON STOCK; FRACTIONAL SHARES
At the effective time of the Merger, (i) each two (2) shares of Common
Stock of the Company will be automatically converted into one share of Common
Stock having a $.001 par value per share of NetSalon and (ii) the currently
issued shares of Common Stock of NetSalon, all of which are owned by the
Company, will be cancelled. No additional shares of Common Stock of NetSalon
will be issued prior to the effective time of the Merger.
No fractional shares will be issued. Instead, one whole share will be
issued to any shareholder entitled to a fraction of a share.
Each certificate representing shares of Common Stock of the Company will,
at the effective time of the Merger, be deemed to represent shares of Common
Stock of NetSalon.
BUSINESS AND FINANCIAL CONDITION OF THE COMPANY
No change in the business of the Company will result from the Merger. The
business of NetSalon will be conducted under the same names, in the same
places and in the same manner as the business of the Company currently is
conducted. Following the Merger, the corporate headquarters of NetSalon will
continue to be located in Irving, Texas.
At the effective time of the Merger, NetSalon will be vested with all of
the assets of the Company and will be liable for all of the debts and other
legal obligations of the Company. The assets and liabilities of the Company
immediately prior to the effective time of the Merger will be recorded on the
books of account of NetSalon at the same amounts at which they are carried on
the books of account of the Company at that time. No change in the financial
condition of the Company is expected to result from the Merger. Moreover, the
Merger will not change the fiscal year of the Company.
DIRECTORS AND OFFICERS OF THE COMPANY
All of the Directors and Officers the Company immediately prior to the
effective time of the Merger will constitute the Officers and Directors of
NetSalon immediately after the effective time of the Merger.
AMENDMENT OR TERMINATION OF THE PLAN OF MERGER
The Plan of Merger provides that it may be terminated at any time prior
to the effective time of the Merger by action of the Board of Directors of the
Company. In addition, the Plan of Merger provides that certain terms of the
Merger may be changed by action of the Board of Directors of the Company.
However, after the Plan of Merger is approved by shareholders of the Company,
4
<PAGE>
the terms of the Merger may not be changed by the Board of Directors so as to
amend the Certificate of Incorporation of NetSalon or to adversely affect the
rights of shareholders of the Company.
THE CERTIFICATE OF INCORPORATION OF NetSalon
The Plan of Merger provides that the Certificate of Incorporation of
NetSalon shall, at the effective time of the Merger, be the Certificate of
Incorporation of the surviving corporation. Therefore, if the Plan of Merger
is approved by shareholders and is consummated, certain rights of shareholders
and directors of the Company that previously were governed by the Company's
Articles of Incorporation, will be governed by the Certificate of
Incorporation of NetSalon. The following discussion compares certain
provisions of the Articles of Incorporation of the Company, as amended to
date, to the Certificate of Incorporation of NetSalon.
AUTHORIZED AND ISSUED SHARES
The Articles of Incorporation of the Company authorize 100,000,000 shares
of Common Stock, $.001 par value per share, and 20,000,000 shares of Preferred
Stock, $.001 par value per share. The shares of Preferred Sock, none of which
are presently outstanding, are further divided into three series of shares.
The Certificate of Incorporation of NetSalon authorizes the issuance of
100,000,000 shares of Common Stock, $.001 par value per share, and 20,000,000
shares of Preferred Stock, $.001 par value per share. Therefore, the number of
authorized shares of the Company will not be changed as a result of the
Merger. However, the Certificate of Incorporation of NetSalon authorize the
Board of Directors to divide the Preferred Stock into series and to fix by
resolution the designation and the relative rights and preferences of each
series of Preferred Stock. There are no existing agreements or agreements in
principle that provide for the issuance of any shares of Preferred Stock of
NetSalon.
Because each two (2) shares of Common Stock of the Company will be
converted into one (1) share of Common Stock of NetSalon at the effective time
of the Merger, the number of shares of Common Stock of NetSalon that are
issued, or reserved for issuance, immediately after the effective time of the
Merger will be approximately one-half of the number of shares of Common Stock
of the Company that are issued, or reserved for issuance, immediately before
the effective time of the Merger.
Like the holders of shares of Common Stock of the Company, holders of
shares of Common Stock of NetSalon will be entitled to one vote per share on
matters submitted to shareholders and will be entitled to receive dividends
and distributions in liquidation, when and if declared by the Board of
Directors of NetSalon, out of funds legally available therefor.
PREEMPTIVE RIGHTS AND CUMULATIVE VOTING
Both the Articles of Incorporation of the Company and the Certificate of
Incorporation of NetSalon provide that no shareholder has preemptive rights or
the right of cumulative voting.
5
<PAGE>
ADOPTION, AMENDMENT OR REPEAL OF BY-LAWS
The Articles of Incorporation of the Company do not contain any
provisions relating to the Company's by-laws. As a result, under Texas law,
the Board of Directors of the Company has the power to amend or repeal the by-
laws of the Company, or to adopt new bylaws of the Company, subject to the
right of the shareholders of the Company to adopt, amend or repeal the by-
laws. The shareholders of the Company may amend or repeal the by-laws at a
meeting of shareholders called for that purpose.
The Certificate of Incorporation of NetSalon provides that its Board of
Directors has the power to adopt, amend or repeal the by-laws of NetSalon,
subject to the right of shareholders to adopt, amend or repeal the by-laws.
SHAREHOLDER ACTION BY WRITTEN CONSENT
Under current Texas law, any action required or permitted to be taken by
shareholders of the Company may be taken without a meeting if a written
consent to that action is signed by all shareholders of the Company entitled
to vote thereon. Because there are more than 2,000 holders of record of
shares of Common Stock of the Company, the taking of action by unanimous
written consent of the shareholders of the Company is virtually impossible,
with the result that all action by shareholders of the Company must be taken
at a meeting.
Under current Delaware law, unless the certificate of incorporation
provides otherwise, any action required or permitted to be taken by
shareholders of a Delaware corporation may be taken without a meeting if a
written consent to that action is signed by those shareholders who have the
number of votes that are required to take such action at a meeting at which
all shareholders entitled to vote participate. Thereafter, under Delaware law,
prompt notice of such action must be sent to all shareholders of a
corporation.
The Board of Directors of the Company believes that the ability to take
action by shareholders of the Company by written consent instead of at a
meeting is in the best interests of the Company and its shareholders. Since
Delaware law will apply, a group holding a majority of the outstanding shares
of voting stock of the Company could sign a consent to action on any matter
that requires a majority vote and, following the period of notice currently
required by applicable state or federal law, that action would be effective
and binding.
LIMITATION OF LIABILITY OF DIRECTORS
Under both Texas and Delaware law, a corporation is permitted by statute
to amend its articles or certificate of incorporation to provide that a
director will not be liable to the corporation or its shareholders for
monetary damages for breach of fiduciary duty, subject to certain specified
exceptions. These statutes were adopted in response to concerns about the
ability of corporations to attract and retain qualified directors in light of
the unavailability to many corporations of adequate director liability
insurance.
6
<PAGE>
The Articles of Incorporation of the Company contain a provision limiting
the liability of directors of the Company to the maximum extent permitted by
law. The Certificate of Incorporation of NetSalon also contains a provision
limiting the liability of directors of NetSalon to the fullest extent
permitted by Delaware law.
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
Under current Texas law, the Articles of Incorporation of the Company may
be amended only if the proposed amendment receives the affirmative vote of the
holders of at least two-thirds of the outstanding shares of voting stock of
the Company and the affirmative vote of the holders of at least two-thirds of
the outstanding shares of each class that are entitled to vote as a class on
the amendment. This requirement applies to the Company because its Articles of
Incorporation do not specify that a vote of the holders of a lesser number of
shares is required for amendments to the Articles of Incorporation.
Under current Delaware law, the certificate of incorporation of a
Delaware corporation may be amended if the proposed amendment receives the
affirmative vote of the holders of a majority of the outstanding shares of
voting stock of the corporation and the affirmative vote of the holders of a
majority of the outstanding shares of each class that are entitled to vote as
a class on the amendment. Current Delaware law also provides that the
certificate of incorporation may specify that the vote of the holders of a
greater number of shares is required for amendments to the certificate of
incorporation. The Certificate of Incorporation for NetSalon contains no such
provision.
DISSOLUTIONS, MERGERS AND CONSOLIDATIONS
Under current Texas law, the Company may be dissolved or may merge or
consolidate with another corporation if the resolution to dissolve or the plan
of merger or consolidation receives the affirmative vote of the holders of at
least two-thirds of the outstanding shares of all stock of the Company,
including shares that do not otherwise have voting rights, and the affirmative
vote of the holders of at least two-thirds of the outstanding shares of each
class that are entitled to vote as a class on the transaction. For this
reason, the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Common Stock is required to approve the Plan of Merger.
This requirement applies to the Company because its Articles of Incorporation
do not specify that a vote of the holders of a lesser number of shares is
required for the approval of a resolution to dissolve or a plan of merger or
consolidation.
Under current Delaware law, a Delaware corporation may be dissolved or
may merge or consolidate with another corporation if the resolution to
dissolve or the agreement of merger or consolidation receives the affirmative
vote of the holders of a majority of the outstanding shares of voting stock of
the corporation.
Unlike Texas law, Delaware law also provides that no vote of shareholders
of a Delaware corporation is required for a merger if (i) that corporation is
the surviving corporation in the merger, (ii) the agreement of merger does not
amend the certificate of incorporation of the surviving corporation, (iii)
each share of stock of the surviving corporation outstanding immediately prior
to the effective time of the merger is to be an identical outstanding or
7
<PAGE>
treasury share of the surviving corporation after the effective time of the
merger, and (iv) any shares of common stock of the surviving corporation to be
issued or delivered under the agreement of merger, including shares of common
stock issuable upon the conversion of any convertible securities to be issued
under the agreement of merger, constitute 20% or less of the shares of common
stock of the surviving corporation outstanding immediately prior to the
effective date of the merger.
However, certain transactions involving "Interested Stockholders" are
subject to additional limitations under Delaware law. Under the Delaware
General Corporation Law, the term "Interested Stockholder" is defined broadly
to include any person owning 15% or more of the outstanding voting stock of a
corporation, and affiliates and associates of such person. The definition also
covers a person who is an affiliate or an associate of a corporation and who
was the owner of 15% or more of its outstanding voting stock at any time
during the preceding three years, and affiliates and associates of such
person. Under Delaware law, for a period of three years following the date
that a shareholder becomes an Interested Stockholder, several types of
business combinations and other transactions between a Delaware corporation
and such Interested Stockholder would be prohibited unless certain conditions
are met.
COMPARISON OF CERTAIN OTHER FEATURES OF DELAWARE AND TEXAS LAW
If the Plan of Merger is approved by shareholders, all rights of
shareholders and directors of the Company that previously were governed by the
corporation laws of the State of Texas will be governed by the corporation
laws of the State of Delaware. As described previously, the corporation laws
of Delaware differ in numerous respects from those of Texas, and many of those
differences have been discussed. Following is a summary of certain other
differences between the corporation laws of Delaware and the corporation laws
of Texas that shareholders of the Company may wish to consider in deciding
whether to approve the Plan of Merger.
SALES OF SUBSTANTIALLY ALL ASSETS
Under current Texas law, a sale of substantially all of the assets of a
corporation does not require the authorization of shareholders if the
transaction was made in the usual and regular course of business of the
corporation and the corporation continues to engage in one or more businesses,
either directly or through subsidiaries or applies a portion of the
consideration received in connection with the sale to the conduct of a
business in which it engages following the sale. By contrast, under current
Delaware law a corporation may not sell all or substantially all of its assets
unless the proposed sale is authorized by a majority of the outstanding shares
of voting stock of the corporation, and the fact that the corporation
continues to engage in business after the sale will not excuse the requirement
of shareholder authorization.
SPECIAL MEETINGS OF SHAREHOLDERS
Under current Texas law, the holders of at least 10% of the outstanding
shares of voting stock of the Company have the right to call special meetings
of shareholders. By contrast, under current Delaware law special meetings of
shareholders of NetSalon may be called only by the Board of Directors of
NetSalon or by such other persons as are authorized by the Certificate of
Incorporation or by-laws of NetSalon to call special meetings. The by-laws of
8
<PAGE>
NetSalon authorize the Board of Directors, the Chairman of the Board, the
Chief Executive Officer, the President or stockholders holding at least ten
percent of the shares entitled to vote at such meeting to call the meeting.
VACANCIES ON BOARD OF DIRECTORS
Under current Texas law, a vacancy on the board may be filled by the vote
of a majority of directors then in office, although less than a quorum, or by
election at a meeting of shareholders. A newly created directorship resulting
from an increase in the number of directors may be filled by election at a
meeting of shareholders or may be filled by the board for a term continuing
only until the next election of directors by shareholders, but not more than
two such directorships may be so filled during the period between any two
successive annual meetings. Under Delaware law, a vacancy and newly created
directorship may be filled by a majority of the remaining directors, although
less than a quorum, unless otherwise provided in the charter or by-laws.
Neither the Certificate of Incorporation or By-laws of NetSalon will otherwise
so provide.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Texas law currently permits the Company to indemnify any person who has
been or is threatened to be made a party to a legal proceeding because he is
or was a director of the Company, or because he served at the request of the
Company as a principal of another business or employee benefit plan, against
any judgments, penalties, fines, settlements and reasonable expenses incurred
by him in connection with the proceeding. However, the Company may not
indemnify a director in reliance on this statute unless the director (i)
conducted himself in good faith, (ii) reasonably believed that his conduct was
in the best interests of the Company or, in the case of action not taken in
his official capacity, was not opposed to the best interests of the Company,
and (iii) in the case of a criminal proceeding, had no reason to believe that
his conduct was unlawful. The Company also may not indemnify a director in
reliance on this statute for judgments or settlements if the director has been
found liable to the Company or is found to have received an improper personal
benefit.
Texas law permits the Company to pay expenses of a director in advance of
the final disposition of a proceeding for which indemnification may be
provided on the condition that the Company receives (i) a written affirmation
by the director of his good faith belief that he has met the standard of
conduct necessary for indemnification and (ii) an undertaking by or on behalf
of the director that he will repay such expenses if it is ultimately
determined that he is not entitled to be indemnified. This statute also
permits the Company to indemnify its officers, employees and other agents
other than those officers, employees and agents who are also directors, to the
same extent and under the same circumstances that it allows for directors.
The Delaware General Corporation Law permits NetSalon to indemnify its
officers, directors and other agents to substantially the same extent that the
Texas statute permits the Company to indemnify its directors, except that (i)
a director need not have reasonably believed that his conduct was in the best
interests of NetSalon so long as he believed his conduct to be not opposed to
the best interests of NetSalon and (ii) no indemnification may be provided to
9
<PAGE>
any person in respect of any matter as to which he has been adjudged liable to
NetSalon, except to the extent that the Delaware Chancery Court or the court
in which the matter was brought determines such person is fairly and
reasonably entitled to indemnification and then only for such expenses as the
court deems proper.
Delaware law permits NetSalon to pay expenses of a director or officer in
advance of a final disposition of a proceeding if the director or officer
provides NetSalon with an undertaking to repay such expenses if it is
ultimately determined that he is not entitled to be indemnified. NetSalon also
is permitted to pay expenses incurred by other employees and agents upon such
terms and conditions, if any, as the Board of Directors of NetSalon deems
appropriate.
The by-laws of NetSalon obligate NetSalon to indemnify its directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law and provide procedural mechanisms for directors and officers to enforce
these rights. The by-laws of NetSalon also provide the Board of Directors of
NetSalon with the authority to extend the indemnification provided for under
the by-laws to employees and other agents of NetSalon. To the knowledge of the
Board of Directors of the Company, there is no suit or other proceeding
pending or threatened against any officer of the Company to which this by-law
would apply.
Both Texas and Delaware law currently provide that a corporation is
required to indemnify any director or officer of the corporation who has been
or is threatened to be made a party to a legal proceeding by reason of his
service to the corporation if the director or officer is successful on the
merits or otherwise in the defense of such proceeding. In addition, both Texas
and Delaware law currently permit a corporation to purchase and maintain on
behalf of its directors and officers insurance with respect to any liability
asserted against or incurred by such persons, whether or not the corporation
would have the power under applicable law to indemnify such persons.
Under current Delaware law, NetSalon may be permitted to indemnify its
directors against some liabilities for which indemnification is not permitted
under Texas law. To the extent that the Delaware statute is construed to
permit indemnification of directors under circumstances in which
indemnification is not permitted by Texas law, the adoption by NetSalon of the
by-law that obligates NetSalon to indemnify its directors to the fullest
extent permitted by Delaware law may represent a conflict of interest for the
directors of the Company and may operate to their benefit at the expense of
the Company.
The Securities and Exchange Commission has expressed its opinion that
indemnification of directors, officers and controlling persons against
liabilities arising under the Securities Act of 1933 is against public policy
and, therefore, is unenforceable.
APPRAISAL RIGHTS
Under current Texas law, the shareholders of the Company do not currently
have appraisal rights in the event of a merger, a consolidation or a sale,
lease, exchange or other disposition of all or substantially all of the assets
of the Company in a transaction that would require shareholder approval
because the Company currently has more than 2,000 shareholders of record.
10
<PAGE>
Under current Delaware law, shareholder of NetSalon have no appraisal
rights with respect to any merger or consolidation of NetSalon in which such
holders receive solely stock of the surviving corporation (or cash in lieu of
fractional shares) and (i) such stock is listed on a national securities
exchange, (ii) such stock is held of record by more than 2,000 shareholders or
(iii) in the case of a merger, the merger did not require shareholder
approval.
FEDERAL INCOME TAX CONSEQUENCES
The Merger should have no federal income tax consequences under the
Internal Revenue Code of 1986, as amended, to the Company or to holders of
Common Stock of the Company. The Merger will be treated as a nontaxable
transaction involving the merger of a parent into its wholly-owned subsidiary.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL
The Board of Directors of the Company has unanimously approved the Plan
of Merger. The proposed merger will not be effected unless the holders of at
least two-thirds of the outstanding shares of Common Stock vote "FOR" the Plan
of Merger.
The Board of Directors recommends approval of the proposed
merger.
SHAREHOLDER PROPOSALS
The Board of Directors has not yet determined the date on which the next
Annual Meeting of the Shareholders will be held. Any proposal by a
Shareholder intended to be presented at the Company's next Annual Meeting of
Shareholders must be received at the offices of the Company a reasonable
amount of time prior to the date on which the information or proxy statement
for that meeting are mailed to Shareholders in order to be included in the
Company's information or proxy statement relating to that meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. A majority vote of the shares represented at the Meeting is
necessary to approve any such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Jan R. Thurman, Chief Executive Officer
Irving, Texas
September 25, 2000
11
<PAGE>
P R O X Y PRELIMINARY COPY
MAKEPEACE CAPITAL CORP.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jan R. Thurman with the power to appoint
a substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of Makepeace Capital Corp. held of
record by the undersigned on September 22, 2000, at the Special Meeting of
Shareholders to be held on October 17, 2000, or any adjournment thereof.
1. A proposed merger with a newly-formed Delaware subsidiary for the
purpose of changing the Company's domicile from Texas to Delaware, changing
the name to "NetSalon Corporation" and effecting a one for two reverse split
of the outstanding shares of the Company's Common Stock.
[ ] For [ ] Against [ ] Abstain
2. The transaction of such other business as may properly come before
the meeting or at any adjournment or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL NO. 1.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO
THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement.
Dated: _____________, 2000.
__________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MAKEPEACE
CAPITAL CORP. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED
ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE MEETING.
