<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6)
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Upgrade International Corporation
--------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), 14a-6(i)(2) or
Item 22(a)(2)of Schedule 14A.
[_] 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 transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
(5) Total fee paid:
_________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________________________________
(2) Form Schedule or Registration Statement No.:________________________
(3) Filing Party:________________________________________________________
(4) Date Filed:_________________________
<PAGE>
UPGRADE INTERNATIONAL CORPORATION
1411 Fourth Avenue, Suite 629
Seattle, WA 98101
Tel. (206) 903-3116
Fax (206) 903-3112
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
August 16, 2000
----------------
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Upgrade International Corporation (the "Company"), which will be held on
Wednesday, August 16, 2000, at 5:00 p.m. at the offices of Ogden Murphy
Wallace, P.L.L.C., located at 1601 Fifth Avenue, Suite 2100, Seattle,
Washington, 98101, for the following purposes as more fully described in the
Proxy Statement accompanying this Notice:
(1) To approve the Agreement and Plan of Merger By and Between Upgrade
International Corporation, a Florida corporation, and its wholly owned
subsidiary, Upgrade of Washington Inc., a Washington corporation (attached
hereto as Appendix A); and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
All stockholders are entitled to receive notice of the Special Meeting.
However, only holders of record of Shares at the close of business on July 11,
2000, the record date for the Special Meeting fixed by the Board of Directors,
are entitled to vote at the Special Meeting. A Proxy Statement and a Proxy
Card will be mailed to stockholders of record shortly.
The approval of the merger requires a quorum of one-third of the Company's
outstanding shares entitled to vote, and an affirmative vote of more than 50%
of the Company's outstanding shares entitled to vote. Consequently, your vote
on the merger is important.
Stockholders are or may be entitled to assert dissenters' rights under
Florida Statutes Sections 607.1301, 607.1302 and 607.1320 (copies of which are
attached hereto as Appendix D).
All of the Company's stockholders are invited to attend the Special Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED
ENVELOPE PROVIDED WITH THIS NOTICE OR FAX IT TO (206) 903-3117. NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU WISH.
By Order of the Board of Directors,
/s/ Daniel S. Bland
-------------------------------------
Daniel S. Bland
President
Seattle, Washington
July 14, 2000
<PAGE>
UPGRADE INTERNATIONAL CORPORATION
1411 Fourth Avenue, Suite 629
Seattle, Washington 98101
Tel: (206) 903-3116
Fax: (206) 903-3117
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
SUMMARY TERM SHEET
The Agreement and Plan of Merger (the "Merger Agreement") by and between
Upgrade International Corporation, a Florida corporation (the "Disappearing
Co.") and its wholly-owned subsidiary, Upgrade of Washington Inc., a
Washington corporation (the "Surviving Co.") (together, the "Constituent
Corporations"), is summarized below. The sole purpose of the merger is to
effect a change in domicile of the Disappearing Co. from the State of Florida
to the State of Washington. Please see the section entitled "Proposal (1): To
Approve the Merger Agreement" for a more detailed discussion of the merger
transaction.
. Merger. The merger will be pursuant to the applicable provisions of the
laws of Washington and Florida with respect to mergers and in accordance
with the Merger Agreement.
. Effective Time of Merger. The merger will be effective when the
Surviving Co. files Articles of Merger with the Secretaries of State of
the States of Washington and Florida.
. Articles of Incorporation and Bylaws. The Articles of Incorporation and
Bylaws of the Surviving Co. will be the Articles of Incorporation and
Bylaws of the Surviving Co. following the merger.
. Directors and Officers. The directors and officers of the Disappearing
Co. will be the directors and officers of the Surviving Co. following
the merger.
. Conversion of Shares--Common Stock. Every one issued and outstanding
share of the common stock of the Disappearing Co. will be converted into
and become one new fully paid and nonassessable share of common stock,
par value $0.0001 per share, of the Surviving Co. The Surviving Co. will
honor the stock certificates of the Disappearing Co. as if they were
issued by the Surviving Co.
. Conversion of Shares--Stock Options. Every one employee option granted
and convertible into common stock of the Disappearing Co., whether or
not vested, will be converted into and become one option convertible
into common stock of the Surviving Co. The employee options will remain
subject to substantially similar provisions to that of the Disappearing
Co.'s Stock Option Plan.
. Conversion of Shares--Other Equity Instruments. Every other equity
instrument of the Disappearing Co. will be converted into a similar
equity instrument of the Surviving Co. on economic terms substantially
similar to those of the existing other equity instruments.
. Termination. The Merger Agreement may be terminated for any reason at
any time before the filing of the Articles of Merger with the
Secretaries of State of the Washington and Florida by resolution of the
Board of Directors of the Constituent Corporations.
. Amendment. The Merger Agreement may be amended, supplemented or
interpreted at any time by action taken by the Board of Directors of
both the Constituent Corporations except after the Merger Agreement has
been approved by the stockholders of either Constituent Corporation
unless by a vote or consent of the stockholders of the Constituent
Corporations in accordance with applicable law.
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DATE, TIME AND PLACE OF SPECIAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Disappearing Co. for use at the
Special Meeting of Stockholders to be held at the offices of Ogden Murphy
Wallace, P.L.L.C. located at 1601 Fifth Avenue, Suite 2100, Seattle,
Washington, 98101, on Wednesday, August 16, 2000, at 5:00 p.m., Pacific
Standard Time, and at any adjournments thereof, for the purposes set forth
herein and in the accompanying Notice. The record date for the meeting is the
close of business on July 11, 2000. All holders of record of the Disappearing
Co.'s common stock on the record date are entitled to notice of the meeting
and to vote at the meeting and any meetings held upon adjournment of that
meeting. The approximate date of mailing of this Proxy statement and the
accompanying proxy is July 14, 2000.
As the Disappearing Co. is the sole stockholder of the Surviving Co., the
approval of the merger by the stockholder of the Surviving Co. will be by
consent in lieu of a meeting of the stockholders of the Surviving Co..
PERSONS MAKING THE SOLICITATION
The Boards of Directors of the Constituent Corporations are making this
solicitation. No Director of the Boards intends to oppose the merger.
PROXY INFORMATION
A proxy form is enclosed. Whether or not you plan to attend the meeting in
person, please date, sign and return the enclosed proxy as promptly as
possible, in the postage prepaid envelope provided to insure that your shares
will be voted at the meeting. You may revoke your proxy at any time prior to
its use by filing with your secretary an instrument revoking it or a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person. Unless you instruct otherwise in the proxy, any proxy, if not revoked,
will be voted at the meeting:
(1) To approve the Merger Agreement By and Between the Disappearing Co. and
the Surviving Co.;* and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
--------
* Upon approving the merger, the Articles of Incorporation and Bylaws of the
Surviving Co. will become the Articles of Incorporation and Bylaws of the
Disappearing Co. The overall effect will be to render more difficult a
change in control of the Disappearing Co. by stockholders.
RECORD DATE AND VOTING
Record Date. As of July 11, 2000, the record date fixed by the Board of
Directors, the Disappearing Co. had 19,420,568 shares of common stock issued
and outstanding. If the stockholders of record present in person or
represented by their proxies at the meeting hold one-third of the Disappearing
Co.'s outstanding voting common stock, a quorum will exist for the transaction
of business at the meeting. Stockholders of record who abstain from voting,
including brokers holding their customers' shares who cause abstentions to be
recorded, are counted as present for quorum purposes.
Stockholder List. At least 10 days before the Special Meeting, the officer
or agent in charge of the stock transfer books for the shares of the
Disappearing Co. will make a complete list of the stockholders entitled to
vote at the Special Meeting arranged in alphabetical order, with the address
of and number of shares held by each stockholder. The list will be kept on
file at the principal office of the Disappearing Co. and will be subject to
inspection by any stockholder at any time during usual business hours. The
list will be present for inspection at the Special Meeting.
Proxies. Each stockholder entitled to vote at the Special Meeting of
Stockholders may vote by proxy executed in writing by the stockholder or by
his or her duly authorized attorney-in-fact, but no proxy can be
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voted or acted upon after six months from its date, unless the proxy provides
for a longer period. The proxy must be filed with the Secretary of the
Disappearing Co. before or at the time of the Special Meeting.
The following constitute valid means by which a stockholder may authorize
another person to act for him or her as proxy:
(1) A stockholder may execute a writing authorizing another person or
persons to act for him or her as proxy. The proxy may be limited to
specific proposals. Execution may be accomplished by the signing of the
writing by the stockholder or his or her authorized officer, director,
employee or agent or by causing his or her signature to be affixed to the
writing by any reasonable means including, but not limited to, a facsimile
signature.
(2) A stockholder may authorize another person or persons to act for him
or her as proxy by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission to the person
who will be the holder of the proxy or to a proxy solicitation firm, proxy
support service organization or like agent duly authorized by the person
who will be the holder of the proxy. The transmission must either set forth
or be submitted with information from which it can be determined that it
was authorized by the stockholder.
The cost of soliciting proxies will be borne by the Disappearing Co.. The
Disappearing Co. will reimburse brokerage firms and other persons representing
beneficial owners of shares for their reasonable out-of-pocket expenses
regarding these solicitations. Proxies may be solicited by certain of the
Disappearing Co.'s directors, officers and regular employees, without
additional compensation, personally or by telephone, electronic mail,
facsimile or telegram. The Disappearing Co. will pay no additional
compensation to its officers, directors and employees for these activities.
Date and Time of Opening and Closing of the Polls. The date and time of the
opening of the polls for the Special Meeting of the Stockholders of the
Disappearing Co. shall be 5:00 p.m. on August 16, 2000. The time of the
closing of the polls for voting shall be announced at the Special Meeting. No
ballot, proxies or votes, nor any revocations or changes to a vote, shall be
accepted after the closing of the polls unless a court of equity, upon
application by a stockholder, determines otherwise.
Vote. Votes cast by proxy or in person at the Special Meeting will be
tabulated by the Secretary of the Disappearing Co.. The Secretary will also
determine whether or not a quorum is present. Each stockholder of record of
the Disappearing Co. at the close of business on July 11, 2000 is entitled to
one vote for each share then held on each matter submitted to a vote of
stockholders. Brokers holding shares of record for their customers generally
are not entitled to vote on certain matters unless their customers give them
specific voting instructions. If the broker does not receive specific
instructions, the broker will note this on the proxy form or otherwise advise
the Disappearing Co. that it lacks voting authority.
The voting requirements for the proposal to be considered at the meeting
are:
Approval of the Merger Agreement: Proxies solicited by the Board of
Directors will, unless otherwise directed, be voted to approve the Merger
Agreement. A stockholder submitting a Proxy may vote for or against
approving the Merger Agreement or may abstain from voting his or her
shares. IF A SUBMITTED PROXY IS PROPERLY SIGNED BUT UNMARKED IN RESPECT OF
THE APPROVAL OF THE MERGER AGREEMENT, THE PROXY AGENTS NAMED IN THE PROXY
WILL VOTE ALL THE SHARES REPRESENTED THEREBY FOR THE APPROVAL OF THE MERGER
AGREEMENT.
In accordance with Florida Statutes and the Disappearing Co.'s Bylaws,
the approval of the Merger Agreement requires a quorum of one-third of the
Disappearing Co.'s issued and outstanding shares entitled to vote, and an
affirmative vote of more than 50% of the Disappearing Co.'s issued and
outstanding shares entitled to vote.
This Proxy Statement is accompanied by the proposed Merger Agreement.
Stockholders are encouraged to review the Merger Agreement in connection with
the information contained herein.
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INTEREST OF CERTAIN PERSONS IN MATTER TO BE ACTED UPON
The directors and executive officers of the Disappearing Co. do not have any
substantial interest in the matters to be acted upon other than the affect of
certain provisions in the Surviving Co.'s Articles of Incorporation that
entrench them then in their positions and ensure their continued control of
the Disappearing Co.. For further discussion of those provisions, please see
the section of this Proxy statement entitled "Proposal (1): To Approve the
Merger Agreement."
REVOCABILITY OF PROXY
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if it is coupled with an interest sufficient in law to support
an irrevocable power.
DISSENTERS' RIGHTS OF APPRAISAL
Enclosed as Appendix D to this Proxy Statement are Florida Statutes Sections
607.1301, 607.1302 and 607.1320, covering dissenters' rights available to
stockholders of a Florida corporation that is merging with another
corporation. Please carefully review the statutory provisions.
Right of Dissent. In Florida, a stockholder has the right to dissent from,
and obtain payment of the fair value of his or her shares in the event of a
consummation of a plan of merger to which the Disappearing Co. is a party if
the merger requires the approval by the stockholder and the stockholder is
entitled to vote on the merger.
Right of Dissent as to Fewer Than All Shares Held. A stockholder may dissent
as to less than all the shares registered in his or her name. In that event,
the stockholder's rights shall be determined as if the shares as to which he
or she has dissented and his or her other shares were registered in the names
of different stockholders.
Procedure for Asserting Dissenters' Rights. A stockholder who wishes to
assert dissenters' rights shall: (1) Deliver to the Disappearing Co. before
the vote is taken written notice of the stockholder's intent to demand payment
for his or her shares if the proposed action is effectuated, and (2) Not vote
his or her shares in favor of the proposed action. A proxy or vote against the
proposed action does not constitute such a notice of intent to demand payment.
Dissenter's Notice. Within 10 days after the stockholders' authorization
date, the Disappearing Co. must give written notice of such authorization or
consent or approval of the Merger Agreement, as the case may be, to each
stockholder who filed a notice of intent to demand payment for his or her
shares pursuant to or, in the case of action authorized by written consent, to
each stockholder, excepting any who voted for, or consented in writing to, the
proposed action.
Prerequisite to Demand for Payment for Shares by Dissenting
Stockholder. Within 20 days after the giving of notice to him or her, any
stockholder who elects to dissent shall file with the Disappearing Co. a
notice of such election, stating the stockholder's name and address, the
number, classes, and series of shares as to which he or she dissents, and a
demand for payment of the fair value of his or her shares. Any stockholder
failing to file such election to dissent within the period set forth shall be
bound by the terms of the proposed corporate action. Any stockholder filing an
election to dissent shall deposit his or her certificates for certificated
shares with the Disappearing Co. simultaneously with the filing of the
election to dissent. The Disappearing Co. may restrict the transfer of
uncertificated shares from the date the stockholder's election to dissent is
filed with the Disappearing Co.
Demand for Payment and Deposit of Certificates. Upon filing a notice of
election to dissent, the stockholder must thereafter be entitled only to
payment for his or her shares and shall not be entitled to vote or to exercise
any other rights of a stockholder. A notice of election may be withdrawn in
writing by the stockholder at any time before an offer is made by the
Disappearing Co. to pay for his or her shares. After such offer, no such
notice of election may be withdrawn unless the Disappearing Co. consents
thereto. However, the right of
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such stockholder to be paid the fair value of his or her shares shall cease,
and the stockholder shall be reinstated to have all his or her rights as a
stockholder as of the filing of his or her notice of election, including any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the Disappearing Co., the fair value thereof in
cash as determined by the board as of the time of such expiration or
completion, but without prejudice otherwise to any corporate proceedings that
may have been taken in the interim, if: (a) Such demand is withdrawn as
provided in this section; (b) The proposed corporate action is abandoned or
rescinded or the stockholders revoke the authority to effect such action; (c)
No demand or petition for the determination of fair value by a court has been
made or filed within the time provided in this section; or (d) A court of
competent jurisdiction determines that such stockholder is not entitled to the
relief provided by this section.
STOCKHOLDER PROPOSALS
No proposal by a stockholder may be presented for a vote at a special
meeting of stockholders unless the stockholder provides the Board of Directors
or the Secretary of the Disappearing Co., not later than the close of business
on the tenth calendar day following the date on which notice of the meeting is
first given to stockholders, with written notice of its intention to present a
proposal for action at the forthcoming special meeting of stockholders. The
notice must be personally delivered to the Disappearing Co. or sent by first
class certified mail, return receipt requested, postage prepaid and must
include the name and address of the stockholder, the number of voting
securities held by the stockholder of record, a statement that the stockholder
holds beneficially the text of the proposal to be presented for vote at the
meeting, and a statement in support of the proposal.
A stockholder proposal is a stockholder's recommendation or requirement that
the Disappearing Co. and/or its board of directors take action, which the
stockholder intends to present at a meeting of the company's stockholders. The
proposal should state as clearly as possible the course of action that the
stockholder believes the Disappearing Co. should follow and should be
accompanied by a supporting statement. The proposal, including the
accompanying supporting statement, may not exceed 500 words.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Disappearing Co.
The following table sets forth, as of June 7, 2000, the Disappearing Co.'s
outstanding common stock owned of record or beneficially by each Executive
Officer and Director and by each person who owned of record, or was known by
Upgrade to own beneficially, more than 5% of its common stock, and the
shareholdings of all Executive Officers and Directors as a group. Each person
has sole voting and investment power with respect to the shares shown. The
address for Messrs. Bland, Burke, Erickson and Zucker is c/o Upgrade
International Corporation, 1411 Fourth Avenue--Suite 629, Seattle, WA 98101.
At June 16, 2000 there were 19,420,568 shares of common stock issued and
outstanding; such number has been used in calculating the below percentages,
which include direct and indirect ownership of share capital including non-
exercised options and warrants.
<TABLE>
<CAPTION>
(3)
Amount and (4)
(2) nature of Percent
(1) Name and address beneficial of
Title of class of beneficial owner ownership class
-------------- ------------------- ---------- -------
<S> <C> <C> <C>
Common Stock............. Daniel S. Bland (1)(2) 32%
Malcolm P. Burke (1)(3) 2.0%
Ronald P. Erickson (1)(4) 3.0%
David I. Zucker (1)(5) 1.0%
Daniel Kehoe 0 0%
UltraCard, Inc.
1550 Bascom Ave.
Campbell, CA 95008
John A. French 0 0%
Centurion Technologies, Inc.
10900 N.E. 8th Street--Suite 900
Bellevue, WA 98004
Don Mann 0 0%
UltraCard, Inc.
1550 Bascom Ave.
Campbell, CA 95008
All directors and
executive officers
as a group(7)................... 7,494,100 39%
</TABLE>
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Except as noted below, all shares are held of record and each shareholder
has sole voting and investment power.
(1) Includes all options and warrants exercisable within 60 days.
(2) Comprised of 4,000,000 shares and 800,000 warrants (exercisable at $0.25
per share and expiring 1/20/2001) owned by the Bland Family Trust, as to
which Mr. Bland, as trustee, has sole voting and investment powers,
476,100 shares owned by International Internet Corporation, which Mr.
Bland controls, and 650,000 options (exercisable at $0.25 per share and
expiring 1/20/2004) owned directly by Mr. Bland, and 350,000 options
(exercisable at $2.50 per share and expiring 09/30/2004) owned directly by
Mr. Bland.
(3) Comprised of 7,500 shares and 150,000 options (exercisable at $0.25 per
share and expiring 1/20/2004) owned directly by Mr. Burke, and 200,000
options (exercisable at $2.50 per share and expiring 09/30/2004) owned
directly by Mr. Burke. In addition 10,500 shares owned by Primary Ventures
Corporation, a company controlled by Mr. Burke.
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(4) Comprised of 550,000 options (exercisable at $0.25 per share and expiring
1/20/2001) and 100,000 options (exercisable at $2.50 per share and
expiring 09/30/2004) owned directly by Mr. Erickson.(5) Comprised of
150,000 shares owned directly by Mr. Zucker and 100,000 options,
(exercisable at $2.50 per share and expiring 09/30/2004) owned directly by
Mr. Zucker.
Surviving Co.
The sole director and executive officer of the Surviving Co. is Daniel S.
Bland.
All 1,000 shares of common stock of the Surviving Co. are held by the
Disappearing Co. All 1,000 shares will be voted by the President of the
Disappearing Co. to approve the Merger Agreement.
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PROPOSAL (1): TO APPROVE THE MERGER AGREEMENT
The Merger Agreement dated as of July , 2000, will merge the Disappearing
Co. with and into the Surviving Co. The purpose of the merger is to effect a
change in domicile of the Disappearing Co. from the State of Florida to the
State of Washington. On July , 2000, the Board of Directors of the
Disappearing Co. signed resolutions advising the approval of the Merger
Agreement by the stockholders, called this Special Meeting and set a record
date of July 11, 2000, for the meeting.
CONTACT INFORMATION
The principal executive offices of the Disappearing Co. and Surviving Co.
are located at 1411 Fourth Avenue, Suite 629, Seattle, Washington, 98101,
telephone number (206) 903-3116, facsimile number (206) 903-3117.
BUSINESS CONDUCTED
Disappearing Co.
The Disappearing Co. was incorporated in Florida on February 5, 1997, to
identify, acquire and/or develop and commercialize proprietary technology,
both hardware and software, in the information technology industry.
To date, the Disappearing Co. has implemented this objective by identifying
and acquiring substantial interests in three companies, which collectively own
certain patented and patent pending technologies, know-how and personnel
capable of commercializing the technology.
The core technology that the Disappearing Co. acquired an interest in,
through the acquisition of more than 50% of UltraCard, Inc., is a system for
ultra high capacity data storage and retrieval in a credit card format. This
technology is controlled through an exclusive license agreement that UltraCard
holds from Cardtech Inc., along with certain patent applications and know-how
developed within UltraCard Inc. The Disappearing Co. currently owns more than
50% of UltraCard.
A second developing technology and know-how, that the Disappearing Co. has
acquired and is developing through a 50% interest in EforNet Corporation
("EforNet"), is a suite of software and an operating system which will reside
on the UltraCard and will be capable of providing, through the use of the
UltraCard, a means of achieving secure e-commerce transactions anonymously
over the Internet.
The third developing technology is a Web-enabled, transaction-processor
software application that represents a significant advancement in the
electronic distribution of information over the Internet. The primary market
focus of this technology is in the medical industry, developing a medical card
on a smart card platform, capable of providing a host of interrelated services
on-line including such things as pharmacology conflict analysis. This
technology is controlled and being developed by Centurion Technologies, Inc.
The Disappearing Co. currently owns a 50% equity interest in Centurion
Technologies.
In addition, the Disappearing Co. has proxies which permit it to exercise
control over its subsidiaries.
Surviving Co.
The Surviving Co. was incorporated in Washington on June 29, 2000, to enable
the Disappearing Co. to change its domicile from the State of Florida to the
State of Washington. The Surviving Co. has been inactive since its formation.
TERMS OF THE MERGER
The Merger Agreement is hereby incorporated by reference into this Proxy
Statement. A copy of the executed Merger Agreement accompanies this Proxy
Statement as Appendix A.
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The Disappearing Co. will be merged with and into the Surviving Co. pursuant
to the applicable provisions of the Washington Business Corporation Act,
Chapter 23B of the Revised Code of Washington, as amended, and Chapter 607 of
the Florida Statutes, as amended, and in accordance with the terms and
conditions of the Merger Agreement. If a majority of the shares entitled to
vote of record for each of the Constituent Corporations vote in favor of the
merger, then upon execution by the surviving entity of the Articles of Merger
and filing of the Articles of Merger with the Secretaries of State of the
States of Florida and Washington, the merger will become effective (the
"Effective Time of the merger").
The Board of Directors of the Disappearing Co. approved this transaction by
resolution on July , 2000. The Board of Directors of the Surviving Co.
approved this transaction by resolution on July , 2000.
Articles of Incorporation and Bylaws
Upon approval of the Merger Agreement, the Articles of Incorporation and
Bylaws of the Surviving Co. will become the Articles of Incorporation and
Bylaws of the surviving entity. As part of the merger transaction, the name of
the Surviving Co. will be changed from "Upgrade of Washington Inc." to
"Upgrade International Corporation." A copy of the Articles of Incorporation
and Bylaws accompany this Proxy Statement as Appendices B and C.
Officers and Directors
The executive officers and directors of the Disappearing Co. in office at
the Effective Time of the merger shall become the executive officers and
directors of the surviving entity.
Purpose of Merger
The main purpose of the merger is to enable the Disappearing Co. to change
its domicile from the State of Florida to the State of Washington.
Conversion of Shares
Every one issued and outstanding share of the common stock of the
Disappearing Co. will be converted into and become one new fully paid and
nonassessable share of common stock, par value $0.0001 per share, of the
Surviving Co. The Surviving Co. will honor the stock certificates of the
Disappearing Co. as if they were issued by the Surviving Co. There will be no
need to exchange your current Disappearing Co. share certificate following the
merger.
Every one employee option granted and convertible into common stock of the
Disappearing Co., whether or not vested, will be converted into and become one
option convertible into common stock of the Surviving Co. The employee options
will remain subject to the Disappearing Co.'s Stock Option Plan.
Every other equity instrument of the Disappearing Co. will be converted into
a similar equity instrument of the Surviving Co. on economic terms
substantially similar to those of the existing other equity instruments.
Termination of the Merger
The Merger Agreement may be terminated for any reason at any time before the
filing of the Articles of Merger with the Secretaries of State of the States
of Florida and Washington (whether before or after approval by the
stockholders of the Disappearing Co.) by resolution of the Board of Directors
of both of the Constituent Corporations.
Amendments to the Merger Agreement
The Merger Agreement may, to the extent permitted by law, be amended,
supplemented or interpreted at any time by action taken by the Boards of
Directors of the Constituent Corporations. However, this Merger
9
<PAGE>
Agreement may not be amended or supplemented after having been approved by the
stockholders of the Constituent Corporations except by a vote or consent of
stockholders of the Constituent Corporations in accordance with applicable
law.
Effect of the Merger
The Disappearing Co. will cease to exist and the surviving entity will be
domiciled in Washington.
COMPARISON OF DISAPPEARING CO.'S AND SURVIVING CO.'S ARTICLES OF INCORPORATION
As part of the merger, the Articles of Amendment of the Surviving Co. will
completely supersede the existing Articles of Incorporation of the
Disappearing Co..
The following is a summary comparison of the major differences between the
current Articles of Incorporation of the Disappearing Co. and the Articles of
Incorporation of the Surviving Co. (a copy of which is attached to this Proxy
Statement as Appendix A). Where relevant, a brief discussion is included of
the purpose of the change and the effect, both positive and negative, of the
change on stockholders and management of the Disappearing Co..
APPROVING THE MERGER AGREEMENT WILL REPLACE THE DISAPPEARING CO.'S ARTICLES
OF INCORPORATION WITH THOSE OF THE SURVIVING CO.. THE OVERALL EFFECT WILL BE
TO RENDER MORE DIFFICULT THE ACCOMPLISHMENT OF MERGERS OR THE ASSUMPTION OF
CONTROL BY A PRINCIPAL STOCKHOLDER, AND THUS TO MAKE MORE DIFFICULT THE
REMOVAL OF MANAGEMENT.
<TABLE>
<CAPTION>
Subject Matter of Articles of Incorporation Articles of Incorporation
Change of Disappearing Co. of Surviving Co.
----------------- ------------------------- -------------------------
<S> <C> <C>
1. Authorized capital Article IV. 50,000,000 Article II,
shares of common stock Section 2.1. 120,000,000 total
having par value of $0.001 authorized shares, consisting
per share of 100,000,000 shares of
common stock having par value
of $0.0001 per share and
40,000,000 shares of preferred
stock having a par value of
$0.001 per share
Purpose: To enable the Board to establish classes and series of preferred
stock with separate rights and preferences to that of common stock.
Effect: Authorizing the preferred stock provides the Board with a mechanism
for establishing a separate class of stock with superior rights to the common
stock of the corporation.
2. Rights and No authorized preferred Article II, Section 2.2. Board
preferences of the stock. of Directors granted the
preferred stock authority to issue preferred
stock and to fix and determine
and to amend the voting
powers, designations,
preferences, limitations,
restrictions and relative
rights of the shares,
including such matters as
dividends, redemption,
liquidation, conversion and
voting
</TABLE>
Purpose: To enable the Board to determine the rights, preferences,
privileges and limitations associated with preferred stock without stockholder
approval.
10
<PAGE>
<TABLE>
<CAPTION>
Subject
Matter
of Articles of Incorporation Articles of Incorporation
Change of Disappearing Co. of Surviving Co.
------- ------------------------- -------------------------
<S> <C> <C>
Effect: This is an anti-takeover measure. The Board has exclusive discretion
to issue preferred stock with rights that may trump those of common stock. The
effect may be to dilute the stock ownership of holders of common stock and
thereby reduce their voting power and reduce their rights to the net assets of
the corporation upon dissolution. Blank-check preferred stock can delay or
hinder a change in control of the Board and management.
3. Cumulative voting Not specified. Article V. The right to
cumulate votes in the election
of directors shall not exist
with respect to shares of
stock of the corporation.
Purpose: To eliminate the ability of stockholders to cumulate votes when
electing directors.
Effect: The absence of cumulative voting means that the holders of more than
50% of outstanding shares entitled to vote, voting for election of directors,
can elect all of the directors to be elected, if they so choose, and, in such
event, the holders of the remaining shares will not be able to elect any of
the corporation's directors.
4. Number of directors Article VI. Not less than 1 Article VI, Section 6.1. No
with the number subject to more than 9 nor less than 1.
bylaws. Bylaws--Article II,
Section 5. A minimum of 1
but no more than 7.
</TABLE>
Purpose: To enable the Board to be comprised of between 1 and 9 directors.
Effect: None.
<TABLE>
<S> <C> <C>
5. Term of office of Bylaws-- Article VI, Section
directors Article II, Section 6. The 6.2. Directors shall be
directors shall be elected divided into three classes,
at the annual meeting of the with each class to be as
stockholders. nearly equal in number as
possible, as specified by
resolution of the Board or,
if the directors in office
constitute fewer than a
quorum of the Board, by
affirmative vote of a
majority of the directors in
office. Term of office of
directors is as follows:
First Class--expires at
first annual meeting of
stockholders.
Second Class--expires at
second annual meeting of
stockholders.
Third Class--expires at
third annual meeting of
stockholders.
Thereafter, the directors by
class shall hold staggered
</TABLE> terms of three years.
Purpose: To lengthen the term of each director from 1 to 3 years and to
stagger the terms of the directors to ensure the continuity of the Board and
management.
11
<PAGE>
<TABLE>
<CAPTION>
Subject
Matter
of Articles of Incorporation Articles of Incorporation
Change of Disappearing Co. of Surviving Co.
------- ------------------------- -------------------------
<S> <C> <C>
Effect: A staggered board affects every election of directors. Such a system
of electing directors makes it more difficult for stockholders to change the
majority of directors even when the only reason for the change may be the
performance of the present directors. Changing the majority of directors under
the staggered system requires three separate annual meetings, while under the
current system of electing directors only one annual meeting is necessary to
change all of the of directors. As an anti-takeover measure, the effect is to
prevent insurgent stockholders from immediately seizing control of the Board,
either through stock acquisitions or a proxy contest.
6. Removal of directors Bylaws--Article II, Section Article VI, Section
8. At a stockholders meeting 6.3/Bylaws--Section
called expressly for that 3.13. Stockholders may
purpose, any director or the remove one or more directors
entire Board of Directors with or without cause, but
may be removed, with or only at a special meeting
without cause, by a vote of called for the purpose of
the holders of a majority of removing the director(s) if
the shares then entitled to a majority of the shares
vote at an election of eligible to vote cast votes
directors. in favor of removal.
</TABLE>
Purpose: To place limitations on removal of directors by stockholders.
Effect: No change. In combination with the prohibition against stockholders
calling a special meeting, this provision effectively limits the removal of
directors to an annual meeting or board action. This represents an additional
measure to deter a change in control of the corporation.
<TABLE>
<S> <C> <C>
7. Vacancies on Board of Bylaws--Article II, Section Article VI, Section 6.4. The
Directors 7. Vacancies in the Board Board may fill the vacancy,
may be filled by a majority or, if the directors in
of the remaining directors, office constitute fewer than
though less than a quorum. a quorum, they may fill the
vacancy by the affirmative
vote of a majority of all
directors in office. The
stockholders may fill a
vacancy only if there are no
directors in office.
</TABLE>
Purpose: No change.
Effect: None.
12
<PAGE>
<TABLE>
<CAPTION>
Subject Matter of Articles of Incorporation Articles of Incorporation
Change of Disappearing Co. of Surviving Co.
----------------- ------------------------- -------------------------
<S> <C> <C>
8. Bylaws Article VIII. Bylaws shall Article VIII. Board has
not be adopted, modified, power to adopt, amend or
amended or repealed by the repeal the Bylaws of the
stockholders except upon the corporation, subject to the
affirmative vote of a simple power of the stockholders to
majority of the holders of amend or repeal the Bylaws.
all the issued and The stockholders also have
outstanding shares of the the power to amend or repeal
corporation entitled to Bylaws of the corporation
vote. and to adopt new Bylaws.
Bylaws--Article VIII. Bylaws
may be altered, amended or
repealed, and new Bylaws may
be adopted by a majority
vote of the directors of the
corporation.
Purpose: No change.
Effect: None.
9. Consent in Lieu of Bylaws--Article I, Section Article IX, Section 9.1. Any
Meeting of 9. Any action to be taken at action required or permitted
Stockholders a meeting of the to be taken at a
stockholders, may be taken stockholders meeting may be
without a meeting, without taken without a meeting,
prior notice and without a without prior notice and
vote, if a consent in without a vote, if a consent
writing, setting forth the or consents in writing,
action so taken, is signed setting forth the action
by the holders of taken, are signed by the
outstanding stock having not holders of outstanding stock
less than the minimum number having not less than the
of votes that would be minimum number of votes that
necessary to authorize or would be necessary to
take such action at a authorize or take the action
meeting at which all shares at a meeting at which all
entitled to vote thereon shares entitled to vote were
were present and voted. present and voted.
</TABLE>
Purpose: No change.
Effect: None.
<TABLE>
<S> <C> <C>
10. Number of votes Article IX, Section Article IX, Section 9.2. The
necessary to approve 9.4. Acts of stockholders minimum number of shares
actions require the approval of required by law to approve
holders of 50.01% of the the action; pursuant to RCW
outstanding votes of 23B.07.270, 50.01% of the
stockholders. shares present at the
meeting must vote "for" the
action.
</TABLE>
Purpose: No change.
Effect: None.
13
<PAGE>
<TABLE>
<CAPTION>
Subject Matter of Articles of Incorporation Articles of Incorporation
Change of Disappearing Co. of Surviving Co.
----------------- ------------------------- -------------------------
<S> <C> <C>
11. Special meetings Bylaws--Article I, Section Article IX, Section
2. Special meetings of the 9.3. Except as may be
stockholders shall be held authorized by the Board upon
when directed by the issuance of preferred stock,
President or Board, or when special meetings of the
requested in writing by the stockholders of the
holders of not less than 10% corporation for any purpose
of all the shares entitled may be called at any time by
to vote at the meeting. the Board and not by any
other person(s).
Purpose: Limits the authority to call a special meeting to the Board of
Directors.
Effect: This is an anti-takeover measure. The change ensures that
stockholders will not be authorized to call a special meeting. The effect is
to limit the ability of one or more stockholders from bringing matters before
the stockholders that may be contrary to the objectives of the Board. This
limitation, in conjunction with the provisions on staggered elections of
directors and removal of directors, prevents stockholders from effecting a
change in control.
12. Quorum for Meetings Article IX, Section Article IX, Section
of Stockholders 9.3. Holders of shares 9.4. Except as required
entitled to one-third of the elsewhere in the Articles of
votes at a meeting of Incorporation or under law,
stockholders constitutes a one-third of the votes
quorum. entitled to be cast on a
matter by the holders of
shares that are entitled to
vote and be counted on the
matter shall constitute a
quorum of such shares at a
meeting of stockholders.
</TABLE>
Purpose: No change.
Effect: None.
The Board of Directors recommends you vote FOR the approval of the Merger
Agreement.
14
<PAGE>
OTHER MATTERS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Disappearing Co.'s and Surviving Co.'s directors and officers will be
indemnified according to their respective Articles of Incorporation and Bylaws
and according to applicable state law. However, such indemnification shall not
apply to acts of intentional misconduct, a knowing violation of the law or any
transaction where an officer or director personally received a benefit in
money, property, or services to which to the officer or director was not
legally entitled.
Insofar as indemnification for liabilities arising under the Securities
Exchange Act of 1933 may be permitted to directors, officers and controlling
persons of the Disappearing Co. and Surviving Co. pursuant to the foregoing
provisions, or otherwise, the Disappearing Co. and Surviving Co. have been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities
Exchange Act of 1933 and is, therefore, unenforceable.
ADDITIONAL INFORMATION
Stockholders are hereby offered the opportunity to ask questions of and
receive answers from the Disappearing Co. concerning the terms and conditions
of the offering and to obtain such additional information as the stockholder
and/or her or his representative may deem necessary to formulate a decision.
For example, an investor may wish to review the Disappearing Co.'s or
Surviving Co.'s Articles of Incorporation and Bylaws, which will govern the
Disappearing Co.'s or Surviving Co.'s powers and actions. To obtain any such
information, the stockholder or authorized representative should contact the
Disappearing Co. and the Surviving Co. at (206) 903-3116. All such additional
information, however, must be in writing and identified as such by the
Disappearing Co. No information other than that contained in the Proxy
Statement and Offering Memorandum and the accompanying exhibits may be relied
upon in connection with this merger.
A copy of the Merger Agreement accompanies this Proxy Statement as Appendix
A. A copy of the Articles of Incorporation and Bylaws of the Surviving Co. are
enclosed herewith as Appendix B and C.
The Board of Directors does not intend to bring any matters before the
Meeting other than as stated in this Proxy Statement and is not aware that any
other matters will be presented for action at the Meeting. Should any other
matters be properly presented, the person named in the enclosed form of Proxy
will vote the Proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the Proxy.
By Order of the Board of Directors,
/s/ Daniel S. Bland
-------------------------------------
Daniel S. Bland
President
July 14, 2000
15
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UPGRADE INTERNATIONAL CORPORATION, A FLORIDA CORPORATION
AND
UPGRADE OF WASHINGTON INC., A WASHINGTON CORPORATION
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is entered into as of the
day of , 2000, between Upgrade International Corporation, a
Florida corporation (hereinafter, "Disappearing Corporation"), located at 1411
Fourth Avenue, Suite 629, Seattle, Washington 98101, and Upgrade of Washington
Inc., a Washington corporation (hereinafter, "Surviving Corporation"), located
at 1411 Fourth Avenue, Suite 629, Seattle, Washington 98101 (collectively, the
"Constituent Corporations").
RECITALS
A. The Disappearing Corporation is a corporation organized and existing
under the laws of the State of Florida. The authorized capital stock of the
Disappearing Corporation consists of 50,000,000 shares of common stock having
a par value of $0.001 per share, of which 19,420,568 shares are duly issued
and outstanding as of June 16, 2000.
B. The Surviving Corporation is a corporation organized and existing under
the laws of the State of Washington. The authorized capital stock of the
Surviving Corporation consists of 100,000,000 shares of common stock having a
par value of $0.0001 per share, of which one thousand (1,000) shares are duly
issued and outstanding, and 20,000,000 shares of Preferred Stock having a par
value of $0.0001 per share of which no (0) shares are duly issued and
outstanding.
C. The Disappearing Corporation and the Surviving Corporation have deemed it
advisable and in the best interests of the Disappearing Corporation and the
Surviving Corporation, respectively, and their respective shareholders, that
the Disappearing Corporation be merged with and into the Surviving Corporation
(the "Merger") as authorized by the laws of the States of Washington and
Florida.
AGREEMENT
In consideration of the foregoing recitals, the covenants and conditions set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Merger; Effectiveness. The Disappearing Corporation shall be merged with
and into the Surviving Corporation pursuant to the applicable provisions of
the Washington Business Corporation Act, Chapter 23B of the Revised Code of
Washington, as amended, and Chapter 607 of the Florida Statutes, as amended,
and in accordance with the terms and conditions of this Agreement. Upon the
execution by the Surviving Corporation of Articles of Merger incorporating
this Agreement and the filing of such Articles of Merger with the Secretaries
of State of the States of Washington and Florida, the Merger shall become
effective (the "Effective Time of the Merger").
2. Articles of Incorporation. The Articles of Incorporation of the Surviving
Corporation shall, at the Effective Time of the Merger, be amended as follows:
1
<PAGE>
Delete ARTICLE I and replace it with the following:
ARTICLE I
The name of the corporation is "Upgrade International Corporation" and, as
so amended, shall be the Articles of Incorporation of the Surviving
Corporation until the same shall be further altered, amended or repealed as
therein provided.
3. Bylaws. The Bylaws of the Surviving Corporation in effect at the
Effective Time of the Merger shall, at the Effective Time of the Merger, be
and remain the Bylaws of the Surviving Corporation until the same shall be
further altered, amended or repealed as therein provided.
4. Directors and Officers. The directors and officers of the Disappearing
Corporation in office at the Effective Time of the Merger shall, at the
Effective Time of the Merger, become the directors and officers of the
Surviving Corporation and shall hold such offices in accordance with and
subject to the Certificate of Incorporation and Bylaws of the Surviving
Corporation, as in effect immediately after the Effective Time of the Merger.
5. Conversion of Shares.
(a) Common Stock. At the Effective Time of the Merger, by virtue of the
Merger and without any action on the part of the holder of any shares of
stock of the Disappearing Corporation or of the Surviving Corporation,
every one (1) issued and outstanding share of the common stock of the
Disappearing Corporation held as of the record date shall be converted into
and become one (1) new fully paid and nonassessable share of common stock,
par value $.0001 per share, of the Surviving Corporation. The Surviving
Corporation will honor the stock certificates of the Disappearing
Corporation as if they were issued by the Surviving Corporation.
(b) Conversion of Other Equity Instruments. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
holder of any employee stock option of the Disappearing Corporation, every
one (1) employee option granted and convertible into common stock of the
Disappearing Corporation, whether or not vested, shall be converted into
and become one (1) option convertible into common stock of the Surviving
Corporation. The employee options of the Surviving Corporation shall be
issued pursuant to its Stock Option Plan on economic terms substantially
similar to those of the existing options in the Disappearing Corporation.
At the Effective Time of the Merger, every other equity instrument of the
Disappearing Corporation not addressed elsewhere in this Agreement shall be
converted into a similar equity instrument in the Surviving Parent
Corporation on economic terms substantially similar to those of the
existing other equity instruments in the Disappearing Corporation.
6. Rights, Duties, Powers, Liabilities, Etc. At the Effective Time of the
Merger, the separate existence of the Disappearing Corporation shall cease,
and the Disappearing Corporation shall be merged in accordance with the
provisions of this Agreement with and into the Surviving Corporation, which
shall possess all the properties and assets, and all the rights, privileges,
powers, immunities and franchises, of whatever nature and description, and
shall be subject to all restrictions, disabilities, duties and liabilities of
each of the Constituent Corporations; and all such things shall be taken and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate or other property, or
any interest therein, vested by deed or otherwise in either of the Constituent
Corporations, shall be vested in the Surviving Corporation without reversion
or impairment. Any claim existing or action or proceeding, whether civil,
criminal or administrative, pending by or against either Constituent
Corporation, may be prosecuted to judgment or decree as if the Merger had not
taken place, and the Surviving Corporation may be substituted in any such
action or proceeding.
7. Implementation. Each of the Constituent Corporations shall take, or cause
to be taken, all action or do, or cause to be done, all things necessary,
proper or advisable under the laws of the States of Washington and Florida to
consummate and make effective the Merger.
2
<PAGE>
8. Termination. This Agreement may be terminated for any reason at any time
before the filing of Articles of Merger with the Secretaries of State of the
States of Washington and Florida (whether before or after approval by the
shareholders of the Constituent Corporations, or either of them) by resolution
of the Board of Directors of both of the Constituent Corporations.
9. Amendment. This Agreement may, to the extent permitted by law, be
amended, supplemented or interpreted at any time by action taken by the Board
of Directors of both of the Constituent Corporations; Provided, however, that
this Agreement may not be amended or supplemented after having been approved
by the shareholders of either Constituent Corporation except by a vote or
consent of shareholders both Constituent Corporations in accordance with
applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
AGREEMENT AND PLAN OF MERGER as of the date first set forth above.
Upgrade International Corporation, Upgrade of Washington Inc.,
a Florida Corporation a Washington Corporation
By __________________________________ By __________________________________
Name: _______________________________ Name: ____________________________
Title: ______________________________ Title: ___________________________
3
<PAGE>
ADOPTION OF THE AGREEMENT BY SHAREHOLDERS OF
RECORD OF THE CONSTITUENT CORPORATIONS:
The Agreement and Plan of Merger was approved at a Special Meeting of the
shareholders of the Disappearing Corporation held on , 2000 at
.m. by shareholders of record holding shares of voting
stock, which constitutes % of the Disappearing Corporation's issued and
outstanding shares.
Upgrade International Corporation, a Florida corporation
By: _________________________________ _____________________________________
Its: Secretary (Date)
The Agreement and Plan of Merger was approved at a Special Meeting of the
shareholders of the Surviving Corporation held on , 2000
at .m. by shareholders of record holding 1,000 shares of voting stock,
which constitutes 100% of the Surviving Corporation's issued and outstanding
shares.
Upgrade of Washington Inc., a Washington corporation
By: _________________________________ _____________________________________
Its: Secretary (Date)
4
<PAGE>
APPENDIX B
ARTICLES OF INCORPORATION OF
UPGRADE OF WASHINGTON INC.
The undersigned, for the purpose of forming a corporation under the
Washington Business Corporation Act, hereby adopts the following Articles of
Incorporation.
ARTICLE I
The name of the corporation is "Upgrade of Washington Inc.".
ARTICLE II
2.1. Authorized Capital
The total number of shares that this corporation is authorized to issue is
120,000,000, consisting of 100,000,000 shares of Common Stock having a par
value of $0.0001 per share and 20,000,000 shares of Preferred Stock having a
par value of $0.0001 per share. The Common Stock is subject to the rights and
preferences of the Preferred Stock as set forth below.
2.2. Issuance of Preferred Stock by Class and in Series
The Preferred Stock may be issued from time to time in one or more classes
and one or more series within such classes in any manner permitted by law and
the provisions of these Articles of Incorporation, as determined from time to
time by the Board of Directors and stated in the resolution or resolutions
providing for its issuance, prior to the issuance of any shares. The Board of
Directors shall have the authority to fix and determine and to amend the
designation, preferences, limitations and relative rights of the shares
(including, without limitation, such matters as dividends, redemption,
liquidation, conversion and voting) of any class or series that is wholly
unissued or to be established. Unless otherwise specifically provided in the
resolution establishing any class or series, the Board of Directors shall
further have the authority, after the issuance of shares of a class or series
whose number it has designated, to amend the resolution establishing such
class or series to decrease the number of shares of that class or series, but
not below the number of shares of such class or series then outstanding.
ARTICLE III
The purpose of this corporation is to engage in any business, trade or
activity that may lawfully be conducted by a corporation organized under the
Washington Business Corporation Act and to engage in any and all such
activities as are incidental or conducive to the attainment of the foregoing
purpose or purposes.
ARTICLE IV
No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE V
The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of this corporation.
A-1
<PAGE>
ARTICLE VI
6.1. Number of Directors
The Board of Directors shall be composed of not less than one nor more than
six Directors. Except with respect to the initial Director, the specific
number of Directors shall be set by resolution of the Board of Directors or,
if the Directors in office constitute fewer than a quorum of the Board of
Directors, by the affirmative vote of a majority of all the Directors in
office. The number of Directors of this corporation may be increased or
decreased from time to time in the manner provided herein, but no decrease in
the number of Directors shall have the effect of shortening the term of any
incumbent Director.
6.2. Classification of Directors
The Directors shall be divided into three classes, with each class to be as
nearly equal in number as possible, as specified by resolution of the Board of
Directors or, if the Directors in office constitute fewer than a quorum of the
Board of Directors, by the affirmative vote of a majority of all the Directors
in office. The term of office of Directors of the first class shall expire at
the first annual meeting of shareholders after their election. The term of
office of Directors of the second class shall expire at the second annual
meeting after their election. The term of office of Directors of the third
class shall expire at the third annual meeting after their election. At each
annual meeting after such classification, a number of Directors equal to the
number of the class whose term expires at the time of such meeting shall be
elected to hold office until the third succeeding annual meeting. Absent his
or her death, resignation or removal, a Director shall continue to serve
despite the expiration of the Director's term until his or her successor shall
have been elected and qualified or until there is a decrease in the number of
Directors.
6.3. Removal of Directors
The shareholders may remove one or more Directors with or without cause, but
only at a special meeting called for the purpose of removing the Director or
Directors, and the meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the Director or Directors.
6.4. Vacancies on Board of Directors
If a vacancy occurs on the Board of Directors, including a vacancy resulting
from an increase in the number of Directors, the Board of Directors may fill
the vacancy, or, if the Directors in office constitute fewer than a quorum of
the Board of Directors, they may fill the vacancy by the affirmative vote of a
majority of all the Directors in office. The shareholders may fill a vacancy
only if there are no Directors in office.
6.5. Initial Board of Directors
The initial Board of Directors shall consist of one Director, who shall be
in the first class of Directors, and the name and address of the person who
shall serve as such Director until the first annual meeting of shareholders or
until his successor is elected and qualified is:
<TABLE>
<S> <C>
Daniel Bland Upgrade of Washington Inc.
1411 Fourth Avenue, Suite 629
Seattle, WA 98101
</TABLE>
ARTICLE VII
This corporation reserves the right to amend or repeal any of the provisions
contained in these Articles of Incorporation in any manner now or hereafter
permitted by the Washington Business Corporation Act, and the rights of the
shareholders of this corporation are granted subject to this reservation.
A-2
<PAGE>
ARTICLE VIII
The Board of Directors shall have the power to adopt, amend or repeal the
Bylaws of this corporation, subject to the power of the shareholders to amend
or repeal such Bylaws. The shareholders shall also have the power to amend or
repeal the Bylaws of this corporation and to adopt new Bylaws.
ARTICLE IX
9.1. Shareholder Actions
Any action required or permitted to be taken at a shareholders meeting may
be taken without a meeting or a vote if either:
(a) the action is taken by written consent of all shareholders entitled
to vote on the action; or
(b) so long as this corporation is not a public company, the action is
taken by written consent of shareholders holding of record, or otherwise
entitled to vote, in the aggregate 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 on the action were present and voted.
To the extent that the Washington Business Corporation Act requires prior
notice of any such action to be given to nonconsenting or nonvoting
shareholders, such notice shall be made prior to the date on which the action
becomes effective, as required by the Washington Business Corporation Act. The
form of the notice shall be sufficient to apprise the nonconsenting or
nonvoting shareholder of the nature of the action to be effected, in a manner
approved by the Directors of this corporation or by the committee or officers
to whom the Board of Directors has delegated that responsibility.
9.2. Number of Votes Necessary to Approve Actions
Whenever the Washington Business Corporation Act permits a corporation's
articles of incorporation to specify that a lesser number of shares than would
otherwise be required shall suffice to approve an action by shareholders,
these Articles of Incorporation hereby specify that the number of shares
required to approve such an action shall be such lesser number.
9.3. Special Meetings of Shareholders
So long as this corporation is a public company, special meetings of the
shareholders of the corporation for any purpose may be called at any time by
the Board of Directors or, if the Directors in office constitute fewer than a
quorum of the Board of Directors, by the affirmative vote of a majority of all
the Directors in office, but such special meetings may not be called by any
other person or persons.
9.4. Quorum for Meetings of Shareholders.
Except with respect to any greater requirement contained in these Articles
of Incorporation or the Washington Business Corporation Act, one-third of the
votes entitled to be cast on a matter by the holders of shares that, pursuant
to the Articles of Incorporation or the Washington Business Corporation Act,
are entitled to vote and be counted collectively upon such matter, represented
in person or by proxy, shall constitute a quorum of such shares at a meeting
of shareholders.
A-3
<PAGE>
ARTICLE X
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation
or elimination of the liability of Directors, a Director of this corporation
shall not be liable to this corporation or its shareholders for monetary
damages for conduct as a Director. Any amendments to or repeal of this Article
X shall not adversely affect any right or protection of a Director of this
corporation for or with respect to any acts or omissions of such Director
occurring prior to such amendment or repeal.
ARTICLE XI
11.1. Indemnification.
The corporation shall indemnify its directors to the full extent permitted
by the Washington Business Corporation Act now or hereafter in force. However,
such indemnity shall not apply on account of: (a) acts or omissions of the
director finally adjudged to be intentional misconduct or a knowing violation
of law; (b) conduct of the director finally adjudged to be in violation of RCW
23B.08.310; or (c) any transaction with respect to which it was finally
adjudged that such director personally received a benefit in money, property,
or services to which the director was not legally entitled. The corporation
shall advance expenses for such persons pursuant to the terms set forth in the
Bylaws, or in a separate Board resolution or contract.
11.2. Authorization.
The Board of Directors may take such action as is necessary to carry out
these indemnification and expense advancement provisions. It is expressly
empowered to adopt, approve, and amend from time to time such Bylaws,
resolutions, contracts, or further indemnification and expense advancement
arrangements as may be permitted by law, implementing these provisions. Such
Bylaws, resolutions, contracts or further arrangements shall include but not
be limited to implementing the manner in which determinations as to any
indemnity or advancement of expenses shall be made.
11.3. Effect of Amendment.
No amendment or repeal of this Article shall apply to or have any effect on
any right to indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
ARTICLE XII
The name and address of the incorporator is:
<TABLE>
<S> <C>
Vicki E. Orrico Ogden Murphy Wallace, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101
</TABLE>
The incorporator's authority on behalf of this corporation is limited to
forming it by the filing of these Articles of Incorporation, and the
incorporator has no further power or authority on behalf of the corporation,
express or implied, by virtue of being the incorporator.
ARTICLE XIII
The street address of the initial registered office of the corporation is
Ogden Murphy Wallace, P.L.L.C., 1601 Fifth Ave., Suite 2100, Seattle,
Washington 98101-1686. The name of its initial registered agent at that
address is Vicki E. Orrico.
A-4
<PAGE>
ARTICLE XIV
These Articles of Incorporation shall become effective "upon filing."
IN WITNESS WHEREOF, the incorporator has signed these Articles of
Incorporation this 28th day of June 2000.
/s/ Vicki E. Orrico
-------------------------------------
Vicki E. Orrico
Incorporator
A-5
<PAGE>
CONSENT TO APPOINTMENT AS REGISTERED AGENT
The undersigned, having been appointed as registered agent of Upgrade of
Washington Inc., does hereby consent to such appointment and agrees to serve
as registered agent for the corporation.
DATED this 28th day of June 2000.
OGDEN MURPHY WALLACE, P.L.L.C.
/s/ Vicki E. Orrico
-------------------------------------
Vicki E. Orrico, Registered Agent
Address of Registered Agent:
Ogden Murphy Wallace, P.L.L.C.
1601 Fifth Ave., Suite 2100
Seattle, WA 98101-1686
6
<PAGE>
APPENDIX C
BYLAWS
OF
UPGRADE OF WASHINGTON INC.
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
SECTION 1--OFFICES......................................................... B-3
SECTION 2--STOCKHOLDERS.................................................... B-3
2.1 Annual Meeting....................................................... B-3
2.2 Special Meetings..................................................... B-3
2.3 Meetings by Communications Equipment................................. B-3
2.4 Date, Time and Place of Meeting...................................... B-3
2.5 Notice of Meeting.................................................... B-3
2.6 Waiver of Notice..................................................... B-4
2.7 Fixing of Record Date for Determining Stockholders................... B-4
2.8 Voting Record........................................................ B-4
2.9 Quorum............................................................... B-4
2.10 Manner of Acting..................................................... B-5
2.11 Proxies.............................................................. B-5
2.12 Voting Shares........................................................ B-5
2.13 Voting for Directors................................................. B-5
2.14 Action by Stockholders Without a Meeting............................. B-5
SECTION 3--BOARD OF DIRECTORS.............................................. B-6
3.1 General Powers....................................................... B-6
3.2 Number, Classification and Tenure.................................... B-6
3.3 Annual and Regular Meetings.......................................... B-6
3.4 Special Meetings..................................................... B-6
3.5 Meetings by Communications Equipment................................. B-6
3.6 Notice of Special Meetings........................................... B-6
3.6.1 Personal Delivery.............................................. B-7
3.6.2 Delivery by Mail............................................... B-7
3.6.3 Delivery by Private Carrier.................................... B-7
3.6.4 Facsimile Notice............................................... B-7
3.6.5 Delivery by Telegraph.......................................... B-7
3.6.6 Oral Notice.................................................... B-7
3.7 Waiver of Notice..................................................... B-7
3.7.1 In Writing..................................................... B-7
3.7.2 By Attendance.................................................. B-7
3.8 Quorum............................................................... B-7
3.9 Manner of Acting..................................................... B-8
3.10 Presumption of Assent................................................ B-8
3.11 Action by Board or Committees Without a Meeting...................... B-8
3.12 Resignation.......................................................... B-8
3.13 Removal.............................................................. B-8
3.14 Vacancies............................................................ B-8
3.15 Executive and Other Committees....................................... B-9
3.15.1 Creation of Committees........................................ B-9
3.15.2 Authority of Committees....................................... B-9
3.15.3 Minutes of Meetings........................................... B-9
</TABLE>
B-1
<PAGE>
TABLE OF CONTENTS--(Continued)
<TABLE>
<C> <S> <C>
3.15.4 Removal..................................................... B-9
3.16 Compensation....................................................... B-9
SECTION 4--OFFICERS....................................................... B-9
4.1 Appointment and Term............................................... B-9
4.2 Resignation........................................................ B-10
4.3 Removal............................................................ B-10
4.4 Contract Rights of Officers........................................ B-10
4.5 Chairman of the Board.............................................. B-10
4.6 President.......................................................... B-10
4.7 Vice President..................................................... B-10
4.8 Secretary.......................................................... B-10
4.9 Treasurer.......................................................... B-10
4.10 Salaries........................................................... B-11
SECTION 5--CONTRACTS, LOANS, CHECKS AND DEPOSITS.......................... B-11
5.1 Contracts.......................................................... B-11
5.2 Loans to the Corporation........................................... B-11
5.3 Checks, Drafts, Etc................................................ B-11
5.4 Deposits........................................................... B-11
SECTION 6--CERTIFICATES FOR SHARES AND THEIR TRANSFER..................... B-11
6.1 Issuance of Shares................................................. B-11
6.2 Certificates for Shares............................................ B-11
6.3 Stock Records...................................................... B-12
6.4 Restriction on Transfer............................................ B-12
6.5 Transfer of Shares................................................. B-12
6.6 Lost or Destroyed Certificates..................................... B-12
SECTION 7--BOOKS AND RECORDS.............................................. B-12
SECTION 8--ACCOUNTING YEAR................................................ B-13
SECTION 9--SEAL........................................................... B-13
SECTION 10--INDEMNIFICATION............................................... B-13
10.1 Right to Indemnification........................................... B-13
10.2 Restrictions on Indemnification.................................... B-14
10.3 Advancement of Expenses............................................ B-14
10.4 Right of Indemnitee to Bring Suit.................................. B-14
10.5 Nonexclusivity of Rights........................................... B-14
10.6 Insurance, Contracts and Funding................................... B-14
10.7 Identification of Employees and Agents of the Corporation.......... B-15
10.8 Persons Serving Other Entities..................................... B-15
SECTION 11--LIMITATION OF LIABILITY....................................... B-15
SECTION 12--AMENDMENTS.................................................... B-15
</TABLE>
B-2
<PAGE>
SECTION 1. OFFICES
The principal office of the corporation shall be located at the principal
place of business or such other place as the Board of Directors ("Board") may
designate. The corporation may have such other offices as the Board may
designate or as the business of the corporation may require.
SECTION 2. STOCKHOLDERS
2.1 Annual Meeting
The annual meeting of the stockholders to elect Directors and transact such
other business as may properly come before the meeting shall be held on a date
not more than 180 days after the end of the corporation's fiscal year, such
date and time to be determined by the Board.
2.2 Special Meetings
Special meetings of the stockholders of the corporation for any purpose may
be called at any time by the Board of Directors or, if the Directors in office
constitute fewer than a quorum of the Board of Directors, by the affirmative
vote of a majority of all the Directors in office, but such special meetings
may not be called by any other person or persons.
2.3 Meetings by Communications Equipment
Stockholders may participate in any meeting of the stockholders by any means
of communication by which all persons participating in the meeting can hear
each other during the meeting. Participation by such means shall constitute
presence in person at a meeting.
2.4 Date, Time and Place of Meeting
Except as otherwise provided in these Bylaws, all meetings of stockholders,
including those held pursuant to demand by stockholders, shall be held on such
date and at such time and place designated by or at the direction of the
Board.
2.5 Notice of Meeting
Written notice stating the place, day and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called shall be given by or at the direction of the Board, the Chairman of the
Board, the President or the Secretary to each stockholder entitled to notice
of or to vote at the meeting not less than 10 nor more than 60 days before the
meeting, except that notice of a meeting to act on a plan of merger or share
exchange, the sale, lease, exchange or other disposition of all or
substantially all of the corporation's assets other than in the regular course
of business or the dissolution of the corporation shall be given not less than
20 or more than 60 days before such meeting. If an annual or special
stockholders' meeting is adjourned to a different date, time or place, no
notice of the new date, time or place is required if they are announced at the
meeting before adjournment. If a new record date for the adjourned meeting is
or must be fixed, notice of the adjourned meeting must be given to
stockholders entitled to notice of or to vote as of the new record date.
Such notice may be transmitted by mail, private carrier, personal delivery,
telegraph, teletype or communications equipment that transmits a facsimile of
the notice. If those forms of written notice are impractical in the view of
the Board, the Chairman of the Board, the President or the Secretary, written
notice may be transmitted by an advertisement in a newspaper of general
circulation in the area of the corporation's principal office. If such notice
is mailed, it shall be deemed effective when deposited in the official
government mail, first-class postage prepaid, properly addressed to the
stockholder at such stockholder's address as it appears
B-3
<PAGE>
in the corporation's current record of stockholders. Notice given in any other
manner shall be deemed effective when dispatched to the stockholder's address,
telephone number or other number appearing on the records of the corporation.
Any notice given by publication as herein provided shall be deemed effective
five days after first publication.
2.6 Waiver of Notice
Whenever any notice is required to be given by an stockholder under the
provisions of these Bylaws, the Articles of Incorporation or the Nevada
Private Corporations Law, a waiver of notice in writing, signed by the person
or persons entitled to such notice and delivered to the corporation, whether
before or after the date and time of the meeting or before or after the action
to be taken by consent is effective, shall be deemed equivalent to the giving
of such notice. Further, notice of the time, place and purpose of any meeting
will be deemed to be waived by any stockholder by attendance in person or by
proxy, unless such stockholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting.
2.7 Fixing of Record Date for Determining Stockholders
For the purpose of determining stockholders entitled (a) to notice of or to
vote at any meeting of stockholders or any adjournment thereof, (b) to receive
payment of any dividend, or (c) in order to make a determination of
stockholders for any other purpose, the Board may fix a future date as the
record date for any such determination. Such record date shall be not more
than 60 days, and, in case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action requiring such
determination is to be taken. If no record date is fixed for the determination
of stockholders entitled to notice of or to vote a meeting, the record date
shall be the day immediately preceding the date on which notice of the meeting
is first given to stockholders. Such a determination shall apply to any
adjournment of the meeting unless the Board fixes a new record date, which it
shall do if the meeting is adjourned to a date more than 120 days after the
date fixed for the original meeting. If no record date is set for the
determination of stockholders entitled to receive payment of any stock,
dividend or distribution (other than one involving a purchase, redemption or
other acquisition of the corporation's shares), the record date shall be the
date the Board authorizes the stock dividend or distribution.
2.8 Voting Record
At least 10 days before each meeting of stockholders, an alphabetical list
of the stockholders entitled to notice of such meeting shall be made, arranged
by voting group and by each class or series of shares, with the address of and
number of shares held by each stockholder. This record shall be kept at the
principal office of the corporation for 10 days prior to such meeting, and
shall be kept open at such meeting, for the inspection of any stockholder or
any stockholder's agent or attorney.
2.9 Quorum
Except with respect to any greater requirement contained in the Articles of
Incorporation or the Nevada Private Corporations Law, one-third of the votes
entitled to be cast on a matter by the holders of shares that, pursuant to the
Articles of Incorporation or the Nevada Private Corporations Law, are entitled
to vote and be counted collectively upon such matter, represented in person or
by proxy, shall constitute a quorum of such shares at a meeting of
stockholders. If less than the required number of such votes are represented
at a meeting, a majority of the votes so represented may adjourn the meeting
from time to time. Any business may be transacted at a reconvened meeting that
might have been transacted at the meeting as originally called, provided a
quorum is present or represented at such meeting. Once a share is represented
for any purpose at a meeting other than solely to object to holding the
meeting or transacting business, it is deemed present for quorum purposes for
the remainder of the meeting and any adjournment (unless a new record date is
or must be set for the adjourned meeting), notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
B-4
<PAGE>
2.10 Manner of Acting
If a quorum is present, action on a matter other than the election of
Directors shall be approved if the votes cast in favor of the action by the
shares entitled to vote and be counted collectively upon such matter exceed
the votes cast against such action by the shares entitled to vote and be
counted collectively thereon, unless the Articles of Incorporation or the
Nevada Private Corporations Law requires a greater number of affirmative
votes. Whenever the Nevada Private Corporations Law permits a corporation's
bylaws to specify that a lesser number of shares than would otherwise be
required shall suffice to approve an action by stockholders, these Bylaws
hereby specify that the number of shares required to approve such an action
shall be such lesser number.
2.11 Proxies
As stockholder may vote by proxy executed in writing by the stockholder or
by his or her attorney-in-fact or agent. Such proxy shall be effective when
received by the Secretary or other officer or agent authorized to tabulate
votes. A proxy shall become invalid 11 months after the date of its execution,
unless otherwise provided in the proxy. A proxy with respect to a specified
meeting shall entitle its holder to vote at any reconvened meeting following
adjournment of such meeting but shall not be valid after the final
adjournment.
2.12 Voting Shares
Except as provided in the Articles of Incorporation, each outstanding share
entitled to vote with respect to a matter submitted to a meeting of
stockholders shall be entitled to one vote upon such matter.
2.13 Voting for Directors
Each stockholder entitled to vote in an election of Directors may vote, in
person or by proxy, the number of shares owned by such stockholder for as many
persons as there are Directors to be elected and for whose election such
stockholder has a right to vote. Stockholders shall not have the right to
cumulate their votes. Unless otherwise provided in the Articles of
Incorporation, the candidates elected shall be those receiving the largest
number of votes cast, up to the number of Directors to be elected.
2.14 Action by Stockholders Without a Meeting
Any action that may be or is required to be taken at a meeting of the
stockholders may be taken without a meeting if one or more written consents
describing the action taken shall be signed by stockholders holding of record
or otherwise entitled to vote in the aggregate 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 on the action were present and
voted. The Board may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board, and which date shall not be more than 10 days after the date upon which
the resolution fixing the record date is adopted by the Board. If not
otherwise fixed by the Board, the record date for determining stockholders
entitled to take action without a meeting is the date the first stockholder
consent is delivered to the corporation. A stockholder may withdraw a consent
only by delivering a written notice of withdrawal to the corporation prior to
the time that consents sufficient to authorize taking the action have been
delivered to the corporation. Every written consent shall bear the date of
signature of each stockholder who signs the consent. A written consent is not
effective to take the action referred to in the consent unless, within 60 days
of the earliest dated consent delivered to the corporation, written consents
signed by a sufficient number of stockholders to take action are delivered to
the corporation. Unless the consent specifies a later effective date, actions
taken by written consent of the stockholders are effective when (a) consents
sufficient to authorize taking the action are in possession of the corporation
and (b) the period of advance notice required by the Articles of Incorporation
to be given to any nonconsenting or nonvoting stockholders has been satisfied.
Any such consent shall be inserted in the minute book as if it were the
minutes of a meeting of the stockholders.
B-5
<PAGE>
SECTION 3. BOARD OF DIRECTORS
3.1 General Powers
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the
direction of, the Board, except as may be otherwise provided in these Bylaws,
the Articles of Incorporation or the Nevada Private Corporations Law.
3.2 Number, Classification and Tenure
The Board of Directors shall be composed of not less than one nor more than
nine Directors. The specific number of Directors shall be set by resolution of
the Board of Directors or, if the Directors in office constitute fewer than a
quorum of the Board of Directors, by the affirmative vote of a majority of all
the Directors in office. The number of Directors of this corporation may be
increased or decreased from time to time in the manner provided by the
Articles of Incorporation, but no decrease in the number of Directors shall
have the effect of shortening the term of any incumbent Director. The
Directors shall be divided into three classes, with each class to be as nearly
equal in number as possible, as specified by resolution of the Board or, if
the Directors in office constitute fewer than a quorum of the Board, by the
affirmative vote of a majority of all the Directors in office. The term of
office of Directors of the first class shall expire at the first annual
meeting of stockholders after their election. The term of office of Directors
of the second class shall expire at the second annual meeting after their
election. The term of office of Directors of the third class shall expire at
the third annual meeting after their election. At each annual meeting after
such classification, a number of Directors equal to the number of the class
whose term expires at the time of such meeting shall be elected to hold office
until the third succeeding annual meeting. Absent his or her death,
resignation or removal, a Director shall continue to serve despite the
expiration of the Director's term until his or her successor shall have been
elected and qualified or until there is a decrease in the number of Directors.
Directors need not be stockholders of the corporation or residents of the
state of Nevada, and need not meet any other qualifications.
3.3 Annual and Regular Meetings
An annual Board meeting shall be held without notice immediately after and
at the same place as the annual meeting of stockholders. By resolution the
Board, or any committee designated by the Board, may specify the time and
place for holding regular meetings without notice other than such resolution.
3.4 Special Meetings
Special meetings of the Board or any committee designated by the Board may
be called by or at the request of the Chairman of the Board, the President,
the Secretary or, in the case of special Board meetings, any one-third or more
of the Directors in office and, in the case of any special meeting of any
committee designated by the Board, by its Chairman. The person or persons
authorized to call special meetings may fix any place for holding any special
Board or committee meeting called by them.
3.5 Meetings by Communications Equipment
Members of the Board or any committee designated by the Board may
participate in a meeting of such Board or committee by, or conduct the meeting
through the use of, any means of communication by which all Directors
participating in the meeting can hear each other during the meeting.
Participation by such means shall constitute presence in person at a meeting.
3.6 Notice of Special Meetings
Notice of a special Board or committee meeting stating the place, day and
hour of the meeting shall be given to a Director in writing or orally. Neither
the business to be transacted at nor the purpose of any special meeting need
be specified in the notice of such meeting.
B-6
<PAGE>
3.6.1 Personal Delivery
If notice is given by personal delivery, the notice shall be delivered to a
Director at least two days before the meeting.
3.6.2 Delivery by Mail
If notice is delivered by mail, the notice shall be deposited in the
official government mail at least five days before the meeting, properly
addressed to a Director at his or her address shown on the records of the
corporation, with postage thereon prepaid.
3.6.3 Delivery by Private Carrier
If notice is given by private carrier, the notice shall be dispatched to a
Director at his or her address shown on the records of the corporation at
least three days before the meeting.
3.6.4 Facsimile Notice
If a notice is delivered by wire or wireless equipment that transmits a
facsimile of the notice, the notice shall be dispatched at least two days
before the meeting to a Director at his or her telephone number or other
number appearing on the records of the corporation.
3.6.5 Delivery by Telegraph
If notice is delivered by telegraph, the notice shall be delivered to the
telegraph company for delivery to a Director at his or her address shown on
the records of the corporation at least three days before the meeting.
3.6.6 Oral Notice
If notice is delivered orally, by telephone or in person, the notice shall
be personally given to the Director at least two days before the meeting.
3.7 Waiver of Notice
3.7.1 In Writing
Whenever any notice is required to be given to any Director under the
provisions of these Bylaws, the Articles of Incorporation or the Nevada
Private Corporations Law, a waiver thereof in writing, signed by the person or
persons entitled to such notice and delivered to the corporation, whether
before or after the date and time of the meeting, shall be deemed equivalent
to the giving of such notice. Neither the business to be transacted at nor the
purpose of any regular or special meeting of the Board or any committee
designated by the Board need be specified in the waiver of notice of such
meeting.
3.7.2 By Attendance
A Director's attendance at or participation in a Board or committee meeting
shall constitute a waiver of notice of such meeting, unless the Director at
the beginning of the meeting, or promptly upon his or her arrival, objects to
holding the meeting or transacting business at such meeting and does not
thereafter vote for or assent to action taken at the meeting.
3.8 Quorum
A majority of the number of Directors fixed by or in the manner provided in
these Bylaws shall constitute a quorum for the transaction of business at any
Board meeting but, if less than a majority are present at a meeting,
B-7
<PAGE>
a majority of the Directors present may adjourn the meeting from time to time
without further notice. A majority of the number of Directors composing any
committee of the Board, as established and fixed by resolution of the Board,
shall constitute a quorum for the transaction of business at any meeting of
such committee but, if less than a majority are present at a meeting, a
majority of such Directors present may adjourn the committee meeting from time
to time without further notice.
3.9 Manner of Acting
If a quorum is present when the vote is taken, the act of the majority of
the Directors present at a Board or committee meeting shall be the act of the
Board or such committee, unless the vote of a greater number is required by
these Bylaws, the Articles of Incorporation or the Nevada Private Corporations
Law.
3.10 Presumption of Assent
A Director of the corporation who is present at a Board or committee meeting
at which any action is taken shall be deemed to have assented to the action
taken unless (a) the Director objects at the beginning of the meeting, or
promptly upon the Director's arrival, to holding the meeting or transacting
any business at such meeting, (b) the Director's dissent or abstention from
the action taken is entered in the minutes of the meeting, or (c) the Director
delivers written notice of the Director's dissent or abstention to the
presiding officer of the meeting before its adjournment or to the corporation
within a reasonable time after adjournment of the meeting. The right of
dissent or abstention is not available to a Director who votes in favor of the
action taken.
3.11 Action by Board or Committees Without a Meeting
Any action that could be taken at a meeting of the Board or of any committee
created by the Board may be taken without a meeting if one or more written
consents setting forth the action so taken are signed by each of the Directors
or by each committee member either before or after the action is taken and
delivered to the corporation. Action taken by written consent of Directors
without a meeting is effective when the last Director signs the consent,
unless the consent specifies a later effective date. Any such written consent
shall be inserted in the minute book as if it were the minutes of a Board or a
committee meeting.
3.12 Resignation
Any Director may resign from the Board or any committee of the Board at any
time by delivering either oral tender of resignation at any meeting of the
Board or any committee, or written notice to the Chairman of the Board, the
President, the Secretary or the Board. Any such resignation is effective upon
delivery thereof unless the notice of resignation specifies a later effective
date and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
3.13 Removal
At a meeting of stockholders called expressly for that purpose, one or more
members of the Board, including the entire Board, may be removed with or
without cause (unless the Articles of Incorporation permits removal for cause
only) by the holders of the shares entitled to elect the Director or Directors
whose removal is sought if the number of votes cast to remove the Director
exceeds the number of votes cast not to remove the Director.
3.14 Vacancies
If a vacancy occurs on the Board, including a vacancy resulting from an
increase in the number of Directors, the Board may fill the vacancy, or, if
the Directors in office constitute fewer than a quorum of the Board, they may
fill the vacancy by the affirmative vote of a majority of all the Directors in
office. The stockholders may fill a vacancy only if there are no Directors in
office. A Director elected to fill a vacancy shall serve only until the next
election of Directors by the stockholders.
B-8
<PAGE>
3.15 Executive and Other Committees
3.15.1 Creation of Committees
The Board, by resolution adopted by the greater of a majority of the
Directors then in office and the number of Directors required to take action
in accordance with these Bylaws, may create standing or temporary committees,
including an Executive Committee, and appoint members from its own number and
invest such committees with such powers as it may see fit, subject to such
conditions as may be prescribed by the Board, the Articles of Incorporation,
these Bylaws and applicable law. Each committee must have one or more members,
and the Board may designate one or more Directors as alternate members who may
replace any absent or disqualified member at any committee meeting, with all
such members and alternate members to serve at the pleasure of the Board.
3.15.2 Authority of Committees
Each Committee shall have and may exercise all the authority of the Board to
the extent provided in the resolution of the Board creating the committee and
any subsequent resolutions adopted in like manner, except that no such
committee shall have the authority to: (i) approve or adopt, or recommend to
the stockholders, any action or matter expressly required by the Articles of
Incorporation or the Nevada Private Corporations Law to be submitted to
stockholders for approval or (ii) adopt, amend or repeal any bylaw of the
corporation.
3.15.3 Minutes of Meetings
All committees shall keep regular minutes of their meetings and shall cause
them to be recorded in books kept for that purpose.
3.15.4 Removal
The Board may remove any member of any committee elected or appointed by it
but only by the affirmative vote of the greater of a majority of Directors
then in office and the number of Directors required to take action in
accordance with these Bylaws.
3.16 Compensation
By Board resolution, Directors and committee members may be paid either
expenses, if any, of attendance at each Board or committee meeting, or a fixed
sum for attendance at each Board or committee meeting, or a stated salary as
Director or a committee member, or a combination of the foregoing. No such
payment shall preclude any Director or committee member from serving the
corporation in any other capacity and receiving compensation therefore.
SECTION 4. OFFICERS
4.1 Appointment and Term
The officers of the corporation shall be those officers appointed from time
to time by the Board or by any other officer empowered to do so. The Board
shall have sole power and authority to appoint executive officers. As used
herein, the term "executive officer" shall mean the President, the chief
financial officer and any other officer designated by the Board as an
executive officer. The Board or the President may appoint such other officers
to hold office for such period, have such authority and perform such duties as
may be prescribed. The Board may delegate to any other officer the power to
appoint any subordinate officers and to prescribe their respective terms of
office, authority and duties. Any two or more offices may be held by the same
person. Unless an officer dies, resigns or is removed from office, he or she
shall hold office until his or her successor is appointed.
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4.2 Resignation
Any officer may resign at any time by delivering written notice to the
corporation. Any such resignation is effective upon delivery, unless the
notice of resignation specifies a later effective date, and, unless otherwise
specified, the acceptance of such resignation shall not be necessary to make
it effective.
4.3 Removal
Any officer may be removed by the Board at any time, with or without cause.
An officer or assistant officer, if appointed by another officer, may be
removed at any time, with or without cause, by any officer authorized to
appoint such officer or assistant officer.
4.4 Contract Rights of Officers
The appointment of an officer does not itself create contract rights.
4.5 Chairman of the Board
If appointed, the Chairman of the Board shall perform such duties as shall
be assigned to him or her by the Board from time to time, and shall preside
over meetings of the Board and stockholders unless another officer is
appointed or designated by the Board of Chairman of such meetings.
4.6 President
If appointed, the President shall be the chief executive officer of the
corporation unless some other offices is to designated by the Board, shall
preside over meetings of the Board and stockholders in the absence of a
Chairman of the Board, and, subject to the Board's control, shall supervise
and control all the assets, business and affairs of the corporation. In
general, the President shall perform all duties incident to the office of
President and such other duties as are prescribed by the Board from time to
time. If no Secretary has been appointed, the President shall have
responsibility for the preparation of minutes of meetings of the Board and
stockholders and for authentication of the records of the corporation.
4.7 Vice President
In the event of the death of the President or his or her inability to act,
the Vice President (or if there is more than one Vice President, the Vice
President who was designated by the Board as the successor to the President,
or if no Vice President is so designated, the Vice President first elected to
such office) shall perform the duties of the President, except as may be
limited by resolution of the Board, with all the powers of and subject to all
the restrictions upon the President. Vice Presidents shall perform such other
duties as from time to time may be assigned to them by the President or by or
at the direction of the Board.
4.8 Secretary
If appointed, the Secretary shall be responsible for preparation of minutes
of the meetings of the Board and stockholders, maintenance of the corporation
records and stock registers, and authentication of the corporation's records,
and shall in general perform all duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him or her by
the President or by or at the direction of the Board. In the absence of the
Secretary, an Assistant Secretary may perform the duties of the Secretary.
4.9 Treasurer
If appointed, the Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in
banks, trust companies or other
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depositories selected in accordance with the provisions of these Bylaws, and
in general perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him or her by the
President or by or at the direction of the Board. In the absence of the
Treasurer, an Assistant Treasurer may perform the duties of the Treasurer.
4.10 Salaries
The salaries of the officers shall be fixed from time to time by the Board
or by any person or persons to whom the Board has delegated such authority. No
officer shall be prevented from receiving such salary by reason of the fact
that he or she is also a Director of the corporation.
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts
The Board may authorize any officer or officers, or agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation. Such authority may be general or confined to
specific instances.
5.2 Loans to the Corporation
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution
of the Board. Such authority may be general or confined to specific instances.
5.3 Checks, Drafts, Etc.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, or agent or agents, of the corporation and
in such manner as is from time to time determined by resolution of the Board.
5.4 Deposits
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies
or other depositories as the Board may authorize.
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares
No shares of the corporation shall be issued unless authorized by the Board,
or by a committee designated by the Board to the extent such committee is
empowered to do so.
6.2 Certificates for Shares
Certificates representing shares of the corporation shall be signed, either
manually or in facsimile, by the President or any Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary and shall include on their face written notice of any restrictions
that may be imposed on the transferability of such shares. All certificates
shall be consecutively numbered or otherwise identified.
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6.3 Stock Records
The stock transfer books shall be kept at the principal office at the
corporation or at the office of the corporation's transfer agent or registrar.
The name and address of each person to whom certificates for shares are
issued, together with the class and number of shares represented by each such
certificate and the date of issue thereof, shall be entered on the stock
transfer books of the corporation. The person in whose name shares stand on
the books of the corporation shall be deemed by the corporation to be the
owner thereof for all purposes.
6.4 Restriction on Transfer
Except to the extent that the corporation has obtained an opinion of counsel
acceptable to the corporation that transfer restrictions are not required
under applicable securities laws, or has otherwise satisfied itself that such
transfer restrictions are not required, all certificates representing shares
of the corporation shall bear a legend on the face of the certificate, or on
the reverse of the certificate if a reference to the legend is contained on
the face, which reads substantially as follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) THIS
CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE
SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION
IS EXEMPT FROM REGISTRATION, OR (C) THIS CORPORATION OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
6.5 Transfer of Shares
The transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation pursuant to authorization or document of
transfer made by the holder of record thereof or by his or her legal
representative, who shall furnish proper evidence of authority to transfer, or
by his or her attorney-in-fact authorized by power of attorney duly executed
and filed with the Secretary of the corporation. All certificates surrendered
to the corporation for transfer shall be canceled and no new certificate shall
be issued until the former certificates for a like number of shares shall have
been surrendered and canceled.
6.6 Lost or Destroyed Certificates
In the case of a lost, destroyed or damaged certificate, a new certificate
may be issued in its place upon such terms and indemnity to the corporation as
the Board may prescribe.
SECTION 7. BOOKS AND RECORDS
The corporation shall:
(a) Keep as permanent records minutes of all meetings of its stockholders
and the Board, a record of all actions taken by the stockholders or the
Board without a meeting, and a record of all actions taken by a committee
of the Board exercising the authority of the Board on behalf of the
corporation.
(b) Maintain appropriate accounting records.
(c) Maintain a record of its stockholders, in a form that permits
preparation of a list of the names and addresses of all stockholders, in
alphabetical order by class of shares showing the number and class of
shares held by each; provided, however, such record may be maintained by an
agent of the corporation.
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(d) Maintain its records in written form or in another form capable of
conversion into written form within a reasonable time.
(e) Keep a copy of the following records at its principal office:
1. the Articles of Incorporation and all amendments thereto as
currently in effect;
2. these Bylaws and all amendments thereto as currently in effect;
3. the minutes of all meetings of stockholders and records of all
action taken by stockholders without a meeting, for the past three
years;
4. the corporation's financial statements for the past three years;
5. all written communications to stockholders generally within the
past three years;
6. a list of the names and business addresses of the current
Directors and officers; and
7. the most recent annual report delivered to the Nevada Secretary of
State.
SECTION 8. ACCOUNTING YEAR
The accounting year of the corporation shall be the calendar year, provided
that if a different accounting year is at any time selected by the Board for
purposes of federal income taxes, or any other purpose, the accounting year
shall be the year so selected.
SECTION 9. SEAL
The Board may provide for a corporate seal that shall consist of the name of
the corporation, the state of its incorporation, and the year of its
incorporation.
SECTION 10. INDEMNIFICATION
10.1 Right to Indemnification
Each person who was, is or is threatened to be made a party to or is
otherwise involved (including, without limitation, as a witness) in any
threatened, pending or completed action, suit, claim or proceeding, whether
civil, criminal, administrative or investigative and whether formal or
informal (hereinafter "proceedings"), by reason of the fact that he or she is
or was a Director or officer of the corporation or, that being or having been
such a Director or officer of the corporation, he or she is or was serving at
the request of the corporation as a Director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (hereafter an "indemnitee"), whether
the basis of a proceeding is alleged action in an official capacity or in any
other capacity while serving as such a Director, officer, partner, trustee,
employee or agent, shall be indemnified and held harmless by the corporation
against all losses, claims, damages (compensatory, exemplary, punitive or
otherwise), liabilities and expenses (including attorneys' fees, costs,
judgments, fines, ERISA excise taxes or penalties, amounts to be paid in
settlement and any other expenses) actually and reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a Director or officer
of the Company or a Director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise and shall insure to the benefit of the indemnitee's heirs,
executors and administrators. Except as provided in subsection 10.4 of this
Section with respect to proceedings seeking to enforce rights to
indemnification, the corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if a proceeding (or part thereof) was authorized or ratified by the
Board. The right to indemnification conferred in this Section shall be a
contract right.
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10.2 Restrictions on Indemnification
No indemnification shall be provided to any such indemnitee for acts or
omissions of the indemnitee (a) if the indemnitee did not (i) act in good
faith and in a manner the indemnitee reasonably believed to be in or not
opposed to the best interests of the corporation, and (ii) with respect to any
criminal action or proceeding, have reasonable cause to believe the
indemnitee's conduct was unlawful or (b) if the corporation is otherwise
prohibited by applicable law from paying such indemnification. Notwithstanding
the foregoing, if Section 78.7502 or any successor provision of the Nevada
Private Corporations Law is hereafter amended, the restrictions on
indemnification set forth in this subsection 10.2 shall be as set forth in
such amended statutory provision.
10.3 Advancement of Expenses
The right to indemnification conferred in this Section shall include the
right to be paid by the corporation the expenses reasonably incurred in
defending any proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"). An advancement of expenses shall be made upon
delivery to the corporation of an undertaking (hereinafter an "undertaking"),
by or on behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal that such indemnitee is not entitled to be
indemnified.
10.4 Right of Indemnitee to Bring Suit
If a claim under subsection 10.1 or 10.3 of this Section is not paid in full
by the corporation within 60 days after a written claim has been received by
the corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be 20 days, the indemnitee may at
any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim. If successful in whole or in part, in any such suit or in
a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of the undertaking, the indemnitee shall be entitled to
be paid also the expense of litigating such suit. The indemnitee shall be
presumed to be entitled to indemnification under this Section upon submission
of a written claim (and, in an action brought to enforce a claim for an
advancement of expenses, when the required undertaking has been tendered to
the corporation) and thereafter the corporation shall have the burden of proof
to overcome the presumption that the indemnitee is so entitled.
10.5 Nonexclusivity of Rights
The right to indemnification and the advancement of expenses conferred in
this Section shall not be exclusive of any other right that any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation or Bylaws of the corporation, general or specific action of the
Board or stockholders, contract or otherwise.
10.6 Insurance, Contracts and Funding
The corporation may maintain insurance, at its expense, to protect itself
and any Director, officer, partner, trustee, employee or agent of the
corporation or another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any expense, liability or
loss, whether or not the corporation would have the authority or right to
indemnify such person against such expense, liability or loss under the Nevada
Private Corporations Law or other law. The corporation may enter into
contracts with any Director, officer, partner, trustee, employee or agent of
the corporation in furtherance of the provisions of this section and may
create a trust fund, grant a security interest, or use other means (including,
without limitation, a letter of credit) to ensure the payment of such amounts
as may be necessary to effect indemnification as provided in this Section.
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10.7 Indemnification of Employees and Agents of the Corporation
In addition to the rights of indemnification set forth in subsection 10.1,
the corporation may, by action of the Board, grant rights to indemnification
and advancement of expenses to employees and agents or any class or group of
employees and agents of the corporation (a) with the same scope and effect as
the provisions of this Section with respect to indemnification and the
advancement of expenses of Directors and officers of the corporation; (b)
pursuant to rights granted or provided by the Nevada Private Corporations Law;
or (c) as are otherwise consistent with law.
10.8 Persons Serving Other Entities
Any person who, while a Director or officer of the corporation, is or was
serving (a) as a Director, officer, employee or agent of another corporation
of which a majority of the shares entitled to vote in the election of its
directors is held by the corporation or (b) as a partner, trustee or otherwise
in an executive or management capacity in a partnership, joint venture, trust,
employee benefit plan or other enterprise of which the corporation or a
majority owned subsidiary of the corporation is a general partner or has a
majority ownership shall conclusively be deemed to be so serving at the
request of the corporation and entitled to indemnification and the advancement
of expenses under subsections 10.1 and 10.3 of this Section.
SECTION 11. LIMITATION OF LIABILITY
To the full extent that the Nevada Private Corporations Law, as they exist
on the date hereof or may hereafter be amended, permit the limitation or
elimination of the liability of any person who would be considered an
indemnitee under subsection 10.1 of Section 10, an indemnitee of the Company
shall not be liable to the Company or its stockholders for monetary damages
for conduct in the capacity based upon which such person is considered an
indemnitee. Any amendments to or repeal of this Section 11 shall not adversely
affect any right or protection of any indemnitee of the Company for or with
respect to any acts or omissions of such indemnitee occurring prior to such
amendment or repeal.
SECTION 12. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board, except that the Board may not repeal or amend any Bylaw
that the stockholders have expressly provided, in amending or repealing such
Bylaw, may not be amended or repealed by the Board. The stockholders may also
alter, amend and repeal these Bylaws or adopt new Bylaws. All Bylaws made by
the Board may be amended, repealed, altered or modified by the stockholders.
The foregoing Bylaws were adopted by the Board on June 30, 2000.
/s/ Daniel S. Bland
-------------------------------------
Daniel S. Bland, Secretary
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APPENDIX D
Florida Statutes
Title XXXVI--Business Organizations
Chapter 607--Corporations
607.1301 Dissenters' rights; definitions.
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the
stockholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(3) "Stockholders' authorization date" means the date on which the
stockholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of stockholders in order to authorize the action, or, in
the case of a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder of record
of the subsidiary corporation.
History.--s. 118, ch. 89-154.
607.1302 Right of stockholders to dissent.
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her 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:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under s. 607.1104, and the stockholders would have been entitled to
vote on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including
a sale pursuant to court order or a sale for cash pursuant to a plan by
which all or substantially all of the net proceeds of the sale will be
distributed to the stockholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is
a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his or her shares;
2. Altering or abolishing the voting rights pertaining to any of his
or her shares, except as such rights may be affected by the voting
rights of new shares then being authorized of any existing or new class
or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of
his or her shares, when such exchange, cancellation, or
reclassification would alter or abolish the shareholder's voting rights
or alter
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his or her percentage of equity in the corporation, or effecting a
reduction or cancellation of accrued dividends or other arrearages in
respect to such shares;
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his or her
shares, or making any of his or her shares subject to redemption when
they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of the
shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary
liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which
are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be determined
as if the shares as to which he or she has dissented and his or her other
shares were registered in the names of different stockholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any class
or series which, on the record date fixed to determine the stockholders
entitled to vote at the meeting of stockholders at which such action is to be
acted upon or to consent to any such action without a meeting, were either
registered on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or held of record by not fewer than
2,000 stockholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his
or her entitlement unless the action is unlawful or fraudulent with respect to
the shareholder or the corporation.
History.--s. 119, ch. 89-154; s. 5, ch. 94-327; s. 31, ch. 97-102.
607.1320 Procedure for exercise of dissenters' rights.--
(1)(a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a stockholders' meeting, the meeting notice
shall state that stockholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A
shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of
the shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each
shareholder simultaneously with any request for the shareholder's written
consent or, if such a request is not
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made, within 10 days after the date the corporation received written consents
without a meeting from the requisite number of stockholders necessary to
authorize the action.
(2) Within 10 days after the stockholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating the shareholder's name and address, the number, classes, and
series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date
the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his or her shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his or her shares shall cease, and
the shareholder shall be reinstated to have all his or her rights as a
shareholder as of the filing of his or her notice of election, including any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value thereof in cash as
determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
stockholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which stockholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the stockholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided
in this section to pay an amount the corporation estimates to be the fair
value for such shares. If the corporate action has not been consummated before
the expiration of the 90-day period after the stockholders' authorization
date, the offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
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(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall
cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or stockholders fail to accept the same within the period of
30 days thereafter, then the corporation, within 30 days after receipt of
written demand from any dissenting shareholder given within 60 days after the
date on which such corporate action was effected, shall, or at its election at
any time within such period of 60 days may, file an action in any court of
competent jurisdiction in the county in this state where the registered office
of the corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his or her shares. If the
corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting stockholders (whether or not residents of this state), other than
stockholders who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting shareholder who is a resident of this state in
the manner provided by law for the service of a summons and complaint and upon
each nonresident dissenting shareholder either by registered or certified mail
and publication or in such other manner as is permitted by law. The
jurisdiction of the court is plenary and exclusive. All stockholders who are
proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may,
if it so elects, appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers shall
have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting stockholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the
shares, if the court finds that the action of such stockholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such
expenses shall include reasonable compensation for, and reasonable expenses
of, the appraisers, but shall exclude the fees and expenses of counsel for,
and experts employed by, any party. If the fair value of the shares, as
determined, materially exceeds the amount which the corporation offered to pay
therefor or if no offer was made, the court in its discretion may award to any
shareholder who is a party to the proceeding such sum as the court determines
to be reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of
a merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of
such dissenting stockholders would have been converted had they assented to
the merger shall have the status of authorized but unissued shares of the
surviving corporation.
History.--s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102.
4
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UPGRADE INTERNATIONAL CORPORATION
SPECIAL MEETING OF STOCKHOLDERS--AUGUST 16, 2000
The undersigned stockholder of UPGRADE INTERNATIONAL CORPORATION, a Florida
corporation (the "Company") hereby acknowledges receipt of the Notice of
Special Meeting of Stockholders and Proxy Statement, and hereby appoints Daniel
Bland as proxy and attorney-in-fact with full power of substitution, on behalf
and in the name of the undersigned, to represent the undersigned at the Special
Meeting of Stockholders of the Company to be held on August 16, 2000, at
adjournment(s) or postponement(s) thereof, and to vote all shares of Stock that
the undersigned would be entitled to vote if then and there personally present,
on matter set forth below:
Proposal No. 1--Approval of the Agreement and Plan of Merger
[_] FOR [_] AGAINST [_] ABSTAIN
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
NOTE: This Proxy should be marked, dated signed by the stockholder(s) exactly
as his or her name appears hereon, and returned in the enclosed envelope.
THIS PROXY WILL BE VOTED AS DIRECTED AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY POSTPONEMENT(S) OR
ADJOURNMENT(S) THEREOF WITH RESPECT TO THE APPROVAL OF THE AGREEMENT AND PLAN
OF MERGER. IF NO CONTRARY OBJECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
THE APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
DATED: ______________________________, 2000
___________________________________________
Print name(s) exactly as shown on Stock
Certificate
___________________________________________
Signature
___________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by the
President or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
THIS PROXY WILL BE VOTED FOR THE APPROVAL
OF THE AGREEMENT AND PLAN OF MERGER AND
FOR ANY OTHER PROPOSALS IF NO
SPECIFICATION IS MADE.
