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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number: 333-84845
9278 COMMUNICATIONS, INC.
-------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 98-0207906
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1942 Williamsbridge Road, Bronx, New York 10461
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(Address of Principal Executive Offices)
(718) 792-5150
--------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock, $.001 par value - 20,554,772 shares as of May 1, 2000
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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ITEM 1. FINANCIAL STATEMENTS
9278 COMMUNICATIONS, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 327,792 $ 26,192
Accounts receivable, less allowance for doubtful accounts
of $340,000 and $125,000 4,087,170 3,820,503
Inventories 927,302 1,302,171
Prepaid expenses and other current assets 74,201 30,749
----------- -----------
Total current assets 5,416,465 5,179,615
Property and equipment - at cost, less accumulated
depreciation and amortization 629,255 349,869
Goodwill, less accumulated amortization of $30,724 and $11,205 203,501 593,857
Other assets 28,099 15,339
----------- -----------
$ 6,277,320 $ 6,138,680
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 2,467,213 $ 2,805,579
Current maturities of note and advances payable, shareholder 1,636,328 1,633,521
Current maturities of debt obligations 67,766 69,102
Income taxes payable 2,000 2,000
----------- -----------
Total current liabilities 3,673,307 4,510,202
Note payable, shareholder, less current maturities 1,000,000 1,000,000
Debt obligations, less current maturities 167,798 108,002
----------- -----------
4,841,105 5,618,204
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Commitments and contingencies -- --
Shareholders' equity
Convertible preferred stock
Class B, $.001 par value; 5,000,000 shares authorized,
1,075 and 1,500 shares issued and outstanding 1,075,000 1,500,000
Common stock, $.001 par value; 25,000,000 shares
authorized, 20,554,772 and 19,659,629 shares issued and
outstanding 20,554 19,659
Additional paid-in capital 4,193,487 2,361,382
Accumulated deficit (3,852,826) (3,360,565)
----------- -----------
1,436,215 520,476
----------- -----------
$ 6,277,320 $ 6,138,680
=========== ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
1
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Net sales $ 16,882,918 $ 10,532,611
Cost of sales 16,181,991 10,159,319
------------ ------------
Gross profit 700,927 373,292
------------ ------------
Operating expenses
Selling 7,967 21,570
General and administrative 481,650 105,493
Depreciation and amortization 31,703 8,574
Provision for doubtful accounts 263,474 --
Loss attributable to sale of equipment 363,367 --
Interest expense 45,027 3,464
------------ ------------
1,193,188 139,101
------------ ------------
Net income (loss) $ (492,261) 234,191
============ ============
Basic and diluted earnings (loss) per share $ (.02) $ .01
============ ============
Shares used in the calculation of earnings per share 20,003,337 14,900,000
============ ============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
2
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Cash flows used in operating activities $(546,097) $ (19,425)
Cash flows used in investing activities (76,843) (6,800)
Cash flows provided by (used in) financing activities 924,540 (8,294)
--------- ---------
Net increase (decrease) in cash 301,600 (34,519)
Cash, beginning of period 26,192 364,968
--------- ---------
Cash, end of period $ 327,792 $ 330,449
========= =========
Supplemental cash flow disclosures
Interest paid $ 5,027 $ 3,464
Noncash investing and financing activities
Equipment acquired under capital leases 75,000 --
Common stock issued in exchange
for advances payable, shareholder 500,000 --
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
3
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 - BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. The condensed consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1999.
The unaudited condensed consolidated financial statements included herein
reflect, in the opinion of management, all adjustments (consisting primarily
only of normal recurring adjustments) necessary to present fairly the results
for the interim periods. The results of operations for the three months ended
March 31, 2000 are not necessarily indicative of results to be expected for the
entire year ending December 31, 2000.
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
9278 Communications Inc. is the successor consolidated entity formed by the
merger, on December 10, 1999, of 9278 Distributor Inc. (the "Company") and iLink
Telecom, Inc. ("iLink"). iLink was originally incorporated in Colorado on
December 10, 1997 and was reincorporated in Nevada on July 14, 1998. The Company
was incorporated in New York on April 17, 1997, and reincorporated in Delaware
on May 2, 2000.
Concurrent with the merger, iLink, a publicly held company and the legally
surviving parent company, changed its name to 9278 Communications Inc. For
accounting purposes, the merger has been treated as a reverse acquisition, with
the Company as the acquiror, and is accounted for as a purchase.
The Company consummated the reverse acquisition of iLink on December 10,
1999. The Company's shareholders were issued 14,900,000 iLink shares in exchange
for the 200 shares of the Company. These shares were valued at $155,000 based
upon an independent valuation of iLink. In addition to the value of these
shares, the Company's acquisition cost includes the eight shares (post split
equivalent of 596,000 shares) issued to a creditor of iLink valued at $123,330,
legal fees of $42,455, and investment banker fees of $13,226, for total
acquisition costs of $334,011.
(Continued)
4
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The accompanying consolidated balance sheet as of March 31, 2000 includes
the accounts of the Company and iLink. The related accompanying consolidated
statements of operations and cash flows include the results of operations and
cash flows of the Company for the entire year and of iLink for the periods
beginning December 11, 1999. All significant intercompany transactions and
balances have been eliminated.
The Company sells prepaid telephone cards to distributors and small retail
establishments, primarily in the New York, New Jersey and Connecticut areas.
Goodwill
Goodwill represents cost in excess of fair value of net assets acquired in
the merger transaction, and is being amortized over 3 years. The Company
periodically re-evaluates its recoverability.
On February 28, 2000, the Company sold the assets acquired in the
acquisition of iLink and recognized a loss on the sale of approximately
$363,367, primarily attributable to the write-off of the related goodwill.
Income Taxes
Prior to the merger with iLink, the Company had elected S Corporation status
for Federal and New York State income tax purposes. Under these elections, the
Company's taxable income or loss was reportable by the shareholders on their
individual income tax returns, and the Company made no provision for Federal
income tax. Provisions were recorded for New York State S Corporation tax and
New York City general corporation tax.
Concurrent with the merger with iLink on December 10, 1999, the S
Corporation elections terminated and the Company became subject to all Federal,
state and city corporation income taxes.
(Continued)
5
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share
Basic earnings per common share is calculated by dividing net income (loss)
available to common stockholders by the average number of common shares
outstanding during the year. Diluted earnings per common share is calculated by
adjusting outstanding shares, assuming conversion of any potentially dilutive
securities, such as stock options or warrants. Potentially dilutive securities
have been excluded from the calculation of diluted loss per share for the three
months ended March 31, 2000, as their effect would have been antidilutive.
3 - CAPITAL STOCK TRANSACTIONS
Between January 7, 2000 and February 7, 2000, certain holders of the
Company's Series B convertible preferred stock converted 425 shares into 191,143
shares of common stock.
During March 2000, the Company issued an aggregate of 154,000 shares of its
common stock to seven different investors at a price of $2.00 per share, for
gross proceeds to the Company of $308,000.
During March 2000 the Company exchanged 250,000 shares of Common Stock for
$500,000 of advances from a shareholder.
On March 15, 2000, the Company issued an aggregate of 300,000 shares of its
common stock to six different investors at a price of $2.00 per share, for gross
proceeds to the Company of $600,000.
4 - RELATED PARTY TRANSACTIONS
Sales to a customer who is related to an officer were approximately
$1,200,000 and $1,300,000 for the three months ended March 31, 2000 and 1999,
respectively. On March 2, 2000, the Company entered into a letter of intent to
acquire this customer's business. The acquisition is contingent upon execution
of definitive agreements, obtaining financing and completing due diligence
review.
(Continued)
6
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9278 COMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5 - LITIGATION WITH TELEPHONE CARD SUPPLIERS AND DISTRIBUTORS
In November 1999, the Company commenced an action against a former major
supplier to recover damages resulting from cancellation of telephone cards
purchased by the Company. The loss totaled $553,547, which was reflected in the
fourth quarter of 1999. The Company is doubtful as to the prospects for recovery
against such loss. The supplier subsequently countersued. In the Company's
opinion, with which its legal counsel concurs, no material liability will result
from the countersuit. The Company subsequently mitigated, in substantial part,
its reliance on this supplier by increasing its purchases from other vendors.
In November 1999, a distributor of the Company's prepaid phone cards
commenced an action claiming approximately $600,000 based on a purported breach
of oral contract by the Company. The Company filed an answer and counterclaimed
against the distributor for approximately $600,000 of unpaid invoices due and
owing from such distributor to the Company. The Company believes it has
meritorious defenses to the claims of the distributor and plans to pursue its
claim for unpaid invoices.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
This discussion, other than the historical financial information, may
consist of forward-looking statements that involve risks and uncertainties,
including quarterly and yearly fluctuations in results, the timely availability
of new communication products, the impact of competitive products and services,
and other risks and uncertainties. These forward-looking statements speak only
as of the date hereof and should not be given undue reliance. Actual results may
vary significantly from those projected.
OVERVIEW
To date, the Company's principal source of revenue has been the marketing
and distribution of prepaid phone cards. The Company markets and distributes
branded prepaid phone cards produced by a variety of telecommunications long
distance carriers and resellers, as well as private label proprietary prepaid
phone cards produced exclusively for the Company by various long distance
carriers and/or resellers.
Prepaid phone cards are distributed through a vast network of retail
outlets, including convenience stores, newsstands, grocery stores and discount
stores. The retail outlets are serviced by independent distributors, which often
distribute newspapers or other items to the retail outlets. The Company
purchases large volumes of branded prepaid phone cards from the long distance
carrier or reseller and sells the cards in smaller quantities, together with
cards from other carriers and/or private label cards distributed by the Company,
to the independent distributor, for ultimate distribution to retail outlets.
Branded cards are purchased by the Company at a discount from the face value
of the card, and resold to the distributor at a slightly lower discount. The
difference between the two discount rates, typically from 1% to 3%, represents
the gross margin retained by the Company. Purchases of branded cards by the
Company are made on varying terms, from C.O.D. to a net 30 basis, although the
majority of the Company's purchases are made on credit terms of 10 days or less.
Sales by the Company of its product are generally made on a net 30 basis.
Private label cards are generally designed and produced by the Company,
utilizing card numbers and PINs provided by the telecommunications' carrier or
reseller providing the long distance service for the card. The Company incurs
the upfront expense of printing the phone cards. However, the Company does not
pay the long distance carrier until it activates the cards, which occurs upon
the sale by the Company to the distributor. Accordingly, through the use of
private label cards, the Company's cost of inventory is significantly reduced,
as purchases are effectively made on an as-needed basis. In addition, private
label cards generally provide the Company with the ability to achieve a greater
gross margin percentage, typically ranging from 3% to 6%.
The Company is seeking to develop and acquire rights to additional prepaid
telecommunications services and other prepaid products or services to diversify
its product offerings and increase its overall gross margin.
8
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RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1999
Net sales for the three months ended March 31, 2000 rose 60.2% to
$16,882,918, from net sales of $10,532,611 during the three months ended March
31, 1999. Gross profit increased 87.9% during the 2000 period to $700,927 from
$373,292 for the 1999 period. The increase in gross profit was due to higher
gross profit margins achieved by the sale of private label phone cards, which
increased during the current period. Total expenses increased 945% to $1,193,188
in the 2000 period, as compared to $139,101 for the 1999 period. Included in the
current period expenses are $363,367 of expense attributable to the sale of the
assets of iLink Telecom, a company with which 9278 Communications merged in
December 1999. Also included in total expenses was a $263,474 provision for
doubtful accounts, which are due from a distributor of the Company with whom the
Company is in litigation. In addition, general and administrative expenses for
the three months ended March 31, 2000 increased to $481,650, as compared to
$105,493 for the period ended March 31, 1999 as a result of the addition of new
management personnel and increased legal and accounting costs resulting from the
Company becoming a publicly traded company. As a result of the foregoing, the
Company generated a net loss of $492,261 during the three months ended March 31,
2000, as compared to net income of $234,191 for the period ended March 31, 1999.
Absent the expenses for the provision for doubtful accounts and the expenses
attributable to the sale of the iLink assets, the Company would have generated
net income for the three months ended March 31, 2000 of $134,580.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000 and December 31, 1999, the Company had total current
assets of approximately $5,416,000 and $5,180,000, respectively. At March 31,
2000, this included $328,000 in cash, $927,000 of inventory and $4,087,000 of
accounts receivable. At December 31, 1999, cash, inventory and accounts
receivable were $26,000, $1,302,000 and $3,821,000, respectively. The Company's
cash balances vary significantly from day-to-day due the large volume of
purchases and sales made by the Company from the various prepaid phone card
companies and the numerous distributors to whom the Company sells cards. Due to
the shorter credit terms made available to the Company from the
telecommunications companies from whom it buys branded cards, as compared to the
credit terms made available by the Company to its customers, the Company, from
time-to-time, requires infusions of cash in order to maintain its preferential
buying/purchasing terms with its carriers. Such cash flow needs are also
affected by the timing of large purchases by the Company, which are made by the
Company from time-to-time to take advantage of favorable pricing opportunities.
To date, the Company has satisfied such cash requirements by loans from its
principals and/or private sales of the Company's equity securities. The Company
is seeking to secure financing to provide the Company with liquidity to meet its
future needs. There can be no assurance that the Company will be able to obtain
such financing on commercially reasonable terms, or otherwise, or that it will
be able to otherwise satisfy it short-term cash flow needs from other sources in
the future.
9
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PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
a) On January 7, January 18, January 19 and February 7, 2000, holders of the
Company's series B convertible preferred stock converted 200, 100, 100 and 25
shares into 94,604, 42,496, 42,839 and 11,204 shares of the Company's common
stock, respectively. These transactions were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933 (the "Act").
b) On March 15, 2000, pursuant to its non-qualified stock option plan, the
Company granted non-qualified options to purchase 25,000 shares of its common
stock, at an exercise price of $4.00 per share, to Raymond Akwule, the Company's
newly appointed director. The options vest 50% on September 15, 2000 and 50% on
March 15, 2001 and are exercisable for a period of ten years from the date of
the grant.
c) On March 15, 2000, the Company issued an aggregate of 300,000 shares of
its common stock to six different investors at a price of $2.00 per share, for
gross proceeds of $600,000. This transaction was exempt from registration
pursuant to Rule 506 of Regulation D of the Act.
d) On March 21, 2000, the Company issued an aggregate of 404,000 shares of
its common stock to seven different investors at a price of $2.00 per share, for
gross proceeds of $808,000, including $500,000 of debt forgiveness. Two of the
investors are officers and directors of the Company. This transaction was exempt
from registration pursuant to Section 4(2) of the Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 24, 2000 the Company held a special meeting of stockholders to
consider an agreement and plan of merger between the Company and it's
wholly-owned subsidiary, 9278 Communications, Inc., a Delaware corporation (the
"Delaware Company"), pursuant to which, among other things, (i) the Company's
state of incorporation would change from Nevada to Delaware, (ii) all of the
authorized shares of the Company would be converted into an equal number of
similar shares of the Delaware Company, and (iii) certain changes in the
Company's Certificate of Incorporation would be effectuated, including an
increase in the number of authorized shares of common stock of the Company from
25,000,000 to 40,000,000. At the meeting 13,205,425 votes were cast for the
merger and no votes were cast against the merger. The merger became effective
upon filing of a certificate of merger on May 2, 2000.
ITEM 5. OTHER INFORMATION
On April 24, 2000 the Company entered into an Agreement and Plan of Merger
with its wholly-owned subsidiary, 9278 Communications, Inc., a Delaware
corporation (the "Delaware Company") providing for the Company to merge with and
into the Delaware Company. The merger became effective upon filing of a
Certificate of Merger on May 2, 2000. Upon effectiveness of the merger, among
other things, (i) the Company's state of incorporation was changed from Nevada
to Delaware, (ii) all of the authorized shares of the Company were converted
into an equal number of similar shares of the Delaware Company, and (iii)
certain changes in the Company's Certificate of Incorporation took effect,
including and increase in the authorized shares of common stock of the Company
from 25,000,000 to 40,000,000. At the time of the merger, the Company ceased to
exist and
10
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the Delaware Company took ownership of all of the Company's assets and assumed
all of its liabilities. The surviving company is governed by the Delaware
General Corporation Law and the Certificate of Incorporation and Bylaws of the
Delaware Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a). Exhibits
The exhibits in the following table have been filed as part of this
quarterly report on Form 10-QSB.
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Agreement and Plan of Merger between the Company and its wholly-owned
subsidiary, 9278 Communications, Inc., a Delaware corporation
3.1 Articles of Incorporation of 9278 Communications, Inc., a Delaware
corporation
3.2 Bylaws of 9278 Communications, Inc., a Delaware corporation
27.1 Financial Data Schedule
b). Reports on Form 8-K
1) On January 10, 2000, the Company amended its Current Report on Form
8-K, dated December 28, 1999. It had filed the December 28, 1999 report
to report that it had (i) dismissed Ernst & Young LLP as its
independent certified public accountant, effective December 28, 1999,
(ii) engaged Friedman Alpren & Green LLP to act as it independent
certified public accountant, effective December 28, 1999, (iii) filed
an amendment to its Certificate of Incorporation on December 23, 1999,
changing its name from iLink Telecom, Inc. to 9278 Communications,
Inc., and (iv) changed its fiscal year end from February 28 to
December 31.
2) On February 22, 2000, the Company amended its Current Report on Form
8-K, dated December 10, 1999. iLink Telecom, Inc. had filed the
December 10, 1999 report to report a change in control of iLink as a
result of iLink consummating a merger among iLink, 9278 Acquisition
Corp., a wholly-owned subsidiary of iLink and 9278 Distributor, Inc.
For accounting purposes, the merger was treated as a reverse
acquisition, with 9278 Distributor as the acquiror. Included with the
report filed on February 22, 2000, were the Financial Statements of
9278 Distributor Inc. for the year ended December 31, 1998 and
nine-month period ended September 30, 1998 and 1999.
11
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
9278 Communications Inc.
--------------------------------------------
Date: May 15, 2000 /s/ Amar Bahadoorsingh
--------------------------------------------
President
(Principal Financial and Accounting Officer)
12
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as
of April 24, 2000, by and between 9278 Communications, Inc., a Nevada
corporation (the "Nevada Company"), and 9278 Communications, Inc., a Delaware
corporation (the "Delaware Company"); (the Nevada Company and the Delaware
Company collectively, the "Constituent Corporations").
WHEREAS, the authorized capital stock of the Nevada Company consists of
twenty-five million (25,000,000) shares of Common Stock, $0.001 par value per
share, and five million (5,000,000) shares of Preferred Stock, $0.001 par value
per share, of which two thousand five hundred (2,500) shares have been
designated as Series B Convertible Preferred Stock;
WHEREAS, the authorized capital stock of the Delaware Company consists
of forty million (40,000,000) shares of Common Stock, $0.001 par value per
share, and five million (5,000,000) shares of Preferred Stock, $0.001 par value
per share, of which two thousand five hundred (2,500) shares have been
designated as Series B Convertible Preferred Stock.; and
WHEREAS, the directors of the Constituent Corporations deem it
advisable and to the advantage of the Constituent Corporations that the Nevada
Company merge with and into the Delaware Company upon the terms and conditions
provided herein.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that the Nevada Company
shall merge with and into the Delaware Company on the following terms,
conditions and other provisions:
1. TERMS AND CONDITIONS.
1.1 MERGER. the Nevada Company shall be merged with and into the
Delaware Company (the "Merger"), and the Delaware Company shall be the surviving
corporation (the "Surviving Corporation") effective at 12:01 a.m., on the day
following the date the appropriate certificate reflecting the Merger is filed
with the Secretary of State of the State of Delaware (the "Effective Date").
1.2 SUCCESSION. On the Effective Date, the Delaware Company shall
continue its corporate existence under the laws of the State of Delaware, and
the separate existence and corporate organization of the Nevada Company, except
insofar as it may be continued by operation of law, shall be terminated and
cease.
1.3 TRANSFER OF ASSETS AND LIABILITIES. On the Effective Date (i)
the rights, privileges, powers and franchises, both of a public as well as of a
private nature, of each of the Constituent Corporations shall be vested in and
possessed by the Surviving Corporation, subject to all of the disabilities,
duties and restrictions of or upon each of the Constituent Corporations; (ii)
all and singular rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, of each of
the Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the Constituent Corporations shall be transferred to and vested in the
Surviving Corporation; and (iii) all property, rights, privileges, powers and
franchises, and all and every other interest, thereafter shall be the property
of the Surviving Corporation as they
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were of the Constituent Corporations, and the title to any real estate vested by
deed or otherwise in either of the Constituent Corporations shall not revert or
be in any way impaired by reason of the Merger; provided, however, that the
liabilities of the Constituent Corporations and of their stockholders, directors
and officers shall not be affected and all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and any claim existing or action or proceeding pending by or against
either of the Constituent Corporations may be prosecuted to judgment as if the
Merger had not been consummated, except as they may be modified with the consent
of such creditors, and all debts, liabilities and duties of or upon each of the
Constituent Corporations shall attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
1.4 COMMON STOCK OF THE NEVADA COMPANY AND THE DELAWARE COMPANY.
On the Effective Date, by virtue of the Merger and without any further action on
the part of the Constituent Corporations or their respective stockholders, (i)
each share of Common Stock of the Nevada Company issued and outstanding
immediately prior thereto shall be combined, changed and converted into one (1)
share of Common Stock of the Delaware Company, in each case fully paid and
nonassessable, (ii) each share of Common Stock of the Delaware Company issued
and outstanding immediately prior thereto shall be canceled and returned to the
status of authorized but unissued shares, and (iii) each share of Series B
Convertible Preferred Stock of the Nevada Company issued and outstanding
immediately prior thereto shall be combined, changed and converted into one (1)
share of Series B Convertible Preferred Stock of the Delaware Company, in each
case fully paid and nonassessable.
1.5 STOCK CERTIFICATES. On and after the Effective Date, all of
the outstanding certificates that, prior to that time, represented shares of
Common Stock of the Nevada Company shall be deemed for all purposes to evidence
ownership of and to represent the shares of the Delaware Company into which the
shares of the Nevada Company represented by such certificates have been
converted as herein provided and shall be so registered on the books and records
of the Surviving Corporation or its transfer agents. The registered owner of any
such outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and be entitled to exercise
any voting and other rights with respect to and to receive any dividend and
other distribution upon the shares of the Delaware Company evidenced by such
outstanding certificate as above provided.
1.6 PURCHASE RIGHTS. On the Effective Date, the Surviving
Corporation will assume the outstanding obligations of the Nevada Company, if
any, to issue Common Stock or other capital stock pursuant to contractual
purchase rights granted by the Nevada Company, and the outstanding and
unexercised portions of all outstanding contractual rights to purchase Common
Stock or other capital stock of the Nevada Company shall be changed and
converted into contractual rights to purchase Common Stock or other capital
stock, respectively, of the Delaware Company such that a contractual right to
purchase one (1) share of Common Stock or other capital stock of the Nevada
Company shall be converted into a contractual right to purchase one (1) share of
Common Stock or other capital stock, respectively, of the Delaware Company. No
other changes in the terms and conditions of such contractual purchase rights
will occur.
1.7 EMPLOYEE BENEFIT PLANS. On the Effective Date, the Surviving
Corporation shall assume all obligations of the Nevada Company under any and all
employee benefit plans in effect as of such date with respect to which employee
rights or accrued benefits are outstanding as of such date. On the Effective
Date, the Surviving Corporation shall adopt and
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continue in effect all such employee benefit plans upon the same terms and
conditions as were in effect immediately prior to the Merger.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS.
2.1 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of the Delaware Company in effect on the Effective Date shall
continue to be the Certificate of Incorporation of the Surviving Corporation
without change or amendment until further amended in accordance with the
provisions thereof and applicable law. The Bylaws of the Delaware Company in
effect on the Effective Date shall continue to be the Bylaws of the Surviving
Corporation without change or amendment until further amended in accordance with
the provisions thereof and applicable law.
2.2 DIRECTORS. The directors of the Nevada Company immediately
preceding the Effective Date shall become the directors of the Surviving
Corporation on and after the Effective Date to serve until the expiration of
their terms and until their successors are elected and qualify.
2.3 OFFICERS. The officers of the Nevada Company immediately
preceding the Effective Date shall become the officers of the Surviving
Corporation on and after the Effective Date to serve at the pleasure of its
Board of Directors.
3. MISCELLANEOUS.
3.1 FURTHER ASSURANCES. From time to time, and when required by
the Surviving Corporation or by its successors and assigns, the Surviving
Corporation shall execute and deliver, or cause to be executed and delivered,
such deeds and other instruments, and the Surviving Corporation shall take or
cause to be taken such further and other action as shall be appropriate or
necessary in order to vest or perfect in or to conform of record or otherwise,
in the Surviving Corporation the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of the Delaware Company and otherwise to carry out the purposes of
this Merger Agreement, and the officers and directors of the Surviving
Corporation are authorized fully in the name and on behalf of the Delaware
Company or otherwise to take any and all such action and to execute and deliver
any and all such deeds and other instruments.
3.2 AMENDMENT. At any time before or after approval by the
stockholders of the Nevada Company, this Merger Agreement may be amended in any
manner (except that, after the approval of the Merger Agreement by the
stockholders of the Nevada Company, the principal terms may not be amended
without the further approval of the stockholders of the Nevada Company) as may
be determined in the judgment of the respective Board of Directors of the
Delaware Company and the Nevada Company to be necessary, desirable, or expedient
in order to clarify the intention of the parties hereto or to effect or
facilitate the purpose and intent of this Merger Agreement.
3.3 CONDITIONS TO MERGER. The obligation of the Constituent
Corporations to effect the transactions contemplated hereby is subject to
satisfaction of the following conditions (any or all of which may be waived by
either of the Constituent Corporations in its sole discretion to the extent
permitted by law):
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(i) the Merger shall have been approved by the stockholders
of the Nevada Company in accordance with applicable provisions of the Nevada
General Corporation Law; and
(ii) the Nevada Company, as sole stockholder of the Delaware
Company, shall have approved the Merger in accordance with the Delaware General
Corporation Law; and
(iii) any and all consents, permits, authorizations,
approvals, and orders deemed in the sole discretion of the Nevada Company to be
material to consummation of the Merger shall have been obtained.
3.4 ABANDONMENT OR DEFERRAL. Notwithstanding the approval of this
Merger Agreement by the stockholders of the Nevada Company or the Delaware
Company, at any time before the Effective Date, (a) this Merger Agreement may be
terminated and the Merger may be abandoned by the Board of Directors of either
the Nevada Company or the Delaware Company or both or (b) the consummation of
the Merger may be deferred for a reasonable period of time if, in the opinion of
the Boards of Directors of the Nevada Company and the Delaware Company, such
action would be in the best interests of such corporations. In the event of
termination of this Merger Agreement, this Merger Agreement shall become void
and of no effect and there shall be no liability on the part of either
Constituent Corporation or their respective Board of Directors or stockholders
with respect thereto, except that the Nevada Company shall pay all expenses
incurred in connection with the Merger or in respect of this Merger Agreement or
relating thereto.
3.5 COUNTERPARTS. In order to facilitate the filing and recording
of this Merger Agreement, the same may be executed in any number of
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Board of Directors of the Nevada Company and the Delaware
Company, hereby is executed on behalf of each such corporations and attested by
their respective officers thereunto duly.
9278 COMMUNICATION, INC.,
A NEVADA CORPORATION
By: /s/ Amar Bahadoorsingh
-------------------------------------
Name: Amar Bahadoorsingh
Title: President
9278 COMMUNICATIONS, INC.,
A DELAWARE CORPORATION
By: /s/ Sajid Kapadia
-------------------------------------
Name: Sajid Kapadia
Title: President
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CERTIFICATE OF INCORPORATION
OF
9278 COMMUNICATIONS, INC.
------------------------------------
IT IS HEREBY CERTIFIED THAT:
FIRST: The name of the corporation is 9278 Communications, Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 15 East North Street, Dover, Delaware 19901 and the name of the
registered agent of the Corporation in the State of Delaware is United Corporate
Services, Inc., located in Kent County.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware. The Corporation shall possess and may exercise all powers and
privileges necessary or convenient to effect the foregoing purpose, including
the general powers now or hereafter conferred by the laws of the State of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is Forty-Five Million (45,000,000) shares, which shall
consist of Forty Million (40,000,000) shares, $0.001 par value per share,
designated as Common Stock and Five Million (5,000,000) shares, $0.001 par value
per share, designated as Preferred Stock. Subject to the provisions of this
Certificate of Incorporation, shares of the Corporation regardless of class, may
be issued for such consideration and for such corporate purposes as the Board of
Directors may from time to time determine.
The following is a statement of the designations and the powers,
preferences and rights, and the qualifications, limitations or restrictions in
respect of each class of stock of the corporation.
I. COMMON STOCK
1. Voting Rights. Subject to the provisions of this Certificate in
Incorporation, of any applicable law, or of the By-Laws of the Corporation as
from time to time amended, with respect to the closing of the transfer books or
the fixing of a record date for the determination of stockholders entitled to
vote and except as otherwise provided herein or by law or by the
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resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of outstanding Common Stock shall exclusively possess voting
power for the election of directors and for all other purposes, each holder of
record of Common Stock being entitled to one vote for each share of Common Stock
standing in his, her or its name on the books of the Corporation.
2. Dividends. Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of Preferred Stock, the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to receive such dividends as from time to
time may be declared by the Board of Directors.
3. Dissolution. In the event of any dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, after payment shall
have been made to the holders of Preferred Stock of the full amount for which
they shall be entitled pursuant to the resolution or resolutions providing for
the issue of any series of Preferred Stock, the holders of Common Stock shall be
entitled, to the exclusion of the holders of Preferred Stock of any and all
series, to share, ratably according to the number of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stockholders.
II. PREFERRED STOCK
The Preferred Stock shall be comprised of (i) Class B Convertible
Preferred Stock ("Class B Preferred Stock"), which shall consist of Two Thousand
and Five Hundred (2,500) shares, and (ii) additional Preferred Stock
("Additional Preferred Stock") which shall consist of Four Million Nine Hundred
Ninety Seven and Five Hundred (4,997,500) shares.
PART A: CLASS B PREFERRED STOCK
1. CREATION OF SERIES B CONVERTIBLE PREFERRED STOCK
There is hereby created a series of preferred stock consisting of Two
Thousand and Five Hundred (2,500) shares and designated as Class B Preferred
Stock, having the voting powers, preferences, relative, participating,
limitations, qualifications, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
2. CONVERSION PROVISIONS
The holders of Class B Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
2.1 Conversion.
(a) Right to Convert. From and after the third (3rd)
business day following the day on which the Corporation
receives payment in full for Class B
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Preferred Stock from and issues Class B Preferred Stock
to a particular holder (the "Issuance Date"), all Class
B Preferred Stock held by that holder shall be
convertible at the option of the holder into such number
of shares of Common Stock of the Corporation as is
calculated by the Conversion Rate (as hereinafter
defined). The Conversion Rate, subject to the exceptions
defined in paragraphs 2(b) and (c) hereof, shall be that
number of shares of Common Stock equal to $1,000 divided
by seventy five percent (75%) of the average Market
Price (as hereinafter defined) of the shares of Common
Stock for the ten trading days immediately prior to the
Conversion Date (as hereinafter defined).
(b) Early Conversion Exception. From and after the third
(3rd) business day following the Issuance Date and until
the date which is forty-five (45) calendar days
following the Issuance Date a particular holder of Class
B Preferred Stock may elect, as an alternative to the
Conversion Rate defined in paragraph 2(a) hereof, to
convert some or all of the shares of Class B Preferred
Stock held by that holder into such number of shares of
Common Stock as is calculated by the Early Conversion
Rate (as hereinafter defined). The Early Conversion Rate
shall be that number of shares of Common Stock equal to
$1,000 divided by seventy five percent (75%) of the
Market Price of the shares of Common Stock on the day
immediately preceding the Issuance Date.
(c) Failure to Register Exemption. In the event that a
registration statement in respect of the Common Stock to
be issued upon the conversion of the Class B Preferred
Stock has not been filed with and declared effective by
the Securities and Exchange Commission on or before the
date which is twelve months following the Issuance Date
(the "Anniversary Date"), the number of shares of Common
Stock issued to a particular holder will be calculated
by the Failure to Register Conversion Rate. The Failure
to Register Conversion Rate shall be that number of
shares of Common Stock equal to $1,000 divided by fifty
percent (50%) of the Market Price of the shares of
Common Stock on the day immediately preceding the
Anniversary Date.
(d) Market Price. Market Price for a particular date shall
be the closing bid price of the shares of Common Stock
on such date, as reported by the National Association of
Securities Dealers Automated Quotation System
('NASDAQ"), or the closing bid price in the
over-the-counter market if other than NASDAQ.
(e) No Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of the Class B
Preferred Stock, and in lieu thereof
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the number of shares of Common Stock to be issued for
each share of Class B Preferred Stock converted shall be
rounded down to the nearest whole number of shares of
Common Stock. Such number of whole shares of Common
Stock to be issued upon the conversion of one share of
Class B Preferred Stock shall be multiplied by the
number of shares of Class B Preferred Stock submitted
for conversion pursuant to the Notice of Conversion
(defined below) to determine the total number of shares
of Common Stock to be issued in connection with any one
particular conversion.
(f) Method of Conversion. In order to convert Class B
Preferred Stock into shares of Common Stock, a holder of
Class B Preferred Stock shall:
(1) complete, execute and deliver to the Corporation
and the Corporation's Transfer Agent, Liberty
Transfer Co. (the "Transfer Agent"), or such other
transfer agent appointed by the Corporation, a
notice of conversion (the "Notice of Conversion");
and
(2) surrender the certificate or certificates
representing the Class B Preferred Stock being
converted (the "Converted Certificate") to the
Transfer Agent.
Subject to paragraph 2(i) hereof, the Notice of
Conversion shall be effective and in full force and effect
for a particular date if delivered to the Corporation and the
Transfer Agent on that particular date prior to 5:00 pm,
eastern time, by facsimile transmission or otherwise,
provided that particular date is a business day, and provided
that the original Notice of Conversion and the Converted
Certificate are delivered to and received by the Transfer
Agent within three (3) business days thereafter at 191 New
York Avenue, Huntington, New York 11743-2711 (facsimile:
516-385-1619) and that particular date shall be referred to
herein as the "Conversion Date". The person or persons
entitled to receive the shares of Common Stock to be issued
upon conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of
the Conversion Date. If the original Notice of Conversion and
the Converted Certificate are not delivered to and received
by the Transfer Agent within three (3) business days
following the Conversion Date, the Notice of Conversion shall
become null and void as if it were never given and the
Corporation shall, within two (2) business days thereafter,
instruct the Transfer Agent to return to the holder by
overnight courier any Converted Certificate that may have
been submitted in connection with any such conversion. In the
event that any Converted Certificate submitted represents a
number of shares of Class B Preferred Stock that is greater
than the number of such shares that is being converted
pursuant to the Notice of Conversion delivered in connection
therewith, the Transfer Agent shall advise the
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Corporation to deliver a certificate representing the
remaining number of shares of Class B Preferred Stock not
converted.
(g) Absolute Obligation to issue Common Stock. Upon receipt
of a Notice of Conversion, the Corporation shall
absolutely and unconditionally be obligated to cause a
certificate or certificates representing the number of
shares of Common Stock to which a converting holder of
Class B Preferred Stock shall be entitled as provided
herein, which shares shall constitute fully paid and
non-assessable shares of Common Stock and shall be
issued to, delivered by overnight courier to, and
received by such holder by the sixth (6th) business day
following the Conversion Date. Such delivery shall be
made at such address as such holder may designate
therefor in its Notice of Conversion or in its written
instructions submitted together therewith.
(h) Minimum Conversion. No less than 50 shares of Class B
Preferred Stock may be converted at any one time by a
particular holder, unless the holder then holds less
than 50 shares and converts all such shares held by it
at that time.
(i) Deemed Conversion. Notwithstanding any other provision
herein, and provided that a registration statement in
respect of the Common Stock to be issued upon the
conversion of the Class B Preferred Stock has been filed
with and declared effective by the Securities and
Exchange Commission on or before the Anniversary Date,
all of the Class B Preferred Stock outstanding on
Anniversary Date shall be deemed to convert into shares
of Common Stock as is calculated by the Conversion Rate
as defined in paragraph 2(a) hereof, provided that, in
the event that this paragraph would result in a
particular holder of Class B Preferred Stock holding,
together with the shares of Common Stock then held by
that holder, more than 9.9% of the Corporation's then
issued and outstanding Common Stock, the conversion
deemed hereby shall be postponed until such time as the
particular holder holds such number of shares of Common
Stock that, together with the shares of Common Stock
then held by that holder, would constitute less than
9.9% of the Corporation's then issued and outstanding
Common Stock . The onus for notifying the Corporation of
the application of this qualification shall be upon the
particular holder.
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2.2 Adjustments to Conversion Rate
(a) Reclassification, Exchange and Substitution. If the
Common Stock to be issued on conversion of the Class B
Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes
of stock, whether by capital reorganization,
reclassification, reverse stock split or forward stock
split or stock dividend or otherwise (other than a
subdivision or combination of shares provided for
above), the holders of the Class B Preferred Stock
shall, upon its conversion be entitled to receive, in
lieu of the Common Stock which the holders would have
become entitled to receive but for such change, a number
of shares of such other class or classes of stock that
would have been subject to receipt by the holders if
they had exercised their rights of conversion of the
Class B Preferred Stock immediately before that change.
(b) Reorganizations, Mergers, Consolidations or Sale of
Assets. If at any time there shall be a capital
reorganization of the Common Stock (other than a
subdivision, combination, reclassification or exchange
of shares provided for elsewhere in this Section 2) or
merger of the Corporation into another corporation, or
the sale of the Corporation's properties and assets as,
or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger or sale,
lawful provision shall be made so that the holders of
the Class B Preferred Stock receive the number of shares
of stock or other securities or property of the
Corporation, or of the successor corporation resulting
from such merger, to which holders of the Common Stock
deliverable upon conversion of the Class B Preferred
Stock would have been entitled on such capital
reorganization, merger or sale if the Class B Preferred
Stock had been converted immediately before that capital
reorganization, merger or sale to the end that the
provisions of this paragraph 2(k) (including adjustment
of the Conversion Rate then in effect and the number of
shares purchasable upon conversion of the Class B
Preferred Stock) shall be applicable after that event as
nearly equivalently as may be practicable.
(c) No Impairment. The Corporation will not, by amendment of
its Articles of Incorporation or through any
reorganization, recapitalization, transfer of assets,
merger, dissolution, or any other voluntary action,
avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder
by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such action as may be
necessary or appropriate in order to protect the
Conversion Rights of the holders of the Class B
Preferred Stock against impairment.
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(d) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate
for any shares of Class B Preferred Stock pursuant to
paragraphs 2(j) or (k) hereof, the Corporation at its
expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Class B Preferred
Stock effected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request
at any time of any holder of Class B Preferred Stock,
furnish or cause to be furnished to such holder a like
certificate setting forth: (i) such adjustments and
readjustments; (ii) the Conversion Rate at the time in
effect; and (iii) the number of shares of Common Stock
and the amount, if any, of other property which at the
time would be received upon the conversion of such
holder's shares of Class B Preferred Stock.
3. LIQUIDATION PROVISIONS
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, holders of Class B Preferred
Stock shall be entitled to receive an amount equal to $1,000.00 per share, plus
any accrued and unpaid dividends. After the full preferential liquidation amount
has been paid to, or determined and set apart for the Class B Preferred Stock
and all other series of preferred stock hereafter authorized and issued, if any,
the remaining assets of the Corporation available for distribution to
stockholders shall be distributed ratably to the holders of the Common Stock. In
the event the assets of the Corporation available for distribution to its
stockholders are insufficient to pay the full preferential liquidation amount
per share required to be paid to the holders of Corporation's Class B Preferred
Stock, the entire amount of assets of the Corporation available for distribution
to stockholders shall be paid up to their respective full liquidation amounts
first to the holders of Class B Preferred Stock, then to any other series of
preferred stock hereafter authorized and issued, all of which amounts shall be
distributed ratably among holders of each such series of preferred stock, and
the Common Stock shall receive nothing. A reorganization or any other
consolidation or merger of the Corporation with or into any other corporation,
or any other sale of all or substantially all of the assets of the Corporation,
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 3, and the Class B Preferred
Stock shall be entitled only to: (i) the rights provided in any agreement or
plan governing the reorganization or other consolidation, merger or sale of
assets transaction; (ii) the rights contained in the Delaware General
Corporation Law; and (iii) the rights contained in other Sections hereof.
4. DIVIDEND PROVISIONS
The holders of shares of Class B Preferred Stock shall not be entitled
to receive any dividends.
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5. RESERVATION OF STOCK TO BE ISSUED UPON CONVERSION
The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Class B Preferred Stock such
number of its shares of Common Stock as shall from time to time be sufficient,
based on the Conversion Rate then in effect, to effect the conversion of all
then outstanding shares of the Class B Preferred Stock. If at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Class B Preferred
Stock, then, in addition to all rights, claims and damages to which the holders
of the Class B Preferred Stock shall be entitled to receive at law or in equity
as a result of such failure by the Corporation to fulfill its obligations to the
holders hereunder, the Corporation will take any and all corporate or other
action as may, in the opinion of its counsel, be helpful, appropriate or
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
6. NOTICES
In the event of the establishment by the Corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any distribution, the Corporation shall mail
to each holder of Class B Preferred Stock at least twenty (20) days prior to the
date specified therein a notice specifying the date on which any such record is
to be taken for the purpose of such distribution and the amount and character of
such distribution.
Any notices required by the provisions hereof to be given to the
holders of shares of Class B Preferred Stock shall be deemed given if deposited
in the United States mail, postage prepaid and return receipt requested, and
addressed to each holder of record at its address appearing on the books of the
Corporation or to such other address of such holder or its representative as
such holder may direct.
7. VOTING PROVISIONS
Except as otherwise expressly provided or required by law, the
Preferred Stock shall have no voting rights.
PART B: ADDITIONAL PREFERRED SHARES
Additional Preferred Stock may be issued from time to time in one or
more series of any number of shares provided that the aggregate number of shares
issued and not canceled of any and all such series shall not exceed the total
number of Preferred Shares hereinabove authorized, and with distinctive serial
designations, all as shall hereafter be stated and expressed in the resolution
or resolutions providing for the issue of such Additional Preferred Stock from
time to
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time adopted by the Board of Directors pursuant to authority so to do which is
hereby vested in the Board of Directors. Each series of Additional Preferred
Stock may:
(a) have such voting powers;
(b) be subject to redemption at such time or times and at such prices;
(c) be entitled to receive dividends (which may be cumulative or
non-cumulative) at such rate or rates, on such conditions, and at such times,
and payable in preference to, or in such relation to, the dividends payable on
any other class or classes or series of shares;
(d) have such rights upon the dissolution of, or upon any distribution
of the assets of, the Corporation;
(e) be made convertible into or exchangeable for, shares of any other
class or classes or of any other series of the same or other class or classes or
of any other series of the same or any other class or classes of shares of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments;
(f) be entitled to the benefit of a sinking fund to be applied to the
purchase or redemption of shares of such series in such amount or amounts;
(g) be entitled to the benefit of conditions and restrictions upon the
creation of indebtedness of the Corporation or any subsidiary, upon the issue of
any shares (including additional shares of such series or of any other series)
and upon the payment of dividends or the making of other distributions on, and
the purchase, redemption or other acquisition by the Corporation or any
subsidiary of any outstanding shares of the Corporation; and
(h) have such other relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof;
all as shall be stated in said resolution or resolutions providing for the issue
of such Preferred Stock. Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or otherwise) or
which, if convertible or exchangeable, have been converted into or exchanged for
shares of any other class or classes shall have the status of authorized and
unissued Preferred Stock of the same series and may be reissued as a part of the
series of which they were originally a part or may be reclassified and reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors or as part of any other series of
Preferred Stock, all subject to the conditions or restrictions on issuance set
forth in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of Preferred Stock.
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FIFTH: The name and mailing address of the sole incorporator is Craig
S. Libson, c/o Parker Duryee Rosoff & Haft, P.C., 529 Fifth Avenue, 8th Floor,
New York, New York 10017.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors, or any class of them, and/or between the
Corporation and its stockholders, or any class of them, any court of equitable
jurisdiction within the State of Delaware may, upon the application of the
Corporation in a summary fashion, or of any creditor or stockholder thereof, or
on the application of any receiver or receivers appointed for the Corporation
under the provisions of ss.291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution, or of any receiver or receivers
appointed for the Corporation under the provisions of ss.279 of Title 8 of the
Delaware Code, order a meeting of the creditors, or a class of creditors, and/or
the stockholders, or a class of stockholders, of the Corporation, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three fourths in value of the creditors, or class of
creditors, and/or of the stockholders, or a class of stockholders, of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement, and the reorganization, shall,
if sanctioned by the court to which the said application has been made, be
binding on all the creditors, or class of creditors, and/or on all the
stockholders, or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation and in further definition, limitation, and regulation
of the powers of the Corporation and of its directors and of its stockholders,
or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in the
By-laws. The phrase "whole Board of Directors" and the phrase
"total number of directors" shall be deemed to have the same
meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other By-laws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance
with the provisions of ss.109 of the General Corporation Law of
the State of Delaware, and, after the Corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal
the By-laws of the Corporation may be exercised by the Board of
Directors of the Corporation, provided, however, that any
provision for the
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classification of directors of the Corporation for staggered
terms, pursuant to the provision of subsection (d) of Section 141
of the General Corporation Law of the State of Delaware, shall be
set forth in an initial By-law, or in a By-law adopted by the
stockholders entitled to vote for the Corporation, unless
provisions for such classification shall be set forth in this
Certificate of Incorporation.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the Corporation shall be authorized to
issue more than one class of stock, no outstanding share of any
class of stock which is denied voting power under the provisions
of the Certificate of Incorporation, shall entitle the holder
thereof to the right to vote at any meeting of stockholders,
except as the provisions of paragraph (2) of subsection (b)
of Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require, provided, that no share of any
such class which is otherwise denied voting power shall entitle
the holder thereof to vote upon the increase or decrease in the
number of authorized shares of said class.
NINTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of the State of Delaware, as now or
hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. The indemnification provided by this section shall not limit or
exclude any rights, indemnities or limitations of liability to which any person
may be entitled, whether as a matter of law, under the By-laws of the
Corporation, by agreement, vote of the stockholders or disinterested directors
of the Corporation, or otherwise. Except as specifically required by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
ELEVENTH:The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute and all rights and powers
conferred upon stockholders, directors and officers herein are granted subject
to this reservation.
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I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this Certificate of Incorporation, hereby
declaring and certifying, under penalties of perjury, that this is my act and
deed and the facts herein stated are true and accordingly have hereunto set my
hand this 31st day of March, 2000.
/s/ Eric C. Mendelson
-----------------------------------------
Eric C. Mendelson
c/o Parker Duryee Rosoff & Haft, P.C.
529 Fifth Avenue, 8th Floor
New York, NY 10017
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BYAWS
OF
9278 COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1 DELAWARE OFFICE. The registered office of the Corporation
in the State of Delaware shall be located in the City of Dover, County of Kent.
SECTION 1.2 OTHER OFFICES. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3 BOOKS AND RECORDS. The books and records of the Corporation
may be kept at the Corporation's headquarters in Bronx, New York, or at such
other locations outside the State of Delaware as may from time to time be
designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1 ANNUAL MEETING. The annual meeting of the stockholders of
the Corporation shall be held at such date, place and/or time as may be fixed by
resolution of the Board of Directors.
SECTION 2.2 SPECIAL MEETING.
A. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning at least twenty
percent (20%) in amount of the entire capital stock of the corporation issued
and outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
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B. Notwithstanding the above provisions of this Section 2.2(A),
effective upon a closing of an initial public offering of the Corporation's
securities pursuant to a registration statement filed under the Securities Act
of 1933, as amended, a special meeting of the stockholders of the corporation
may be called only by the President, the Chairman of the Board or by the Board
of Directors pursuant to a resolution adopted by a majority of the total number
of directors which the Corporation would have if there were no vacancies (the
"Whole Board"), or at the request in writing of stockholders owning at least
fifty percent (50%) in amount of the entire capital stock of the corporation
issued and outstanding and entitled to vote.
SECTION 2.3 PLACE OF MEETING. The Board of Directors may designate the
place of meeting for any meeting of the stockholders. If no designation is made
by the Board of Directors, the place of meeting shall be the principal office of
the Corporation.
SECTION 2.4 NOTICE OF MEETING. Written or printed notice, stating the
place, day and hour of the meeting and the purposes for which the meeting is
called, shall be prepared and delivered by the Corporation not less than ten
(10) days nor more than sixty (60) days before the date of the meeting, either
personally, or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law.
Meetings may be held without notice if all stockholders entitled to vote are
present (except as otherwise provided by law), or if notice is waived by those
not present. Any previously scheduled meeting of the stockholders may be
postponed and (unless the Certificate of Incorporation otherwise provides) any
special meeting of the stockholders may be cancelled, by resolution of the Board
of Directors upon public notice given prior to the time previously scheduled for
such meeting of stockholders.
SECTION 2.5 QUORUM AND ADJOURNMENT. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the voting
power of the outstanding shares of the Corporation entitled to vote generally in
the election of directors (the "Voting Stock"), represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except that when
specified business is to be voted on by a class or series voting separately as a
class or series, the holders of a majority of the voting power of the shares of
such class or series shall constitute a quorum for the transaction of such
business. The chairman of the meeting or a majority of the shares of Voting
Stock so represented may adjourn the meeting from time to time, whether or not
there is such a quorum (or, in the case of specified business to be voted on by
a class or series, the chairman or a majority of the shares of such class or
series so represented may adjourn the meeting with respect to such specified
business). No notice of the time and place of adjourned meetings need be given
except as required by law. The stockholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
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SECTION 2.6 PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or as may be permitted by
law, or by his duly authorized attorney-in-fact. Such proxy must be filed with
the Secretary of the Corporation or his representative at or before the time of
the meeting.
SECTION 2.7 NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
A. Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders: (a) pursuant to
the Corporation's notice of meeting delivered pursuant to Section 2.4 of these
Bylaws; (b) by or at the direction of the Chairman of the Board or the Board of
Directors; or (c) by any stockholder of the Corporation who is entitled to vote
at the meeting, who has complied with the notice procedures set forth in clauses
(2) and (3) of this paragraph (A) of this Bylaw and who was a stockholder of
record at the time such notice was delivered to the Secretary of the
Corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to a clause (c) of paragraph
(A)(1) of this Bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than seventy days nor more than
ninety days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than twenty (20) days, or delayed by more than
seventy (70) days, from such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the later of the
seventieth day prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder,
including such person's written consent to being named in the proxy statement as
a nominee and to serving as a director if elected; (b) as to any other business
that the stockholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such stockholder, as they appear on the Corporation's
books, and of such beneficial owner and (ii) the class and number of shares of
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the Corporation which are owned beneficially and of record by such stockholder
and such beneficial owner. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least eighty days prior to the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
B. Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting pursuant to Section
2.4 of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Bylaw and who is a stockholder of record at the
time such notice is delivered to the Secretary of the Corporation. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as are specified in the Corporation's Notice of Meeting, if the
stockholder's notice as required by paragraph (A)(2) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the ninetieth day prior to such special meeting and not later
than the close of business on the later of the seventieth day prior to such
special meeting or the tenth day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall the
public announcement of an adjournment of a special meeting commence a new time
period for the giving of a stockholder's notice as described above.
C. General.
(1) Only persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the chairman of the meeting shall have the power
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and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Bylaw and, if any proposed nomination or business is not in compliance
with this Bylaw, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2.8 PROCEDURE FOR ELECTION OF DIRECTORS. Election of directors
at all meetings of the stockholders at which directors are to be elected shall
be by written ballot, and, except as otherwise set forth in the Certificate of
Incorporation with respect to the right of the holders of any series of
Preferred Stock or any other series or class of stock to elect additional
directors under specified circumstances, a plurality of the votes cast thereat
shall elect directors. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all matters other than the election of directors
submitted to the stockholders at any meeting shall be decided by the affirmative
vote of a majority of the voting power of the outstanding Voting Stock present
in person or represented by proxy at the meeting and entitled to vote thereon.
SECTION 2.9 INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
A. The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act, or if all inspectors or alternates who
have been appointed are unable to act, at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the General Corporation Law of the State of
Delaware.
B. The chairman of the meeting shall fix and announce at the
meeting the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting.
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SECTION 2.10 CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
A. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Any written consent may be revoked by a writing
received by the Secretary of the Corporation prior to the time that written
consents of the number of shares required to authorize the proposed action have
been filed with the Secretary.
B. Notwithstanding the above provisions of this Section 2.10(A),
effective upon a closing of an initial public offering of the Corporation's
securities pursuant to a registration statement filed under the Securities Act
of 1933, as amended, the stockholders of the Corporation may not take action by
written consent without a meeting but must take any such actions at a duly
called annual or special meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these Bylaws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law, by the Certificate of
Incorporation or by these Bylaws required to be exercised or done by the
stockholders.
SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. Subject to the rights of
the holders of any series of Preferred Stock, or any other series or class of
stock as set forth in the Certificate of Incorporation, to elect directors under
specified circumstances, the number of directors shall initially be four (4) and
shall be fixed from time to time thereafter by a majority of the Board of
Directors; provided, however, that the number of directors shall be no less than
one (1) and no greater than nine (9).
SECTION 3.3 REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without notice other than this Bylaw immediately after,
and at the same place as, each
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annual meeting of stockholders. The Board of Directors may, by resolution,
provide the time and place for the holding of additional regular meetings
without notice other than such resolution.
SECTION 3.4 SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the Board of Directors. The person or persons
authorized to call special meetings of the Board of Directors may fix the place
and time of the meetings.
SECTION 3.5 NOTICE. Notice of any special meeting shall be given to
each director at his business or residence in writing or by telegram or by
telephone communication. If mailed, such notice shall be deemed adequately
delivered when deposited in the United States mails so addressed, with postage
thereon prepaid, at least five days before such meeting. If by telegram, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company at least twenty-four hours before such meeting. If by
facsimile transmission, such notice shall be transmitted at least twenty-four
hours before such meeting. If by telephone, the notice shall be given at least
twelve hours prior to the time set for the meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice of such meeting, except for
amendments to these Bylaws as provided under Section 8.1 of Article VIII hereof.
A meeting may be held at any time without notice if all the directors are
present (except as otherwise provided by law) or if those not present waive
notice of the meeting in writing, either before or after such meeting.
SECTION 3.6 CONFERENCE TELEPHONE MEETINGS. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
SECTION 3.7 QUORUM. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
SECTION 3.8 VACANCIES. Subject to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth in
the Certificate of Incorporation, to elect additional directors under specified
circumstances, and unless the Board of Directors otherwise determines, vacancies
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, and newly created directorships resulting from any
increase in the authorized number of directors, may be filled only by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors, and directors so chosen shall hold office for
a term expiring at the annual meeting of stockholders at which the term of
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office of the class to which they have been elected expires and until such
director's successor shall have been duly elected and qualified. No decrease in
the number of authorized directors constituting the Whole Board shall shorten
the term of any incumbent director.
SECTION 3.9 COMMITTEE.
A. The Board of Directors may designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of the
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent permitted by law and to the extent provided in the resolution of
the Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it.
B. Unless the Board of Directors otherwise provides, each
committee designated by the Board of Directors may make, alter and repeal rules
for the conduct of its business. In the absence of such rules each committee
shall conduct its business in the same manner as the Board of Directors conducts
its business pursuant to these Bylaws.
SECTION 3.10 REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth in
the Certificate of Incorporation, to elect additional directors under specified
circumstances, any director, or the entire Board of Directors, may be removed
from office at any time, with or without cause, only by the affirmative vote of
the holders of at least fifty-one percent (51 %) of the voting power of the then
outstanding Voting Stock, voting together as a single class.
ARTICLE IV
OFFICERS
SECTION 4.1 ELECTED OFFICERS. The elected officers of the Corporation
shall be a Chairman of the Board, a President, a Secretary, a Treasurer, and
such other officers as the Board of Directors from time to time may deem proper.
The Chairman of the Board shall be chosen from the directors. All officers
chosen by the Board of Directors shall each have such powers and duties as
generally pertain to their respective offices, subject to the specific
provisions of this Article IV. Such officers shall also have powers and duties
as from time to time may be conferred by the Board of Directors or by any
committee thereof.
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SECTION 4.2 ELECTION AND TERM OF OFFICE. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to Section
4.7 of these Bylaws, each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign.
SECTION 4.3 CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board.
SECTION 4.4 PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and
Chief Executive Officer shall be the general manager of the Corporation, subject
to the control of the Board of Directors, and as such shall preside at all
meetings of shareholders, shall have general supervision of the affairs of the
Corporation, shall sign or countersign or authorize another officer to sign all
certificates, contracts, and other instruments of the Corporation as authorized
by the Board of Directors, shall make reports to the Board of Directors and
shareholders, and shall perform all such other duties as are incident to such
office or are properly required by the Board of Directors. If the Board of
Directors creates the office of Chief Executive Officer as a separate office
from President, the President shall be the chief operating officer of the
corporation and shall be subject to the general supervision, direction, and
control of the Chief Executive Officer unless the Board of Directors provides
otherwise.
SECTION 4.5 SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors and all other notices
required by law or by these Bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board or the President, or by the Board of Directors,
upon whose request the meeting is called as provided in these Bylaws. He shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
by the Board of Directors, the Chairman of the Board or the President. He shall
have custody of the seal of the Corporation and shall affix the same to all
instruments requiring it, when authorized by the Board of Directors, the
Chairman of the Board or the President, and attest to the same.
SECTION 4.6 TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate receipts and
disbursements in books belonging to the Corporation. The Treasurer shall deposit
all moneys and other valuables in the name and to the credit of the Corporation
in such depositaries as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation as may be ordered by the
Board of Directors the Chairman of the Board, or the President, taking proper
vouchers for such disbursements. The Treasurer shall render to the Chairman of
the Board, the President and the Board of Directors, whenever requested, an
account of all his transactions as Treasurer and of the
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financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the Board of Directors shall
prescribe.
SECTION 4.7 REMOVAL. Any officer elected by the Board of Directors may
be removed by the Board of Directors whenever, in their judgment, the best
interests of the Corporation would be served thereby. No elected officer shall
have any contractual rights against the Corporation for compensation by virtue
of such election beyond the date of the election of his successor, his death,
his resignation or his removal, whichever event shall first occur, except as
otherwise provided in an employment contract or an employee plan.
SECTION 4.8 VACANCIES. A newly created office and a vacancy in any
office because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1 STOCK CERTIFICATES AND TRANSFERS.
A. The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the appropriate
officers of the Corporation may from time to time prescribe. The shares of the
stock of the Corporation shall be transferred on the books of the Corporation by
the holder thereof in person or by his attorney, upon surrender for cancellation
of certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require.
B. The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificates to
be in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
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ARTICLE VI
INDEMNIFICATION
SECTION 6.1 RIGHT TO INDEMNIFICATION. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person (an "Indemnitee") who
was or is made or is threatened to be made a party or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or nonprofit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including
attorneys' fees) reasonably incurred by such Indemnitee. Notwithstanding the
preceding sentence, except as otherwise provided in Section 6.3, the Corporation
shall be required to indemnify an Indemnitee in connection with a proceeding (or
part thereof) commenced by such Indemnitee only if the commencement of such
proceeding (or part thereof) by the Indemnitee was authorized by the Board of
Directors of the Corporation.
SECTION 6.2 PREPAYMENT OF EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees) incurred by an Indemnitee in defending any
proceeding in advance of its final disposition, provided, however, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Indemnitee to repay all amounts advanced if it should be ultimately
determined that the Indemnitee is not entitled to be indemnified under this
Article VI or otherwise.
SECTION 6.3 CLAIMS. If a claim for indemnification or payment of
expenses under this Article VI is not paid in full within sixty days after a
written claim therefor by the Indemnitee has been received by the Corporation,
the Indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the burden
of proving that the Indemnitee is not entitled to the requested indemnification
or payment of expenses under applicable law.
SECTION 6.4 NONEXCLUSIVITY OF RIGHTS. The rights conferred on any
Indemnitee by this Article VI shall not be exclusive of any other rights which
such Indemnitee may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders
or disinterested directors or otherwise.
SECTION 6.5 AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any
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<PAGE>
Indemnitee in respect of any act or omission occurring prior to the time of such
repeal or modification.
SECTION 6.6 OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES. This
Article VI shall not limit the right of the Corporation, to the extent and in
the manner permitted by law, to indemnify and to advance expenses to persons
other than Indemnitees when and as authorized by appropriate corporate action.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of January and end on the thirty-first day of December of each
year.
SECTION 7.2 DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its Certificate of
Incorporation.
SECTION 7.3 SEAL. The corporate seal shall have inscribed the name of
the Corporation thereon and shall be in such form as may be approved from time
to time by the Board of Directors.
SECTION 7.4 WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at, nor the purpose of, any
annual or special meeting of the stockholders of the Board of Directors need be
specified in any waiver of notice of such meeting.
SECTION 7.5 AUDITS. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be made annually.
SECTION 7.6 RESIGNATIONS. Any director or any officer, whether elected
or appointed, may resign at any time by serving written notice of such
resignation on the Chairman of the Board, the President or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President, or
the Secretary or at such later date as is stated therein. No formal action shall
be required of the Board of Directors or the stockholders to make any such
resignation effective.
-12-
<PAGE>
SECTION 7.7 CONTRACTS. Except as otherwise required by law, the
Certificate of Incorporation or these Bylaws, any contracts or other instruments
may be executed and delivered in the name and on the behalf of the Corporation
by such officer or officers of the Corporation as the Board of Directors may
from time to time direct. Such authority may be general or confined to specific
instances as the Board may determine. The Chairman of the Board, the President
or any Vice President may execute bonds, contracts, deeds, leases and other
instruments to be made or executed for or on behalf of the Corporation. Subject
to any restrictions imposed by the Board of Directors or the Chairman of the
Board, the President or any Vice President of the Corporation may delegate
contractual powers to others under his jurisdiction, it being understood,
however, that any such delegation of power shall not relieve such officer of
responsibility with respect to the exercise of such delegated power.
SECTION 7.8 PROXIES. Unless otherwise provided by resolution adopted by
the Board of Directors, the Chairman of the Board, the President or any Vice
President may from time to time appoint any attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to cast
the votes which the Corporation may be entitled to cast as the holder of stock
or other securities in any other corporation or other entity, any of whose stock
or other securities may be held by the Corporation, at meetings of the holders
of the stock and other securities of such other corporation or other entity, or
to consent in writing, in the name of the Corporation as such holder, to any
action by such other corporation or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 AMENDMENTS. These Bylaws may be amended, altered, added to,
rescinded or repealed at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was given in the notice of
the meeting and, in the case of a meeting of the Board of Directors, in a notice
given no less than twenty-four hours prior to the meeting; provided, however,
that, notwithstanding any other provisions of these Bylaws or any provision of
law which might otherwise permit a lesser vote or no vote, but in addition to
any affirmative vote of the holders of any particular class or series of the
stock required by law, the Certificate of Incorporation or these Bylaws, the
affirmative vote of the holders of at least 75 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required in order for stockholders to alter, amend or repeal any provision of
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF 9278 COMMUNICATIONS, INC. FOR THE
PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 327,792
<SECURITIES> 0
<RECEIVABLES> 4,087,170
<ALLOWANCES> 0
<INVENTORY> 927,302
<CURRENT-ASSETS> 5,416,465
<PP&E> 629,255
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,277,320
<CURRENT-LIABILITIES> 3,673,307
<BONDS> 0
1,075,000
0
<COMMON> 20,554
<OTHER-SE> 340,661
<TOTAL-LIABILITY-AND-EQUITY> 6,227,320
<SALES> 16,882,918
<TOTAL-REVENUES> 16,882,918
<CGS> 16,181,991
<TOTAL-COSTS> 16,181,991
<OTHER-EXPENSES> 1,193,188
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (492,261)
<INCOME-TAX> 0
<INCOME-CONTINUING> (492,261)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (492,261)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
