UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [__]
Check the appropriate box:
[ X ] Preliminary Proxy Statement [__] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E) (2))
[__] Definitive Proxy Statement
[__] Definitive Additional Materials
[__] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
--------------------------------------------------------------------------------
CATHAYONLINE, INC.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[_ _] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
[__] Fee paid previously with preliminary materials.
[__] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable
(2) Form, Schedule or Registration Statement No.: Not Applicable
(3) Filing Party: Not Applicable
(4) Date Filed: Not Applicable
<PAGE>
CATHAYONLINE INC.
437 Madison Avenue, 33rd Floor
New York, New York 10022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Wednesday, November 29, 2000
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of CathayOnline Inc. (the "Company") will be held at the New York Marriott
Marquis, 1535 Broadway, New York, New York 10036, on Wednesday, November 29,
2000, commencing at 10:00 a.m., New York City time. The purpose of the meeting
is to consider and act upon the following proposals and to consider and act upon
such other matters as may properly come before the meeting or any adjournment
thereof:
1. To elect six directors of the Company.
2. To approve an amendment to the Articles of Incorporation of the
Company to increase the maximum number of authorized shares of Common
Stock of the Company from 50,000,000 to 100,000,000 shares.
3. To approve an amendment to the Articles of Incorporation of the
Company to authorize 10,000,000 shares of preferred stock, the terms,
conditions and designations of which may be set by the Board of
Directors at the time of issuance.
4. To approve a change in the Company's jurisdiction of incorporation
from Nevada to Delaware by means of a merger of the Company with and
into a wholly-owned subsidiary of the Company to be established
specifically for such purpose.
The close of business on October 30, 2000 has been fixed as
the record date for determining the shareholders entitled to receive notice of
and to vote at the meeting.
The enclosed proxy is being solicited on behalf of the Board
of Directors of the Company.
Dated: October 30, 2000
New York, New York
By Order of the Board of Directors,
/s/ Glenn R. Ohlhauser
Glenn R. Ohlhauser
Secretary
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
THE CARD(S) IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE AND IS
INTENDED FOR YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S)
MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM
AT THE MEETING. IF YOU CAN ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO, EVEN IF YOU HAVE PREVIOUSLY
RETURNED A PROXY CARD TO THE COMPANY.
<PAGE>
CATHAYONLINE INC.
437 Madison Avenue, 33rd Floor
New York, New York 10022
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, NOVEMBER 29, 2000
This Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors (the "Board") of CathayOnline
Inc. (the "Company") for use at the Annual Meeting of Shareholders to be held at
the New York Marriott Marquis, 1535 Broadway, New York, New York, 10036 on
Wednesday, November 29, 2000, commencing at 10:00 a.m., New York City time, and
at any adjournments thereof (collectively, the "Meeting"). A Notice of Annual
Meeting of Shareholders and a proxy card (the "Proxy") accompany this Proxy
Statement. Proxy solicitations will be made primarily by mail, but solicitations
may also be made by telephone, telegraph or personal interviews conducted by
officers or employees of the Company, or MacKenzie Partners Inc. ("MacKenzie"),
a proxy solicitation firm that has been retained by the Company and which will
receive a fee of approximately $6000 and will be reimbursed for its reasonable
expenses. All costs of solicitation, including (a) printing and mailing of this
Proxy Statement and accompanying material, (b) the reimbursement of brokerage
firms and others for their expenses in forwarding solicitation material to the
beneficial owners of the Company's shares, (c) payment of MacKenzie for its
services in soliciting Proxies and (d) supplementary solicitations to submit
Proxies, will be borne by the Company. This Proxy Statement is expected to be
mailed to shareholders on or about November 3, 2000.
The Company's Annual Report containing audited financial
statements for the fiscal year ended June 30, 2000 is concurrently being
furnished to all shareholders of the Company. It is not to be regarded as
proxy-soliciting material.
If the enclosed Proxy is properly executed and returned in
time to be voted at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. If no instructions are
marked on the Proxy, the Proxy will be voted FOR election of the nominees for
director, FOR the proposed amendment to the Articles of Incorporation to
increase the number of authorized shares, FOR the proposed amendment to the
Articles of Incorporation to authorize preferred stock, FOR the proposed
reincorporation in Delaware, and in accordance with the judgment of the persons
named in the proxy on any other matters that may properly come before the
Meeting and that are deemed appropriate.
Any shareholder giving a Proxy has the right to attend the
Meeting to vote his or her shares in person (thereby revoking any prior Proxy)
and also the right to revoke a Proxy at any time by written notice received by
the Company prior to the time it is voted. In the event that a quorum is present
at the Meeting but sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of Proxies. Any such adjournment will
require the affirmative vote of a majority of the votes cast by the holders of
shares entitled to vote thereon. A shareholder vote may be taken on one or more
of the proposals in the Proxy Statement prior to any adjournment if sufficient
votes have been received and it is otherwise appropriate. A quorum of
shareholders is constituted by the presence in person or by proxy of the
shareholders holding of record a majority of the total number of shares of the
Company then issued and outstanding and entitled to vote at the Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted.
Proposal 1 requires for approval the vote of a majority of the votes cast at the
Meeting in person or by proxy by the holders of shares entitled to vote thereon.
Proposal 2, Proposal 3 and Proposal 4 require for approval the vote of the
shareholders holding shares of the Company entitling them to exercise at least a
majority of the voting power.
The Company has one class of shares of common stock, par value
$.001 per share (the "Common Stock"). On the record date, October 30, 2000,
there were 30,334,201 shares of Common Stock outstanding. Each holder of record
of Common Stock shall be entitled to one vote for each share of Common Stock
owned by such holder.
In order that your shares may be represented at the Meeting,
you are requested to:
o complete, date and sign the Proxy;
o mail the Proxy promptly in the enclosed envelope;
o allow sufficient time for the Proxy to be received and processed
on or before 10:00 a.m. on November 29, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be submitted at the Meeting will be the
election of five (5) directors of the Company, each to hold office for a term of
one year and until his or her successor is elected and qualified.
At present, the Board of Directors (the "Board") consists of
four (4) directors: Messrs. Brian W. Ransom, Peter Lau, Kenneth Levy and Owen
Li. The term of office of each of these directors will expire on the date of the
Meeting. Each of the current directors has been nominated for re-election. Each
nominee has indicated an intention to continue to serve if elected and has
consented to being named in this Proxy Statement.
The following table sets forth certain information for the
nominees for election to the Board of the Company and the officers of the
Company.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND EMPLOYMENT FOR THE PAST
NAME/ADDRESS AGE FIVE YEARS DIRECTOR SINCE
------------------------- --- ------------------------------------------------- --------------
<S> <C> <C> <C>
Brian W. Ransom 39 President and Director of the Company 1999
543 Granville Street (12/98-present); independent consultant and
Suite 1108 negotiator for North American and European
Vancouver companies (1991 to 12/98).
British Columbia
Canada V6C 1X8
Peter S. Lau 47 Chief Executive Officer of CathayOne Inc. 1999
437 Madison Avenue (07/00-present); Secretary of the Company
33rd Floor (07/00-present); Chief Financial Officer and
New York, NY 10022 Secretary of the Company (10/99-07/00); Managing
Director of Corporate Finance, American
Frontieer Financial Inc. (11/96-07/99); MD Heng
Fung Capital Inc. (03/96 - 07/99); Managing
Director of Corporate Finance, Ridgewood Capital
LLC (02/92 - 10/96)
Kenneth M. Levy 54 President, United Network Marketing Systems 2000
575 Madison Avenue (01/00-present); Managing Director of Janssen
10th Floor Meyers Associates LP (03/97-12/99); President of
New York, NY 10022 Marshall Alexander & Marshall (06/94 - 03/97).
Owen L. Li 37 Managing Director, Sichuan CathayOnline 1999
9/F, DongFu Mansion Technologies Co. Ltd. (06/99-present); Manager,
No. 3 North Yu Lin Road ChengduNet (09/97-05/99); Database
Chengdu, Sichuan Administrator, Workers' Compensation Board of
China 610041 the Province of British Columbia, Canada
(07/91-09/97).
Jack Chin 61 President of Dai Tong Co. Inc. since 1975 to 2000
present. Also currently Chairman of the Board
for China Industrial & Technology Corporation,
Texas, USA.
Glenn R. Ohlhauser 47 Chief Financial Officer of the Company N/A
543 Granville Street (7/00-present); Secretary /Treasurer (05/10/00
Suite 1108 - present); Principal, MacKay & Partners,
Vancouver Chartered Accountants (1993 - 2000).
British Columbia
Canada V6C 1X8
Yuning Wang 40 Vice President, China Operations N/A
543 Granville Street 06/00 - present; Torchmail.com Inc.; Lothian
Suite 1108 Energy Corp. (11/97 - 04/99); Vice President of
Vancouver China Oil and Gas Corporation (09/96 - 10/97);
British Columbia Richie Petroleum Corp. (03/95 -08/96)
Canada V6C 1X8
</TABLE>
During the fiscal year ended June 30, 2000, the Company's
Board of Directors met six times. All directors other than Mr. Levy and Mr. Chin
(who were not appointed to the Board of Directors until February, 2000 and
October, 2000, respectively) attended at least 75% of these meetings.
No director who receives a salary from the Company or its
subsidiaries is paid any fees to serve as a director or as a member of any
committee of the Board of Directors.
The director not receiving a salary from the Company, Mr. Levy
(the "Outside Director"), has not been paid any fee for his services as a
director or as a member of the Audit Committee.
The Board of Directors currently has an Audit Committee, which
consists of Mr. Levy. The Board of Directors has not yet adopted a written
Charter for the Audit Committee. The Audit Committee recommends to the Board of
Directors the appointment of the independent public accountants. The Audit
Committee reviews and considers the comments from the independent public
accountants with respect to internal accounting controls and the consideration
given or corrective action taken by management to weaknesses, if any, in
internal controls. The Audit Committee discusses matters of concern to the
Committee, the independent public accountants or management relating to the
Company's financial statements or other results of the audit. It also meets with
the Company's chief financial officer regarding internal auditing matters and
controls. Based on these discussions and reviews, the Audit Committee has
recommended to the Board of Directors that the audited financials be included in
the Company's Annual Report on Form 10-K.
The Board does not have a nominating committee or a
compensation committee. The Board performs the functions of a nominating
committee and will consider nominees recommended by shareholders in the event
that any vacancies arise. Recommendations should be submitted to the Board in
care of the Secretary of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE NOMINEES
FOR DIRECTOR.
PROPOSAL 2 AND PROPOSAL 3. AMENDMENTS TO ARTICLES OF INCORPORATION.
On June 28, 2000, the Board unanimously approved a resolution
recommending the advisability of, and submission to the shareholders for
approval of, a proposal to amend the Company's Articles of Incorporation to
increase the maximum number of authorized shares of Common Stock of the Company
from 50,000,000 shares to 100,000,000 shares. On September 28, 2000, the Board
unanimously approved a resolution recommending the advisability of, and
submitting to the shareholders for approval of, a proposal to amend the
Company's Articles of Incorporation to authorize 10,000,000 shares of preferred
stock (the "Preferred Stock").
If these proposals are adopted by the shareholders of the
Company, Article Fourth of the Articles of Incorporation would be amended and
restated in its entirety, as follows:
"The corporation is authorized to issue 100,000,000 shares of
common stock with a par value of $0.001 per share, which shares may be
issued by the corporation from time to time for such consideration as
may be fixed from time to time by the Board of Directors. In addition,
the corporation is authorized to issue 10,000,000 shares of preferred
stock in one or more classes or series, which shares may be issued by
the corporation from time to time for such consideration as may be
fixed from time to time by the Board of Directors, and which shares
shall have such voting powers, designations, preferences, limitations,
restrictions, relative rights and distinguishing designations for each
class or series as may described in the in the resolution or
resolutions of the Board of Directors before the issuance of such
shares."
The proposed increase in the number of authorized shares of
the Company will provide additional shares for issuance, without the delay and
expense of further shareholder approval, at such time and for such proper
corporate purposes as the Board of the Company may in the future deem advisable.
Such shares may be issued if and when the Company's Board decides it is in the
best interest of the Company to do so which may include, without limitation,
issuances (i) as part of an acquisition transaction; (ii) to obtain funds
through the sale of the Company's Common Stock; (iii) to declare a stock split
or stock dividend; (iv) in respect of an employee benefit or stock plan; or (v)
for other corporate purposes.
This amendment will also provide the Board of Directors the
authority to issue from time to time one or more series of Preferred Stock, the
specific terms, rate of dividends, preferences and conditions of which will
determined by the Board prior to each issuance, without further shareholder
approval. The Board does not have any current plans to issue any Preferred
Stock, and adoption of Proposal 2 will not cause any current change to the
Company's outstanding capitalization. However, the Board of Directors believes
that having preferred stock authorized in the Company's Articles of
Incorporation will provide the Board with greater flexibility in raising capital
for the Company. The use of Preferred Stock may permit the Company to raise
capital without diluting the voting interests or ownership interests of current
holders of the Common Stock. Permitting the Board to set the terms, rates,
conditions and preferences of any issuance of any series of Preferred Stock at
the time the stock is issued, without further shareholder approval, will permit
the Board to exercise the maximum flexibility and will allow the Board to react
to changing market conditions or business opportunities which require additional
capital. In certain situations, issuance of a series of Preferred Stock could
hinder the ability of a third-party to take control of the Company.
Unless required by applicable law, the rules of the NASD, the
Company's Articles of Incorporation or the Company's By-Laws, it is not
anticipated that the Company will solicit the votes of shareholders prior to the
issuance of the Company's Common Stock or Preferred Stock for any of the
purposes described above.
If additional shares of the Company's Common Stock were to be
issued in the future out of the authorized shares contemplated by this Proposal
2 and if such additional shares of Common Stock issued to anyone other than the
then existing holders of the Company's Common Stock, the percentage interest of
such existing holders in the Company's Common Stock would be reduced. Although
the existence or issuance of authorized but unissued shares of stock could,
under certain circumstances, have an anti-takeover effect, by diluting the
percentage ownership of persons seeking to obtain control of the Company, the
Company has no present intention to issue such shares for anti-takeover
purposes.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS OF THE
COMPANY VOTE "FOR" PROPOSAL 2 AND PROPOSAL 3.
PROPOSAL 4: REINCORPORATION IN DELAWARE
INTRODUCTION
For the reasons set forth below, the Board of Directors of the
Company believes that it is in the best interests of the Company and its
shareholders to change the jurisdiction of incorporation of the Company from
Nevada to Delaware (the "Proposed Reincorporation"). SHAREHOLDERS ARE URGED TO
READ CAREFULLY THIS SECTION OF THE PROXY STATEMENT, INCLUDING THE RELATED
EXHIBITS REFERENCED BELOW AND ATTACHED HERETO, BEFORE VOTING ON THE PROPOSED
REINCORPORATION. Throughout this Proxy Statement, the term "CathayOnline Nevada"
or the "Company" refers to CathayOnline Inc., the existing Nevada corporation,
and the term "CathayOnline Delaware" refers to CathayOnline Inc., the new
Delaware corporation, a wholly owned subsidiary of CathayOnline Nevada, which is
the proposed successor to CathayOnline Nevada pursuant to the Delaware
Reincorporation.
As discussed below, the principal reason for the Proposed
Reincorporation is to permit the Company to take advantage of the greater
flexibility of Delaware corporation law and the substantial body of case law
interpreting that law. The Company believes that its shareholders will benefit
from the well-established principles of corporate governance that Delaware law
affords. The proposed Certificate of Incorporation for CathayOnline Delaware
(the "Delaware Certificate"), set forth as Appendix A hereto, is substantially
similar to the Articles of Incorporation currently in effect for CathayOnline
Nevada (the "Existing Articles"). Certain differences, including the following,
are discussed below:
- The shareholders of CathayOnline Delaware will be unable
to act by written consent in lieu of a meeting unless the
action proposed to be taken, and the taking of the action
by written consent, are approved in advance by the board
of directors of CathayOnline Delaware;
- The shareholders will be unable to compel the President of
CathayOnline Delaware to call a special meeting of
shareholders;
- Any business not specifically stated in the notice of a
special meeting of the shareholders of CathayOnline
Delaware cannot be conducted at the special meeting; and
- Shareholder nominations for the election of directors at a
meeting of shareholders and proposals for the conduct of
business at an annual meeting of shareholders will have to
be made in advance of the meeting of shareholders.
The Proposed Reincorporation is not being proposed in order to
prevent an unsolicited takeover attempt, and the Company's Board of Directors is
not aware of any present attempt by any person to acquire control of the
Company, obtain representation on the Company's Board of Directors or take any
action that would materially affect the governance of the Company.
The Proposed Reincorporation will be affected by merging
CathayOnline Nevada with and into CathayOnline Delaware (the "Merger"). Upon
completion of the proposed Merger, CathayOnline Nevada, as a corporate entity,
will cease to exist and CathayOnline Delaware will continue to operate the
business of the Company under its current name, CathayOnline Inc.
Pursuant to the proposed Agreement and Plan of Merger, in
substantially the form attached hereto as Appendix B (the "Merger Agreement"),
each outstanding share of Common Stock (the "Common Stock") will be
automatically converted into one share of CathayOnline Delaware common stock,
par value $0.001 per share (the "Delaware Common Stock"), upon the effective
date of the proposed Merger. EACH STOCK CERTIFICATE REPRESENTING ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK WILL CONTINUE TO REPRESENT THE SAME NUMBER OF
SHARES OF THE DELAWARE COMMON STOCK. IT WILL NOT BE NECESSARY FOR SHAREHOLDERS
TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF
CATHAYONLINE DELAWARE. HOWEVER, SHAREHOLDERS MAY EXCHANGE THEIR CERTIFICATES IF
THEY SO CHOOSE. The Common Stock is included for quotation on the Nasdaq
Bulletin Board under the symbol "CAOL.OB" and, after the proposed Merger, the
Delaware Common Stock will continue to be included for quotation on the Nasdaq
Bulletin Board without interruption, under the same symbol "CAOL.OB" as the
shares of Common Stock are currently traded.
Under Nevada law and pursuant to the Existing Articles, the
vote of the shareholders holding shares of the Company entitling them to
exercise at least a majority of the voting power is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby. The
Proposed Reincorporation has been unanimously approved by the Company's Board of
Directors. If approved by the shareholders, it is anticipated that the Merger
will become effective as soon as practicable (the "Effective Date") following
the annual meeting of shareholders. However, pursuant to the Merger Agreement,
the proposed Merger may be abandoned or the Merger Agreement may be amended by
the Board of Directors of the Company (except that certain principal terms may
not be amended without shareholder approval) either before or after shareholder
approval has been obtained and prior to the Effective Date.
The discussion set forth below is qualified in its entirety by
reference to the proposed Merger Agreement (see Appendix B), the Existing
Articles, the Existing By-laws, the proposed Delaware Certificate (see Appendix
A), and the proposed Delaware Bylaws (see Appendix C).
APPROVAL OF THE PROPOSED REINCORPORATION WILL CONSTITUTE
APPROVAL OF THE MERGER AGREEMENT, THE DELAWARE CERTIFICATE AND THE DELAWARE
BYLAWS AND ALL PROVISIONS THEREOF.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
The following describes the advantages to changing the
jurisdiction of incorporation of the Company from Nevada to Delaware:
Prominence, Predictability and Flexibility of Delaware Law.
For many years, Delaware has followed a policy of encouraging incorporation in
that state. In furtherance of that policy, Delaware has been a leader in
adopting, construing and implementing comprehensive, flexible corporate laws
responsive to the legal and business needs of corporations organized in
Delaware. Many corporations have chosen Delaware initially as a state of
incorporation or have subsequently changed corporate domicile to Delaware in a
manner similar to that proposed by the Company. Because of Delaware's prominence
as the state of incorporation for many major corporations, both the legislature
and courts in Delaware have demonstrated ability and a willingness to act
quickly and effectively to meet changing business needs. The Delaware courts
have developed considerable expertise in dealing with corporate issues, and a
substantial body of case law has developed construing Delaware law and
establishing policies with respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified Directors.
Both Nevada and Delaware law permit a corporation to include a provision in its
charter that reduces or limits the monetary liability of directors for breaches
of fiduciary duty in certain circumstances. The Company believes that, in
general, Delaware case law regarding a corporation's ability to limit director
liability is more developed and provides more guidance than Nevada law. This
will help the Company to recruit and retain qualified directors.
Well-Established Principles of Corporate Governance. There is
substantial judicial precedent in the Delaware courts as to the legal principles
applicable to measures that may be taken by a corporation and as to the conduct
of the board of directors of a corporation such as the "business judgment rule"
and other standards. The Company believes that its shareholders will benefit
from the well-established principles of corporate governance under Delaware law.
No Change in Board Members, Business, Management or Location
of Principal Facilities of the Company. The Proposed Reincorporation will effect
only a change in the legal domicile of the Company and certain other changes of
a legal nature, certain of which are described in this Proxy Statement. The
Proposed Reincorporation will NOT result in any change in the name, business,
management, fiscal year, assets or liabilities (except to the extent of legal
and other costs of effecting the Merger) or location of the principal facilities
of the Company. All warrants of the Company will be assumed and continued by
CathayOnline Delaware, and each warrant of CathayOnline Nevada will
automatically be converted into a warrant to purchase the same number of shares
of Delaware Common Stock, at the same price per share, upon the same terms, and
subject to the same conditions. Shareholders should note that approval of the
Proposed Reincorporation will also constitute approval of the assumption of
these plans by CathayOnline Delaware. As noted above, after the proposed Merger,
shares of Delaware Common Stock will continue to be included for quotation on
the Nasdaq Bulletin Board and under the same symbol "CAOL.OB" as the shares of
Common Stock are currently traded. The Company believes that the Proposed
Reincorporation will not affect any of its material contracts with any third
parties and that CathayOnline Nevada's rights and obligations under such
material contracts will continue and be assumed by CathayOnline Delaware.
ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to
adopt a number of measures designed to reduce a corporation's vulnerability to
unsolicited takeover attempts through amendment of the corporation's certificate
of incorporation or bylaws or otherwise. The Proposed Reincorporation is NOT
being proposed in order to prevent such a change in control, and the Board of
Directors of the Company is not aware of any current attempt to acquire control
of the Company or to obtain representation on the Company's Board of Directors.
The Board of Directors of the Company, however, believes that future unsolicited
takeover attempts may be unfair or disadvantageous to the Company and its
shareholders because, among other reasons:
- a non-negotiated takeover bid may be timed to take
advantage of temporarily depressed stock prices;
- a non-negotiated takeover bid may be designed to
foreclose or minimize the possibility of more favorable
competing bids or alternative transactions;
- a non-negotiated takeover bid may involve the
acquisition of only a controlling interest in the
Company's stock, without affording all shareholders the
opportunity to receive the same economic benefits; and
By contrast, in a transaction in which a potential acquirer
must negotiate with an independent board of directors, the board of directors
can and should take account of the underlying and long-term values of the
business, technology and other assets, the possibility of alternative
transactions on more favorable terms, anticipated favorable developments in the
business not yet reflected in the stock price and equality of treatment among
all shareholders.
Certain aspects of the Proposed Reincorporation may have the
effect of deterring hostile takeover attempts. Section 203 of the General
Corporation Law of the State of Delaware ("DGCL") restricts certain "business
combinations" with "interested shareholders" for three years following the date
that a person becomes an "interested shareholder," unless the board of directors
of the corporation approves the business combination. CathayOnline Delaware may
choose to opt out of this provision but currently does not intend to do so.
Despite the belief of the Company's Board of Directors as to
the benefits to its shareholders of the Proposed Reincorporation, it may be
disadvantageous to the extent that it has the effect of discouraging a future
takeover attempt which is not approved by the Company's Board of Directors, but
which a majority of the shareholders may deem to be in their best interests or
in which shareholders may receive a substantial premium for their shares over
the then current market value or their cost basis in such shares. As a result of
such effects of the Proposed Reincorporation, shareholders who might wish to
participate in an unsolicited tender offer may not have an opportunity to do so.
In addition, to the extent that provisions of Delaware law enable the Company's
Board of Directors to resist a takeover or change in control of the Company,
such provisions could make it more difficult to change the existing board and
management.
THE ARTICLES OF INCORPORATION AND BYLAWS OF THE COMPANY AND THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF CATHAYONLINE DELAWARE
The provisions of the proposed Delaware Certificate and the
proposed bylaws of CathayOnline Delaware (the "Delaware Bylaws") are
substantially similar to those of the Existing Articles and the existing By-laws
of the Company (the "Existing By-laws"), with certain differences such as:
- The shareholders of CathayOnline Delaware will be unable
to act by written consent in lieu of a meeting unless the
action proposed to be taken, and the taking of the action
by written consent, are approved in advance by the board
of directors of CathayOnline Delaware;
- The shareholders will be unable to compel the President of
CathayOnline Delaware to call a special meeting of
shareholders;
- Only business stated in the notice of a special meeting of
the shareholders of CathayOnline Delaware will be
conducted at a special meeting; and
- Shareholder nominations for the election of directors at a
meeting of shareholders and proposals for the conduct of
business at an annual meeting of shareholders will have to
be made in advance of the meeting of shareholders.
While the Company has no present intention to do so,
CathayOnline Delaware could, in the future, implement certain other changes by
amendment to the proposed Delaware Certificate or the proposed Delaware Bylaws.
The following discussion of the proposed Delaware Certificate
and Delaware Bylaws is qualified by reference to Appendix A and Appendix C
hereto, respectively. For a more detailed explanation, see "-- Significant
Differences Between the Corporation Law of Nevada and Delaware."
Authorized Capital Stock. The Existing Articles currently
authorize the Company to issue up to 50,000,000 shares of Common Stock. If
Proposal 2, Proposal 3 and the Proposed Reincorporation are all approved by the
shareholders, the proposed Delaware Certificate will authorize CathayOnline
Delaware to issue up to 100,000,000 shares of Delaware Common Stock and
10,000,000 shares of preferred stock, and will permit CathayOnline Delaware's
board of directors to determine the voting powers, designations, preferences,
limitations, restrictions and relatives rights for each class or series of the
authorized and unissued preferred stock. If the shareholders approve the
Proposed Reincorporation but not Proposal 2 and Proposal 3, the proposed
Delaware Certificate will authorize CathayOnline Delaware to issue up to
50,000,000 shares of Delaware Common Stock and no preferred stock.
Limitation of Liability of Directors or Officers. The Existing
Articles and the proposed Delaware Certificate both provide for the elimination
of personal liability of directors and officers to the maximum extent
permissible under the law of the respective states. The Existing Articles, in
accordance with Nevada law, limit the personal liability of directors or
officers of the Company for breaches of fiduciary duty other than for acts or
omissions which involve intentional misconduct, fraud or knowing violations of
law and for payment of dividends in violation of Nevada law. The proposed
Delaware Certificate, in accordance with Delaware law, limits the personal
liability of directors for breaches of fiduciary duty other than for (i)
breaches of the duty of loyalty to CathayOnline Delaware or its shareholders,
(ii) acts or missions not in good faith or involving intentional misconduct or a
knowing violation of law, (iii) unlawful payment of dividends or unlawful
purchase or redemption of stock, or (iv) any transaction from which a director
derived an improper personal benefit. Thus, the proposed Delaware Certificate
may not limit the personal liability of directors of CathayOnline Delaware to as
great an extent as the Existing Articles.
In addition, in compliance with Delaware law, the proposed
Delaware Certificate only limits the personal liability of directors of
CathayOnline Delaware as opposed to both directors and officers under the
Existing Articles.
Removal of Directors. The Existing By-laws provide that any
director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of CathayOnline Nevada at a special meeting of the
shareholders called for that purpose, and may be removed for cause by action of
the Board. Similarly, the proposed Delaware Bylaws provide that any director or
the entire board of directors may be removed with or without cause by the
holders of a majority of the voting power of the outstanding shares of capital
stock of CathayOnline Delaware entitled to vote at an election of directors.
Filling Vacancies on the Board of Directors. The Existing
By-laws, in accordance with Nevada law, provide that vacancies on the Company's
Board of Directors may be filled by a majority vote of the remaining directors,
though less than a quorum. The proposed Delaware Bylaws, in accordance with the
DGCL, similarly provide that vacancies on the board of directors of CathayOnline
Delaware may be filled by a majority of the remaining directors, although less
than a quorum.
Power to Call Special Shareholders' Meetings. The Existing
By-laws provide that special meetings of shareholders may be called by the
President or by the Board of Directors, and must be called by the President or
the Secretary at the written request of the holders of 10% of the shares then
outstanding and entitled to vote thereat. The proposed Delaware Certificate and
Delaware Bylaws, by contrast, provide that special meetings of shareholders may
only be called by the President or by the Board of Directors and not by any
other person. The proposed Delaware Bylaws do not permit ten (10%) or more of
the issued and outstanding shares of voting stock of CathayOnline Delaware to
compel the President, by their written request, to call a special meeting of
shareholders.
Notice of Shareholder Business and Nominations. The Existing
By-laws do not specifically require shareholders to notify the Company of any
proposed business to be transacted at an annual meeting of shareholders or of
any proposed nominations for the election of directors. By contrast, the
proposed Delaware Bylaws require advance written notice of a shareholder's
intention to propose to nominate a director for election to the board of
directors of CathayOnline Delaware or to propose business to be conducted at an
annual meeting of the shareholders of CathayOnline Delaware. Such advance notice
must be timely, which, in general, requires it to be delivered to the Secretary
of CathayOnline Delaware at the principal executive offices of CathayOnline
Delaware no later than the ninetieth (90th) day or earlier than the one hundred
twentieth (120th) day prior to the first anniversary of the preceding year's
annual meeting. In addition, the proposed Delaware Bylaws provide that the
shareholder must attend the shareholders' meeting to present any proposed
nomination or business in order for such nomination or business to be considered
at the shareholders' meeting.
Amendment of Bylaws. The Existing By-laws permit the Board of
Directors to amend the Existing By-laws, except that the board does not have
power to change the quorum for meetings of shareholders or to change any
provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the board resulting from the removal by the
shareholders. The proposed Delaware Bylaws provide that the Delaware Bylaws may
be amended or repealed and new Delaware Bylaws adopted by the vote of a majority
of directors present at a meeting at which a quorum of the board of directors is
present.
Actions By Written Consent of Shareholders. The Existing
Articles and the Existing By-laws do not prohibit shareholder action by written
consent in lieu of a meeting. The proposed Delaware Certificate, by contrast,
prevents the shareholders of CathayOnline Delaware from acting by written
consent in lieu of a meeting of shareholders unless the action proposed to be
taken, and the taking of the action by written consent, are approved in advance
by the board of directors of CathayOnline Delaware.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEVADA AND DELAWARE
CathayOnline Nevada is incorporated under the laws of the
State of Nevada. Upon the approval of the Proposed Reincorporation, CathayOnline
Delaware will be incorporated under the laws of the State of Delaware. On
consummation of the proposed Merger, the shareholders of the Company, whose
rights currently are governed by Nevada law, the Existing Articles and the
Existing By-laws, will become shareholders of a Delaware company, CathayOnline
Delaware, and their rights as shareholders will then be governed by Delaware
law, the proposed Delaware Certificate and Delaware Bylaws.
Although the corporate statutes of Nevada and Delaware are
similar, certain differences exist. The most significant differences, in the
judgment of the management of the Company, are summarized below. This summary is
not intended to be complete, and shareholders should refer to the General
Corporation Law of the State of Delaware (the "DGCL") and the Nevada Business
Corporation Act ("Nevada law") for information concerning how these laws apply
to the Company and CathayOnline Delaware.
Classified Board of Directors. The DGCL permits a Delaware
corporation to classify its board of directors into as many as three classes
with staggered terms of office. After initial implementation of a classified
board, one class will be elected at each annual meeting of the shareholders to
serve for a term of one, two or three years (depending upon the number of
classes into which directors are classified) or until their successors are
elected and take office. Nevada law also permits corporations to classify boards
of directors provided that at least one-fourth of the total number of directors
is elected annually. The Company currently does not have a classified board, nor
will CathayOnline Delaware's board of directors be classified in connection with
the proposed Merger.
Removal of Directors. With respect to removal of directors,
under Nevada law, any one or all of the directors of a corporation may be
removed by the holders of not less than two-thirds of the voting power of a
corporation's issued and outstanding stock. Nevada does not distinguish between
removal of directors with and without cause. Under the DGCL, directors of a
corporation without a classified board may be removed with or without cause, by
the holders of a majority of shares then entitled to vote in an election of
directors.
Special Meetings of Shareholders. The DGCL permits special
meetings of shareholders to be called by the board of directors or by any other
person authorized in the certificate of incorporation or bylaws to call a
special shareholder meeting. Nevada law does not address the manner in which
special meetings of shareholders may be called. As previously discussed, the
Existing By-laws provide that special meetings of shareholders may be called by
the President or by the Company's Board of Directors, and must be called by the
President at the written request of the holders of 10% of the shares outstanding
and entitled to vote. In contrast, the proposed Delaware Certificate and
Delaware Bylaws do not provide that the President must call a special meeting of
the shareholders if 10% or more of the issued and outstanding shares of voting
stock of CathayOnline Delaware request in writing.
In addition, the DGCL provides that if an annual meeting for
the election of directors is not held for a period of thirty (30) days from the
date designated, or action by written consent in lieu of an annual meeting has
not been taken for a period of thirty (30) days after the date designated, or if
no date has been designated for a period of thirteen months after the last
annual meeting or last action by written consent in lieu of an annual meeting, a
shareholder or director may apply to the Court of Chancery of the State of
Delaware for an order to hold an annual meeting of shareholders for the purpose
of electing directors.
Cumulative Voting. Cumulative voting for directors entitles
shareholders to cast a number of votes that is equal to the number of voting
shares held multiplied by the number of directors to be elected. Shareholders
may cast all such votes either for one nominee or distribute such votes among up
to as many candidates as there are positions to be filled. Cumulative voting may
enable a minority shareholder or group of shareholders to elect at least one
representative to the board of directors where such shareholders would not
otherwise be able to elect any directors. Nevada law permits cumulative voting
in the election of directors as long as the articles of incorporation provide
for cumulative voting and certain procedures for the exercise of cumulative
voting are followed. The Company opted out of cumulative voting by not including
such a provision in the Existing Articles. A Delaware corporation may provide
for cumulative voting in the corporation's certificate of incorporation. The
proposed Delaware Certificate also does not provide for cumulative voting in the
election of directors. Because neither the Company nor CathayOnline Delaware
utilizes cumulative voting, there will be no difference in shareholders' rights
with respect to this issue.
Vacancies. Under the DGCL, subject to the rights, if any, of
any series of preferred stock to elect directors and to fill vacancies on the
board of directors, vacancies on the board of directors may be filled by the
affirmative vote of a majority of the remaining directors then in office, even
if less than a quorum. Any director so appointed will hold office for the
remainder of the full term of the class of directors in which the vacancy
occurred. Similarly, Nevada law provides that vacancies may be filled by a
majority of the remaining directors, though less than a quorum, unless the
articles of incorporation provide otherwise. The Existing By-laws and the
proposed Delaware Bylaws address the issue of director vacancies in the same
manner. Therefore, the change from Nevada law to Delaware law will not alter
shareholders' rights with respect to filling vacancies.
Indemnification of Officers and Directors and Advancement of
Expenses. The DGCL and Nevada law have substantially similar provisions
regarding indemnification by a corporation of its officers, directors, employees
and agents. The DGCL and Nevada law differ in the extent to which they provide
for advancement of expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding. The DGCL provides that expenses
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined that he or she is not
entitled to be indemnified by the corporation. A Delaware corporation has the
discretion to decide whether or not to advance expenses, unless its certificate
of incorporation or bylaws provides for mandatory advancement. Under Nevada law,
the articles of incorporation, bylaws or an agreement made by the corporation
may provide that the corporation must pay advancements of expenses in advance of
the final disposition of the action, suit or proceedings upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined that he or she is not entitled to be indemnified by the
corporation. Thus, a Nevada corporation may have no discretion to decide whether
or not to advance expenses to directors or officers. Neither the Existing
Articles nor the Existing By-laws currently provide for the mandatory
advancement of expenses of directors and officers. In contrast, the proposed
Delaware Certificate provides for mandatory advancement of expenses of directors
and officers.
Limitation on Personal Liability of Directors. A Delaware
corporation is permitted to adopt provisions in its certificate of incorporation
limiting or eliminating the liability of a director to a company and its
shareholders for monetary damages for breach of fiduciary duty as a director,
provided that such liability does not arise from certain specified conduct,
including breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law or liability
to the corporation based on unlawful dividends or distributions or improper
personal benefit. The proposed Delaware Certificate will limit the liability of
directors to CathayOnline Delaware to the fullest extent permitted by law.
While Nevada law also permits the adoption of provisions in
the articles of incorporation limiting personal liability, the Nevada statute
differs in two respects. First, the Nevada provisions applies to both directors
and officers. Second, in contrast to the DGCL, Nevada law permits limitation of
liability arising from a breach of the duty of loyalty. The Existing Articles
limits the personal liability to the Company of both directors and officers. The
proposed Delaware Certificate adopts a narrower limitation on liability, and
officers will therefore remain potentially liable to CathayOnline Delaware.
CathayOnline Delaware, however, may determine to indemnify such persons in its
discretion subject to the conditions of the DGCL and the proposed Delaware
Certificate.
Dividends. The DGCL is more restrictive than Nevada law with
respect to when dividends may be paid. Under the Delaware law, unless further
restricted in the certificate of incorporation, a corporation may declare and
pay dividends out of surplus, or if no surplus exists, out of net profits for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year (provided that the amount of capital of the corporation is not less than
the aggregate amount of the capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets). In
addition, the DGCL provides that a corporation may redeem or repurchase its
shares only if the capital of the corporation is not impaired and such
redemption or repurchase would not impair the capital of the corporation.
Nevada law provides that no distribution (including dividends
on, or redemption or repurchases of, shares of capital stock) may be made if,
after giving effect to such distribution, the corporation would not be able to
pay its debts as they become due in the usual course of business, or, except as
specifically permitted by the articles of incorporation, the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed at the time of a dissolution to satisfy the preferential rights
of preferred shareholders.
Restrictions on Business Combinations. Both the DGCL and
Nevada law contain provisions restricting the ability of a corporation to engage
in business combinations with an interested shareholder. Under the DGCL, a
corporation which is listed on a national securities exchange, included for
quotation on the Nasdaq Stock Market or held of record by more than 2,000
shareholders, is not permitted to engage in a business combination with any
interested shareholder for a three-year period following the time when such
shareholder became an interested shareholder, unless (i) the transaction
resulting in a person becoming an interested shareholder, or the business
combination, is approved by the board of directors of the corporation before the
person becomes an interested shareholder; (ii) the interested shareholder
acquires 85% or more of the outstanding voting stock of the corporation in the
same transaction that makes it an interested shareholder (excluding shares owned
by persons who are both officers and directors of the corporation, and shares
held by certain employee stock ownership plans); or (iii) on or after the date
the person becomes an interested shareholder, the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting (and not by written consent), excluding shares owned by the interested
shareholder. The DGCL defines "interested shareholder" generally as a person who
owns 15% or more of the outstanding shares of a corporation's voting stock.
Nevada law regulates business combinations more stringently.
First, an "interested shareholder" is defined as a beneficial owner (directly or
indirectly) of 10% or more of the voting power of the outstanding shares of the
corporation. Second, the three-year moratorium can be lifted only by advance
approval by a corporation's board of directors. Finally, after the three-year
period, combinations with "interested shareholders" remain prohibited unless (i)
they are approved by the board of directors, the disinterested shareholders or a
majority of the outstanding voting power not beneficially owned by the
interested party, or (ii) the interested shareholders satisfy certain fair value
requirements. As in Delaware, a Nevada corporation may opt out of the statute by
inserting appropriate provisions in its articles of incorporation. Neither the
Existing Articles nor the proposed Delaware Certificate contain provisions to
opt out of the interested shareholder restrictions described above.
Amendment to Articles of Incorporation/Certificate of
Incorporation or Bylaws. In general, both the DGCL and Nevada law require the
approval of the holders of a majority of all outstanding shares entitled to vote
to approve proposed amendments to a corporation's certificate/articles of
incorporation. Both the DGCL and Nevada law also provide that in addition to the
vote described above, the vote of a majority of the outstanding shares of a
class may be required to amend the certificate of incorporation or articles of
incorporation. Neither state requires shareholder approval for the board of
directors of a corporation to fix the voting powers, designation, preferences,
limitations, restrictions and rights of a class of stock provided that the
corporation's organizational documents grant such power to its board of
directors. Both Nevada law and the DGCL permit, in general, the number of
authorized shares of any such class of stock to be increased or decreased (but
not below the number of shares then outstanding) by the board of directors
unless otherwise provided in the articles of incorporation or resolution adopted
pursuant to the certificate of incorporation, respectively.
Actions by Written Consent of Shareholders. Both Nevada law
and the DGCL provide that, unless the articles/certificate of incorporation
provides otherwise, any action required or permitted to be taken at a meeting of
the shareholders may be taken without a meeting if the holders of outstanding
stock having at least the minimum number of votes that would be necessary to
authorize or take such action at a meeting consents to the action in writing. In
addition, the DGCL requires the corporation to give prompt notice of the taking
of corporate action without a meeting by less than unanimous written consent to
those shareholders who did not consent in writing. The Existing Articles do not
limit shareholder action by written consent. By contrast, however, the proposed
Delaware Certificate does limit shareholder action by written consent. Pursuant
to the proposed Delaware Certificate, the shareholders of CathayOnline Delaware
will be unable to act by written consent in lieu of a meeting unless the action
proposed to be taken, and the taking of the action by written consent, are
approved in advance by the board of directors of CathayOnline Delaware.
Shareholder Vote for Mergers and Other Corporation
Reorganizations. In general, both jurisdictions require authorization by an
absolute majority of outstanding shares entitled to vote, as well as approval by
the board of directors, with respect to the terms of a merger or a sale of
substantially all of the assets of the corporation. The DGCL does not require a
shareholder vote of the surviving corporation in a merger (unless the
corporation provides otherwise in its certificate of incorporation) if: (a) the
merger agreement does not amend the existing certificate of incorporation; (b)
each share of stock of the surviving corporation outstanding immediately before
the effective date of the merger is an identical outstanding share after the
merger; and (c) either no shares of common stock of the surviving corporation
and no shares, securities or obligations convertible into such stock are to be
issued or delivered under the plan of merger, or the authorized unissued shares
or shares of common stock of the surviving corporation to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other shares, securities or obligations to be issued or delivered under such
plan do not exceed twenty percent (20%) of the shares of common stock of such
constituent corporation outstanding immediately prior to the effective date of
the merger. Nevada law does not require a shareholder vote of the surviving
corporation in a merger under substantially similar circumstances.
Dissenters' Rights. In both jurisdictions, dissenting
shareholders of a corporation engaged in certain major corporate transactions
are entitled to appraisal rights. Appraisal rights permit a shareholder to
receive cash equal to the fair value of the shareholder's shares, in lieu of the
consideration such shareholder would otherwise receive in any such transaction.
Under the DGCL, such fair market value is determined exclusive
of any element of value arising from the accomplishment or expectation of the
merger or consolidation, and such appraisal rights are not available: (a) with
respect to the sale, lease or exchange of all or substantially all of the assets
of a corporation; (b) with respect to a merger or consolidation by a corporation
the shares of which are either listed on a national securities exchange or are
held of record by more than 2,000 holders if such shareholders receive only
shares of the surviving corporation or shares of any other corporation that are
either listed on a national securities exchange or held of record by more than
2,000 holder, plus cash in lieu of fractional shares of such corporations; or
(c) to shareholders of a corporation surviving a merger if no vote of the
shareholders of the surviving corporation is required to approve the merger
under Delaware law.
Under Nevada law, a shareholder is entitled to dissent from,
and obtain payment for the fair value of his or her shares in the event of the
consummation of a plan of merger or plan of exchange in which the corporation is
a party and to the extent that the articles of incorporation, bylaws or a
resolution of the board of directors provide that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their shares any
corporate action taken pursuant to a vote of the shareholders. As with the DGCL,
Nevada law provides an exception to dissenters' rights. Holders of securities
(i) listed on a national securities exchange or designated as a National Market
security on an interdealer quotation system by the NASD, (ii) held by more than
2,000 shareholders of record, or (iii) who are not required to vote on the plan
of merger, are generally not entitled to dissenters' rights, unless (A) the
articles of incorporation of the corporation issuing the shares provide
otherwise or (B) the holders of the class or series are required to accept
anything other than (or a combination of such consideration) cash, owner's
interest, or cash in lieu of fractional shares and owner's interest in the
surviving entity or another entity whose shares were listed on a national
exchange, the NASD or held by at least 2,000 holders of record.
Shareholder Inspection Rights. The DGCL grants any shareholder
the right to inspect and to copy for any proper purpose the corporation's stock
ledger, a list of its shareholders, and its other records. A proper purpose is
one reasonably related to such person's interest as a shareholder. Directors
also have the right to examine the corporation's stock ledger; a list of its
shareholders and it's other records for a purpose reasonably related to their
positions as directors.
Nevada law provides the right to inspect the corporation's
financial records for only a shareholder who (i) owns at least 15% of the
corporation's issued and outstanding shares, or (ii) has been authorized in
writing by the holder(s) of at least 15% of the issued and outstanding shares.
To inspect the corporation's stock ledger, the shareholder must have been a
shareholder of record for six months prior to demanding inspection.
Shareholder Derivative Suits. Under both the DGCL and Nevada
law, a shareholder may bring a derivative action on behalf of the corporation
only if the shareholder was a shareholder of the corporation at the time of the
transaction in question or the shareholder acquired the stock thereafter by
operation of law.
Dissolution. Under Nevada law, if a corporation has issued
stock, the board of directors must act to recommend dissolution of the
corporation to the shareholders to effect a dissolution of the corporation. The
corporation must notify each shareholder entitled to vote on dissolution and the
shareholders entitled to vote thereon must approve the dissolution. Under the
DGCL, unless the board of directors of a Delaware corporation approves the
proposal to dissolve, the dissolution must be unanimously approved by the
written consent of shareholders entitled to vote thereon. Only if the
dissolution is initially approved by the board of directors may the dissolution
be approved by a majority of the shareholders of the corporation entitled to
vote thereon.
Interested Director Transactions. Under both Nevada and
Delaware law, certain contracts or transactions in which one or more of a
corporation's directors has an interest are not void or voidable because of such
interest, provided that certain conditions, such as obtaining the required
approval and fulfilling the requirements of good faith and full disclosure, are
met. With certain minor exceptions, the conditions are similar under Nevada and
Delaware law.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax consequences
of the proposed Merger to CathayOnline Nevada and its shareholders. The Company
believes that the proposed Merger will constitute a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that for federal income tax purposes:
(a) Neither CathayOnline Nevada nor its shareholders will
recognize any gain or loss by reason of the exchange of CathayOnline
Nevada Common Stock for CathayOnline Delaware Common Stock, or the
transfer of assets (subject to liabilities) by CathayOnline Nevada to
CathayOnline Delaware in connection with the Merger.
(b) The shares of CathayOnline Delaware Common Stock issued as
a result of the Merger in the hands of a shareholder will have an
aggregate basis for computing gain or loss equal to the aggregate basis
of shares of CathayOnline Nevada Common Stock (less that portion, if
any, allocable to fractional shares) held by that shareholder
immediately prior to the Merger.
(c) The holding period of the shares of CathayOnline Delaware
Common Stock issued as a result of the Merger in the hands of a
shareholder will include the period during which the shareholder held
the shares of CathayOnline Nevada Common Stock prior to the Merger
provided the shares of CathayOnline Nevada Common Stock were held as a
capital asset at the effective time of the Merger.
The tax analysis and conclusions stated above are limited to
certain U.S. federal income tax consequences of the proposed Merger. Tax
consequences to foreign persons may vary depending on the law of the applicable
jurisdiction. Each shareholder is urged to consult such shareholder's tax
advisor to determine the specific tax consequences of the proposed Merger to
such shareholder.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSED REINCORPORATION.
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the
chief executive officer and the four other most highly compensated executive
officers of the Company for the fiscal year ended June 30, 2000, as well as the
total compensation paid to each such individual for the Company's two previous
years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (6)
Long-Term
Compensation
Annual Compensation Award
--------------------------------------------- ------------------
Name and Principal Other Annual Securities All Other
Position Year Salary Bonus Compensation Underlying Compensation
Options
<S> <C> <C> <C> <C> <C> <C>
Brian Ransom 2000 $60,000 - - - $241,500
President1 1999 $25,000 - -
1998 -
Owen Li 2000 $120,000 $60,000 - - $69,000
Director3
Glenn R. Ohlhauser 2000 $5,078 - - - -
Chief Financial
Officer
Peter Lau 2000 - - $67,500 - $172,500
Secretary2
Yuning Wang 2000 $23,453 - - - $34,500
Vice President,
China Operations
</TABLE>
1. Other compensation to Mr. Ransom includes 175,000 shares of
Common Stock issued to Mr. Ransom in consideration of services rendered, which
shares were valued at $1.38 each.
2. Annual compensation to Mr. Lau includes 27,000 shares of
Common Stock issued to Mr. Lau pursuant to his management agreement, which
shares were valued at an aggregate of $31,500. Other compensation to Mr. Lau,
which includes 125,000 of Common Stock issued to Mr. Lau in consideration of
services rendered, which shares were valued at $1.38 each.
3. Owen Li receives $10,000 per month pursuant to his
management agreement, of which $6,500 is paid in cash with the remainder payable
in shares with number of shares calculated at market less 10%. Owen Li was paid
$78,000 cash and issued 46,501 shares and as at June 30, 2000 was owed and
additional 8,504 shares under that agreement. Pursuant to the agreement he was
issued 120,000 shares at $.50 each, a portion of which will be distributed to
other employees. Other compensation includes an additional 50,000 shares issued
to Owen Li for services rendered, which shares were valued at $1.38 each.
4. Other compensation to Yuning Wang includes 25,000 shares of
common stock, issued in consideration of services rendered which shares were
valued at $1.38 each.
The Company has no bonus, profit sharing, pension or
retirement plans.
WARRANTS GRANTED IN FISCAL YEAR
The following table sets forth information concerning the
grant of common stock purchase warrants to the directors and executive officers
of the Company.
<TABLE>
<CAPTION>
Individual Grants
Percent of Potential Realizable Value
Total at Assumed Annual Rates of
Warrants Stock Price Appreciation
Number of Granted to for Warrant Term (2)
Securities Employees Exercise Expiration
Underlying Warrants in Fiscal Price
Name Granted (#) Year (%) ($/Shares)(1) Date 5% 10%
---- ----------- --------- ------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Brian W. Ransom 15,000,000 68.3% $0.33 10/26/02 $900,000 $1,950,000
Glenn R. Ohlhauser 0 0 % N/A N/A N/A N/A
Peter S. Lau 1,500,000 6.8% $0.33 10/26/02 $90,000 $195,000
Owen L. Li 1,500,000 6.8 % $0.33 10/26/02 $90,000 $195,000
Yuning Wang 1,500,000 6.8% $0.33 10/26/02 $90,000 $195,000
</TABLE>
(1) Common stock purchase warrants were granted at an exercise price equal to
[the fair market value] of the Common Stock based on the [closing bid price] for
the Common Stock as reported on the Nasdaq Bulletin Board on the date of the
grant.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by applicable regulations of the Securities and
Exchange Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the stock price. Assumes all warrants are exercised at
the end of their respective terms. Actual gains, if any, on stock warrant
exercises depend on the future performance of the Common Stock and overall
market conditions. The amounts reflected in this table may not be achieved.
OPTION EXERCISES AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the
exercise of common stock purchase warrants during fiscal year ended June 30,
2000 by the directors and executive officers and their options outstanding at
fiscal year-end.
<TABLE>
<CAPTION>
Shares Value Number of Securities Underlying Value of Unexercised In-The
Acquired on Realized Unexercised Warrants at Fiscal Money Warrants at Fiscal Year
Year End End (2)
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brian W. Ransom 0 $0 15,000,000 0 $1,612,500 $0
Peter S. Lau 0 $0 1,500,000 0 $161,250 $0
Owen L. Li 0 $0 1,500,000 0 $161,250 $0
Yuning Wang 0 $0 1,500,000 0 $161,250 $0
</TABLE>
(1) "Value Realized" represents the fair value of the underlying securities on
the exercise date, minus the exercise price of such warrants.
(2) Amounts equal the closing price of the Common Stock on June 30, 2000
($0.4375 per share), less the warrant exercise price, multiplied by the number
of shares exercisable or unexercisable.
EMPLOYMENT CONTRACTS
In October 1999, the Company entered into an employment
agreement with Mr. Brian Ransom. This agreement provides that Mr. Ransom will
serve as Chief Executive Officer and President for a period of two years at an
annual compensation of $60,000 for his services, a monthly bonus based upon the
number of Web-based professional messaging e-mail accounts resold by the Company
during the term of his employment, and a warrant to purchase up to an aggregate
of 15,000,000 shares of Common Stock at $0.33 per share. Mr. Ransom's annual
salary was increased from $60,000 to $120,000 effective August 1, 2000. Either
the Company or Mr. Ransom may terminate his employment agreement with or without
cause on sixty day's prior written notice.
On June 29, 1999, CathayOnline Technologies (Hong Kong) Ltd.,
a subsidiary of the Company, entered into a Management Agreement with Mr. Owen
Li, a director of the Company and the President of Sichuan CathayOnline
Technologies Co., Ltd. ("Sichuan CathayOnline") to serve as the General Manager
of that entity for a period of three years. During the term of the Management
Agreement, Mr. Li receives an aggregate of $10,000 per month payable as follows:
(i) $6,500 in cash, (ii) $3,500 in Common Stock of the Company, based on a 10%
discount from the average bid price per share of Common Stock for the last five
trading days of each month. Mr. Li also is entitled to receive additional shares
of Common Stock of the Company based on the achievement of certain milestones by
Sichuan CathayOnline, some of which shares will be given to other employees of
Sichuan CathayOnline as employee incentive. In addition, the Company has issued
to Mr. Li warrants to purchase up to 1.5 million shares or the Company's Common
Stock. The warrants are exercisable for a period of three years at an exercise
price of $0.33 per share. Mr. Li has agreed that he will not engage in any
business or activities, which are in competition with that of Sichuan
CathayOnline. The Company may terminate the agreement if Mr. Li fails to perform
his obligations under the agreement. Mr. Li may also terminate the agreement if
the Company fails to pay Mr. Li's compensation in accordance with the agreement.
In October 1999, we entered into a Consulting Agreement with
Peter Lau, a director of the Company, to serve as Chief Financial Officer of the
Company for a period of one year. The Company agreed to pay Mr. Lau a consulting
fee of $4,000 per month and to issue to Mr. Lau 3,000 shares of Common Stock in
each month during the term of the agreement. In addition, the Company agreed to
pay Mr. Lau (i) a fee equal to 3% of the proceeds provided to the Company from
any financing or loan obtained through Mr. Lau; (ii) a fee, in cash, stock or
warrants, equal to [5% of the gross value] of any merger, acquisition or
disposition to a party introduced to the Company by him; (iii) an additional
undetermined fee for serving on the Board of Directors; and (iv) a bonus to be
determined. In addition, the Company has issued to Mr. Lau warrants to purchase
up to 1.5 million shares of Common Stock. The warrants are exercisable for a
period of three years at an exercise price of $0.33 per share.
In May 2000, the Company entered into an employment contract
with Mr. Glenn Ohlhauser, who subsequently became the Chief Financial Officer of
the Company. The Company agreed to pay an annual salary of Cdn$90,000 and to
issue 50,000 shares after three months of employment. In addition, after three
months of employment, the Company agreed to issue Mr. Ohlhauser warrants to
purchase up to 150,000 shares of Common Stock. The warrants are exercisable for
a period of three years at an exercise price of $1.00 per share.
BENEFICIAL OWNERSHIP OF SHARES
The following table presents certain information regarding the
Company's Common Stock beneficially owned by each director, the Chief Executive
Officer, the four other most highly compensated executive officers of the
Company for the fiscal year ended June 30, 2000, each person who is known to own
beneficially more than five percent (5%) of the issued and outstanding Common
Stock, and all directors and executive officers of the Company as a group as of
June 30, 2000:
<TABLE>
<CAPTION>
Amount of Percent of Outstanding Shares of
Name of Beneficial Owner Beneficial Ownership Class Owned
----------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Brian W. Ransom 1 15,182,000 21.3%
Owen L. Li 2 1,716,501 2.4%
Peter S. Lau 3 1,652,000 2.3%
Yuning Wang 4 1,525,000 2.1%
Kenneth M. Levy 7,000 *
Glenn R. Ohlhauser 5 0 *
Global Tech Holding 6 5,700,000 8%
All officers and directors as a group (6 20,082,501 28.2%
persons) 7
</TABLE>
1. Includes 15,000,000 shares issuable upon the exercise of
common stock purchase warrants granted to Mr. Ransom on October 26, 1999 as
partial compensation for the services he renders as President. The 15,000,000
warrants are exercisable for a period of three years commencing on the date of
grant at an exercise price of $0.33 per share. Ten million of these warrants are
held by a corporation all of the shares of which will be held in a trust of
which Mr. Ransom is the sole beneficiary. The shares of Common Stock underlying
the 15,000,000 warrants are not yet registered under the Securities Act of 1933,
as amended (the "Securities Act").
2. Includes 1,500,000 shares issuable upon the exercise of
common stock purchase warrants granted to Mr. Li on October 26, 1999 as
compensation for services rendered to the Company. The warrants are exercisable
for a period of three years commencing on the date of grant at an exercise price
of $0.33 per share. The shares of Common Stock underlying these warrants are not
yet registered under the Securities Act.
3. Includes 1,500,000 shares issuable upon the exercise of
common stock purchase warrants granted to Mr. Lau on October 26, 1999 as
compensation for services rendered to the Company. The warrants are exercisable
for a period of three years commencing on the date of grant at an exercise price
of $0.33 per share. The shares of Common Stock underlying these warrants are not
yet registered under the Securities Act.
4. Includes 1,500,00 shares issuable upon the exercise of
common stock purchase warrants granted to Mr. Wang on October 26, 1999 as
compensation for services rendered to the company. The warrants are exercisable
for a period of three years commencing on the date of grant at an exercise price
of $0.33 per share. The shares of Common Stock underlying these warrants are not
yet registered under the Securities Act.
5. Pursuant to Mr. Ohlhauser's employment agreement, the
Company was to issue to him 50,000 shares (the issue of which is outstanding)
and granted him common stock purchase warrants entitling him to purchase 150,000
shares. The warrants are exercisable for a period of three years commencing on
the date of grant at an exercise price of $1.00 per share. The shares of Common
Stock underlying these warrants are not yet registered under the Securities Act.
6. Includes 2,850,000 shares issuable upon the exercise of
common stock purchase warrants attached to shares issued under a private
placement. The warrants are exercisable for a period expiring two years after
the common stock is registered under the Securities Act at an exercise price of
$0.77 per share. The shares of Common Stock underlying these warrants are not
yet registered under the Securities Act.
7. Figure includes only the first six individuals named in the
table and assumes exercise of all convertible securities held by these
individuals.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires the Company's officers and directors and persons who
beneficially own more than ten percent of the Company's Common Stock to file
reports of ownership with the Securities and Exchange Commission and the
Company. Based upon its review of the copies of such forms received by it, and
written representations from the officers and directors, the Company believes
that, for the fiscal year ended June 30, 2000, Mr. Ohlhauser filed the required
report in a timely manner. The other directors and officers of the Company have
filed the required Forms 3, 4 and 5, but did not do so within the applicable
deadline. Mr. Ransom has not filed any required reports of ownership under
Section 16(a) of the Exchange Act and will do so promptly.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended June 30, 2000, the Company borrowed an
aggregate of $790,000 from Lothian Bancorp Ltd., a private company controlled by
Bruce Ransom, the brother of Brian Ransom, President of the Company. The Company
has repaid this loan including interest of $13,857.
On June 30, 2000, the Company sold its interest in CMD Capital
Limited ("CMD") to Premier Brands Inc. (now known as CathayOne, Inc. or
"CathayOne") in consideration for 1,750,000 of shares of common stock of Premier
Brands. Through this transaction, the Company received an equity interest in
CathayOne, enabling the two companies to develop a strategic alliance. The
Company may assist CathayOne in the implementation of a broad array of services,
including Web hosting, Web development and strategic planning. Mr. Peter Lau, a
director of the Company, is the Chief Executive Officer and a director of
CathayOne and was the Chief Financial Officer of the Company at the time of the
transaction. Mr. Brian Ransom, President of the Company, also is a director of
CathayOne.
Brian Ransom, a director of the Company, was paid $60,000 by
the Company pursuant to an employment agreement and was issued 175,000 shares of
Common Stock at $1.38 per share for services rendered.
Peter Lau, a director of the Company, was paid $36,000 by the
Company and issued 27,000 shares of Common Stock valued at $31,500 pursuant to a
consulting agreement. An additional 125,000 shares were issued to him at $1.38
per share for other services rendered.
Owen Li, a director of the Company, was paid $78,000 and
issued 32,284 shares of Common Stock pursuant for a management services
agreement. Under the same agreement, Mr. Li was issued 120,000 shares of Common
Stock at $0.50 per share, which are to be distributed to other employees. An
additional 50,000 shares of Common Stock at $1.38 per share were issued to him
for other services rendered.
During the fiscal year ended June 30, 2000, the Company paid
consulting fees of approximately $156,750 to Lothian Bancorp Ltd. Lothian
Bancorp Ltd is a private company controlled by Mr. Bruce Ransom the brother of
the Company's president. Subsequent to June 30, 2000, the Company leased an
apartment, which Mr. Bruce Ransom currently uses as personal residence.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING;
SHAREHOLDER PROPOSALS
The Board is not aware of any other matters that will come
before the Meeting. If any other matter properly comes before the Meeting, it is
the intention of the persons named in the accompanying Proxy to vote the Proxy
in accordance with their judgment on such matters.
Notice is hereby given that for a shareholder proposal to be
considered for inclusion in the Company's proxy material relating to its 2001
annual meeting of shareholders, the shareholder proposal must be received by the
Company no later than July 15, 2001. The shareholder proposal, including any
accompanying supporting statement, may not exceed 500 words. A shareholder
desiring to submit a proposal must be a record or beneficial owner of Common
Stock with a market value of $2,000 and must have held such Common Stock for at
least one year. Further, the shareholder must continue to hold such Common Stock
through the date on which the meeting is held. Documentary support regarding the
foregoing must be provided along with the proposal. There are additional
requirements regarding proposals of shareholders, and a shareholder
contemplating submission of a proposal is referred to Rule 14a-8 promulgated
under the Securities Exchange Act of 1934. The timely submission of a proposal
does not guarantee its inclusion in the Company's proxy materials.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
ANNUAL REPORT
For further information with respect to the Company, reference
is made to the 2000 Annual Report of the Company, a copy of which has been
mailed to all shareholders of the Company.
CATHAYONLINE INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Messrs. Brian W. Ransom and
Peter Lau as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side and
in accordance with their judgment on such other matters as may properly come
before the meeting or any adjournment thereof, all shares of common stock, par
value $0.001 per share, of CathayOnline Inc. that the undersigned is entitled to
vote at the annual meeting of shareholders on Wednesday, November 29, 2000, at
10:00 a.m. and at any and all adjournments of such meeting.
(Continued and to be signed on reverse side)
----------------
<PAGE>
This proxy when properly executed will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this proxy
will be voted for Proposals 1, 2, 3 and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN
PROPOSAL 1 AND "FOR" PROPOSALS 2, 3 and 4
1. ELECTION OF THE FOLLOWING NOMINEES AS DIRECTORS:
Nominees:
Brian W. Ransom
Peter Lau
Kenneth Levy
Jack Chin
Glenn R. Ohlhauser
FOR ALL NOMINEES ____ WITHHOLD ALL NOMINEES ____
FOR ALL NOMINEES EXCEPT AS NOTED BELOW:
----------------------------------------------
2. TO APPROVE AN AMENDMENT TO THE ARTICLES OF
INCORPORATION OF THE COMPANY TO INCREASE THE MAXIMUM
NUMBER OF AUTHORIZED SHARES OF THE COMPANY FROM
50,000,000 TO 100,000,000.
FOR ____ AGAINST ____ ABSTAIN ____
3. TO APPROVE AN AMENDMENT OF INCORPORATION OF THE
COMPANY TO AUTHORIZE 10,000,000 shares of PREFERRED
STOCK, the terms, conditions and designations of
which may be set by the Board of Directors at the
time of issuance.
FOR ____ AGAINST ____ ABSTAIN ____
4. TO APPROVE A CHANGE IN THE COMPANY'S JURISDICTION OF
INCORPORATION FROM NEVADA TO DELAWARE BY MEANS OF A
MERGER OF THE COMPANY WITH AND INTO A WHOLLY-OWNED
SUBSIDIARY OF THE COMPANY.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW ______
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: _____________________________ Date:_______________
Signature: _____________________________ Date:_______________
<PAGE>
APPENDIX A
FORM OF DELAWARE CERTIFICATE OF INCORPORATION
[NOTE: BRACKETED PROVISIONS WILL BE USED IF PROPOSAL 2 IS APPROVED BY THE
SHAREHOLDERS OF THE COMPANY]
CERTIFICATE OF INCORPORATION
OF
CATHAYONLINE INC.
I, the undersigned, for the purposes of incorporating and
organizing a corporation under the General Corporation Law of the State of
Delaware, do execute this Certificate of Incorporation and do hereby certify as
follows:
FIRST. The name of the corporation is CathayOnline Inc. (the
"Corporation").
SECOND. The address of the Corporation's registered office in
the State of Delaware is 1013 Centre Road, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is Corporation
Service Company.
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 the State of Delaware.
FOURTH. The Corporation is authorized to issue 50,000,000
[100,000,000] shares of common stock with a par value of $0.001 per share (the
"Common Stock"), which shares may be issued by the Corporation from time to time
for such consideration as may be fixed from time to time by the Board of
Directors. [In addition, the Corporation is authorized to issue 10,000,000
shares of preferred stock (the "Preferred Stock") in one or more classes or
series, which shares may be issued by the Corporation from time to time for such
consideration as may be fixed from time to time by the Board of Directors.]
A. Common Stock.
(1) Voting. Except as may otherwise be provided in this
Certificate of Incorporation (including any certificate filed with the Secretary
of State of the State of Delaware establishing the terms of a series of
Preferred Stock in accordance with Section B of this Article FOURTH) or by
applicable law, each holder of Common Stock, as such, shall be entitled to one
(1) vote for each share of Common Stock held of record by such holder on all
matters on which stockholders generally are entitled to vote, and no holder of
any series of Preferred Stock, as such, shall be entitled to any voting powers
in respect thereof.
(2) Dividends. Subject to applicable law and the rights, if
any, of the holders of any outstanding series of Preferred Stock, dividends may
be declared and paid on the Common Stock at such times and in such amounts as
the Board of Directors in its discretion shall determine.
(3) Liquidation. Upon the dissolution, liquidation or winding
up of the Corporation, subject to the rights, if any, of the holders of any
outstanding series of Preferred Stock] the holders of the Common Stock shall be
entitled to receive the assets of the Corporation available for distribution to
its stockholders ratably in proportion to the number of shares held by them.
B. Preferred Stock. The Board of Directors of the Corporation
is hereby expressly authorized, by resolution or resolutions thereof, to
provide, out of the unissued shares of Preferred Stock, for one or more series
of Preferred Stock and, with respect to each such series, to fix the number of
shares constituting such series and the designation of such series, the voting
powers (if any) of the shares of such series, and the preferences and relative
participating, optional or other special rights, if any, and any qualifications,
limitations or restrictions thereof, of the shares of such series. The voting
powers, preferences and relative participating, optional and other special
rights of each series of Preferred Stock, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
at any time outstanding.
FIFTH. The incorporator of the Corporation is Brian W. Ransom,
whose mailing address is c/o CathayOnline Inc., 437 Madison Avenue, 33rd Floor,
New York, New York 10022.
SIXTH. Except as otherwise provided for or fixed pursuant to
the provisions of Article FOURTH, Subsection B of this Certificate of
Incorporation relating to the rights of holders of any series of Preferred Stock
provided by Article FOURTH, Subsection B of this Certificate of Incorporation,
no action that is required or permitted to be taken by the stockholders of the
Corporation at any annual or special meeting of stockholders may be effected by
written consent of stockholders in lieu of a meeting of stockholders, unless the
action to be effected by written consent of stockholders and the taking of such
action by such written consent have expressly been approved in advance by the
Board of Directors of the Corporation. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of at
least 80 percent in voting power of the then outstanding voting stock of the
Corporation, voting together as a single class, shall be required to amend,
repeal or adopt any provision inconsistent with this Article SIXTH.
SEVENTH. Unless and except to the extent that the Bylaws of
the Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
EIGHTH. Special meetings of the stockholders for any purpose
or purposes may be called by the President or the Board of Directors, but such
special meetings may not be called by any other person or persons.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of at least 80 percent in voting power of the
then outstanding voting stock of the Corporation, voting together as a single
class, shall be required to amend, repeal or adapt any provision inconsistent
with this Article EIGHTH.
NINTH. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized to make, alter and repeal the Bylaws of the
Corporation, subject to the power of the stockholders of the Corporation to
alter or repeal any Bylaw whether adopted by them or otherwise.
TENTH. A director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence shall not adversely affect any
right or protection of a director of the Corporation hereunder in respect of any
act or omission occurring prior to the time of such amendment, modification or
repeal.
ELEVENTH. The Corporation reserves the right at any time, and
from time to time, to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, and other provisions authorized by the laws
of the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the rights
reserved in this Article ELEVENTH.
The undersigned incorporator hereby acknowledges that the
foregoing Certificate of Incorporation is his act and deed on this _____ day of
________________, 2000.
----------------------
Brian W. Ransom
Incorporator
<PAGE>
APPENDIX B
FORM OF MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
OF
CATHAYONLINE INC.
(A NEVADA CORPORATION)
WITH AND INTO
CATHAYONLINE INC.
(A DELAWARE CORPORATION)
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as
of [November ____], 2000 between CATHAYONLINE INC., a Nevada corporation
("CathayOnline Nevada"), and, CATHAYONLINE INC., a Delaware corporation
("CathayOnline Delaware").
RECITALS
WHEREAS, CathayOnline Nevada is a corporation duly organized and existing under
the laws of the State of Nevada;
WHEREAS, CathayOnline Delaware is a corporation duly organized and existing
under the laws of the State of Delaware; and
WHEREAS, the Board of directors of each of CathayOnline Nevada and CathayOnline
Delaware deems it desirable to merge CathayOnline Nevada with and into
CathayOnline Delaware so that CathayOnline Delaware is the surviving corporation
on the terms provided herein (the "Merger").
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
MERGER
1.1 The Merger. Upon the Effective Date (as defined in Section 1.5) and subject
to and upon the terms of conditions provided in this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL") and the General Corporation Law of the State of Nevada (the
"NGCL"), CathayOnline Nevada will merge with and into CathayOnline Delaware, the
separate corporate existence of CathayOnline Nevada shall cease, and
CathayOnline Delaware shall be the surviving corporation. CathayOnline Delaware
is hereinafter sometimes referred to as the "Surviving Corporation".
1.2 Constituent Corporations. The name, address, jurisdiction of organization
and governing law of each of the constituent corporations are as follows:
(a) CathayOnline Inc., a corporation organized under and governed by the laws of
the State of Nevada with an address at 437 Madison Avenue, 33rd Floor, New York,
New York 10022; and
(b) CathayOnline Inc., a corporation organized under and governed by the laws of
the State of Delaware with an address at 437 Madison Avenue, 33rd Floor, New
York, New York 10022.
1.3 Surviving Corporation. CathayOnline Inc., a corporation organized under the
laws of the State of Delaware, shall be the surviving corporation.
1.4 Address of Principal Office of Surviving Corporation. The address of the
principal office of CathayOnline Delaware as the Surviving Corporation shall be
437 Madison Avenue, 33rd Floor, New York, New York 10022.
1.5 Closing; Effective Date. The Merger shall be effective (the "Effective
Date"), on the date upon which the last of the following shall have been
completed:
(a) This Agreement and the Merger shall have been adopted and recommended to the
shareholders of CathayOnline Nevada by the board of directors of CathayOnline
Nevada and approved by a majority of voting power of CathayOnline Nevada, in
accordance with the requirements of the DGCL and the NGCL;
(b) This Agreement and the Merger shall have been adopted and approved by the
board of directors of CathayOnline Delaware in accordance with the requirements
of the DGCL;
(c) An executed Articles of Merger shall have been filed with the Secretary of
State of the State of Nevada; and
(d) An executed Certificate of Merger or an executed counterpart of this
Agreement meeting the requirements of the DGCL shall have been filed with the
Secretary of State of the State of Delaware.
1.6 Effect of the Merger. The effect of the Merger shall be as provided in this
Agreement, the Certificate of Merger, and the applicable provisions of the DGCL
and the NGCL. Without limiting the foregoing, on the Effective Date, all the
property, rights, privileges, powers and franchises of CathayOnline Nevada shall
vest in CathayOnline Delaware, as the Surviving Corporation, and all debts,
liabilities and duties of CathayOnline Nevada shall become the debts,
liabilities and duties of CathayOnline Delaware, as the Surviving Corporation.
1.7 Certificate of Incorporation; Bylaws.
(a) From and after the Effective Date, the Certificate of Incorporation of
CathayOnline Delaware as in effect immediately prior to the Effective Date shall
be the Certificate of Incorporation of the Surviving Corporation.
(b) >From and after the Effective Date, the Bylaws of CathayOnline Delaware as
in effect immediately prior to the Effective Date, shall be the Bylaws of the
Surviving Corporation.
1.8 Directors and Officers of the Surviving Corporation. From and after the
Effective Date, the directors or officers of CathayOnline Nevada serving as
directors or officers of CathayOnline Nevada immediately prior to the Effective
Date, shall be the directors and officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Stock. Upon the Effective Date, by virtue of the Merger and
without any action on the part of the holders of any outstanding shares of
capital stock or other securities of CathayOnline Nevada, each share of common
stock of CathayOnline Nevada, par value $0.001 per share ("Company Common
Stock"), issued and outstanding or held in treasury immediately prior to the
Effective Date shall be converted into one (1) fully paid and nonassessable
share of Common Stock, par value $0.001 per share, of the Surviving Corporation
("Delaware Common Stock"). Upon the Effective Date, by virtue of the Merger and
without any action on the part of the holders of any outstanding shares of
capital stock or other securities of CathayOnline Nevada, each certificate which
immediately prior to the Effective Date represented a share or shares of Company
Common Stock shall represent an equivalent number of shares of Delaware Common
Stock.
2.2 Delaware Common Stock. Upon the Effective Date, each share of Delaware
Common Stock issued and outstanding immediately prior to the Merger, if any,
shall, by virtue of the Merger and without any action by the holder thereof or
CathayOnline Delaware, cease to be outstanding, and shall be canceled and
returned to the status of authorized but unissued shares and any holder of
certificates which immediately prior to the Effective Date represented such
shares of Delaware Common Stock shall thereafter cease to have any rights with
respect to such shares.
2.3 CathayOnline Nevada Employee Plans and Warrants.
(a) Upon the Effective Date, each outstanding and unexercised warrant or other
right to purchase or security convertible into Company Common Stock shall become
a warrant or right to purchase or a security convertible into Delaware Common
Stock on the basis of one share of Delaware Common Stock for each share of
Company Common Stock issuable pursuant to such warrant, stock purchase right or
convertible security, on the same terms and conditions and at an exercise price
per share equal to the exercise price applicable to any such CathayOnline Nevada
warrant, stock purchase right or convertible security on the Effective Date.
(b) A number of Delaware Common Stock shall be reserved for issuance upon the
exercise of warrants, stock purchase rights and convertible securities equal to
the number of shares of Company Common Stock so reserved immediately prior to
the Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of CathayOnline Nevada. CathayOnline Nevada
hereby represents and warrants to CathayOnline Delaware that:
(a) It is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and has all the requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted;
(b) It is duly qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary;
(c) It is not in violation of any provisions of its articles of incorporation or
bylaws; and
(d) It has full corporate power and authority to execute and deliver this
Agreement and, assuming the approval of this Agreement by the shareholders of
CathayOnline Nevada in accordance with the NGCL, consummate the Merger and the
other transactions contemplated by this Agreement.
3.2 Representations and Warranties of CathayOnline Delaware. CathayOnline
Delaware hereby represents and warrants to CathayOnline Nevada that:
(a) It is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all the requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted;
(b) It is duly qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary;
(c) It is not in violation of any provisions of its certificate of incorporation
or bylaws;
(d) It has full corporate power and authority to execute and deliver this
Agreement and consummate the Merger and the other transactions contemplated by
this Agreement; and
(e) This Agreement and the Merger contemplated hereby have been approved by the
board of directors of CathayOnline Delaware in accordance with the DGCL. No vote
of the shareholders of CathayOnline Delaware shall be necessary to approve this
Agreement and authorize the Merger because no shares of CathayOnline Delaware
have been issued prior to the adoption by the board of directors of CathayOnline
Delaware of the resolution approving this Agreement.
ARTICLE IV
TERMINATION
4.1 Termination. At any time prior to the Effective Date, this Agreement may be
terminated and the Merger abandoned for any reason whatsoever by the Board of
directors of either CathayOnline Nevada or CathayOnline Delaware, or both of
them, notwithstanding the approval of this Agreement and the Merger by a
majority of the voting power of CathayOnline Nevada.
ARTICLE V
FURTHER ASSURANCES
5.1 Further Assurances as to CathayOnline Nevada. From time to time, as and when
required by CathayOnline Delaware or by its successors or assigns, there shall
be executed and delivered on behalf of CathayOnline Nevada such deeds and other
instruments, and there shall be taken or caused to be taken by CathayOnline
Delaware such further and other actions as shall be appropriate or necessary in
order to vest or perfect in or conform of record or otherwise by CathayOnline
Delaware the title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of CathayOnline
Nevada and otherwise to carry out the purposes of this Agreement, the officers
and directors of CathayOnline Delaware are fully authorized in the name and on
behalf of CathayOnline Nevada or otherwise to take any and all such action and
to execute and deliver any and all such deeds and other instruments.
ARTICLE VI
MISCELLANEOUS
6.1 Amendment. Subject to applicable law, at any time prior to the Effective
Date, this Agreement may be amended, modified or supplemented only by the
written agreement of CathayOnline Nevada and CathayOnline Delaware.
6.2 Assignment; Third Party Beneficiaries. Neither this Agreement, nor any
right, interest or obligation hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. This Agreement is not intended to
confer any rights or benefits upon any person other than the parties hereto.
6.3 Registered Office. The registered office of the Surviving Corporation in the
State of Delaware shall be 1013 Centre Road, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is Corporation
Service Company.
6.4 Executed Agreement. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 437 Madison, Avenue,
33rd Floor, New York, New York 10022, and copies of this Agreement will be
furnished to any shareholder of any of the parties hereto, upon request and
without cost.
6.5 Governing Law. This Agreement shall in all respects be interpreted by, and
construed, interpreted and enforced in accordance with and pursuant to the laws
of the State of Delaware and, so far as applicable, by the provisions of the
NGCL.
6.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6.7 Entire Agreement; Modification. This Agreement and the documents referred to
herein are intended by the parties as a final expression of their agreement with
respect to the subject matter hereof, and are intended as a complete and
exclusive statement of the terms and conditions of that agreement, and there are
not other agreements or understandings, written or oral, among the parties,
relating to the subject matter hereof. This Agreement supercedes all prior
agreements and understandings, written or oral, among the parties with respect
to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
duly executed this Agreement as of the date first stated above.
CATHAYONLINE INC..
(A Nevada corporation)
By: ________________________
Name: Brian W. Ransom
Title: President
CATHAYONLINE INC..
(A Delaware corporation)
By: _________________________
Name: Brian W. Ransom
Title: President
~
~
Continued on next page
<PAGE>
APPENDIX C
FORM OF DELAWARE BYLAWS
BYLAWS OF
CATHAYONLINE INC.
(A Delaware corporation)
ARTICLE I
STOCKHOLDERS
SECTION 1.01 Annual Meeting. If required by applicable law,
the annual meeting of the stockholders shall be held for the election of
directors at such date, place (either within or without the State of Delaware)
and time as shall be designated by resolution of the Board of Directors. Any
other business may be transacted at the annual meeting. If the Board of
Directors shall fail to designate an annual meeting of the stockholders as set
forth above, the annual meeting of the stockholders of the corporation shall be
held during the month of November or December of each year as determined by the
Board of Directors. If the election of the directors is not held on the day
designated herein for any annual meeting of the stockholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
as soon thereafter as is convenient.
SECTION 1.02 Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called by the President or the
Board of Directors, but such special meetings may not be called by any other
person or persons. All business lawfully to be transacted by the stockholders
may be transacted at any special meeting at any adjournment thereof. Business
transacted at any special meeting of stockholders shall be limited to the
purpose or purposes stated in the notice of such meeting.
SECTION 1.03 Place of Meetings. Any meeting of the
stockholders of the corporation may be held at its principal office or such
other place within or without of the State of Delaware as the Board of Directors
may designate.
SECTION 1.04 Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, the secretary shall give
to all stockholders entitled to vote at such meeting written notice, or other
form of notice permitted by applicable law, of such meeting not less than ten
(10) days, nor more than sixty (60) days, before the date of such meeting unless
otherwise provided by applicable law; which notice shall stated the place, date
and time of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Except as otherwise provided herein,
the notice shall be in writing (or other form of notice permitted by applicable
law) and delivered personally or mailed to the stockholders at their addresses
appearing on the books of the corporation. If mailed, the giving of such notice
shall be deemed delivered the date the same is deposited in the United States
mail, postage prepaid, directed to the stockholder at his or her address as it
appears on the records of the corporation.
SECTION 1.05 Notice of Stockholder Business and Nominations.
(a) Annual Meetings 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 only (a) pursuant to the corporation's notice of
meeting (or any supplement thereto), (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the corporation who was a stockholder of
record of the corporation at the time the notice provided for in this Section
1.05 is delivered to the Secretary of the corporation, who is entitled to vote
at the meeting and who complies with the notice procedures set forth in this
Section 1.05.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this Section 1.05, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation and any such proposed
business other than the nominations of persons for election to the Board of
Directors must constitute 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 later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day 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 more than thirty (30) days before or more than seventy (70) days
after such anniversary date, notice by the stockholder must be so delivered not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such annual meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the corporation). In no event shall the public
announcement of an adjournment or postponement of an annual meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth: (a) as to
each person whom the stockholder proposes to nominate for election 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 (the "Exchange Act") and Rule 14a-11
thereunder (and 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
text of the proposal or business (including the text of any resolutions proposed
for consideration and in the event that such business includes a proposal to
amend the Bylaws of the corporation, the language of the proposed amendment),
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, (ii) the class and number
of shares of capital stock of the corporation which are owned beneficially and
of record by such stockholder and such beneficial owner, (iii) a representation
that the stockholder is a holder of record of stock of the corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to propose such business or nomination, and (iv) a representation
whether the stockholder or the beneficial owner, if any, intends or is part of a
group which intends (x) to deliver a proxy statement and/or form of proxy to
holders of at least the percentage of the corporation's outstanding capital
stock required to approve or adopt the proposal or elect the nominee and/or (y)
otherwise to solicit proxies from stockholders in support of such proposal or
nomination. The foregoing notice requirements shall be deemed satisfied by a
stockholder if the stockholder has notified the corporation of his or her
intention to present a proposal at an annual meeting in compliance with Rule
14a-8 (or any successor thereof) promulgated under the Exchange Act and such
stockholder's proposal has been included in a proxy statement that has been
prepared by the corporation to solicit proxies for such annual meeting. The
corporation may require any proposed nominee to furnish such other information
as it may reasonably require to determine the eligibility of such proposed
nominee to serve as a director of the corporation.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Section 1.05 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the corporation
at an annual meeting is increased and there is no public announcement by the
corporation naming the nominees for the additional directorships at least one
hundred (100) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 1.05 shall also be
considered timely, but only with respect to nominees for the additional
directorships, 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 (10th) 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. 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 (1) by or at the direction of the Board of
Directors or (2) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
corporation who is a stockholder of record at the time the notice provided for
in this Section 1.05 is delivered to the Secretary of the corporation, who is
entitled to vote at the meeting and upon such election and who complies with the
notice procedures set forth in this Section 1.05. 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 entitled to vote in
such election of directors may nominate a person or persons (as the case may be)
for election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (A)(2) of this
Section 1.05 shall be delivered to the Secretary at the principal executive
offices of the corporation not earlier than the close of business on the one
hundred twentieth (120th) day prior to such special meeting and not later than
the close of business on the later of the ninetieth (90th) day prior to such
special meeting or the tenth (10th) days 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 or postponement of a
special meeting commence a new time period (or extend any time period) for the
giving of a stockholder's notice as described above.
(c) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 1.05 shall be eligible
to be elected at an annual or special meeting of stockholders of the corporation
to serve as directors and only such business shall be conduced at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 1.05. Except as otherwise provided by
law, the chairman of the meeting shall have the power and duty (a) to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 1.05 (including whether the stockholder or beneficial
owner, if any, on whose behalf the nomination or proposal is made solicited (or
is part of a group which solicited) or did not so solicit, as the case may be,
proxies in support of such stockholder's nominee or proposal in compliance with
such stockholder's representation as required by clause (A)(2)(c)(iv) of this
Section 1.05) and (b) if any proposed nomination or business was not made or
proposed in compliance with this Section 1.05, to declare that such nomination
shall be disregarded or that such proposed business shall not be transacted.
Notwithstanding the foregoing provisions of this Section 1.05, if the
stockholder (or a qualified representative of the stockholder) does not appear
at the annual or special meeting of stockholders of the corporation to present a
nomination or business, such nomination shall be disregarded and such proposed
business shall not be transacted, notwithstanding that proxies in respect of
such vote may have been received by the corporation.
(2) For purposes of this Section 1.05, "public announcement"
shall include 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 Section
1.05, 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 Section 1.05. Nothing in this Section 1.05 shall be
deemed to affect any rights (a) of stockholders to request inclusion of
proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act, as applicable, or (b) of the holders of any series of preferred
stock to elect directors pursuant to any applicable provisions of the
Certificate of Incorporation.
SECTION 1.06 Waiver of Notice. Any written waiver of notice,
signed by the stockholder entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a
stockholder at a meeting shall constitute a waiver of notice of such meeting,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at nor the purpose of any annual or special meeting of the
stockholders need be specified in any written waiver of notice.
SECTION 1.07 Fixing Date for Determination of Stockholders of
Record.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall, unless otherwise required by law, not be more than
sixty (60) nor less than ten (10) days before the date of such meeting; (2) in
the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten (10)
days from the date upon which the resolution fixing the record date is adopted
by the Board of Directors; and (3) in the case of any other action, shall not be
more than sixty (60) days prior to such other action.
(b) If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action of the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
(c) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 1.08 Quorum; Adjourned Meetings.
--------------------------
(a) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, at any meeting of the stockholders, the presence
in person or by proxy of the holders of a majority in voting power of the
outstanding shares of capital stock entitled to the vote at the meeting shall
constitute a quorum.
(b) In the absence of a quorum, the holders of a majority of
the voting power of the outstanding shares of capital stock entitled to vote at
the meeting so represented and entitled to vote may adjourn the meeting from
time to time until holders of the amount of stock required to constitute a
quorum shall be in attendance. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted as originally called. When a stockholders' meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless the adjournment is for more than thirty (30) days or if after
adjournment a new record date is set, in which event notice thereof shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 1.09 Voting.
(a) Except as otherwise provided by or pursuant to the
Certificate of Incorporation, each stockholder entitled to vote at a meeting of
stockholders, such stockholders' duly authorized proxy or attorney-in-fact shall
be entitled to one (1) vote for each share of capital stock held by such
stockholder.
(b) If a quorum is present, the affirmative vote of holders of
a majority in voting power of the outstanding shares of capital stock of the
Corporation present at the meeting and entitled to vote on any matter shall be
the act of the stockholders, unless a vote of greater number or voting by
classes is required by applicable law, the rules or regulations of any stock
exchange applicable to the corporation, the Certificate of Incorporation and
these Bylaws.
(c) The corporation shall be entitled to treat the person in
whose name any share of its stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any other person, whether or not the
corporation shall have notice thereof, except as expressly provided by
applicable law.
SECTION 1.10 Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to a corporate action
in writing without a meeting may authorize another person or persons to act for
such stockholder by proxy. No proxy shall be valid after the expiration of three
(3) years from the date of execution thereof, unless the proxy provides for a
longer period. A proxy shall be irrevocable if the proxy states that it is
irrevocable and is coupled with an interest sufficient to support an irrevocable
power. Revocation of a proxy that is not irrevocable may be effected by
attending the meeting and voting in person or by filing an instrument revoking
the same or by delivering a duly executed proxy bearing a later date to the
Secretary of the corporation.
SECTION 1.11 Action Without Meeting. Unless otherwise provided
in the Certificate of Incorporation, any action required or permitted to be
taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if consented to in writing by
the holders of a majority of the shares entitled to vote or such greater
proportion as may be required by applicable law, the Certificate of
Incorporation, or these Bylaws. Such consents shall be delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which minutes of proceedings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall, to the extent required by law, be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
corporation.
SECTION 1.12 List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, as required by applicable law. Except as otherwise
provided by law, the stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE II
DIRECTORS
SECTION 2.01 Number, Tenure and Qualifications. Except as
otherwise provided herein, the Board of Directors of the corporation shall
consist of at least one (1) but no more than nine (9) persons, the number
thereof to be determined from time to time by resolution of the Board of
Directors. Each director shall be elected at the annual meeting of the
stockholders of the corporation and shall hold office for one (1) year or until
his or her successor is elected and qualified or until his or her earlier death,
resignation, disqualification or removal.
SECTION 2.02 Resignation. Any director may resign at any time
upon giving written notice to the corporation. If the Board of Directors accepts
the resignation of a director tendered to take effect at a future date, the
Board of Directors shall elect a successor to fill such vacancy when the
resignation becomes effective.
SECTION 2.03 Reduction in Number. No reduction in the number
of directors shall have the effect of removing any director prior to the
expiration of his or her term of office.
SECTION 2.04 Removal. Any director of the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the voting power of the outstanding shares of capital stock then entitled to
vote at an election of directors.
SECTION 2.05 Vacancies.
(a) Unless otherwise provided by law or the Certificate of
Incorporation, a vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors or otherwise may be filled
by the stockholders at any regular or special meeting or any adjourned meeting
thereof, or by the remaining director(s) by the affirmative vote of a majority
thereof, although less than a quorum, or by the sole remaining director. Each
successor so elected shall hold office until the next annual meeting of
stockholders or until a successor shall have been duly elected and qualified.
(b) If, at the time of the filing of any vacancy or newly
created directorship, the directors then in office shall constitute less than a
majority of the whole board, the Court of Chancery of the State of Delaware may,
upon application of stockholder(s) holding at least 10% of the total shares at
the time outstanding and entitled to vote for such directors, summarily order an
election to be held to fill any such vacancies, or to replace any directors
chosen by the directors then in office as provided above.
SECTION 2.06 Regular Meetings. Immediately following the
adjournment of, and at the same place as, the annual meeting of the
stockholders, the Board of Directors, including directors newly elected, shall
hold its annual meeting without notice, other than this provision, to elect
officers of the corporation and to transact such further business as may be
necessary or appropriate. The Board of Directors may provide by resolution the
place (within or without the State of Delaware), date and hour for holding
additional regular meetings.
SECTION 2.07 Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman and shall be called by the Chairman
upon the request of any two (2) directors or the President of the corporation.
SECTION 2.08 Place of Meetings. Any meeting of the directors
of the corporation may be held at its principal office or at such other place
within or without of the State of Delaware as the Board of Directors may
designate.
SECTION 2.09 Notice of Meetings. Except as otherwise provided
in Section 2.06, the Chairman shall deliver to all directors written notice (or
any other form of notice permitted by applicable law) of any special meeting, at
least two (2) days before the date of such meeting, by delivery of such notice
personally or mailing such notice first class mail, or by telegram, telecopier,
telephone or other means of electronic transmission. If mailed, the notice shall
be deemed delivered two (2) business days following the date the same is
deposited in the United States mail, postage prepaid. Any director may waive
notice of any meeting in writing, and the attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, unless such attendance is
for the express purpose of objecting, at the beginning of the meeting, to the
transaction or business threat because the meeting is not properly called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of directors need be specified in any written waiver
of notice.
SECTION 2.10 Quorum: Adjourned Meetings.
(a) At all meetings of the Board of Directors, a majority of
the whole Board of Directors shall constitute a quorum for the transaction of
business.
(b) At any meeting of the Board of Directors where a quorum is
not present, a majority of those present may adjourn the meeting, from time to
time, until a quorum is present, and no notice of such adjournment shall be
required.
At any adjourned meeting where a quorum is present, any
business may be transacted which could have been transacted at the meeting
originally called.
SECTION 2.11 Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting if a written consent
thereto is signed by all of the members of the Board of Directors or of such
committee. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board of Directors or committee. Such action by written
consent shall have the same force and effect as the unanimous vote of the Board
of Directors or committee.
SECTION 2.12 Telephonic Meetings. Meetings of the Board of
Directors or any committee thereof may be held through the use of a conference
telephone or similar communications equipment so long as all members
participating in such meeting can hear one another at the time of such meeting.
Participation in such a meeting constitutes presence in person at such meeting.
SECTION 2.13 Board Decisions. Except as otherwise provided by
applicable law, the Certificate of Incorporation or these Bylaws, the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
SECTION 2.14 Powers and Duties.
(a) Except as otherwise provided by the Certificate of
Incorporation or applicable law, the Board of Directors is invested with the
authority to manage and direct the affairs of the corporation.
(b) 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.
SECTION 2.15 Compensation. The directors shall be allowed and
paid all necessary expenses incurred in attending any meetings of the board.
SECTION 2.16 Order of Business. The order of business at any
meeting of the Board of Directors may be as follows:
(a) Determination of members present and existence of
quorum;
(b) Reading and approval of the minutes of any previous
meeting or meetings;
(c) Reports of officers and committeemen;
(d) Election of officers;
(e) Unfinished business;
(f) New business; and
(g) Adjournment.
ARTICLE III
OFFICERS
SECTION 3.01 Election. The Board of Directors, at its first
meeting following the annual meeting of stockholders, shall elect a President, a
Secretary and a Treasurer to hold office for one (1) year next coming and until
their successors are elected and qualified or until their earlier resignation or
removal. Any person may hold two or more offices. The Board of Directors may,
from time to time, by resolution, appoint one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and transfer agents of the corporation as it
may deem advisable, prescribe their duties and fix their compensation.
SECTION 3.02 Removal; Resignation. Any officer or agent
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever, in its judgment, the best interest of the corporation would
be served thereby. Any officer may resign at any time upon written notice to the
corporation without prejudice to the rights, if any, of the corporation under
any contract to which the resigning officer is a party.
SECTION 3.03 Vacancies. Any vacancy in any office because of
death, resignation, removal, or otherwise may be filled by the Board of
Directors for the unexpired portion of the term of such office.
SECTION 3.04 President. The President shall be the general
manager and executive officer of the corporation, subject to the supervision and
control of the Board of Directors, and shall direct the corporate affairs, with
full power to execute all resolutions and orders of the Board of Directors not
especially entrusted to some other officer of the corporation. The President
shall preside at all meetings of the stockholders and shall sign the
certificates of stock issued by the corporation, and shall perform such other
duties as shall be prescribed by the Board of Directors. Unless otherwise
ordered by the Board of Directors, the President shall have full power and
authority on behalf of the corporation to attend and to act and to vote at any
meetings of the stockholders of any corporation in which the corporation may
hold stock and, at any such meetings, shall possess and may exercise any and all
rights and powers incident to the ownership of such stock. The Board of
Directors, by resolution from time to time, may confer like powers on any person
or persons in place of the President to represent the corporation for these
purposes.
SECTION 3.05 Vice President. The Board of Directors may elect
one or more Vice Presidents who shall be vested with all the powers and perform
all the duties of the President whenever the President is absent or unable to
act, including the signing of the certificates of stock issued by the
corporation, and the Vice President shall perform such other duties as shall be
prescribed by the Board of Directors.
SECTION 3.06 Secretary. The Secretary shall have the duty to
record the proceedings of the meetings of stockholders or directors and shall
keep the minutes of all meetings of the stockholders and the Board of Directors
in books provided for that purpose. The Secretary shall attend to the giving and
service of all notices of the corporation, may sign with the President in the
name of the corporation all contracts authorized by the Board of Directors or
appropriate committee, shall have the custody of the corporate seal, shall sign
the certificates of stock issued by the corporation, shall have charge of stock
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors or appropriate committee may direct, and shall,
in general perform all duties incident to the office of the Secretary. All
corporate books kept by the Secretary shall be open for examination by any
director for a purpose reasonably related to the director's position as a
director.
SECTION 3.07 Assistant Secretary. The Board of Directors may
appoint an Assistant Secretary who shall have such powers and perform such
duties as may be prescribed for him or her by the Board of Directors.
SECTION 3.08 Treasurer. The Treasurer shall be the chief
financial officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall have custody of all the funds and securities
of the corporation. When necessary or proper, the Treasurer shall endorse on
behalf of the corporation for collection checks, notes and other obligations,
and shall deposit all monies to the credit of the corporation in such bank or
banks or other depository as the Board of Directors may designate, and shall
sign all receipts and vouchers for payments made by the corporation. Unless
otherwise specified by the Board of Directors, the Treasurer shall sign with the
President all bills of exchange and promissory notes of the corporation, shall
also have the care and custody of the stocks, bonds, certificates, vouchers,
evidence of debts, securities and such other property belong to the corporation
as the Board of Directors shall designate, and shall sign all papers required by
law, by these Bylaws or by the Board of Directors to be signed by the Treasurer.
The Treasurer shall enter regularly in the books of the corporation, to be kept
for that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the Board of Directors, the
Treasurer shall render a statement of any or all accounts. The Treasurer shall
perform all acts incident to the position of Treasurer subject to the control of
the Board of Directors. The Treasurer shall, if required by the Board of
Directors, give a bond to the corporation in such sum and with such security as
shall be approved by the Board of Directors for the faithful performance of all
the duties of the Treasurer and for restoration to the corporation in the event
of the Treasurer's death, resignation, retirement, or removal from office, of
all books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
SECTION 3.09 Assistant Treasurer. The Board of Directors may
appoint an Assistant Treasurer who shall have such powers and perform such
duties as may be prescribed by the Board of Directors, and the Board of
Directors may require the Assistant Treasurer to give a bond to the corporation
in such sum and with such security as it may approve, for the faithful
performance of the duties of Assistant Treasurer, and for the restoration to the
corporation, in the event of the Assistant Treasurer's death, resignation,
retirement or removal from office, of all books, records, papers, vouchers,
money and other property belonging to the corporation. The expense of such bond
shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
SECTION 4.01 Certificates. The shares of the corporation shall
be evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, and shall be signed by the President or
the Vice President and also by the Secretary or an Assistant Secretary. Any or
all of the signatures on the certificate may be by facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of such issue. Each certificate shall contain the
name of the record holder, the number, designation, if any, class or series of
shares represented, a statement of summary of any applicable rights,
preferences, privileges, or restrictions thereon, and a statement that the
shares are assessable, if applicable. All certificates shall be consecutively
numbered. The name and address of the stockholders, the number of shares, and
the date of issue shall be entered on the stock transfer books of the
corporation.
SECTION 4.02 Lost or Destroyed Certificates. The corporation
may issue a new certificate of stock in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed and the corporation
may require the owner of the lost, stolen or destroyed certificate, or his or
her legal representative to, prior to the issuance of a replacement, provide the
corporation with a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
ARTICLE V
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
SECTION 5.01 Records. Any records maintained by the
corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time.
SECTION 5.02 Right of Inspection.
(a) The corporation's stock ledger, list of stockholders and
its other books and records shall be open to inspection upon the written demand
under oath stating the purpose thereof of any stockholder, in person or by
attorney or other agent, during usual business hours for a purpose reasonably
related to such holder's interest as a stockholder. Such inspection may be made
in person or by agent or attorney, provided that the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder and the right of
inspection includes the right to copy and make extracts. The demand under oath
shall be directed to the corporation at its registered office in the State of
Delaware or at its principal place of business.
(b) Every director shall have the right to examine the
corporation's stock ledger, a list of its stockholders and its other books and
records for a purpose reasonably related to the director's position as a
director.
SECTION 5.03 Corporate Seal. The Board of Directors may, by
resolution, authorize a seal, and the seal may be used by causing it, or a
facsimile, to be impressed or affixed or reproduced or otherwise. Except when
otherwise specifically provided herein, any officer of the corporation shall
have the authority to affix the seal to any document requiring it.
SECTION 5.04 Fiscal Year. The fiscal year of the corporation
shall end on each June 30th or such other date as may be fixed by resolution of
the Board of Directors.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01 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 executive officer of the corporation, is or
was serving at the request of the corporation as a director or officer of
another corporation or of a partnership, joint venture, trust, enterprise or
non-profit 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. The indemnification provided by this
Section 6.01 shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person.
SECTION 6.02 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 6.03 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 6.04 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 Indemnitee in respect of any act or
omission occurring prior to the time of such repeal or modification.
Notwithstanding anything else contained in these Bylaws or the Certificate of
Incorporation to the contrary, Article VI of these Bylaws may only be amended by
the Board of Directors by the vote of 80% of the whole Board of Directors and
the holders of 66 2/3% of each class of the outstanding stock of the
corporation, voting separately as a single class.
SECTION 6.05 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.
SECTION 6.06 Insurance. The corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liability under this Article VI.
ARTICLE VII
BYLAWS
SECTION 7.01 Amendment. These Bylaws may be altered, amended
or repealed, and new Bylaws made, by the Board of Directors by the affirmative
vote of a majority of the directors present at a meeting at which a quorum is
present, but the stockholders may make additional Bylaws and may alter and
repeal any Bylaws whether adopted by them or otherwise.
