<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INLAND ENTERTAINMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
1
<PAGE> 2
PRELIMINARY COPIES
INLAND ENTERTAINMENT CORPORATION
16868 VIA DEL CAMPO COURT, SUITE 200
SAN DIEGO, CALIFORNIA 92127
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
We cordially invite you to attend our Annual Meeting of Shareholders.
This Annual Meeting will be held at 10:00 A.M., California time, on Friday,
December 10, 1999, at the executive offices of the Company, located at 16868 Via
Del Campo Court, Suite 200, San Diego, California 92127, for the following
purposes:
1. To elect nine directors to the Board of Directors to hold
office for a term of one year and until their respective successors are
elected and qualified.
2. To approve an amendment to the Company's Articles of
Incorporation to change the name of the Company to "Venture Catalyst
Incorporated."
3. To approve a resolution permitting the Company to take
action by the written consent of fewer than all of the shareholders of
the Company entitled to vote with respect to the subject matter of the
action.
4. To approve the Amended and Restated Bylaws of the Company.
5. To transact such other business as may properly come before
this Annual Meeting or any adjournment thereof.
The Board of Directors has nominated Richard T. Harrison, Thomas G.
Holmes, Andrew B. Laub, Jana McKeag, G. Fritz Opel, Charles Reibel, Sanjay
Sabnani, Cornelius E. ("Neil") Smyth and L. Donald Speer, II, for election to
the Board of Directors.
The Board of Directors has fixed the close of business on October 22,
1999, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting.
YOU ARE CORDIALLY INVITED TO BE PRESENT AND TO VOTE AT THIS ANNUAL
MEETING IN PERSON. HOWEVER, YOU ARE ALSO REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID AND ADDRESSED ENVELOPE, WHETHER OR
NOT YOU EXPECT TO ATTEND. IN THE EVENT YOU HAVE RETURNED A SIGNED PROXY, BUT
ELECT TO ATTEND THIS ANNUAL MEETING AND VOTE IN PERSON, YOU WILL BE ENTITLED TO
VOTE.
By Order of the Board of Directors,
[Signature]
Christopher Wm. Voisin
Secretary
San Diego, California
October __, 1999
<PAGE> 3
NOTE: UNLESS OTHERWISE SPECIFIED, FOR PURPOSES OF
THIS PRELIMINARY PROXY STATEMENT, ALL SHARE
INFORMATION "AS OF THE RECORD DATE" IS AS OF
OCTOBER 1, 1999. THIS INFORMATION WILL BE UPDATED
TO THE RECORD DATE, OCTOBER 22, 1999, IN THE
DEFINITIVE PROXY STATEMENT.
INLAND ENTERTAINMENT CORPORATION
16868 VIA DEL CAMPO COURT, SUITE 200
SAN DIEGO, CALIFORNIA 92127
----------------
PROXY STATEMENT
----------------
The Board of Directors of Inland Entertainment Corporation (the
"Company") is soliciting proxies to be voted at the Annual Meeting of
Shareholders of the Company to be held on Friday, December 10, 1999, at the
executive offices of the Company, located at 16868 Via Del Campo Court, Suite
200, San Diego, California 92127, at 10:00 A.M., California time, and at any
adjournments thereof (the "Annual Meeting" or the "Meeting"), for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders and
described herein. This Proxy Statement describes issues on which we would like
you, as a shareholder, to vote. It also gives you information on these issues so
that you can make an informed decision. The approximate date on which this Proxy
Statement and the enclosed form of proxy are first being sent or given to
shareholders is November __, 1999.
VOTING RIGHTS AND SOLICITATION OF PROXIES
WHO MAY VOTE. The Board of Directors of the Company (the "Board of
Directors" or the "Board") has fixed the close of business on October 22, 1999,
as the record date for the determination of shareholders entitled to receive
notice of, and to vote at, the Annual Meeting (the "Record Date"). The only
outstanding class of stock of the Company is its common stock, par value $.001
per share ("Common Stock"), and, at the Record Date, 4,753,786 shares were
outstanding. Each share of Common Stock entitles the record holder on the Record
Date to one vote on all matters. With respect to the election of directors only
(Proposal 1), shareholders may vote in favor of all nominees or withhold their
votes as to all nominees or withhold their votes as to specific nominees.
REVOCABILITY OF PROXY. You may revoke your proxy prior to its exercise.
You may do this by (a) delivering to the Secretary of the Company, Christopher
Wm. Voisin, at or prior to the Annual Meeting, an instrument of revocation or
another proxy bearing a date or time later than the date or time of the proxy
being revoked, or (b) voting in person at the
1
<PAGE> 4
Annual Meeting. Mere attendance at the Annual Meeting will not serve to revoke
your proxy.
HOW YOUR SHARES WILL BE VOTED. All proxies received and not revoked will
be voted as directed. If no directions are specified, such proxies will be voted
FOR (a) election of the Board's nine nominees for directors, (b) approval of the
amendment to the Company's Articles of Incorporation to change the name of the
Company to "Venture Catalyst Incorporated," (c) approval of a resolution
allowing the Company to take action by the written consent of less than all of
the shareholders entitled to vote on the subject matter of the action, and (d)
approval of the Amended and Restated Bylaws of the Company. As to any other
business which may properly come before the Annual Meeting, the persons named in
such proxies will vote in accordance with their best judgment, although the
Company does not presently know of any other such business.
QUORUM; VOTING; BROKER NON-VOTES. Shares of Common Stock will be counted
as present at the Annual Meeting if the shareholder is present and votes in
person at the Meeting or has properly submitted a proxy card. A majority of the
Company's outstanding shares entitled to vote as of the Record Date must be
present at the Annual Meeting in order to hold the Meeting and conduct business.
This is called a quorum. The nine nominees receiving the highest number of votes
FOR a director will be elected as directors. This number is called a plurality.
The affirmative vote of a majority of the shares of Common Stock present in
person or by proxy at the Annual Meeting and entitled to vote on each of the
proposals (other than the election of directors) is required for the adoption of
each such proposal. Abstentions will be counted as votes against any proposal as
to which a shareholder abstains, but broker non-votes will have no effect on the
voting with respect to any proposal as to which there is a non-vote. A non-vote
may occur when a nominee holding shares of Common Stock for a beneficial owner
does not vote on a proposal because such nominee does not have discretionary
voting power and has not received instructions from the beneficial owner.
EXPENSES; METHOD OF SOLICITATION. The expenses of soliciting proxies for
the Annual Meeting are to be paid by the Company. Solicitation of proxies may be
made by means of personal calls upon, or telephonic or telegraphic
communications with, shareholders or their personal representatives by
directors, officers and employees of the Company who will not be specially
compensated for such services. Although there is no formal agreement to do so,
the Company may reimburse banks, brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in forwarding this Proxy Statement
to shareholders whose Common Stock is held of record by such entities.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
This table contains certain information as of the Record Date regarding
all persons who, to the knowledge of the Company, were the beneficial owners of
more than 5% of the outstanding shares of Common Stock, each of the directors of
the Company who also are the nominees for director, each of the executive
officers named in the Summary Compensation Table set forth herein under the
caption "Compensation of Executive Officers" (we refer to all these officers as
the "Named Executive Officers") and all directors and executive officers as a
group. The persons named hold sole voting and investment power with respect to
the shares shown opposite their respective names, unless otherwise indicated.
The information with respect to each person specified is as supplied or
confirmed by such person, based upon statements filed with the U.S. Securities
and Exchange Commission (the "SEC"), or based upon the actual knowledge of the
Company.
3
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP(1)
-------------------------------
NUMBER OF
SHARES RIGHT TO PERCENT OF
NAME OWNED(2) ACQUIRE(3) CLASS(1)(2)
- ---- ------------ ----------- -----------
<S> <C> <C> <C>
Karol M. Schoen ................................. 477,216 122,784 12.3%
9254-B Lake Murray Blvd.
San Diego, California 92119
Jo Ann Speer(4) ................................. 394,000 -- 8.3%
5731 Loma Verde
Rancho Santa Fe, California 92067
Arthur R Pfizenmayer ............................ -- 342,500 6.7%
P.O. Box 231369
Encinitas, California 92023
Directors/Nominees:
L. Donald Speer, II(5) ........................ 1,578,360 300,000 37.2%
Richard T. ("Chip") Harrison(5) ............... 750,000 -- 15.8%
Andrew B. Laub(5) ............................. -- 320,000 6.3%
G. Fritz Opel(5) .............................. 1,000 240,000 4.8%
Jana McKeag ................................... -- 60,000 1.2%
1350 I Street, N.W., Suite 2002
Washington, D.C. 20005
Thomas G. Holmes .............................. -- 35,000 *
8 Proctor Road
Merrimack, New Hampshire 03054
Charles Reibel ................................ -- 41,250 *
11755 Wilshire Blvd., Suite 1800
Los Angeles, California 90025
Sanjay Sabnani ................................ -- 65,625 1.4%
3420 Ocean Park Blvd., Suite 3020
Santa Monica, California 90405
Cornelius E. ("Neil") Smyth ................... -- 41,250 *
20 Bahama Bend
Coronado, California 92118
Named Executive Officers Who are Not Directors:
Robert Regent(5) .............................. -- 90,000 1.9%
All directors and executive officers as a group
(10 persons)................................... 2,329,360 1,193,125 59.2%
</TABLE>
- -------------------
* Less than one percent
(1) Subject to applicable community property and similar statutes.
(2) Includes shares beneficially owned, whether directly or indirectly,
individually or together with associates.
(Footnotes continued on the following page.)
4
<PAGE> 7
(Footnotes continued from the preceding page.)
(3) Shares that can be acquired through stock option exercises through [November
30, 1999] [December 21, 1999], within 60 days of the Record Date. These
shares are referred to herein as "Stock Option Shares".
(4) Jo Ann Speer is the former spouse of L. Donald Speer, II.
(5) The mailing address of such shareholder is in care of Inland Entertainment
Corporation, 16868 Via Del Campo Court, Suite 200, San Diego, California
92127.
CHANGE IN CONTROL OF THE COMPANY
Arrangements Which May Result in a Change of Control. Pursuant to the
Company's Articles of Incorporation, no person may become an officer, director
or the beneficial owner of such number of any class or series of the Company's
issued and outstanding capital stock such that he or she shall hold, directly or
indirectly, one of the ten greatest financial interests in the Company (an
"Interested Person") unless such Interested Person agrees in writing to (a)
provide the National Indian Gaming Commission ("Gaming Commission") or other
gaming authority having jurisdiction over the Company's operations ("Gaming
Authority") with information regarding such Interested Person, including
information regarding other gaming-related activities of such Interested Person
and financial statements, in such form, and with such updates, as may be
required by the Gaming Commission or other Gaming Authority; (b) respond to
written or oral questions that may be propounded by the Gaming Commission or any
Gaming Authority; and (c) consent to the performance of any background
investigation that may be required by the Gaming Commission or any Gaming
Authority, including an investigation of any criminal record of such Interested
Person.
In the event that an Interested Person (a) fails to provide information
requested by the Gaming Commission or any Gaming Authority, (b) gives the Gaming
Commission or any Gaming Authority cause either to deny approval of or to seek
to void a management contract to which the Company is a party, or (c) takes
action that will affect the voiding of any such management contract, such
Interested Person shall be required to divest all of the Company's stock owned
by such shareholder within a 90-day period. If the Interested Person is unable
to sell such stock within this period, the Interested Person shall notify the
Company in writing, and the Company shall repurchase such stock at a purchase
price equivalent to the lower of such stock's book value or cost.
5
<PAGE> 8
ELECTION OF DIRECTORS
PROPOSAL 1
Under the Articles of Incorporation and Bylaws of the Company (the
"Bylaws"), nine persons, Richard T. Harrison, Thomas G. Holmes, Andrew B. Laub,
Jana McKeag, G. Fritz Opel, Charles Reibel, Sanjay Sabnani, Cornelius E.
("Neil") Smyth and L. Donald Speer, II, have been nominated by the Board of
Directors for election at the Annual Meeting to serve one year terms expiring at
the Company's annual meeting in 2000 and until his or her respective successor
is elected and qualified.
The Bylaws provide for not less than three nor more than ten directors,
the exact number within the range being set by the Board of Directors from time
to time. Currently, the Board of Directors has set that number at nine
directors. Each of the nine nominees, whose term expires at the Annual Meeting,
presently serves as a director and has served continuously as a director of the
Company since the date indicated under the caption "Information with Respect to
the Director Nominees" below. In the event the nominee is unable to or declines
to serve as a director at the time of the Annual Meeting, which is not
anticipated, the persons named in the proxy will vote for the election of such
person or persons as may be designated by the Board of Directors. Unless
otherwise directed in the accompanying proxy, the persons named therein will
vote FOR the election of the nine director nominees listed below.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
RICHARD T. HARRISON, THOMAS G. HOLMES, ANDREW B. LAUB, JANA MCKEAG, G. FRITZ
OPEL, CHARLES REIBEL, SANJAY SABNANI, CORNELIUS E. ("NEIL") SMYTH AND L. DONALD
SPEER, II AS DIRECTORS. A PLURALITY OF THE VOTES CAST AT THE ANNUAL MEETING IS
REQUIRED FOR ELECTION OF EACH NOMINEE.
INFORMATION WITH RESPECT TO THE DIRECTOR NOMINEES
The following table sets forth information regarding the nominees,
including age on the date of the Annual Meeting, present position with the
Company, and other business experience during at least the past five years. With
the exception of Messrs. Reibel and Smyth, each of the directors/nominees is an
executive officer of the Company.
6
<PAGE> 9
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND
NAME AGE SINCE OTHER INFORMATION CONCERNING NOMINEE
- ----- ---- ---------- ------------------------------------------------------------
<S> <C> <C> <C>
Richard T. ("Chip") Harrison... 41 Aug. 1998 Richard T. ("Chip") Harrison is President and Chief
Operating Officer of Cyberworks, Inc., a wholly-owned
subsidiary of the Company that was acquired in August
1998. Prior to the acquisition, Mr. Harrison served as
President and Chief Executive Officer and sole
shareholder of Cyberworks since June 1995. In addition,
Mr. Harrison was founder of Pegsys Holdings, a system
integrator for the client/server marketplace, where he
served as President from 1990 to 1994. From 1983 to
1990, Mr. Harrison was Chairman, Chief Executive
Officer and President of Peripheral Systems, Inc., a
nationwide systems integrator and network products
distributor.
Thomas G. Holmes............... 52 Oct. 1997 Thomas G. Holmes joined the Company in September
1997 and was appointed as Vice President of Technology
in October 1997. Prior to Mr. Holmes' employment with
the Company, he worked for Digital Equipment
Corporation ("DEC") from January 1970 to August 1997.
In addition to his technical management assignments at
DEC, Mr. Holmes served in senior roles in both marketing
and sales functions. While on leave from DEC, Mr.
Holmes served in the U.S. Air Force at Nellis A.F.B.,
Nevada from March 1971 to November 1974 in the
Tactical Electronic Warfare Training Squadron.
Andrew B. Laub................. 47 May 1995 Andrew B. Laub has served as Executive Vice President,
Finance and Development of the Company since July
1995, Chief Financial Officer since October 1997 and
Treasurer since May 22, 1995, the effective date of the
merger of Inland Casino Corporation, a Delaware
corporation ("ICC II"), with and into the Company (the
"Effective Date"). From the Effective Date to July 1995,
Mr. Laub also held the position of Vice President. From
September 1994 to the Effective Date, Mr. Laub was Vice
President, Treasurer and a director of ICC II. From
January 1994 through August 1994, he was self-employed
as a financial consultant. From July 1987 through
January 1994, Mr. Laub was Treasurer for Southwest Gas
Corporation, a natural gas distribution utility.
Jana McKeag.................... 48 Feb. 1996 Jana McKeag has served as a consultant to the Company
from February to March 1996 and Vice President, Governmental
Relations since April 1996. Prior to joining the Company, Ms.
McKeag served from April 1991 through December 1995 as a
Commissioner on the National Indian Gaming Commission. From
January through April 1991, Ms. McKeag served as Director of
Native American Programs for the U.S. Department of
Agriculture and from April 1985 to December 1990, she held
several senior management and policy level posts at the U.S.
Department of the Interior including Assistant to the
Assistant Secretary of Indian Affairs.
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND
NAME AGE SINCE OTHER INFORMATION CONCERNING NOMINEE
- ----- ---- ---------- ------------------------------------------------------------
<S> <C> <C> <C>
G. Fritz Opel.................. 56 Oct. 1995 G. Fritz Opel has served as Executive Vice President,
Marketing and Consulting Services of the Company since June
1996. He served as Vice President, Marketing and
Communications from October 1995 until June 1996. From July
1995 to October 1995, Mr. Opel was employed by the Company to
coordinate the Company's marketing activities. From September
1993 through June 1995, Mr. Opel served as a consultant to
the Sycuan Casino, located on the Sycuan Indian Reservation
near San Diego, California, to other Indian tribes and to the
Company. From August 1989 through September 1993, Mr. Opel
served as Director of Marketing for the Sycuan Casino.
Charles Reibel................. 49 May 1997 Charles Reibel is a certified public accountant and has
served as President of Charles Reibel, Inc., C.P.A. since
February 1986. Mr. Reibel was retained as the Company's
independent certified public accountant from March 1991 to
June 1994. Mr. Reibel, since January 1999, has served as a
partner of Reibel & Rose, LLP, certified public accountants,
and President of Reibel & Rose Financial Services, Inc., a
financial systems consulting company. Reibel & Rose, LLP and
Reibel & Rose Financial Services, Inc., are each affiliates
of Charles Reibel, Inc. CPA. In addition, Mr. Reibel has
served as President and a director of Gorilla World, Inc., a
privately-held company that manufactures and distributes
active-wear clothing, since July 1995.
Sanjay Sabnani................. 29 July 1999 Sanjay Sabnani has served as President of Venture-
Catalyst.com, a division of the Company formed in July 1999,
and also Vice President of Investor Relations for the Company
since July 1999. From March 1999 to July 1999, Mr. Sabnani
served as President of Typhoon Capital Consultants, LLC, an
investor relations firm, and from October 1997 to March 1999
Mr. Sabnani was President and head of the Internet Consulting
division of Coffin Communications Group, a Los Angeles-based
investor relations firm. From April 1995 to February 1997,
Mr. Sabnani served as Securities Principal and Branch Manager
at the Beverly Hills Office of Joseph Charles and Associates
(JCA), a NASD brokerage firm. From December 1993 to March
1995, Mr. Sabnani held various positions at several companies
within the securities industry.
Cornelius E. ("Neil") Smyth.... 73 May 1995 Cornelius E. ("Neil") Smyth served as a director of ICC II
from September 1994 to the Effective Date. Mr. Smyth is
currently retired. From February 1990 through August 1990,
Mr. Smyth was a consultant in the gaming industry. From March
1989 through February 1990, he was President of Mexican
operations of Caesars World International Inc. and from
September 1983 through March 1989, Mr. Smyth was Executive
Vice President of Latin American operations for Caesars World
International Inc. From 1981 through 1983, he was President
of the Sands Hotel in Las Vegas. From 1970 through 1981, he
was Chief Financial Officer and Senior Vice President of
Caesars Palace in Las Vegas.
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND
NAME AGE SINCE OTHER INFORMATION CONCERNING NOMINEE
- ----- ---- ---------- ------------------------------------------------------------
<S> <C> <C> <C>
L. Donald Speer, II............ 50 May 1995 L. Donald Speer, II has served as Chief Executive Officer
and Chairman of the Board of the Company since the Effective
Date, and has served as President and Chief Operating Officer
of the Company since June 1997. Mr. Speer served as Chairman
of the Board and Chief Executive Officer Board of ICC II from
June 1994 to the Effective Date. From March 1991 through June
1994, Mr. Speer was the founder, Chairman of the Board, Chief
Executive Officer and a director of Inland Casino Corporation,
a Nevada corporation ("ICC I"), and managing general partner
of Inland Casino Partners, a California general partnership
("ICP"), each of which were consolidated into ICC II through
a roll-up transaction in June 1994. Mr. Speer was President
of ICC I from its inception through March 1994. From July 1986
through January 1992, Mr. Speer was Chairman of the Board,
Chief Executive Officer and a director of Southwest Gaming,
Inc., which provided operating services for the Desert Oasis
Indian Casino, a poker casino on the Cabazon Indian Reservation
near Indio, California.
</TABLE>
INFORMATION WITH RESPECT TO EXECUTIVE OFFICER WHO IS NOT A DIRECTOR NOMINEE
The following table sets forth similar information as that provided for
the director nominees with respect to the only executive officer of the Company
who is not a director nominee.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE OTHER INFORMATION CONCERNING EXECUTIVE OFFICER
- ----- ---- -------------------------------------------------------------------------
<S> <C> <C>
Robert Regent................ 59 Robert Regent has served as Executive Vice President, Casino Operations
of the Company since June 1997. Prior thereto, from February 1996 to
June 1997, Mr. Regent served as Vice President, Casino Operations of the
Company, and from October 1995 to February 1996, Mr. Regent served as
Director of Casino Operations for the Company primarily focusing on the
Barona Casino. From May to October 1995, Mr. Regent served as
Manager of the Barona Casino for the Barona Group of Capitan Grande
Band of Mission Indians (the "Barona Tribe"), the principal Indian
Gaming client of the Company. Mr. Regent has held numerous positions
with various casinos including Director of Gaming for the Gold Coast/Gold
Shore Casino in Biloxi, Mississippi from February 1993 to May 1995;
Assistant Casino Manager/Shift Manager for the Splash Casino in Tunica,
Mississippi from September 1992 to February 1993; and Pit Boss and Shift
Manager for the Horseshoe Hotel & Casino in Las Vegas, Nevada from
June 1988 to September.
</TABLE>
9
<PAGE> 12
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Board of Directors manages the business of the Company. It
establishes overall policies and standards for the Company and reviews the
performance of management. In addition, the Board has established an Executive
Committee, an Audit Committee and a Compensation Committee whose functions are
briefly described below. The Company has not established a Nominating Committee.
The directors are kept informed of the Company's operations at meetings of the
Board and its committees through reports and analyses and discussions with
management.
During the fiscal year ended June 30, 1999 (the "Fiscal Year" or "Fiscal
1999"), the Board of Directors met on three occasions. In addition, the Board
took action on three occasions by Unanimous Written Consent.
Executive Committee. At times when the Board of Directors is not in
session, the Executive Committee is empowered to exercise the authority of the
Board of Directors with respect to the significant day-to-day operational
decisions of the Company. The current members of the Executive Committee are L.
Donald Speer, II (Chairman), Richard T. ("Chip") Harrison, Andrew B. Laub, G.
Fritz Opel and Sanjay Sabnani. During the Fiscal Year, the Executive Committee
met informally on a regular basis.
Audit Committee. The principal duties of the Audit Committee are to (a)
meet with the independent accountants to review and approve the scope of their
audit engagement; (b) meet with the Company's financial management personnel and
independent accountants to review matters relating to internal accounting
controls, the Company's accounting practices and procedures and other matters
relating to the financial condition of the Company; and (c) report to the Board
periodically any recommendations the Audit Committee may have with respect to
such matters. The current members of the Audit Committee are Cornelius E.
("Neil") Smyth (Chairman) and Charles Reibel. During the Fiscal Year, the Audit
Committee met on four occasions.
Compensation Committee. The principal functions of the Compensation
Committee are to (a) evaluate the performance of the Company's officers,
including the Chief Executive Officer; (b) evaluate the recommendations of the
Company's Chief Executive Officer with respect to performance and compensation
of all the Company's officers, and thereafter to make recommendations to the
Board relating to the Company's compensation plans and arrangements relating to
such persons, including approval of loans to, or guaranteeing the obligations
of, such officers; and (c) administer, and make compensation determinations
under, all of the Company's stock option plans. The current members of the
Compensation Committee are Cornelius E. ("Neil") Smyth (Chairman) and Charles
Reibel. The Compensation Committee met on six occasions during the Fiscal Year.
10
<PAGE> 13
Each of the incumbent directors attended at least 75% of the aggregate of
(a) the total number of meetings of the Board of Directors held during the
Fiscal Year (which were held during the period that such person served as a
director) and (b) the total number of meetings held by each committee of the
Board on which such director served during the Fiscal Year (which were held
during the period that such person served on such committee).
COMPENSATION OF DIRECTORS
Directors who also are employees of the Company are not paid any fees or
remuneration, as such, for their service on the Board or on any Board committee.
Cash Compensation. During Fiscal 1999, each nonemployee director of the
Company received for their services as directors $2,500 per meeting attended in
person or by telephone plus travel expenses incurred in connection with
attendance at each Board of Directors' meeting. In addition, nonemployee
directors who are members of the Audit Committee and the Compensation Committee
received for their services as members of such committees $500 per committee
meeting attended in person or by telephone during the Fiscal Year prior to
January 1999 plus travel expenses incurred in connection with attendance at each
committee meeting. The fee for attendance at committee meetings increased to
$2,500 per meeting, plus expenses, for meetings held after January 1, 1999.
Nonemployee Directors' Plan. Each nonemployee director also is eligible
to receive stock options under the Company's 1996 Nonemployee Directors Stock
Option Plan (the "1996 Plan"), a non-discretionary, formula stock option plan
pursuant to which 100,000 shares of Common Stock have been authorized for
issuance. Each nonemployee director who first becomes a member of the Board of
Directors will be granted an option to purchase 10,000 shares of Common Stock
automatically on the date of his or her election to the Board of Directors. Each
nonemployee director also will be granted an option to purchase 5,000 shares of
Common Stock automatically on the date of each of the Company's Annual Meetings
of Shareholders at which such nonemployee director is elected to the Board of
Directors. The exercise price for all options granted under the 1996 Plan is
based on the fair market value of the Common Stock on the date of grant. Each
option granted under the 1996 Plan shall become exercisable in full 6 months
following the date of grant.
At the close of the Company's last annual meeting of shareholders on
December 11, 1998, Charles Reibel and Neil Smyth were each granted, pursuant to
the 1996 Plan, an option to purchase 5,000 shares of Common Stock at an exercise
price of $3.50 per share, the fair market value of the Common Stock on the date
of grant.
The 1995 Plan. Each nonemployee director also is eligible to receive
awards under the Company's 1995 Stock Option Plan, as amended (the "1995 Plan"),
a discretionary stock option plan administered by the Compensation Committee,
except in the case of grants to nonemployee directors in which case the 1995
Plan is administered by the Board of Directors. In Fiscal 1999, no options under
the 1995 Plan were granted to either of the nonemployee directors.
11
<PAGE> 14
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO CHANGE THE CORPORATE NAME
PROPOSAL 2
The Company's Board of Directors has unanimously approved, subject to
shareholder approval, an amendment to the Company's Articles of Incorporation to
change the name of the corporation to "Venture Catalyst Incorporated."
Specifically, you are being asked for your approval to amend Article I of the
Company's Amended and Restated Articles of Incorporation, as amended, to read as
follows:
"The name of the corporation is VENTURE CATALYST INCORPORATED."
In the judgement of the Board, the change of corporate name is desirable
and in the best interest of the Company and its shareholders in view of the
significant change in the strategic focus of the business of the Company. The
Board believes that the name "Venture Catalyst Incorporated" better reflects the
Company's present and future business strategy and direction. Although the
Company's primary business has been providing consulting services for gaming
operations under agreements with Native American Tribes, beginning in the fiscal
year ended June 30, 1998, the Company began to diversify and reinvent itself by
expanding into the areas of Internet gaming and web-site development and on-line
marketing. In July 1999, the Company formed the Venture-Catalyst.com Division to
offer public and private companies a wide array of Internet business services,
including financial public relations, venture capital sourcing and on-line
business strategy. One of the Division's objectives is to act as a financial
consultant to advise clients regarding sources of financing. The Division may,
under certain circumstances, make equity investments in, or take all or a
portion of its consulting fees in, equity of its clients. The Company intends to
continue its pursuit of other Internet related business opportunities and plans
to transition itself, over time, from a gaming consulting company to an Internet
consulting and "venture catalyst" company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE CHANGE OF
THE CORPORATE NAME. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON
STOCK PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE
ON THIS PROPOSAL IS REQUIRED TO APPROVE AND ADOPT THIS PROPOSAL.
If approved by the shareholders, the amendment to Article I will become
effective upon the filing of Articles of Amendment to the Articles of
Incorporation of the Company with the Utah Department of Commerce, Division of
Corporations and Commercial Code, which filing is expected to take place shortly
after the Annual Meeting. However, the Board of Directors will be authorized,
without a further vote of the shareholders, to abandon the name change and
determine not to file the Articles of Amendment if the Board concludes that such
action would be in the best interest of the Company and its shareholders. If
this proposal is not approved by the shareholders, the Articles of Amendment
will not be filed.
If Proposal 2 is adopted, shareholders will not be required to exchange
outstanding stock certificates for new certificates.
12
<PAGE> 15
APPROVAL OF RESOLUTION TO TAKE CORPORATE
ACTION BY WRITTEN CONSENT OF LESS THAN
ALL THE SHAREHOLDERS
PROPOSAL 3
Pursuant to Section 16-10a-704 of the Utah Revised Business Corporations
Act (the "Utah Act"), a corporation's shareholders may take action without a
meeting and without prior notice if one or more consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
thereon were present and voted, unless otherwise provided in the corporation's
articles of incorporation or by Utah law. Section 16-10a-1704 of the Utah Act,
however, provides that a shareholder action without a meeting by less than
unanimous written consent is not permitted for corporations organized prior to
July 1, 1992, unless a resolution providing otherwise is approved by their
shareholders.
Although the Company's current Bylaws authorize shareholder action by a
less than unanimous written consent, it is unclear whether such provision is
valid because the Company has been unable to locate any records of a
shareholder-approved resolution permitting such action. In order to "clean up"
the corporate records of the Company and to comply with Utah law, the Board of
Directors has unanimously adopted, and is recommending to the shareholders for
their approval at the Annual Meeting, a resolution allowing the shareholders to
take action by a less than unanimous written consent. The text of the resolution
is as follows:
"RESOLVED, that any action which may be taken at any annual or special
meeting of shareholders may be taken without a meeting and without prior notice,
if one or more consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitles to vote thereon were present and voted."
If Proposal 3 is adopted, the foregoing resolution shall become
effective immediately. If this proposal is not approved by the shareholders, (a)
the validity of the current Bylaw provision authorizing shareholder action by a
less than unanimous written consent shall remain unclear and (b) the Amended and
Restated Bylaws set forth in Proposal 4 herein shall contain Alternative Section
3.04 pursuant to which a unanimous consent of all the shareholders shall be
required to take action by written consent.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF PROPOSAL 3. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE ON THIS
PROPOSAL IS REQUIRED TO APPROVE AND ADOPT THIS PROPOSAL.
13
<PAGE> 16
APPROVAL AND ADOPTION OF THE AMENDED
AND RESTATED BYLAWS
PROPOSAL 4
The Board of Directors has unanimously approved, subject to shareholder
approval, the Amended and Restated Bylaws which are set forth in full in
Appendix A to this Proxy Statement. The Board of Directors decided to take such
action to (a) generally update the Company's Bylaws to be consistent with the
Utah Act; and (b) clarify the ambiguous language with respect to whether the
Board of Directors may alter, amend or repeal the Company's Bylaws. The Amended
and Restated Bylaws do not classify the Board of Directors and do not add new
provisions to the Company's existing Bylaws generally recognized as
"anti-takeover" provisions. The Amended and Restated Bylaws generally track the
provisions of the Utah Act and provide the Board of Directors with maximum
corporate management operating flexibility as permitted by Utah law.
The most significant new provision of the Amended and Restated Bylaws is
the Amendment provision (Section 11.02). Under the Utah Act, a corporation's
board of directors may amend the corporation's bylaws at any time, except to the
extent that the articles of incorporation, the bylaws or Utah law reserve this
power exclusively to the shareholders, in whole or in part. However, the
Company's Articles of Incorporation are silent, and the Company's Bylaws are
ambiguous, on the matter of the Board's authority to alter, amend or repeal the
Company's Bylaws. In order to eliminate this ambiguity, the new Section 11.02 of
the Amended and Restated Bylaws clearly states that the Bylaws may be altered,
amended or repealed, and new bylaws may be made, by either the Board of
Directors or by the shareholders. The new Section 11.02 also states that, except
as otherwise provided in the Company's Articles of Incorporation, any bylaws
made or altered by the shareholders may be altered or repealed by either the
Board of Directors or the shareholders. The Board believes that such provision
is necessary to allow the Board to have the necessary flexibility to conduct the
business of the Company. You are urged to read the full text of the Amended and
Restated Bylaws set forth in Appendix A.
In addition to the Amendment provision, the Amended and Restated Bylaws
include two other significant changes from the Company's current Bylaws, as
briefly described below.
Under the Amended and Restated Bylaws, special meetings of the Board of
Directors may be called by the chairman of the board or 50% or more of directors
then in office. Under the current Bylaws, such special meetings may be called by
(a) the President, (b) the Secretary, (c) two (2) directors, or (d) if the Board
consists of only one (1) director, the sole director.
Under the Amended and Restated Bylaws, the Company's shares need not be
represented by certificates, but a shareholder may request to have a certificate
or
14
<PAGE> 17
certificates in a form approved by the Board, certifying the number and class
and series of shares owned by the shareholder. The current Bylaws do not include
provisions regarding uncertificated shares.
If Proposal 3 is not adopted, Section 3.04 of the Amended and Restated
Bylaws, Action Without a Meeting, shall be replaced by an alternative Section
3.04 (also set forth in the Amended and Restated Bylaws), pursuant to which a
unanimous consent of all shareholders shall be required to take action by
written consent of the shareholders.
If the Amended and Restated Bylaws are adopted, such Bylaws shall become
effective immediately. If the proposal is not approved by the shareholders, the
current Bylaws of the Company shall remain in effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE AMENDED AND RESTATED BYLAWS. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
SHARES OF COMMON STOCK PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING AND
ENTITLED TO VOTE ON THIS PROPOSAL IS REQUIRED TO APPROVE AND ADOPT THIS
PROPOSAL.
15
<PAGE> 18
COMPENSATION OF EXECUTIVE OFFICERS
This table shows, for the last three fiscal years, compensation
information for the Company's Chief Executive Officer and the next four most
highly compensated executive officers. We refer to all of these officers as the
"Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS-
----------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($) ($)(2) (#) ($)(3)
- --------------------------- ---- -------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
L. Donald Speer, II 1999 463,014 102,477 -- -- 28,877
Chairman of the Board and 1998 400,000 -- 10,441 300,000 26,278
Chief Executive Officer, 1997 340,481 165,000 16,502 600,000 23,020
President and Chief
Operating Officer
Andrew B. Laub 1999 206,507 -- -- -- 957
Executive Vice President, 1998 175,000 15,000 7,115 200,000 958
Chief Financial Officer 1997 175,000 15,000 14,873 50,000 --
and Treasurer
Richard T. "Chip" Harrison 1999 191,770 -- 19,335 -- --
President and Chief Operating 1998 -- -- -- -- --
Officer of Cyberworks, Inc.(4) 1997 -- -- -- -- --
G. Fritz Opel 1999 165,577 -- 25,891 -- 957
Executive Vice President, 1998 175,000 25,000 53,087 200,000 958
Marketing and Consulting 1997 175,000 25,000 10,758 100,000 --
Services
Robert Regent 1999 165,000 -- 19,006 -- 957
Executive Vice President, 1998 165,000 15,000 4,234 -- 958
Vice President 1997 143,077 -- 5,491 150,000 --
Casino Operations
</TABLE>
(Footnotes on the following page.)
16
<PAGE> 19
(Footnotes to the Table on the preceding page.)
(1) Portions of the salaries for Messrs. Speer, Harrison, Opel and Regent
were deferred under the Company's 401(k) Plan.
(2) The amounts disclosed in this column include:
(a) L. Donald Speer, II -- In Fiscal 1998, the amount reflects tax
gross-up payments related to long-term disability insurance and
automobile benefits. In Fiscal 1997, the amount reflects tax
gross-up payments related to automobile benefits. Perquisites
provided to Mr. Speer in each of Fiscal 1999, 1998 and 1997 did
not meet the disclosure threshold established by the SEC.
(b) Andrew B. Laub -- In Fiscal 1998, the amount reflects tax
gross-up payments related to long-term disability insurance and
automobile benefits. In Fiscal 1997, the amount reflects tax
gross-up payments related to automobile benefits. Perquisites
provided to Mr. Laub in each of Fiscal 1999, 1998 and 1997 did
not meet the disclosure threshold established by the SEC.
(c) Richard T. "Chip" Harrison -- In Fiscal 1999, the amount reflects
perquisites related to automobile benefits.
(d) G. Fritz Opel -- In Fiscal 1999, the amount reflects perquisites
of which $19,741 is attributable to automobile benefits; the
remaining perquisites and related amounts do not meet the
disclosure threshold established by the SEC. In Fiscal 1998, the
amount reflects tax gross-up payments of $16,774 related to
long-term disability insurance and automobile benefits and
payments related to perquisites in the amount of $36,313. The
amount attributable to perquisites includes $32,710 related to an
automobile lease; the remaining perquisites and related amounts
do not meet the disclosure threshold established by the SEC. In
Fiscal 1997, the amount reflects tax gross-up payments related to
automobile benefits. Perquisites provided to Mr. Opel in Fiscal
1997 did not meet the disclosure threshold established by the
SEC.
(Footnotes continued on the following page.)
17
<PAGE> 20
(Footnotes continued from the preceding page.)
(e) Robert Regent-- In Fiscal 1999, the amount reflects perquisites
of which $12,503 is related to automobile benefits and $5,127 is
related to country club membership fees; the remaining
perquisites and related amounts do not meet the disclosure
threshold established by the SEC. In Fiscal 1998, the amount
reflects tax gross-up payments related to long-term disability
insurance and automobile benefits. In Fiscal 1997, the amount
reflects tax gross-up payments related to automobile benefits.
Perquisites provided to Mr. Regent in each of Fiscal 1998 and
1997 did not meet the disclosure threshold established by the
SEC.
(3) The Fiscal 1999 amounts disclosed in this column reflect payments by the
Company in Fiscal 1999 of premiums for (a) universal life insurance
(reverse split dollar) on behalf of Mr. Speer in the amount of $27,920
and (b) term life insurance on behalf of Messrs. Speer, Laub, Opel and
Regent in the amounts of $957, $957, $957 and $957, respectively. The
Fiscal 1998 amounts disclosed in this column reflect payments by the
Company in Fiscal 1998 of premiums for (a) universal life insurance
(reverse split dollar) on behalf of Mr. Speer in the amount of $25,320
and (b) term life insurance on behalf of Messrs. Speer, Laub, Opel and
Regent in the amounts of $958, $958, $958 and $958, respectively. The
Fiscal 1997 amount disclosed in this column reflects payments by the
Company of premiums for universal life insurance (reverse split dollar)
on behalf of Mr. Speer.
(4) Richard T. Harrison joined the Company in August 1998.
18
<PAGE> 21
STOCK OPTIONS
Stock Option Grants. No stock options were granted to the Named
Executive Officers during Fiscal 1999.
Option Exercises/Fiscal Year End Value. No stock options were exercised
by the Named Executive Officers during Fiscal 1999. None of the options held
by the Named Executive Officers were in-the-money at Fiscal 1999 year end.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Donald Speer, II -- -- 300,000 600,000 -- --
Andrew B. Laub -- -- 270,000 230,000 -- --
Richard T. "Chip" Harrison -- -- -- -- -- --
G. Fritz Opel -- -- 220,000 280,000 -- --
Robert Regent -- -- 90,000 110,000 -- --
</TABLE>
- ----------
(1) Excludes the value of all unexercised options which have an exercise
price greater than or equal to $2.4375, the closing price of the Common
Stock on June 30, 1999 (the last stock trading day of Fiscal 1999).
EMPLOYMENT CONTRACTS WITH CERTAIN NAMED EXECUTIVE OFFICERS
With the exception of Richard T. Harrison (see "Transactions with
Management and Others" below), the Company has not entered into any employment
contracts with any of the Named Executive Officers in Fiscal 1999.
CHANGE OF CONTROL ARRANGEMENTS
Certain of the Company's stock option plans, and certain of the
individual stock option agreements entered into thereunder, contain change in
control provisions which, under certain circumstances, trigger the acceleration
of vesting of options granted thereunder.
19
<PAGE> 22
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In August and November 1997, the Company loaned Christopher Wm. Voisin,
Secretary of the Company and the son-in-law of L. Donald Speer, II, Chairman of
the Board and Chief Executive Officer and a Director/Nominee, an aggregate
principal amount of $49,462. The interest rate on the loan was 8%. Pursuant to a
Loan and Security Agreement entered into between the Company and Mr. Voisin in
December 1997 and subsequently amended, Mr. Voisin is repaying the outstanding
principal and interest pursuant to a payment schedule. The full amount of the
indebtedness is scheduled to be repaid on November 15, 2001.
In connection with the resignation of Arthur R. Pfizenmayer as an
officer, director and an employee of the Company on February 13, 1998, the
Company entered into a settlement and release agreement with Mr. Pfizenmayer
and a consulting agreement with Mr. Pfizenmayer's wholly-owned corporation,
Torrey Pines Consultants, Inc. ("Torrey Pines"). Pursuant to the settlement and
release agreement, in consideration of the mutual release by the Company and
Mr. Pfizenmayer of all claims and liabilities either party had or may have had
against the other party based on acts or events occurring on or before the date
of the agreement, the Company agreed to (a) reimburse Mr. Pfizenmayer for
premiums paid by him if he elects to participate in any of the Company's group
health insurance plans pursuant to COBRA through February 28, 1998, and (b)
extend all provisions of the stock options granted to Mr. Pfizenmayer under the
Company's stock option plans through each year that he or Torrey Pines is
engaged as a consultant for the Company. Pursuant to the consulting agreement,
the Company retained Torrey Pines as a consultant through February 13, 1999. As
a consultant, Torrey Pines will render such advisory services and perform such
projects as assigned to it from time to time by the Chairman of the Board of
the Company for matters specifically relating to the Barona Casino and the
Barona Tribe. In consideration for the performance of such consulting services,
the Company agreed to pay Torrey Pines $12,500 per month for the first six
months of the consulting term and $8,000 per month for the second six months of
the consulting term. On May 30, 1998, the Company and Torrey Pines amended the
consulting agreement to provide for a consulting fee of $12,500 per month
during the entire twelve months of the consulting term. In February 1999, the
Company and Torrey Pines further amended their agreement to extend the
consulting agreement one year to February 13, 2000 and to amend the consulting
compensation. Pursuant to such amendment, the Company has paid to Torrey Pines
$50,000 as a non-refundable retainer against which Torrey Pines will invoice
the Company for consulting services rendered at the rate of $125 per hour. If
services provided exceed the retainer amount, the Company shall pay Torrey
Pines such additional amount. The consulting agreement also contains certain
confidential information and non-competition provisions.
On August 27, 1998, the Company acquired 100% of the outstanding equity
of Cyberworks, Inc., a California corporation ("Cyberworks") for an aggregate
purchase price, exclusive of acquisition costs, of $3,560,000. Richard T.
Harrison, as the sole shareholder of Cyberworks, received 750,000 shares of
newly-issued Common Stock and $500,000 in cash. For purposes of the merger
transaction, the fair market value of a share of Common Stock was determined to
be $4.08 per share, this price being established pursuant to a formula set forth
in the reorganization agreement.
On the effective date of the merger, in addition to becoming a principal
shareholder of the Company, Richard T. Harrison, the former President and Chief
Executive Officer of Cyberworks, was appointed a director of the Company. In
addition, on the effective date, Mr. Harrison entered into an employment
agreement (the "Employment Agreement") and a noncompetition agreement (the
"Noncompetition Agreement") with the Company and Cyberworks relating to Mr.
Harrison's service as President and Chief Operating Officer of Cyberworks
following the Merger Transaction.
The Employment Agreement provides for an initial base salary of $228,000
per year. The base salary may be adjusted by the Compensation Committee of the
Board of Directors, but may not be reduced below the initial base salary set
forth above. The term of the employment agreement is through August 27, 2001.
The Employment Agreement may be terminated by the Company or Cyberworks for
cause, which is defined as (a) the failure to follow the reasonable instructions
of the Board of Directors of the Company or Cyberworks and the failure to cure
any such breach within 30 days after written notice thereof, (b) the material
breach of any term of the Employment Agreement and the failure to cure any such
breach within 30 days after written notice thereof, or (c) the misappropriation
of assets of the Company or any subsidiary resulting in a material loss to such
entity. If the Company or Cyberworks terminates the Employment Agreement without
cause, Mr. Harrison shall be entitled to receive his salary and benefits then in
effect for the remainder of the term of the agreement, and the vesting of all
outstanding stock options and any awards pursuant to the Company's employee
benefit plans shall be immediately accelerated. The Employment Agreement also
provides Mr. Harrison with his salary and benefits then in effect for the
remainder of the term and the acceleration of the vesting of all outstanding
stock options or other stock-based awards if he terminates his employment for
certain enumerated reasons within one year after a change in control of the
Company (as defined in the Employment Agreement). In addition, the Employment
Agreement may be terminated by Mr. Harrison at any time upon 60 days prior
written notice.
The Noncompetition Agreement prohibits Mr. Harrison from competing with
the Company and Cyberworks and certain affiliates thereof within the territory
of the United States of America during his employment with the Company or any of
its affiliates and thereafter for the greater of (a) three years from the date
of the Noncompetition Agreement or (b) the remainder of the then current term of
Mr. Harrison's employment agreement. The Noncompetition Agreement also prohibits
Mr. Harrison from soliciting
20
<PAGE> 23
certain employees, customers and suppliers of the Company and Cyberworks and
certain affiliates thereof during the noncompetition term.
On April 22, 1999, the Company provided to L. Donald Speer II, Chairman
and Chief Executive Officer of the Company and a Director/Nominee, and his
spouse, Kelly Jacobs Speer, a bridge loan in the principal amount of $110,000,
with interest at the rate of 7%. The debt was secured with the real estate
interest in Mr. and Mrs. Speer's condominium. All amounts due under the loan
have been repaid in full.
On July 16, 1999, the Company purchased certain assets (including the
rights to the domain name "venture-catalyst.com") and assumed certain
liabilities of Typhoon Capital Consultants, LLC, whose members were Sanjay
Sabnani, an executive officer of the Company and a Director/Nominee, and his
spouse, Manisha Sabnani, for a purchase price of $100,000.
In connection with the transaction, Mr. Sabnani became an executive
officer and a director of the Company and entered into a one year employment
agreement with the Company relating to Mr. Sabnani's service as Vice President,
Investor Relations Officer of the Company and President of the Company's
Internet Consulting Division operating under the name Venture-Catalyst.com. The
Employment Agreement provides for an initial annual base salary of $180,000. The
base salary may be adjusted by the Compensation Committee of the Board of
Directors, but may not be reduced below the initial base salary set forth above.
In connection with the Employment Agreement, the Compensation Committee
of the Board (a) granted on July 16, 1999 a nonstatutory stock option to
purchase 262,500 shares of Common Stock, at an exercise price per share equal to
the fair market value on the date of grant, with vesting to occur in four equal
installments on October 15, 1999 and on the 15th of January, April and July
2000, and (b) agreed to grant in the future a nonstatutory stock option to
purchase 240,000 shares of Common Stock, at an exercise price of $10.00 per
share on the date that the fair market value (as defined in the Company's 1995
Stock Option Plan, as amended) of a share of Common Stock is $10.00, provided,
however, that to be granted such option the Employee must be an employee of the
Company or one of its subsidiaries on such date of grant, in each case pursuant
to the terms established by the Compensation Committee.
The Employment Agreement may be terminated by the Company for cause,
which is defined as (a) the failure to follow the reasonable instructions of the
Board of Directors of the Company or the Executive Committee of the Board and
the failure to cure any such breach within 30 days after written notice thereof,
(b) the material breach of any term of the Employment Agreement or the asset
purchase agreement related to the above-referenced transaction with Typhoon
Capital Consultants, LLC and the failure to cure any such breach within 30 days
after written notice thereof, or (c) the misappropriation of assets of the
Company or any subsidiary resulting in a material loss to such entity.
21
<PAGE> 24
If the Company terminates the Employment Agreement without cause, Mr.
Sabnani shall be entitled to receive (a) a cash severance benefit in the
aggregate amount of $200,000 payable within 180 days of termination; (b) the
furniture and office equipment which the Company purchased pursuant to the Asset
Purchase Agreement; (c) if applicable and with the consent of the lessor, assign
to Mr. Sabnani or his designee the Santa Monica office lease; and (d) for a
maximum period of 6 months, commencing with the first complete month after
termination, pay to Mr. Sabnani, as an additional severance benefit, 10% of the
monthly net revenues received by the Company and solely attributable to services
rendered during such 6 month period on Internet consulting accounts originated
by the Venture-Catalyst.com Division and which Mr. Sabnani and the Company
agreed in writing at the time of origination that should be included in accounts
upon which this portion of the severance benefit be based (the "Designated IC
Accounts"), such amounts to be payable to Mr. Sabnani within 15 days after the
end of the month in which the Company received the payment, and (e) consistent
with applicable securities laws and the approval of the applicable issuer whose
consent shall not be unreasonably withheld, transfer to Mr. Sabnani without
further consideration, 10% of any equity securities (including transferable
vested options or warrants), paid to the Company or the Venture-Catalyst.com
Division with respect to any Designated IC Accounts. In addition, the Employment
Agreement may be terminated by Mr. Sabnani at any time upon 60 days prior
written notice.
In the opinion of management, the terms of the above-described
transactions are fair and reasonable and as favorable to the Company as those
which could have been obtained from unrelated third parties at the time of their
execution.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who beneficially own more than 10% of a registered class of the
Company's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the Fiscal Year, the Company's officers, directors
and greater than 10% beneficial owners complied with all Section 16(a) filing
requirements.
22
<PAGE> 25
RELATIONSHIP OF THE COMPANY WITH
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selected the firm of Grant Thornton LLP ("Grant
Thornton"), independent certified public accountants, as the Company's auditors
for Fiscal 1999 and have selected such firm to act as auditors for the fiscal
year ending June 30, 2000. Representatives of Grant Thornton are expected to be
present at the Annual Meeting and will have the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in the Company's proxy
materials relating to the annual meeting of shareholders to be held in the year
2000, you must submit such proposal to the Company no later than June [120 DAYS
PRIOR TO THE DATE OF THIS PROXY STATEMENT], 2000. If such proposal is in
compliance with all of the requirements of Rule 14a-8 under the Exchange Act, we
will include it in the proxy statement and on the form of proxy issued for such
annual meeting of shareholders. You should direct any such shareholder proposals
to the attention of the Secretary of the Company at the address of the Company
set forth on the first page of this Proxy Statement.
With respect to any proposal that a shareholder of the Company presents
at the annual meeting of shareholders to be held in 2000 that is not submitted
for inclusion in the Company's proxy materials pursuant to Rule 14a-8 under the
Exchange Act, the proxy for such annual meeting of shareholders will confer
discretionary voting authority to vote on such shareholder proposal unless (a)
the Company is notified of such proposal no later than [AT LEAST 45 DAYS BEFORE
THE DATE OF MAILING THIS PROXY], and (b) the proponent complies with the other
requirements set forth in Rule 14a-4 under the Exchange Act.
ANNUAL REPORT
YOU MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT ON FORM
10-KSB FOR THE FISCAL YEAR, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENT SCHEDULES REQUIRED TO BE FILED WITH THE SEC PURSUANT TO RULE 13a-1 OF
THE EXCHANGE ACT. YOU MAY ALSO OBTAIN COPIES OF EXHIBITS TO THE FORM 10-KSB, BUT
WE WILL CHARGE A REASONABLE FEE TO SHAREHOLDERS REQUESTING SUCH EXHIBITS. YOU
SHOULD DIRECT YOUR REQUEST IN WRITING TO THE COMPANY AT THE ADDRESS OF THE
COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT, ATTENTION:
CHRISTOPHER WM. VOISIN, SECRETARY.
By Order of the Board of Directors,
[Signature]
Christopher Wm. Voisin
Secretary
San Diego, California
Dated: October __, 1999
23
<PAGE> 26
APPENDIX A
AMENDED AND RESTATED
BYLAWS OF
INLAND ENTERTAINMENT CORPORATION
ARTICLE I - PURPOSES
SECTION 1.01 PURPOSE. This corporation is organized for any and all lawful
purposes for which corporations may be organized under the Utah Revised Business
Corporation Act, as amended, as set forth in the corporation's Articles of
Incorporation.
ARTICLE II - OFFICES
SECTION 2.01 OFFICES. The principal office of the corporation may be
located at any place, either in or outside the State of Utah, as designated in
the corporation's most current Annual Report filed with the Utah Division of
Corporations and Commercial Code. The corporation may have such other offices,
either in or outside the State of Utah, as the board of directors may designate
or as the business of the corporation may require from time to time. The
corporation shall maintain at its principal office a copy of certain records, as
specified in Section 16-10a-1601 of the Utah Revised Business Corporation Act.
SECTION 2.02 REGISTERED OFFICE. The registered office of the corporation,
required by Section 16-10a-501 of the Utah Revised Business Corporation Act,
shall be located in the State of Utah and may be, but need not be, identical
with the corporation's principal office (if located in the State of Utah). The
address of the registered office may be changed from time to time.
ARTICLE III - SHAREHOLDERS
SECTION 3.01 ANNUAL MEETING. The corporation shall hold an annual meeting
of shareholders at such time, date and place as the board of directors shall
determine, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
<PAGE> 27
SECTION 3.02 SPECIAL MEETING. The corporation shall hold a special meeting
of the shareholders:
(i) on call of its board of directors, the chairman of the
board of directors; or
(ii) if the holders of shares representing at least ten
percent (10%) of all the votes entitled to be cast on any issue
that is proposed to be considered at a special meeting sign, date
and deliver to the corporation's secretary one or more written
demands for the meeting, stating the purpose or purposes for which
it is to be held.
SECTION 3.03 PLACE OF MEETINGS. The board of directors may designate any
place, either in or outside the State of Utah, as the place at which any annual
or special meeting is to be held. If no designation is made, the meeting shall
be held at the corporation's principal office.
[The following Section 3.04 is to be used if Proposal 3 is adopted.]
SECTION 3.04 ACTION WITHOUT A MEETING.
(a) ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at a meeting of the shareholders may be taken without a meeting and
without prior notice if one or more consents in writing, setting forth the
action so taken, are signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
the action at a meeting at which all shares entitled to vote thereon were
present and voted.
(b) NOTICE OF ACTION. Unless the written consents of all
shareholders entitled to vote have been obtained, notice of any shareholder
approval without a meeting shall be given at least ten (10) days before the
consummation of the action authorized by the approval to:
(i) those shareholders entitled to vote who have not
consented in writing; and
(ii) those shareholders not entitled to vote and to whom the
Utah Revised Business Corporation Act requires that notice of the
proposed action be given.
The notice must contain or be accompanied by the same material that, under the
Utah Revised Business Corporation Act and these Bylaws, would have been
required to be sent in a notice of meeting at which the proposed action would
have been submitted to the shareholders for action.
-2-
<PAGE> 28
(c) WITHDRAWAL OF CONSENT. Any shareholder giving a written consent
or the shareholder's proxyholder, or a transferee of the shares or a personal
representative of the shareholder or their respective proxyholder, may revoke
the consent by a signed writing describing the action and stating that the
shareholder's prior consent is revoked, if the writing is received by the
corporation prior to the effectiveness of the action.
(d) EFFECTIVE DATE OF ACTION. An action taken pursuant to this
Section 3.04 is not effective unless all written consents on which the
corporation relies for the taking of an action pursuant to subsection (a) are
received by the corporation within a sixty (60) day period and not revoked
pursuant to subsection (c). Action taken pursuant to this Section 3.04 is
effective as of the date the last written consent necessary to effect the action
is received by the corporation, unless all of the written consents necessary to
effect the action specify a later date as the effective date of the action, in
which case the later date shall be the effective date of the action. If the
corporation has received written consents as contemplated by subsection (a)
signed by all shareholders entitled to vote with respect to the action, the
effective date of the action may be any date that is specified in all the
written consents as the effective date of the action
(e) ELECTION OF DIRECTORS. Notwithstanding subsection (a),
directors may not be elected by written consent except by unanimous written
consent of all shares entitled to vote for the election of directors.
(f) RECORD DATE. If not otherwise determined under Section 3.06 of
these Bylaws, the record date for determining shareholders entitled to take
action without a meeting or entitled to be given notice under subsection (b) of
action so taken is the date the first shareholder delivers to the corporation a
writing upon which the action is taken pursuant to subsection (a).
[The following Section 3.04 is to be used if Proposal 3 is not adopted.]
[SECTION 3.04 ACTION WITHOUT A MEETING.
(a) ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all the
shareholders entitled to vote on such action. Such consent has the same force
and effect as a unanimous vote of the shareholders.
(b) WITHDRAWAL OF CONSENT. Any shareholder giving a written
consent, or the shareholder's proxyholder, or a transferee of the shares or a
personal representative of the shareholder or their respective proxyholder, may
revoke the consent by a signed writing describing the action and stating that
the shareholder's prior consent
-3-
<PAGE> 29
is revoked, if the writing is received by the corporation prior to the
effectiveness of the action.
(c) EFFECTIVE DATE OF ACTION. An action taken pursuant to this
Section 3.04 is not effective unless all written consents on which the
corporation relies for the taking of an action pursuant to subsection (a) are
received by the corporation within a sixty (60) day period and not revoked
pursuant to subsection (b). Action taken pursuant to this Section 3.04 is
effective as of the date the last written consent necessary to effect the action
is received by the corporation, unless all of the written consents necessary to
effect the action specify a later date as the effective date of the action, in
which case the later date shall be the effective date of the action.]
SECTION 3.05 NOTICE OF MEETING.
(a) NOTICE REQUIRED. The corporation shall give notice to
shareholders of the date, time and place of each annual and special
shareholders' meeting no fewer than ten (10) nor more than sixty (60) days
before the meeting date. Notice shall be deemed effective at the earlier of (i)
when deposited in the United States mail, addressed to the shareholder at his or
her address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid; (ii) on the date shown on the return receipt if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee; (iii) when received; or (iv) five (5)
days after deposit in the United States mail mailed postpaid and correctly
addressed to an address other than that shown in the corporation's current
record of shareholders.
(b) EXCEPTION TO NOTICE REQUIREMENT. Notwithstanding any
requirement in these Bylaws or elsewhere that notice be given, the corporation
shall not be required to give notice to any shareholder to whom:
(i) a notice of two (2) consecutive annual meetings, and all
notices of meetings during the period between the two (2)
consecutive annual meetings, have been mailed, addressed to the
shareholder at the shareholder's address as shown on the
corporation's records, and have been returned undeliverable; or
(ii) at least two (2) payments, if sent by first class mail,
of dividends or interest on securities during a twelve (12) month period, have
been mailed, addressed to the shareholder at the shareholder's address as shown
on the records of the corporation, and have been returned undeliverable.
(c) CONTENTS OF NOTICE.
(i) The notice of every shareholders' meeting must state the
place, day and time of the meeting.
-4-
<PAGE> 30
(ii) Notice of an annual meeting need not include a
description of the purpose or purposes for which the meeting is called,
except for those matters specified by law or these Bylaws for which
specific notice must be given.
(iii) Notice of a special meeting must include a description
of the purpose or purposes for which the meeting is called.
(iv) If a purpose of any shareholder meeting is to consider
either (1) a proposed amendment of the Articles of Incorporation
(including any restated Articles requiring shareholder approval); (2) a
plan of merger or share exchange; (3) the sale, lease, exchange or other
disposition of all, or substantially all of the corporation's property;
(4) the dissolution of the corporation; or (5) the removal of a director,
the notice must so state and be accompanied by respectively a copy or
summary of the (1) amendment; (2) plan of merger or share exchange; and
(3) a description of the transaction involving the disposition of all or
substantially all the corporation's property. If the proposed corporate
action creates dissenters' rights under Part 13 of the Utah Revised
Business Corporation Act, the notice must state that shareholders are, or
may be, entitled to assert dissenters' rights, and must be accompanied by
a copy of such Part 13.
(d) WAIVER OF NOTICE. A shareholder may waive any notice required
by these Bylaws, before or after the date and time stated in the notice as the
date or time when any action will occur or has occurred. The waiver must be in
writing, be signed by the shareholder entitled to the notice, and be delivered
to the corporation for inclusion in the minutes or filing with the corporate
records.
(e) WAIVER BY ATTENDANCE. A shareholder's attendance at a meeting:
(i) waives objection to lack of notice or defective notice of
the meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting
because of lack of notice or defective notice; and
(ii) in the case of a special meeting, waives objection to
consideration of a particular matter at the meeting that is not within the
purposes described in the meeting notice, unless the shareholder objects
to considering the matter when it is presented.
SECTION 3.06 RECORD DATE FOR MEETINGS AND OTHER ACTIONS.
(a) FIXING OF RECORD DATE. The board of directors by resolution may
fix a record date in order to determine the shareholders entitled to receive
notice of a shareholders' meeting, and to determine the shareholders who are
entitled to take action without a meeting, to demand a special meeting, to vote,
or to take any other action.
-5-
<PAGE> 31
Such record date may not be more than seventy (70) days before the meeting or
action requiring the determination of shareholders.
(b) DEFAULT RECORD DATE. If the board of directors does not fix a
record date, the record date for determining shareholders entitled to notice of
and to vote at an annual or special shareholders' meeting is the close of
business on the date before the first notice is delivered to shareholders.
(c) ADJOURNMENT. A determination of shareholders entitled to notice
of or to vote at a shareholders' meeting is effective for any adjournment of the
meeting unless the board of directors fixes a new record date, which it must do
if the meeting is adjourned to a date more than one hundred twenty (120) days
after the date fixed for the original meeting,
SECTION 3.07 RECORD DATE OF DIVIDENDS AND OTHER DISTRIBUTIONS. The board
of directors may fix a future date as the record date for determining
shareholders entitled to dividends and other distributions, other than one
involving a purchase, redemption, or other acquisition of the corporation's
shares. If the board of directors does not fix a record date, the record date is
the date the board of directors authorizes the distribution.
SECTION 3.08 MEETINGS BY TELECOMMUNICATION. Shareholders may participate
in a meeting by, or the meeting may be conducted through the use of, conference
telephone or similar means of communication by which all persons participating
in the meeting can hear one another during the meeting. A shareholder
participating in a meeting by this means is considered to be present at the
meeting.
SECTION 3.09 VOTING LISTS.
(a) REQUIREMENTS FOR VOTING LIST. After fixing a record date
for a shareholders' meeting, the corporation shall prepare a list of
the names of all its shareholders who are entitled to be given notice of the
meeting. The list must be arranged by voting group, and within each voting
group by class or series of shares. The list must be alphabetical within each
class or series and must show the address of, and the number of shares held by,
each shareholder.
(b) INSPECTION OF VOTING LIST PRIOR TO A MEETING. The shareholders'
list must be available for inspection by any shareholder, beginning on the
earlier of ten (10) days before the meeting for which the list was prepared or
two (2) business days after notice of the meeting is given and continuing
through the meeting and any meeting adjournments, at the corporation's principal
office of at a place identified in the meeting notice in the city in which the
meeting will be held.
(c) INSPECTION OF VOTING LIST AT THE MEETING. The corporation shall
make the shareholders' list available at the meeting, and any shareholder, or
any
-6-
<PAGE> 32
shareholder's agent or attorney is entitled to inspect the list at any time
during the meeting or any adjournment, for any purpose germane to the meeting.
(d) EFFECT ON MEETING. The corporation's refusal or failure to
prepare or make available the shareholders' list does not affect the validity of
action taken at the meeting.
SECTION 3.10 PROXIES.
(a) MANNER OF VOTING. At all meetings of shareholders, a
shareholder may vote his or her shares in person or by proxy.
(b) APPOINTMENT OF PROXY. A shareholder may appoint a proxy by
signing an appointment form, either personally or by the shareholder's attorney
in fact.
(c) EFFECTIVE DATE. A proxy is effective when received by the
corporation.
(d) TERM. A proxy is valid for eleven (11) months unless a longer
period is expressly provided in the appointment form.
(e) REVOCATION. An appointment of a proxy is revocable by the
shareholder, and is revoked upon the death or incapacity of the shareholder
(upon receipt of notice of either event by the secretary or other officer or
agent authorized to tabulate votes before the proxy exercises the authority
under the appointment), unless the appointment form conspicuously states that
it is irrevocable and the appointment is coupled with an interest.
SECTION 3.11 VOTING ENTITLEMENT OF SHARES. Each outstanding share is
entitled to vote is entitled to one (1) vote upon each matter submitted to a
vote at a meeting of shareholders.
SECTION 3.12 QUORUM. Shares entitled to vote at a meeting may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. A majority of the votes entitled to be cast on a matter constitutes
a quorum for action on that matter. Once a quorum is present, it shall be deemed
to continue for the remainder of the meeting and for any adjournment of that
meeting, unless a new record date is or must be set for that adjourned meeting.
SECTION 3.13 VOTE REQUIRED TO TAKE ACTION FOR OTHER THAN ELECTION OF
DIRECTORS. If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast favoring the action exceed the votes
cast opposing the action, except where a greater number of affirmative votes is
otherwise required by law.
-7-
<PAGE> 33
SECTION 3.14 VOTING FOR DIRECTORS.
(a) MANNER OF VOTING. At each election of directors, every
shareholder entitled to vote at the election has the right to cast, in person,
or by proxy, all of the votes to which the shareholders shares are entitled for
as many persons as there are directors to be elected and for whose election the
shareholder has the right to vote. Shareholders shall not have a right to
cumulate their votes for the election of directors.
(b) VOTE REQUIRED. Directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election, at a meeting of
shareholders at which a quorum is present.
SECTION 3.15 CONDUCT OF MEETINGS. The board of directors may adopt by
resolution such rules and regulations for the conduct of meetings of
shareholders as it shall deem appropriate. Except to the extent inconsistent
with such rules and regulations adopted by the board of directors, the chair of
any meeting of shareholders shall have the right and authority to prescribe such
rules, regulations and procedures and to all such acts as, in the judgment of
the chair, are appropriate for the conduct of the meeting. Such rules,
regulations and procedures, whether adopted by the board of directors or
prescribed by the chair, may include, without limitation, the following: (a) the
establishment of an agenda or order of business for the meeting, (b) rules and
procedures for maintaining order at the meeting and the safety of those present,
(c) limitations on attendance at or participation in the meeting to shareholders
of record, their duly authorized and constituted proxies or such other persons
as the chair of the meeting shall determine, (d) restrictions on entry to the
meeting after the time fixed for commencement thereof, and
(e) limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the board of directors or the chair of
the meeting, meetings of shareholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
ARTICLE IV - BOARD OF DIRECTORS
SECTION 4.01 GENERAL POWERS. The business and affairs of the
corporation shall be managed under the direction of its board of directors.
SECTION 4.02 NUMBER. The number of directors of the corporation shall be
not less than three (3) nor more than ten (10), with the exact number of
directors within such parameters to be set by resolution of the board of
directors from time to time; provided that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
-8-
<PAGE> 34
SECTION 4.03 CHAIR. One (1) director may be designated by a majority of
the full board of directors as chair of the board. The chair of the board shall
preside at all meetings of the board of directors.
SECTION 4.04 ELECTION. The directors shall be elected at each annual
meeting of the shareholders. If the directors are not elected at an annual
meeting, or if an annual meeting is not held, then the directors may be elected
at any special meeting of the shareholders held for that purpose.
SECTION 4.05 TERM. The terms of the initial directors of the corporation
expire at the first shareholders' meeting at which directors are elected. The
terms of all other directors expire at the next annual shareholders' meeting
following their election. Despite the expiration of a director's term, the
director shall continue to serve until the election and qualification of a
successor or until there is a decrease in the number of directors, or until such
director's earlier death, resignation or removal from office.
SECTION 4.06 QUALIFICATIONS. Directors need not be residents of the
State of Utah or shareholders of the corporation.
SECTION 4.07 RESIGNATION. Any director of the corporation may resign at
any time by giving written notice to the corporation. A resignation is effective
when the notice is received by the corporation unless the notice specifies a
later effective date.
SECTION 4.08 REMOVAL.
(a) SHAREHOLDERS' RIGHT TO REMOVE DIRECTORS. The shareholders may
remove one or more directors with or without cause. A director may be removed
only at a meeting called for that purpose.
(b) NOTICE REQUIREMENT. The notice of the meeting at which a
director is to be removed must state that the purpose, or one of the purposes,
of the meeting is to remove the director.
(c) VOTE REQUIRED. A director may be removed only if the number of
votes cast to remove the director exceeds the number of votes cast against
removal.
SECTION 4.09 VACANCIES. Any vacancy occurring among the directors,
including a vacancy resulting from an increase in the number of directors, may
be filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum, or by the shareholders. A director elected to fill
a vacancy shall be elected for the unexpired term of his or her predecessor in
office.
SECTION 4.10 COMPENSATION. By resolution of the board of directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the board of
-9-
<PAGE> 35
directors, and may be paid a fixed sum for attendance at each meeting of the
board of directors or stated salaries as directors. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
SECTION 4.11 REGULAR MEETINGS By resolution, the board of directors may
determine the time and place, either within or without the State of Utah, for
the holding of regular meetings without other notice than such resolution.
SECTION 4.12 SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board or fifty percent
(50%) or more of the directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within or without
the State of Utah as the place for holding any special meeting of the board of
directors called by them.
SECTION 4.13 ACTION WITHOUT A MEETING. Any action required or permitted to
be taken at a meeting of the board of directors may be taken without a meeting
if a consent in writing, setting forth the action so taken, is signed by all of
the directors. Such consent has the same force and effect as a unanimous vote of
the directors. Action taken under this provision is effective at the time the
last director signs a writing describing the action taken unless, prior to that
time, any director has revoked a consent by a writing signed by
the director and received by the secretary or any other person authorized by the
Bylaws or the board of directors to receive the revocation, or unless the
consent specifies a different effective time.
SECTION 4.14 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting
shall be given at least one (1) day prior to the date of the meeting. Notice
must be in writing unless oral notice is reasonable under the circumstances.
Notice may be communicated in person, by any form of electronic communication or
by mail or private carrier. The notice need not describe the purpose of the
special meeting, unless otherwise required by law or these Bylaws. Notice will
conclusively be deemed to have been given and shall be effective when personally
delivered (by courier or otherwise); or if given by mail, on the fifth day after
being sent by first class, registered or certified mail; or if given by
telecopy, facsimile or other electronic means, when confirmation of transmission
is indicated by the sender's machines or device.
SECTION 4.15 WAIVER OF NOTICE.
(a) WRITTEN WAIVER. Any director may waive notice of any meeting
before or after the date and time of the meeting stated in the notice. Except as
provided in subsection (b) below, the waiver must be in writing and signed by
the director entitled to notice. The waiver shall be delivered to the
corporation for filing with the corporate records, but delivery and filing are
not conditions to its effectiveness.
-10-
<PAGE> 36
(b) WAIVER BY ATTENDANCE. The attendance of a director at or
participation in a meeting waives any required notice to the director of the
meeting unless the director at the beginning of the meeting, or promptly upon
the director's arrival, objects to the holding of the meeting or the transacting
of business at the meeting because of lack of notice or defective notice, and
does not thereafter vote for or assent to action taken at the meeting.
SECTION 4.16 QUORUM. A majority of the number of directors fixed by
Section 4.02 of these Bylaws constitutes a quorum for the transaction of
business at any meeting of the board of directors.
SECTION 4.17 MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present is the act of the board of
directors. Voting by proxy is not permitted.
SECTION 4.18 MEETINGS BY TELECOMMUNICATION. The board of directors may
permit any or all directors to participate in a regular or special meeting by,
or conduct the meeting through the use of, any means of communication by which
all directors participating may hear each other during the meeting. A director
participating in a meeting by this means is considered present in person at the
meeting.
SECTION 4.19 PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken is presumed to have assented to the action taken unless:
(i) the director objects at the beginning of the meeting, or
promptly upon arrival, to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to any action taken
at the meeting;
(ii) the director contemporaneously requests that his dissent
or abstention as to any specific action be entered into the minutes of the
meeting; or
(iii) the director causes written notice of a dissent or
abstention as to any specific action to be received by the presiding
officer of the meeting before adjournment of the meeting or by the
corporation promptly after adjournment of the meeting.
The right of dissent under this Section as to a specific action shall not be
available to a director who votes in favor of the action taken.
-11-
<PAGE> 37
ARTICLE V - COMMITTEES
SECTION 5.01 CREATION OF COMMITTEES. The board of directors by resolution
adopted by a majority of the number of directors fixed by Section 4.02 of these
Bylaws may appoint such committees from time to time, either standing or ad hoc,
as it deems necessary or appropriate, including but not limited to an executive
committee as described in Section 5.05 below.
SECTION 5.02 MEMBERSHIP. Each committee shall consist of not less than two
(2) directors, who shall serve at the pleasure of the board of directors.
SECTION 5.03 NOTICE, ETC. Sections 4.08 through 4.16 of these Bylaws,
which govern meetings, actions without meetings, notice, waiver of notice, and
quorum and voting requirements of the board of directors, shall apply to
committees and their members, as well.
SECTION 5.04 AUTHORITY. Each committee shall have and may exercise all the
authority specified in the resolution by which it is created, except that no
committee shall have any authority to adopt a plan of merger or consolidation,
to recommend to the shareholders the sale, lease or other disposition of all or
substantially all of the property or as of the corporation other than in the
usual and regular course of its business, to recommend to the shareholders a
voluntary dissolution of the corporation, or to amend the Bylaws of the
corporation.
SECTION 5.05 EXECUTIVE COMMITTEE. The executive committee of the board of
directors, if created pursuant to Section 5.01 of these Bylaws, shall consist of
two (2) or more directors. When the board of directors is not in session, the
executive committee shall have and may exercise all of the authority of the
board of directors except to the extent, if any, that such authority shall be
limited by the resolution appointing the executive committee, and except as
limited by Section 5.04 of these Bylaws.
ARTICLE VI - OFFICERS
SECTION 6.01 NUMBER. The corporation shall have such officers as may be
determined by the board of directors, and may include a president, a vice
president, a secretary, and a treasurer, each of whom shall be appointed by the
board of directors. One or more additional vice presidents (the number to be
determined by the board of directors) and such other officers and assistant
officers and agents as may be deemed necessary may also be appointed by the
board of directors. The board of directors may delegate to any officer of the
corporation or any committee of the board of directors the power to appoint
remove and prescribe the duties of such other officers, assistant officers,
agents and employees. Any two (2) or more offices may be held by the same
person.
-12-
<PAGE> 38
SECTION 6.02 APPOINTMENT AND TERM OF OFFICE. The officers of the
corporation shall be appointed by the board of directors or by any officer to
whom or committee of the board of directors to which the power of appointment
has been delegated. Each officer shall hold office until such officer's
successor has been appointed or until such officer's death or until such officer
shall resign or shall have been removed in the manner provided below. The
appointment of an officer shall not itself create any contract rights with the
corporation.
SECTION 6.03 REMOVAL. Any officer, assistant, agent or employee may be
removed, with or without cause, at any time by the board of directors, or by any
officer to whom or committee of the board of directors to which such power of
removal has been delegated but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
SECTION 6.04 RESIGNATION. An officer may resign at any time by giving
written notice of resignation to the corporation. A resignation of an officer is
effective when it is received by the corporation, unless the notice specifies a
later effective date. An officer's resignation does not affect the corporation's
contract rights, if any, with the officer.
SECTION 6.05 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors or by any officer to whom or committee of the board of directors to
which such power has been delegated.
SECTION 6.06 THE CHAIRMAN OF THE BOARD. The chairman of the board, unless
otherwise specified by the board of directors, shall be the chief executive
officer of the corporation and, under the direction of the board of directors,
shall in general supervise and control all the business and affairs of the
corporation. The chairman of the board shall, when present, preside at all
meetings of the shareholders and at meetings of the board of directors. The
chairman of the board may hire, prescribe the duties of, and fire employees, and
may delegate such authority in whole or in part to any other officer or
employee. The chairman of the board may sign, with the secretary or any other
proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, and any deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these
Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and, in general, shall
perform all duties incident to the office of chief executive officer and such
other duties as may be prescribed by the board of directors from time to time.
SECTION 6.07 THE PRESIDENT. The president is the chief operating officer
of the corporation and has, subject to the direction of the chairman of the
board, if any, general supervision, direction and control of the day-to-day
operations of the business and
-13-
<PAGE> 39
officers of the corporation. The president has the general powers and duties as
may be prescribed by the board of directors. The president may sign, with the
secretary or any other proper officer of the corporation thereunto authorized by
the board of directors, certificates for shares of the corporation, and any
deeds, mortgages, bonds, contracts, or other instruments which the board of
directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed. In the absence of a chairman
of the board, or if there is no chairman of the board, the president shall, in
addition, be the chief executive officer of the corporation and shall have the
powers and duties described in Section 6.06 herein.
SECTION 6.08 THE VICE PRESIDENT. In the absence of the president, or in
the event of the president's death, inability or refusal to act, the vice
president (or in the event there is more than one vice president, the vice
presidents in the order designated by the board of directors, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. Any vice president may sign,
with the secretary or an assistant secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to time may be
assigned to him or her by the president or by the board of directors.
SECTION 6.09 THE SECRETARY. The secretary shall (a) keep the minutes of
the shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and affix such seal to
documents when authorized; (d) keep a register of the address of each
shareholder which shall be furnished to the secretary by such shareholder; (e)
sign with the chairman of the board, president, or a vice president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (f) have general charge
of the stock transfer books of the corporation; (g) maintain the records
required under Section 16-10a-1601 of the Utah Revised Business Corporation Act;
and (h) in general, perform all duties incident to the office of secretary and
such other duties as from time to time may be assigned to him or her by the
president or by the board of directors. In the absence of a secretary and any
assistant secretaries, the president shall perform these duties.
SECTION 6.10 THE TREASURER. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the board of directors shall
determine. He or she shall: (a) have charge and custody of and be responsible
for all funds and securities of the corporation; (b) receive and give receipts
for moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
-14-
<PAGE> 40
provisions of Section 8.04 of these Bylaws; and (c) in general, perform all
of the duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him or her by the president or by the board of
directors. In the absence of a treasurer, the secretary shall perform such
duties.
SECTION 6.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries, when authorized by the board of directors, may sign with the
chairman of the board, president or a vice president certificates for shares of
the corporation, the issuance of which shall have been authorized by a
resolution of the board of directors. The assistant treasurers shall
respectively, if required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the board of
directors shall determine. The assistant secretaries and assistant treasurer, in
general, shall perform such duties as shall be assigned to them by the secretary
or the treasurer, respectively, or by the president or the board of directors.
SECTION 6.12 COMPENSATION. The compensation of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such compensation by reason of the fact that he or she is also a
director of the corporation.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 7.01 CERTIFICATES FOR SHARES.
(a) SHAREHOLDER'S RIGHT TO A CERTIFICATE; CONTENTS. Shares may but
need not be represented by certificates. Unless required by law, the rights and
obligations of shareholders are not affected by whether or not their shares are
represented by certificates. Notwithstanding anything herein to the contrary,
every owner of shares of stock of the corporation may request to have a
certificate or certificate, in a form approved by the board of directors,
certifying the number and class and series of shares of the stock of the
corporation owned by such shareholder. Such certificates shall be consecutively
numbered in the order in which they are issued.
(b) SIGNATURES. Each certificate shall be signed by chairman of the
board or the president or a vice president and by the secretary or an assistant
secretary, or by such other officers as may be designated from time to time by
the board of directors. Any or all of the signatures on the certificates may be
a facsimile. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon, any such certificate, shall
cease to hold such office or position before the certificate is issued, the
certificate may nevertheless be issued by the corporation with the same effect
as if the person who signed the certificate, or whose facsimile signature has
been placed on the certificate, still held such office or position at the date
of issue.
-15-
<PAGE> 41
(c) SHAREHOLDER REGISTER. A record shall be kept of the names and
addresses of the persons and entities owning the capital stock of the
corporation, the number and class and series of shares represented by each stock
certificate, and the date thereof, and when canceled, the date of cancellation.
Every certificate surrendered to the corporation for exchange or transfer must
be canceled, and no new certificate or certificates may be issued in exchange
for any existing certificate until the existing certificate has been canceled,
except in cases provided for in Section 7.05.
SECTION 7.02 TRANSFERS OF STOCK. Transfers of shares of stock of the
corporation shall be made only on the books of the corporation by the registered
holder of such shares, or by such holder's attorney as authorized by a power of
attorney duly executed and filed with the secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 7.04, and upon surrender of
the certificate or certificates representing such shares properly endorsed for
transfer, or when proper instructions with respect to the transfer of
uncertificated shares are received by the transfer agent appointed as provided
in Section 7.04. The person in whose name shares of stock stand on the books of
the corporation shall be deemed the owner of such shares for all purposes as
regards the corporation. Whenever any transfer of shares is made for collateral
security, and not absolutely, such fact shall be indicated in the entry of
transfer if, when the certificate or certificates are presented to the
corporation for transfer, both the transferor and the transferee request the
corporation to do so.
SECTION 7.03 REGULATIONS. The board of directors may make such rules and
regulations as it deems expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates representing
shares of the corporation's capital stock.
SECTION 7.04 TRANSFER AGENT. The board of directors may appoint, or
authorize any officer or officers to appoint, one or more transfer agents and
one or more registrars, and may require all certificates for stock to bear the
signature or signatures of any of them.
SECTION 7.05 LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES. If any
stock certificate is lost, stolen, destroyed, or mutilated, the corporation may
issue another certificate in its place upon proof of such loss, theft,
destruction, or mutilation and upon receipt by the corporation of a bond of
indemnity in such form and for such amount as the board of directors may direct;
provided, however, that a new certificate may be issued without requiring any
bond when the board of directors determines that it is proper.
SECTION 7.06 LEGENDS. Each stock certificate shall contain such legend or
other statements as may be required by the Utah Revised Business Corporation
Act, the Utah Uniform Securities Act, the federal securities laws, and any
agreement between the corporation and the applicable shareholder. Failure to
comply with the requirements of
-16-
<PAGE> 42
this Section 7.06 shall not affect the validity of any certificate of stock
which is otherwise issued in accordance with the provisions of this Article VII.
ARTICLE VIII - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 8.01 CONTRACTS. The board of directors may authorize any officer
or officers, or agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 8.02 LOANS. No loans may be contracted on behalf of the
corporation and no promissory notes or other evidences of indebtedness may be
issued in its name unless authorized by a resolution of the board of directors.
Such authority may be general or confined to specific instances. No loan may be
made by the corporation secured by its unissued shares.
SECTION 8.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, or agent
or agents, of the corporation as may from time to time be determined by
resolution of the board of directors.
SECTION 8.04 DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositaries as the board of directors may
select.
ARTICLE IX DIVIDENDS
SECTION 9.01 DIVIDENDS. The board of directors may from time to time
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the corporation's
Articles of Incorporation.
ARTICLE X - INDEMNIFICATION
SECTION 10.01 DEFINITIONS. As used in this Article X:
(a) "Corporation" includes any domestic or foreign entity that is a
predecessor of the corporation by reason of a merger or other transaction in
which the predecessor's existence ceased upon consummation of the transaction.
-17-
<PAGE> 43
(b) "Director" means an individual who is or was a director of the
corporation or an individual who, while a director of the corporation, is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee fiduciary, or agent of another corporation or other person or of an
employee benefit plan. A director is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by, him or her
to the plan or to participants in or beneficiaries of the of the plan.
"Director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(c) "Expenses" include counsel fees.
(d) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan), or reasonable expenses.
(e) "Officer," "employee," fiduciary," and "agent" include any
person who, while serving the indicated relationship to the corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, fiduciary, or agent of another corporation or other person or
of an employee benefit plan. An officer, employee, fiduciary, or agent is
considered to be serving an employee benefit plan at the corporation's request
if the person's duties to the corporation also impose duties on, or otherwise
involve services by, that person to the plan or participants in, or
beneficiaries of the plan. Unless the context requires otherwise, such terms
include the estates or personal representatives of such persons.
(f) "Official capacity" means:
(i) when used with respect to a director, the office of
director in the corporation; and
(ii) when used with respect to a person other than a
director, as contemplated in Section 10.07, the office in the corporation
held by the officer of the employment, fiduciary, or agency relationship
undertaken by him or her on behalf of the corporation,
"Official capacity" does not include service for any other
corporation, other person, or employee benefit plan.
(g) "Party" includes an individual who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
-18-
<PAGE> 44
(h) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
SECTION 10.02 AUTHORITY TO INDEMNIFY DIRECTORS.
(a) Except as provided in Subsection 10.02(d), the corporation
shall indemnify an individual made a party to a proceeding because he or she is
or was a director, against liability incurred in the proceeding if:
(i) his or her conduct was in good faith; and
(ii) he or she reasonably believed that his or her conduct
was in, or not opposed to, the corporation's best interests; and
(iii) in the case of any criminal proceeding, he or she had
no reasonable cause to believe his conduct was unlawful.
(b) A director's conduct with respect to any employee benefit plan
for a purpose he or she reasonably believed to be in or not opposed to the
interests of the participants in and beneficiaries of the plan is conduct that
satisfies the requirement of Subsection 10.02(a)(ii).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) The corporation may not indemnify a director under this
section:
(i) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(ii) in connection with any other proceeding charging that
the director derived an improper personal benefit, whether or not
involving action in his or her official capacity, in which proceeding he
or she was adjudged liable on the basis that he or she derived an improper
personal benefit.
(e) Indemnification permitted under this Section 10.02 in
connection with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
SECTION 10.03 MANDATORY INDEMNIFICATION OF DIRECTORS. The corporation
shall indemnify a director who was successful, on the merits or otherwise, in
the defense of
-19-
<PAGE> 45
any proceeding, or in the defense of any proceeding, or in the defense of any
claim, issue, or matter in the proceeding, to which he or she was a party
because he or she is or was a director of the corporation, against reasonable
expenses incurred by him or her in connection with the proceeding or claim with
respect to which he or she has been successful.
SECTION 10.04 ADVANCE OF EXPENSES FOR DIRECTORS.
(a) The corporation shall pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(i) the director furnishes the corporation a written
affirmation of his or her good faith belief that he or she has met the
applicable standard of conduct described in Section 10.02;
(ii) the director furnishes to the corporation a written
undertaking, executed personally or on his or her behalf, to repay the
advance if it is ultimately determined that he or she did not meet the
standard of conduct; and
(iii) a determination is made that the facts then known to
those making the determination would not preclude indemnification under
this part.
(b) The undertaking required by Subsection 10.04(a)(ii) must be an
unlimited general obligation of the director but need not be secured and shall
be accepted without reference to financial ability to make repayment.
(c) Determination of payments under this section shall be made in
the manner specified in Section 10.06.
SECTION 10.05 COURT-ORDERED INDEMNIFICATION OF DIRECTOR. A director of the
corporation who is or was a party to a proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any notice
the court considers necessary, may order indemnification in the following
manner:
(a) if the court determines that the director is entitled to
mandatory indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to obtain
court-ordered indemnification; and
(b) if the court determines that the director is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the applicable standard of
conduct set forth in Section 10.02 or was adjudged liable as described in
Subsection 10.02(d), the court may order indemnification as the
-20-
<PAGE> 46
court determines to be proper, except that the indemnification with respect to
any proceeding in which liability has been adjudged in the circumstances
described in Subsection 10.02(d) is limited to reasonable expenses incurred.
SECTION 10.06 DETERMINATION OF INDEMNIFICATION OF DIRECTORS.
(a) A corporation may not advance expenses to a director under
Section 10.04 until after the written affirmation and undertaking required by
Subsection 10.04(a)(ii) are received and the determination required by
Subsection 10.04(a)(iii) has been made.
(b) The determinations required by Subsection 10.06(a) shall be
made:
(i) by the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and only those
directors not parties to the proceeding shall be counted in satisfying the
quorum; or
(ii) If a quorum cannot be obtained as contemplated in
Subsection 10.06(b)(i), by a majority vote of a committee of the board of
directors designated by the board of directors, which committee shall
consist of two or more directors not parties to the proceeding, except
that directors who are parties to the proceeding may participate in the
designation of directors for the committee; or
(iii) by special legal counsel:
(1) selected by the board of directors or its committee
in the manner prescribed in Subsections 10.06(b)(i) and (ii); or
(2) if a quorum of the board of directors cannot be
obtained under Subsection 10.06(b)(i) and a committee cannot be
designated under Subsection 10.06(b)(ii), selected by a majority
vote of the full board of directors, in which selection directors
who are parties to the proceeding may participate; or
(iv) by the shareholders, by a majority of the votes entitled
to be cast by holders of qualified shares (as defined in the Utah Revised
Business Corporation Act) present in person or by proxy at a meeting.
(c) A majority of the votes entitled to be cast by the holders of
all qualified shares constitutes a quorum for purposes of action that complies
with this section. Shareholders' action that otherwise complies with this
section is not affected by the presence of holders, or the voting, of shares
that are not qualified shares.
-21-
<PAGE> 47
SECTION 10.07 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND
AGENTS.
(a) an officer of the corporation is entitled to mandatory
indemnification under Section 10.03, and is entitled to apply for court-ordered
indemnification under Section 10.05, in each case to the same extent as a
director;
(b) the corporation shall indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the same extent as
to a director; and
(c) the corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy and if provided for by specific
action of the board of directors, or contract.
SECTION 10.08 INSURANCE. The corporation may purchase and maintain
liability insurance on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent of the corporation, or who, while serving as a
director, officer, employee, fiduciary, or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary, or agent of another foreign or domestic
corporation or other person, or of an employee benefit plan, against liability
asserted against or incurred by him or her in that capacity or arising from his
or her status as a director, officer, employee, fiduciary, or agent, whether or
not the corporation would have power to indemnify him or her against the same
liability under Sections 10.02, 10.03 or 10.07. Insurance may be procured from
any insurance company designated by the board of directors, whether the
insurance company is formed under the laws of this state or any other
jurisdiction of the United States or elsewhere, including any insurance company
in which the corporation has an equity or any other interest through stock
ownership or otherwise.
SECTION 10.09 LIMITS ON DIRECTORS' LIABILITY. Pursuant to the
corporation's Articles of Incorporation, and to the fullest extent permitted by
the Utah Revised Business Corporation Act, as the same exists or may hereafter
be amended, no director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for any action taken or any
failure to take any action, as a director.
SECTION 10.10 SAVINGS CLAUSE. If this Article or any portion thereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each officer and director as to
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether internal or external,
including without limitation a grand jury proceeding and an action or suit
-22-
<PAGE> 48
brought by or in the right of the corporation, to the full extent permitted by
any applicable portion of this Article that shall not have been invalidated, or
by any other applicable law.
ARTICLE XI - MISCELLANEOUS
SECTION 11.01 SEAL. The board of directors may provide a corporate seal,
which shall be in the form of a circle and shall bear the name of the
corporation and words and figures showing that the corporation was incorporated
in the State of Utah and the year of incorporation.
SECTION 11.02 AMENDMENTS. These Bylaws, or any of them may be altered,
amended or repealed, and new Bylaws may be made, (i) by the board of directors,
by vote of a majority of the directors then in office, acting at any meeting of
the board of directors, or (ii) by the shareholders, by vote of a majority of a
quorum of the shareholders, at any annual meeting of shareholders, without
previous notice, or at any special meeting of shareholders, provided that notice
of such proposed amendment, modification, repeal or adoption is given in the
notice of special meeting. Except as otherwise provided in the corporation's
Articles of Incorporation, any Bylaws made or altered by the shareholders may be
altered or repealed by either the board of directors or the shareholders.
SECTION 11.03 FISCAL YEAR. Unless otherwise specified by the board of
directors, the fiscal year of the corporation shall end on the 30th day of June
in each year.
SECTION 11.04 VOTING OF STOCK IN OTHER CORPORATIONS. Unless otherwise
ordered by the board of directors, chairman of the board, the president and each
vice president shall have full power and authority on behalf of the corporation
to attend any meeting of shareholders of any corporation in which the
corporation may hold stock, to vote the stock held by the corporation, to
exercise on behalf of the corporation at any such meeting any and all of the
rights and powers incident to the ownership of such stock, and to execute and
deliver on behalf of the corporation proxies and consents in connection with the
exercise by the corporation of the rights and powers incident to the ownership
of such stock. The board of directors may, from time to time, confer like powers
upon any other person or persons.
-23-
<PAGE> 49
SECRETARY'S CERTIFICATE
I, the undersigned, being the secretary of Inland Entertainment
Corporation, do hereby certify the foregoing to be the Bylaws of such
corporation, as adopted by its board of directors at a meeting duly noticed and
held, and at which a quorum was present, on the 18th day of August, 1999 and by
the shareholders at a meeting duly noticed and held, and at which a quorum was
present, on the 10th day of December, 1999. The effective date of these Bylaws
shall be December 10, 1999.
-----------------------------------------
Christopher Wm. Voisin
Secretary
-24-
<PAGE> 50
PROXY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
INLAND ENTERTAINMENT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned shareholder(s) of Inland Entertainment Corporation, a Utah
corporation (the "Company"), hereby appoints Andrew B. Laub, Christopher Wm.
Voisin, or either of them, proxies, each with full power of substitution, for
and in the name of the undersigned at the Annual Meeting of Shareholders of the
Company to be held on December 10, 1999, and at any and all adjournments, to
vote all shares of the capital stock of said Company held of record by the
undersigned on October 22, 1999, as if the undersigned were present and voting
the shares.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IN
THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE VOTED FOR PROPOSALS 2, 3 AND 4,
FOR THE NOMINEES NAMED IN PROPOSAL 1 ON THE REVERSE SIDE AND IN ACCORDANCE WITH
THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
(CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE)
1
<PAGE> 51
INLAND ENTERTAINMENT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE LISTED NOMINEES AND THE LISTED PROPOSALS HAVE BEEN PROPOSED BY THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES LISTED AND "FOR"
THE LISTED PROPOSALS.
[ ] I plan to attend the meeting
1. Election of Directors:
Nominees for election to the Board of Directors: Richard T. Harrison,
Thomas G. Holmes, Andrew B. Laub, Jana McKeag, G. Fritz Opel, Charles
Reibel, Sanjay Sabnani, Cornelius E. "Neil" Smyth and L. Donald Speer II.
FOR all the WITHHOLD
nominees listed AUTHORITY
(except as indicated to vote for all
to the contrary) nominees listed
[ ] [ ]
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE,
WRITE THE NOMINEE'S(S') NAME(S) ON THE SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
2. Proposal to approve an amendment to the Company's Articles of
Incorporation to change the name of the Company to "Venture Catalyst
Incorporated."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve a resolution permitting the Company to take action by
the written consent of fewer than all of the shareholders of the Company
entitled to vote with respect to the subject matter of the action.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve the Amended and Restated Bylaws of the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting.
Date: , 1999
----------------
------------------------------
Signature
------------------------------
Signature (if held jointly)
(Please date this Proxy and sign exactly as your name
appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give your full
title. If there is more than one trustee, all should sign.
All joint owners should sign.)
2
