U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
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HYCOMP, INC.
(Name of Small Business Issuer in Its Charter)
Massachusetts 042451506
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
67 Wall Street, Suite 2411 10005
New York, New York
(Address of Principal Executive Offices) (Zip Code)
(212) 344-0351
Issuer's Telephone Number
Securities to be Registered under Section 12(b) of the Act:
- ---------------------------------------------- ---------------------------------
Title of Each Class to be so Registered Name of Each Exchange on Which
Each Class is to be Registered
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Common Stock, par value $0.01 None
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Securities to be Registered under Section 12(g) of the Act:
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Common Stock, par value $0.01
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Title of Class
- --------------------------------------------------------------------------------
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Part I
Item 1. Description of Business.
The principal business of HyComp, Inc. ("HyComp" or the "Company") is
conducted through its wholly owned subsidiary, eieiHome.com Inc. ("eieiHome").
eieiHome operates an Internet service, information and e-commerce web site,
providing information and related products and services for homeowners, home
buyers, and home service providers. This Internet service was introduced in two
Canadian test markets, Vancouver and Toronto, in June 1999 with the intent of
expanding to additional metropolitan markets in Canada and the United States
over the next year. The Company sells advertising space to national and local
home service providers and manufacturers of home-related products. For local and
national accounts, the Company also provides Internet web hosting, web page
design, and e-mail services.
HyComp was incorporated in the Commonwealth of Massachusetts in 1969.
Through March 31, 1999, it was a designer, manufacturer and distributor of thin
film hybrid circuits, thin film resistor networks and various thin film
components mainly used for military purposes. In March 1999, HyComp sold all of
its assets, excluding cash and receivables. The buyer assumed all liabilities
other than commercial and inter-company debt.
On October 14, 1999 HyComp acquired all of the issued and outstanding
common stock of eieiHome from Simmonds Capital Limited ("SCL"). Following the
transaction, eieiHome was considered the acquiring party and the surviving
accounting entity because the former stockholders of eieiHome received an amount
of voting shares of the combined company which constituted an effective
controlling interest in the combined company. Accordingly, the transaction was
accounted for as a reverse acquisition and the discussion in "Item 2.
Management's Discussion and Analysis or Plan of Operation" and the financial
statements contained in this Form 10-SB present the historical financial
position and results of operations of eieiHome rather than the historical
financial position and results of operations of HyComp. Although the acquisition
of eieiHome formally closed on October 14, 1999, the Financial Statements
presented in this Form 10-SB have been prepared on the basis that the
transaction effectively occurred on September 30, 1999.
eieiHome (formerly Chargnet Inc.) was incorporated in June 1998 in the
province of Ontario, Canada. It operated as Chargnet until June 20,1999 when the
Company was acquired by SCL and its name was changed to eieiHome.com Inc.
eieiHome is in its first stage of development and operates an Internet web site
for consumers looking for home-related information, products and services.
1. Products and Markets
Through eieiHome, the Company operates an Internet web site providing
information for homeowners with local references for home products and services.
eieiHome distinguishes itself from other web sites by being both
category-specific in its information, and local in its directory references.
Other Internet web sites tend to be either broad in subject scope, as a general
directory, or narrow in subject scope with little, if any, local content.
The Company expects to receive revenue from the following sources:
o national advertising accounts, which purchase advertising and
exclusive sponsorship in one or more sub-categories of home
service or home products;
o local advertising accounts, which pay monthly listing fees,
monthly advertising fees as well as fees for the design of
customized web pages and e-mail;
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o banner advertising, which pay monthly fees appropriate for the
prevailing level of visits per day or month; and
o e-commerce capability, which is under development but which the Company
anticipates will provide additional revenue from the sale of
home-related products.
The Company currently has a direct sales force in Canada, which targets
national accounts for sponsorship and e-commerce programs. A local commission
sales force is used to solicit listing and advertising revenue for local
accounts. While the eieiHome web site design and database is national in scope,
the service is being introduced on a market-by-market basis. Promotion of the
eieiHome web site to Canadian consumers began in June 1999 in Toronto, Ontario
and Vancouver, British Columbia, with a radio and billboard advertising
campaign. eieiHome plans to expand its service to additional Canadian markets
and to introduce its services into selected US cities within the next year.
These plans are subject to both the successful completion of financing and the
firm commitments of national advertisers in each target market. It is not
certain that either will be available.
The eieiHome web site has been developed with a number of proprietary
designs and systems including the local mapping system, the user interface
designed by ColdFushion, and the database. Approximately one-half of the web
site is devoted to home-related information, including home tips and
do-it-yourself information, while the other half lists directory information for
local service providers and retail outlets of interest to homeowners. The site
is divided into 160 distinct home-related categories. These categories are
organized under five main sections: Real Estate, Renovation, Decorating,
Maintenance, and Electronics. For advertisers, each category is currently
offered on an exclusive basis, limited to one national advertiser plus three
local account references per category per market. In addition to information and
directory service, the eieiHome web site offers a number of other features to
promote user loyalty to increase the frequency of visits by consumers and
advertisers. These include: e-mail service for local accounts, group purchasing
discount benefits for local accounts to purchase business products or services
from third party providers, discussion sites for consumers and service or
product providers and a free local classified advertising section for consumers.
2. Competition
In broad terms, eieiHome competes with all other web sites with
revenues based on advertising for the attention of consumers and available
Internet advertising spending. Distinct from other Internet information or
reference web sites, eieiHome is both category specific in its information,
home-related products and services, and local in its directory references. Other
Internet web sites tend to be either broader in subject scope, as a general
directory, or vertically narrower in subject scope with little if any local
content. The following are some of eieiHome's competitors:
o Service Directories: A number of companies such as Yellow
Pages, GE Bigfoot and AT&T provide on-line business
directories. These Internet web sites are similar to a
telephone directory on-line, with a broad listing of
categories and limited value added information for the
consumer. There is no category exclusivity offered to
advertisers.
o City Guides: Most major metropolitan markets have established
city guide Internet web sites, in many cases owned by or
affiliated with a local newspaper. These sites typically
provide a broad base of local information, including weather
and entertainment, as well as lists of local merchants. They
are not focused on home product information or references.
o Housenet: The Housenet Internet web site provides information
on 12 home-related categories with an emphasis on gardening.
It does not offer local referrals for contractors or service
providers.
o Improvenet: The Improvenet Internet web site provides
information and solicits quotes for home improvement and
renovation projects.
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o Homestore.com: Homestore.com is a real estate focused Internet
web site which provides information and references on a
variety of related topics including real estate listings,
remodeling and home improvement, home builders, and
information for people relocating. There is no third party
advertising offered on the site, which acts as a referral
service.
o Home Depot: The Home Depot Internet web site provides value
added information on home-related products and is focused on
the do-it-yourself homeowner. The site primarily promotes the
sale of home building or hardware products through the local
Home Depot retail outlet.
o Sears: The Sears Internet web site provides home product and
service information. The focus is on selling products through
Sears retail outlets providing a telephone reference for Sears
home service products. Some products can be purchased on-line
for delivery in the continental U.S.
o Canadian Home Builders Association (CHBA): CHBA operates an
Internet web site which provides useful tips on how to secure
a contractor and negotiate a construction contract. The
service is provided free to consumers.
o Ourhouse.com: Ourhouse.com is a new home-related predominantly
e-commerce based Internet web site. Its most significant
feature is their partnership with ACE Hardware. Ourhouse.com
primarily promotes the ACE Hardware inventory.
Several of the Company's competitors have greater financial and marketing
resources. The competitors all have a market lead in the United States and
Canada, with an established or developing Internet web site and customer base.
The Company will depend for its competitive success on eieiHome's
ability to attract national and local advertiser support and to attract and
retain a consumer audience for its Internet web site. The Company hopes that the
potential size of the consumer base will interest advertisers and that the size
and relevance of the directory listing will attract consumers. Consequently,
when launching in a local market, the Company plans to explore a variety of
incentives, including free trial listings, to attract advertisers. The Company
intends to use local market mass media advertising plus strategic Internet
relationships to build consumer traffic to the site.
In the first three quarters of 1999, the Company was dependent upon
national account advertising for approximately 72% of its revenue and its top
three national accounts represented approximately 54% of overall revenues. Most
of the national accounts have their own Internet web sites to promote their own
brands and most also advertise on other informational Internet web sites. As the
Company's business develops in each market, the Company anticipates that the
proportion of its revenue represented by local accounts will increase.
3. Suppliers
Employees on staff and consultants under contract design and maintain
the eieiHome Internet web site and database. The software used by eieiHome is
all from a single source by vendors who are recognized in the computer software
industry. The Company uses a variety of different vendors for its computers and
server platforms. Similarly, the Company has a variety of choices regarding its
web hosting.
To the Company's knowledge all of the proprietary and third-party
software that it uses is Year 2000 compliant. As of January 12, 2000, the
Company was not aware of any Year 2000 problems that had materially affected its
systems or operations. However, there remains some minimal risk that the Company
may still discover or experience serious unanticipated negative consequences or
material costs caused by undetected errors or defects in the technology used in
our internal systems or by Year 2000 deficiencies in the products from third
party suppliers. (see Item 2 - Year 2000 disclosure in the Management's
Discussion and Analysis or Plan of Operations)
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4. Patents and Trademarks
The Company holds a Canadian trademark for eieiHome. The US trademark
application is pending. The Company currently holds no patents for its
intellectual property or designs.
5. Employees
The Company currently has eleven full time employees and three part
time consultants.
6. Proposed Changes
The Company's Board of Directors called for a Special Meeting of
Stockholders to take place on February 29, 2000 at the Marriott Boston Copley
Square, Boston Massachusetts 02116, to consider and vote on actions proposed by
the Board of Directors. The Company delivered to its stockholders a proxy
statement, dated February 7, 2000, detailing the Board of Directors' proposals,
which is attached as Exhibit 99.1 to this Registration Form 10 - SB (the "Proxy
Statement"). The proposals are:
(1) to change the jurisdiction of incorporation of the Company from the
Commonwealth of Massachusetts to the State of Delaware by merging the Company
with eieiHome.com Inc., a company to be incorporated in Delaware and to be a
wholly-owned subsidiary of the Company and, in connection with the move, to
adopt the Agreement and Plan of Merger attached to the Proxy Statement as
Appendix A;
(2) to change the Company's name from HyComp, Inc. to eieiHome.com
Inc.;
(3) to increase the number of shares that the Company is authorized to
issue from 20,000,000 shares of common stock, par value $0.01, to 75,000,000
shares of common stock, par value $0.001;
(4) to adopt the 2000 Stock Option Plan, as described in the Proxy
Statement;
(5) the re-election of the current directors of HyComp, Inc.
Please see the Proxy Statement for further details.
Item 2. Management's Discussion and Analysis or Plan of Operation.
1. Overview
The principal business of the Company is conducted through its wholly
owned subsidiary, eieiHome, a company in its first stage of development, which
operates an Internet web site for consumers seeking home-related information,
products and services.
eieiHome was incorporated on June 25, 1998 as Chargnet Inc. and at that
time launched its web site on the Internet. On June 21, 1999 the Company
launched its Canadian radio and billboard advertising campaign in the Toronto
and Vancouver markets. On July 14, 1999 Chargenet Inc. changed its name to
eieiHome and relaunched an improved Internet web site.
On March 31, 1999, the Company determined that it could no longer run
its previous business at a profit and sold substantially all of its assets and
select liabilities to SatCon Technology Corporation ("SatCon"). On October 14,
1999, the Company bought all of the issued and outstanding shares of the capital
stock of eieiHome and a $500,000 inter-company loan from SCL in exchange for 7.5
million newly issued shares of the common stock of the Company, par value $0.01
("Company Common Stock") (1,125,000 of which were issued to each of Paul Dutton
and Max Hahne, the founders of eieiHome, in consideration for the cancellation
of their options to repurchase up to 30% of eieiHome), a $500,000 demand
promissory note, a $2,000,000 convertible debenture and warrants to purchase up
to five million shares of Company Common Stock. Although the closing of the
acquisition of the shares of eieiHome occurred on October 14, 1999, the
financial statements presented have been prepared on the basis that the
transaction was effective as of September 30, 1999. The Company is now in the
process of raising the necessary funding to promote eieiHome in additional North
American markets.
The Company's Board of Directors proposes to undertake a number of
steps to strengthen the Company's ability to develope the business of its
wholly-owned Canadian subsidiary, eieiHome.com Inc. The Company's Board of
Directors called for a Special Meeting of Stockholders to take place on February
29, 2000 at the Marriott Boston Copley Square, Boston Massachusetts 02116, to
consider and vote on the Board of Director's proposals. See paragraph 6
"Proposed Changes" under "Item 1. Description of Business" and the Proxy
Statement for further details.
2. Results of Operations
Period from June 25, 1998 (Inception) to December 31, 1998
For the period June 25, 1998 to December 31, 1998, management was focused on
constructing an improved Internet web site, building strategic relationships
with key national accounts and refining the business plan prior to the relaunch
of the Internet web site. The construction of the web site was primarily
technical in nature involving mapping systems and code structure. Management
required a minimum number of key national accounts present on the Internet web
site in order to build its reputation and was able to sign Coldwell Banker, a
national real estate business, during October 1998.
Revenues for the period June 25, 1998 to December 31, 1998 were $2,501
consisting primarily of a small group of paying national accounts. Most national
accounts were allowed to advertise on the Internet web site without charge on
the understanding that once a media advertising campaign was launched and
minimum levels of traffic on the Internet web site were achieved that monthly
advertising fees would start to be payable.
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Operating expenses for the six month period ended December 31, 1998
were $120,182 with the bulk of these expenses allocated to the employment and
consulting costs of a small group of technicians required to build and make
improvements to the Internet web site.
The net loss for the period June 25, 1998 to December 31, 1998 was
$117,681.
Nine months ended September 30, 1999
The Company launched a new web site on June 21, 1999 and on July 14,
1999 changed the name of its subsidiary Chargenet Inc. to eieiHome.com Inc.
During the period January 1, 1999 to June 21, 1999, Management concentrated on
organizing and implementing the advertising strategy and reconfiguring the
design of the web site. On June 24, 1999, the Company launched an innovative
radio and billboard advertising campaigns in the Canadian markets of Toronto and
Vancouver capitalizing on the name change. These advertising campaigns were
considered by the Company to be a pilot program in order to assess the impact of
advertising on the results of the business.
On February 1, 1999, the Company moved to new office space located at
590 King Street West in Toronto.
In May 1999, the Company recruited a National Sales Manager to begin
organizing the local account sales force.
Revenues for the nine month period ended September 30, 1999 were
$45,529, consisting of $32,358 from national advertising accounts, $5,678 from
local advertising accounts, $3,925 from web site design for third parties and
$3,568 of miscellaneous income.
Operating expenses for the nine month period ended September 30, 1999
were $780,645 consisting of employment and consulting costs and the initial
advertising campaign.
Amortization of property and equipment and interest for the nine month
period ended September 30, 1999 was $6,210 and $78 respectively.
The net loss for the nine month period ended September 30, 1999 was
$741,403.
Period from June 25, 1998 (Inception) to September 30, 1998
The period from June 25, 1998 to September 30, 1998 was an
organizational phase for the Company and consisted of the initial incorporation
of Chargenet Inc. and the production of content required to the launch the
Chargnet Internet web site. Content development consisted of approximately 2,000
home-related tips and articles.
There were no revenues for the period June 25, 1998 to September 30,
1998.
Operating expenses for the period June 25, 1998 to September 30, 1998
were $58,336, consisting primarily of employment and consulting costs.
The net loss during the period June 25, 1998 to September 30, 1998 was
$58,336.
3. Financial Condition
As at December 31, 1998
Due to the Company's operation of the original Chargnet Internet web
site and the concomitant lack of significant revenue to December 31, 1998, the
Company's balance sheet, as of that date, did not contain any capital assets.
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Total assets as at December 31, 1998 were $299, total liabilities were
$20,479 and stockholders' equity consisted of a deficit of $20,180.
Total assets consisted of cash as of December 31, 1998. Liabilities
represented all accounts payable and accrued liabilities.
As at September 30, 1999
After launching the eieiHome Internet web site during the summer of
1999, the Company's balance sheet reflected a minimum level of operating assets
on September 30, 1999.
Total assets grew from $299 on December 31, 1998 to $65,024 on
September 30, 1999. Current assets totaled $27,972 consisting primarily of
account receivable and cash. As at September 30, 1999 the Company owned $37,052
in capital assets consisting of furniture and computer equipment.
Current liabilities totaled $826,607 as at September 30, 1999 and
consisted primarily of a note for $500,000 payable to SCL and accounts payable
and accrued liabilities. Amounts due to related parties consisted of $118,954
payable to SCL.
The stockholders' equity deficit increased from $20,180 at December 31,
1998 to $2,761,583 as of September 30, 1999. This deficit increase is
attributable to operating losses by the Company during that period and the
Company's issuance of a $2 million convertible debenture to SCL as part of the
eieiHome transaction.
The working capital deficit, excluding related party liabilities, at
September 30, 1999, was $179,681 indicating that additional funding will be
required by the Company in order to continue to operate and grow the business.
4. Liquidity and Capital Resources
The significant losses and working capital deficit at September 30,
1999 have called into question the Company's ability to continue to operate as a
going concern. The Company's ability to fund losses arising from costs and
expenses exceeding revenue is connected to its ability to raise external
financing prior to achieving a break-even level of operations. The Company's
only internal source of funding is from its Internet web site, which has
currently only been introduced in the Toronto and Vancouver markets. At this
time neither of those markets has reached full maturity.
eieiHome was historically funded by the initial capitalization in June
1998 and thereafter by SCL until October 1999 when it became a subsidiary of the
Company.
Each new market entered by the Company will require substantial media
advertising prior to generating revenue. The Company will have to raise
sufficient financing to meet its advertising needs. Pilot advertising programs
carried out in Toronto and Vancouver have indicated that the perception of value
by local and national accounts is heightened with high-profile radio advertising
preceding the launch.
The Company is in the process of organizing new financing through
either the issuance of equity securities or a convertible debenture. There can
be no assurance that the Company will be successful in obtaining funding as and
when required.
5. Foreign Currency
All financial statements in this Form 10-SB presented are expressed in
United States dollars. Hycomp financial statements are expressed in United
States dollars, however the functional and reporting currency for the Hycomp's
wholly owned subsidiary, eieiHome is Canadian dollars. The balance sheets of
eieiHome are translated
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into United States dollars at the exchange rates prevailing at the balance sheet
dates and the statements of operations and cash flows at the average rate for
the relevant periods.
6. Year 2000
Many older installed computer systems and software products are coded
to accept only two digit entries in the date code field and cannot distinguish
21st century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. If Year 2000 requirements
are not met, our software products and those of our suppliers could malfunction,
which could prevent or limit access to our online Internet site and could be
costly to remedy.
Year 2000 Assessment
The Company's operating business, eieiHome, which was established in
1998, is a relatively new company and does not have the same level of exposure
to Year 2000 issues as many older companies. As a matter of strategic direction,
the Company attempts to use only the most recently released versions or models
of in-house and third-party computer and software products. As of January 12,
2000, the Company was not aware of any material Year 2000 problems and, as a
result of our internal testing, we believe that our systems are Year 2000
compliant in all material respects. We have not incurred material costs to date
in our assessment of the Year 2000 issue, and currently do not believe that the
cost of additional actions will have a material effect on our results of
operations or financial condition. Although we are not aware of any material
operational issues or costs associated with preparing our internal systems for
the Year 2000, we may experience serious unanticipated negative consequences or
material costs caused by undetected errors or defects in the technology used in
our internal systems.
Third Party Equipment and Software
In addition, we use third-party equipment, software and content. While
we believe that this equipment and the third party suppliers are Year 2000
compliant and, as of January 12, 2000, the Company was not aware of any material
Year 2000 problems, failure of such third-party equipment, software or content
to operate properly with regard to the Year 2000 and thereafter could require us
to incur unanticipated expenses to remedy any problems. We are also subject to
external forces that might generally affect industry and commerce, such as
utility or telecommunications company Year 2000 failures and related service
interruptions.
Possible Consequences of Year 2000 Malfunctions
Despite efforts to address the Year 2000 risks, our business operations
could be adversely affected by Year 2000 problems. Any such Year 2000 problems
could result in:
o significant downtime for, or inaccuracies in, the Company's
Internet site or database, which could result in a loss of
users and sponsorship;
o an increase in the allocation of resources to address Year
2000 issues, which could result in decreased productivity in
our core operations; or
o an inability for consumers to access the Internet, which would
result in a loss of users and a corresponding reduction in
advertising revenue.
The occurrence of one or more of the foregoing could have a material adverse
effect on our business, results of operations, and financial condition. We do
not have a formal Year 2000 contingency plan in place, since we believe that the
most significant area of exposure is from third party vendors and suppliers, on
whose contingency plans we must rely. However, such contingency plans may not
adequately address Year 2000 risks.
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Item 3. Description of Property.
The Company occupies 4,762 square feet of office space in Toronto,
Ontario, Canada under the terms of a three year lease with an option to renew
for an additional five year period. This is the location for web site and
database design and maintenance, national account sales, and customer service.
The Company currently maintains a temporary office in New York, New York and
intends to lease executive office premises in the United States during the next
year from which it will direct its North American operations.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) As of January 12, 2000 there were 18,198,770 shares of Company Common
Stock, par value, $.01, issued and outstanding. To the knowledge of the Company,
the following persons are the beneficial owners of more than five percent of the
Company's voting securities:
Title of Class Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Company common stock, Simmonds Capital Limited 8,401,700(1) 39.6%(2)
par value $0.01 580 Granite Court
Pickering, ON L1W-3Z4
CANADA
Company common stock, Paul Dutton 1,375,000 7.6%
par value $0.01 590 King St., Suite 403
Toronto, ON M5V 1M3
CANADA
Company common stock, Max Hahne 1,375,000 7.6%
par value $0.01 590 King St., Suite 403
Toronto, ON M5V 1M3
CANADA
(1) This number includes 5,401,700 shares of Company Common Stock, the
right to receive 2,000,000 shares of Company Common Stock upon conversion of a
convertible debenture, and the exercise of warrants to purchase 1,000,000 shares
of Company Common Stock, not all of which may be converted or exercised, as the
case may be, until after the shareholders of the Company have approved an
increase in the Company's authorized capital stock. It is anticipated that a
meeting of shareholders will be held to consider this matter on or before March
1, 2000. See "Certain Relationships and Related Transactions".
(2) The beneficial ownership percent is based upon a total of 21,198,770
shares of Company Common Stock assuming the conversion of the debenture and the
exercise of the warrants.
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(b) As of January 12, 2000, Directors and Officers of the Company had the
following beneficial interest in the shares of Company Common Stock:
Title of Class Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Company common stock, Angelo G. MacDonald 1,000 0.01%
par value $0.01 Director and Chief
Executive Officer
124 West 60th Suite 42H
New York, NY 10023
Company common stock, David C. O'Kell 2.7%
par value $0.01 Director and Secretary 500,000
185 Glencairn Ave.
Toronto, ON M4R 1N3
CANADA
Company common stock, Paul K. Hickey 250,000(1) 1.4%
par value $0.01 Director and Chairman
888 7th Avenue
New York, NY 10106
Company common stock, Lawrence Fox 2.7%
par value $0.01 Director 500,000
212 Crystal Court
Bluebell, PA 19422
Company common stock, John G. Simmonds(2) 3.6%
par value $0.01 Director 650,000
13980 Jane St.
King City, ON L7B 1A3
CANADA
Total Directors and Officers 5,151,000 27.9%
(1) This number includes options to purchase 250,000 shares of Company
Common Stock at $0.013 per share.
(2) This number includes shares of Company Common Stock held by Deborah
Simmonds and shares of Company Common Stock held in trust for Jack
Simmonds.
Item 5. Directors, Executive Officers, Promoters, and Control Persons.
Paul Hickey, 67, has been a Director of the Company since July, 1979. He was
appointed Chairman of the Company effective September 15, 1999. Mr. Hickey is a
former licensed stock broker in New York. He is currently an investment banker
in New York, NY. Mr. Hickey also serves as a director on the boards of Gregory
and Howe Incorporated, American Homeowners Association and Diopsys, Inc.
Angelo G. MacDonald, 41, was appointed Chief Executive Officer and a Director of
the Company effective November 1, 1999. Mr. MacDonald holds a J.D. degree from
Villanova University School of Law. He is member of the bar in New York and New
Jersey, the Southern and Eastern federal districts of
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New York, the United States Tax Court, the United States Court of International
Trade, and the Court of Appeals for the Armed Services. From 1986 to November
1999, Mr. MacDonald was a Senior Trial Assistant District Attorney with the
Office of the District Attorney, Bronx county, New York City.
David C. O'Kell, 48, was appointed secretary and a Director of the Company
effective November 1, 1999. Mr. O'Kell is the Executive Vice President and
Secretary and a Director of SCL, a Toronto Stock Exchange listed company . Mr.
O'Kell joined SCL in July 1991 as Vice President Business Development. Prior to
joining SCL, Mr. O'Kell was the Vice President and Director of Business
Development with the Canadian head office of a multinational advertising agency.
Between September 1995 and November 1997, Mr. O'Kell served as the president and
a Director of Ventel, Inc., a Vancouver Stock Exchange listed venture capital
company. Mr. O'Kell resigned as a Director upon the acquisition by Ventel of
Fifty-Plus.net in June, 1999.
Lawrence Fox, 34, has been a Director of the Company since September 15, 1999.
Mr. Fox is an active private investor. He has provided merger and acquisition
advisory services, including structuring acquisitions and venture capital
investments to a number of public and private companies.
John G. Simmonds, 49, has been a Director of the Company since October 15, 1999.
Mr. Simmonds is the founder of SCL. Since 1991, Mr. Simmonds has served as
Chairman, President and Chief Executive Officer of SCL. SCL is a diversified
management company with strategic investments in contract manufacturing,
electronics distribution, wireless communications, and internet service markets
including both equity investments and wholly owned operations. From 1994 to
1996, Mr. John Simmonds served as Director and Chief Executive Officer of INTEK
Global Corporation (formerly Intek Diversified Corp.), a Nasdaq-listed
(Small-Cap) company. Intek is involved in the US Specialized Mobile Radio market
which owns and manages SMR licenses in the 200 MHz frequency. Between September
1995 and November 1997, Mr. Simmonds served as the Chairman and a Director of
Ventel Inc., a Vancouver Stock Exchange listed company. Ventel provides secured
loans to developing companies in the US SMR market. Mr. Simmonds resigned from
the Board of Directors of Intek during 1998 and resigned from the Board of
Directors of Ventel, upon the acquisition by Ventel of Fifty-Plus.net in June,
1999.
Gary N. Hokkanen, 43, was appointed Chief Financial Officer of the Company
effective November 1, 1999. Mr. Hokkanen's principal occupation is an accountant
and he holds a Certified Management Accountant ("CMA") designation from Society
of Management Accountants of Ontario. Mr. Hokkanen also is Vice President,
Finance/Chief Financial Officer of SCL. He has held this position since July
1997. For the period April 1996 to July 1997, Mr. Hokkanen was Treasurer of
SCL. For the period June 1994 to April 1996 he was Manager, Finance & Treasury.
Prior to June 1994, Mr. Hokkanen was Manager, Financial Planning & Analysis,
with CUC Broadcasting Limited ("CUC"). CUC, prior to being acquired by Shaw
Communications Inc., was a privately owned Canadian cable TV multiple system
operator.
11
<PAGE>
Item 6. Executive Compensation
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------- ------- --------------------------------------------- ----------------- ------------------
Long-Term
Annual Compensation Compensation
Awards
- ---------------------------- ------- --------------------------------------------- -----------------
Other Annual All Other
Name and Principal Year Salary Bonus Compensation Compensation
Position ($) ($) ($) ($)
- ---------------------------- ------- ------------- ------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
George Riley, President 1999 --- --- --- ---
and Chief Executive 1998 110,000 --- --- ---
Officer(1) 1997 110,000 --- --- ---
- ---------------------------- ------- ------------- ------------- ----------------- ----------------- ------------------
Gary N. Hokkanen, Chief 1999 --- --- --- ---
Financial Officer(2) 1998 --- --- --- ---
1997 --- --- --- ---
- ---------------------------- ------- ------------- ------------- ----------------- ----------------- ------------------
David C. O'Kell, 1999 --- --- --- ---
Secretary(2) 1998 --- --- --- ---
1997 --- --- --- ---
- ---------------------------- ------- ------------- ------------- ----------------- ----------------- ------------------
Angelo G. MacDonald, 1999 14,250 --- --- ---
Chief Executive Officer(3) 1998 --- --- --- ---
1997 --- --- --- ---
- ---------------------------- ------- ------------- ------------- ----------------- ----------------- ------------------
</TABLE>
(1) Mr. Riley resigned from HyComp effective March 31,1999. The Company
operated without the services of a full time CEO until Mr. Angelo MacDonald was
appointed effective November 1, 1999. Mr. Hickey served as interim CEO from
August 10, 1999 to October 15, 1999. Mr. Simmonds served as interim CEO from
October 15 to November 15, 1999.
(2) Effective October 15, 1999, Mr. David O'Kell was appointed Secretary of
the Company and Mr. Gary Hokkanen was appointed Chief Financial Officer of the
Company. The services of Mr. Hokkanen and Mr. O'Kell are provided to the Company
as part of the services pursuant to the management services contract with SCL.
Both Mr. Hokkanen and Mr. O'Kell are officers of SCL.
(3) Effective November 1, 1999 Mr. MacDonald was appointed C.E.O. of the
Company with an annual salary of $114,000.
Item 7. Certain Relationships and Related Transactions
During the past three fiscal years and to the date of this registration
statement, there have been no material transactions in which the Company or any
of its subsidiaries was a party, and in which any director or officer of the
Company had a direct or indirect material interest, except as set forth below.
On October 13, 1999, a group of investors, which included SCL and
certain officers and directors both of the Company and of SCL entered into a
Stock Purchase Agreement with MicroTel International, Inc.("MicroTel") and XIT
Corporation (formerly known as XCEL Corporation), a wholly owned subsidiary of
MicroTel, pursuant to which the investors listed on Schedule I thereto (the
"Investors") purchased 9,041,498 shares of Company Common Stock (representing
approximately 90% of the then outstanding shares of Company Common Stock) for
US$150,000, with John G. Simmonds acting as representative of the Buyers. Each
of the Investors acquired the shares of Company Common Stock for his or her own
account and there are no contracts, agreements or understandings with respect to
the holding , disposition or voting of any of such shares among the Investors.
12
<PAGE>
On October 14, 1999, SCL entered into a Stock Purchase Agreement with
the Company for the purchase of 120,000 shares of common stock, no par value, of
eieiHome, which constituted all of the issued and outstanding shares of capital
stock of eieiHome and a $500,000 inter-company loan made by SCL to eieiHome, in
exchange for:
(a) 5,250,000 shares of Company Common Stock;
(b) A demand promissory note in the amount of U.S. $500,000;
(c) A convertible debenture in the principal amount of U.S.
$2,000,000, convertible into shares of Company Common Stock at
a conversion price of $1.00 per share (subject to adjustment
as provided therein); and
(d) Five year warrants for the purchase of an aggregate of
5,000,000 shares of Company Common Stock (subject to
adjustment as provided therein), as follows: (i) 1,000,000
shares of Company Common Stock at an exercise price of $1.00
per share exercisable immediately after the Closing; (ii)
1,000,000 shares of Company Common Stock at an exercise price
of $1.50 per share exercisable after one year from the
Closing; (iii) 1,000,000 shares of Company Common Stock at an
exercise price of $2.00 per share exercisable after two years
after the Closing; (iv) 1,000,000 shares of Company Common
Stock at an exercise price of $2.50 per share exercisable
after three years after the Closing; and (v) 1,000,000 shares
of Company Common Stock at an exercise price of $3.00 per
share exercisable after four years after the Closing.
In addition, HyComp issued 1,125,000 million shares of Company Common Stock to
each of the two founding shareholders of eieiHome, Paul Dutton and Max Hahne, as
consideration for the cancellation of their option to repurchase up to 30% of
eieiHome. The 1,125,000 shares of Company Common Stock held by each of Mr.
Dutton and Mr. Hahn constitute approximately 6.2% of the outstanding Company
Common Stock. In connection with the sale of eieiHome to the Company, the
Company also issued 500,000 restricted shares of Company Common Stock to
Lawrence Fox for services rendered in connection with the sale.
The 12,250,000 shares of Company Common Stock acquired by SCL in this
transaction, together with the 151,700 shares of Company Common Stock they
acquired in the transaction with MicroTel, constitute approximately 48% of the
outstanding shares of Company Common Stock, assuming the conversion of the
debenture and the exercise of all of the warrants. As of January 12, 2000, the
Company's authorized capital stock was not sufficient for it to issue the
12,250,000 shares of Company Common Stock SCL may be entitled to. However,
pursuant to an agreement between the Company and SCL, SCL agrees not to exercise
any of its warrants or to convert any portion of the debenture which would
require the Company to issue shares of Company Common Stock in excess of its
current authorized capital, subject to the Company's undertaking to hold a
meeting of its shareholders' on or before March 1, 2000 to ask the shareholders
to increase the number of shares of Company Common Stock that the Company is
authorized to issue to an amount that is sufficient to cover the number of
shares of Company Common Stock that SCL would be entitled to were it to exercise
all of its warrants and to convert the entire debenture.
HyComp entered into a Management Services Agreement with SCL as of
October 14, 1999 to pay $15,000 per month for certain management services
including the part time services of Mr. Hokkanen, Mr. O'Kell, and Mr. Simmonds.
During the past three years, no relatives, spouses or relatives of
spouses of officers or directors were involved in material transactions with
HyComp, and no such transaction is currently proposed.
During the past three fiscal years and the current fiscal year, no
officer or director and no associate of any officer or director, has been
indebted to HyComp.
Item 8. Description of Securities
The authorized capital of HyComp consists of 20,000,000 shares of
common stock, par value $0.01, of which there were 18,198,770 common shares
issued and outstanding as of January 12, 2000, and 2,000 shares of
13
<PAGE>
Preferred Stock, of which none are currently issued and outstanding. In
addition, the Company has reserved 750,000 shares of Company Common Stock for
issuance upon the exercise of employee stock options.
The holders of shares of Company Common Stock are entitled to receive
notice of, attend and vote at all meetings of the shareholders of HyComp. Each
share of Company Common Stock carries one vote at such meetings. In the event of
the voluntary or involuntary liquidation, dissolution or winding-up of HyComp,
after payment of all outstanding debts, the remaining assets of HyComp available
for distribution will be distributed to the holders of shares of Company Common
Stock. Dividends may be declared and paid on the shares of Company Common Stock
in such amounts and at such times as the directors shall determine in their
discretion in accordance with the laws of the Commonwealth of Massachusetts.
There are no pre-emptive rights, conversion rights, redemption provisions or
sinking fund provisions attaching to shares of Company Common Stock. Shares of
Company Common Stock are not liable to further calls or to assessment by HyComp.
The by-laws of HyComp provide that the holders of a majority in
interest of all stock issued, outstanding and entitled to vote at any meeting of
Shareholders shall constitute a quorum for the transaction of business at such
meeting.
If shares of the Preferred Stock are issued by HyComp, the holders of
such Preferred Stock would be entitled to receive, out of legally available
funds, cash dividends at the rate of 8% of the par value thereof per annum,
before any dividends of any kind may be declared on the Common Stock. Such
annual dividends on the issued and outstanding Preferred Stock shall be
cumulative and shall be deemed to accrue from and after the date of issuance,
whether or not said dividends shall have been declared. In the event of the
voluntary or involuntary liquidation, dissolution or winding-up of HyComp, the
holders of Preferred Stock would be entitled to receive payment at the rate of
the par value thereof plus an amount equal to all unpaid annual dividends,
without interest, whether or not declared, which have accrued, before any
payments shall be made to any holders of Common Stock. HyComp may, at the
authorization of its Board of Directors and in conformity with the governing
statutes, at any time redeem all or a part of the issued and outstanding
Preferred Stock by paying the holders thereof the par value of each such share
plus an amount equal to all unpaid annual dividends, whether or not declared.
Each Preferred Stock shall be convertible into 100 shares, or an adjusted
amount, of Common Stock, at the option of the holder. The holder of Preferred
Stock shall not be entitled to vote or participate at any meeting of the
shareholders.
A debenture in the amount of $2,000,000 is convertible at the option of
the holder into shares of Company Common Stock at the rate of $1.00 per share
(subject to adjustment as provided therein).
There are outstanding warrants to purchase up to 5,000,000 shares of
Company Common Stock (subject to adjustment as provided therein) on the
following basis: (i) 1,000,000 shares of Company Common Stock at an exercise
price of $1.00 per share exercisable after October 14, 1999; (ii) 1,000,000
shares of Company Common Stock at an exercise price of $1.50 per share
exercisable after October 14, 2000; (iii) 1,000,000 shares of Company Common
Stock at an exercise price of $2.00 per share exercisable after October 14,
2001; (iv) 1,000,000 shares of Company Common Stock at an exercise price of
$2.50 per share exercisable after October 14, 2002; and (v) 1,000,000 shares of
Company Common Stock at an exercise price of $3.00 per share exercisable after
October 14, 2003.
14
<PAGE>
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
The price per share of Company Common Stock was quoted on the NASD's
OTC Bulletin Board under the symbol "HYCP" prior to December 15, 1999 when the
new OTC Bulletin Board Eligibility Rule went into effect. This rule eliminates
listing of companies that were not previously subject to the reporting
requirements of the United States Securities and Exchange Commission. This
registration statement is being filed in order to comply with those reporting
requirements. As this registration statement was not effective prior to December
15, 1999, trading in shares of Company Common Stock is currently being quoted in
the "pink sheets" published by the National Quotation Bureau, Inc. until the
requirements for quotation on the NASD's OTC Bulletin Board have been met.
The following table sets forth for the periods indicated the high and low Bid
and Ask prices for the Common Shares in U.S. Dollars:
Quarter Ended Closing Bid Closing Ask
High Low High Low
March 31, 1997 $0.03125 $0.03125 $0.5625 $0.5625
June 30, 1997 $0.03125 $0.03125 $0.5625 $0.5625
September 30, 1997 $0.03125 $0.03125 $0.5625 $0.5625
December 31, 1997 $0.09375 $0.03125 $0.5625 $0.53125
March 31, 1998 $0.09375 $0.09375 $0.53125 $0.53125
June 30, 1998 $0.09375 $0.09375 $0.53125 $0.28125
September 30, 1998 $0.09375 $0.0625 $0.5625 $0.28125
December 31, 1998 $0.0625 $0.03125 $0.5625 $0.53125
March 31, 1999 $0.0500 $0.0300 $0.53125 $0.1300
June 30, 1999 $0.0500 $0.0400 $0.5100 $0.2500
September 30, 1999 $1.4375 $0.0400 $2.4375 $0.5100
On December 15, 1999, the last date on which the Company Common Stock was quoted
on the NASD's OTC Bulletin Board, the closing sale price was $1.25. On that date
there were 331 shareholders of record.
Item 2. Legal Proceedings
To the knowledge of the Company, there are no current or pending legal
proceedings to which the Company is a party other than the following.
The Company has been advised by MicroTel that a claim is being made
against MicroTel by SatCon for warranty reimbursement in connection with the
Asset Purchase Agreement by and between HyComp and HyComp Acquisition Corp.
dated March 31, 1999 (the "SatCon Sale").
Prior to the SatCon Sale, the Company, then a subsidiary of MicroTel,
manufactured products for sale to Honeywell International, Inc. ("Honeywell") in
November and December of 1998 under purchase orders in the amount of
$157,859.80. The Company is advised that, after the consummation of the SatCon
Sale, MicroTel became aware of a claim by Honeywell that some of the products
were defective. On September 30, 1999, SatCon invoiced MicroTel for $185,660.76
for costs it alleges it incurred in repairing the defective products sold to
Honeywell. MicroTel has agreed to accept responsibility for this claim and to
indemnify the Company should it be found to be liable in any respect. The
Company is advised that SatCon and MicroTel are attempting to negotiate a
settlement.
15
<PAGE>
Item 3. Changes in and Disagreements with Accountants
None.
Item 4. Recent Sales of Unregistered Securities
On October 15, 1999, HyComp issued 5,250,000 shares of Company Common
Stock to SCL as partial consideration for the acquisition from SCL of all of the
shares of eieiHome and 1,125,000 shares of Company Common Stock each to Mr. Paul
Dutton and Mr. Max Hahne as consideration for the cancellation of their option
to acquire a 30% interest in eieiHome. On January 12, 2000 (effective December
17, 1999), the Company also issued 500,000 restricted shares of Company Common
Stock to Lawrence Fox for services rendered in connection with the sale of
eieiHome to the Company.
Item 5. Indemnification of Directors and Officers
The by-laws provide for indemnification of directors, officers,
employees and certain other agents of the Company (the "Personnel") serving the
Company or serving any other corporation at the request of the Company. The
Personnel shall be indemnified by the Company against all costs, expenses and
liabilities other than with respect to a proceeding as to which it shall have
been adjudicated that he or she did not act in good faith in the reasonable
belief that his or her action was in the best interests of the Company (the
"Good Faith Standard"). In the event of a proceeding that is settled so as to
impose any liability or obligation on the Personnel, he or she shall not be
indemnified if it is determined by a majority vote of the disinterested
directors then in office, or in their absence or at their request, by the
holders of a majority of the outstanding stock entitled to vote for directors,
exclusive of any stock owned by any interested director or officer, or in
certain circumstances, in the written opinion of independent legal counsel, that
the Personnel did not meet the Good Faith Standard. To the extent authorized by
the Board of Directors, the Company may advance sums on account of
indemnification to the Personnel in advance of a final disposition upon a
proceeding, upon receipt of an undertaking by the Personnel that he or she will
repay such sums if necessary, as provided above. The Board of Directors may
authorize the purchase and maintenance of insurance on behalf of any Personnel
for any costs, expenses or liabilities, whether or not the Company could
indemnify such amounts. The Company anticipates that the Board of Directors will
authorize the purchase of such insurance in the near future.
16
<PAGE>
Part F/S
HYCOMP, INC.
1998/99 Financial Statements
Contents
Page
Independent Auditors' Report 18
Balance Sheet 19
Statement of Operations 20
Statement of Changes in Stockholders' (Deficit) 21
Statement of Cash Flows 22
Notes to Financial Statements 23 - 27
17
<PAGE>
Independent Auditors' Report
To the Directors of
HyComp, Inc.
We have audited the balance sheet of HyComp, Inc. (note 1) at December 31, 1998
and the related statements of operations, changes in stockholders' (deficit) and
cash flows for the period June 25, 1998 (inception) to December 31, 1998. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in both Canada and the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HyComp, Inc. as of December 31,
1998 and the results of its operations and its cash flows for the period June
25, 1998 (inception) to December 31, 1998 in accordance with accounting
principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in note 1, the company
has incurred significant losses since inception and at September 30, 1999 the
company has a working capital deficit of $798,635 (unaudited) and a
stockholders' (deficit) of $2,761,583 (unaudited). These conditions raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Management plans in regard to these matters are
also described in note 1.
PKF Hill LLP
Toronto, Canada
September 21, 1999
18
<PAGE>
HYCOMP, INC.
Balance Sheet
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
(Unaudited)
ASSETS
<S> <C> <C>
Current assets
Cash $ 299 $ 7,277
Accounts receivable -- 16,580
Prepaid expenses -- 4,115
- ------------------------------------------------------------------------------------------------------------
Total current assets 299 27,972
- ------------------------------------------------------------------------------------------------------------
Property and equipment (note 1)
Furniture and equipment -- 22,304
Data processing equipment -- 20,958
- ------------------------------------------------------------------------------------------------------------
-- 43,262
Less: accumulated depreciation -- (6,210)
- ------------------------------------------------------------------------------------------------------------
-- 37,052
- ------------------------------------------------------------------------------------------------------------
Total assets $ 299 $ 65,024
============================================================================================================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $ 20,479 $ 204,613
Deferred revenue (note 1) -- 3,040
Note payable (note 2) -- 500,000
Due to related parties (note 3) -- 118,954
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 20,479 826,607
- ------------------------------------------------------------------------------------------------------------
Long term debt
Convertible debenture (note 4) -- 2,000,000
- ------------------------------------------------------------------------------------------------------------
Stockholders' (deficit)
Common stock, $.01 par value, 20,000,000 shares authorized, 8,000,000 and
18,198,770 shares issued and outstanding
at December 31, 1998 and September 30, 1999, respectively 80,000 181,988
Preferred stock, $100 par value, 8%, non-voting, convertible, redeemable
2,000 shares authorized, Nil shares issued
Additional paid-in capital 17,501 --
Accumulated (deficit) (117,681) (2,943,571)
- ------------------------------------------------------------------------------------------------------------
Total stockholders' (deficit) (20,180) (2,761,583)
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' (deficit) $ 299 $ 65,024
============================================================================================================
</TABLE>
See accompanying notes
19
<PAGE>
HYCOMP, INC.
Statement of Operations
<TABLE>
<CAPTION>
Period from Period from
June 25, 1998 June 25, 1998
(inception) to Nine months ended (inception) to
December 31, September 30, September 30,
1998 1999 1998
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue $ 2,501 $ 45,529 $ --
- --------------------------------------------------------------------------------------------------------------
Expenses
Selling, general and administrative 117,571 742,093 58,336
Occupancy 2,611 38,551 --
Interest -- 78 --
Depreciation - property and equipment -- 6,210 --
- --------------------------------------------------------------------------------------------------------------
120,182 786,932 58,336
- --------------------------------------------------------------------------------------------------------------
Net loss $ (117,681) $ (741,403) $ (58,336)
==============================================================================================================
Basic net loss per share of common stock (note 1) $ (0.01) $ (0.09) $ (0.01)
==============================================================================================================
Weighted average number of common shares
outstanding (note 1) 8,000,000 8,000,000 8,000,000
==============================================================================================================
</TABLE>
See accompanying notes
20
<PAGE>
HYCOMP, INC.
Statement of Changes in Stockholders' (Deficit) For the Period from June 25,
1998 (Inception) to September 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------- Paid-In Accumulated Stockholders'
Shares Amount Capital (Deficit) (Deficit)
<S> <C> <C> <C> <C> <C>
Balances at June 25, 1998 (inception)
as restated (note 1) 8,000,000 $ 80,000 $ 17,501 $ -- $ 97,501
Net loss for the period -- -- -- (117,681) (117,681)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 8,000,000 80,000 17,501 (117,681) (20,180)
Issuance of common stock in
connection with reverse
acquisition (note 1) 10,198,770 101,988 (17,501) (2,084,487) (2,000,000)
Net loss for nine months ended
September 30, 1999 -- -- -- (741,403) (741,403)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999
(unaudited) $18,198,770 $ 181,988 $ -- $(2,943,571) $(2,761,583)
=============================================================================================================================
</TABLE>
See accompanying notes
21
<PAGE>
HYCOMP, INC.
Statement of Cash Flows
<TABLE>
<CAPTION>
Period from Period from
June 25, 1998 June 25, 1998
(inception) to Nine months ended (inception) to
December 31, September 30, September 30,
1998 1999 1998
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows used in operating activities
Net loss $(117,681) $(741,403) $ (58,336)
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation - property and equipment -- 6,210 --
- -----------------------------------------------------------------------------------------------------------------------------
(117,681) (735,193) (58,336)
- -----------------------------------------------------------------------------------------------------------------------------
Changes in operating assets and liabilities
Other receivables -- -- (6,318)
Accounts receivable -- (16,580) --
Prepaid expenses -- (4,115) --
Deferred revenue -- 3,040 --
Accounts payable and accrued liabilities 20,479 184,134 --
- -----------------------------------------------------------------------------------------------------------------------------
20,479 166,479 (6,318)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash flows used in operating
activities (97,202) (568,714) (64,654)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities
Purchase of property and equipment -- (43,262) --
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities -- (43,262) --
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Increase in bank indebtedness -- -- 232
Proceeds from issuance of common stock 97,501 -- 64,422
Increase in note payable -- 500,000 --
Increase in due to related parties -- 118,954 --
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows provided by financing activities 97,501 618,954 64,654
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in cash 299 6,978 --
Cash, beginning of period -- 299 --
- -----------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 299 $ 7,277 $ --
=============================================================================================================================
Supplemental disclosure of cash flow:
information::
Cash paid for interest $ -- $ 78 $ --
=============================================================================================================================
Supplemental disclosure of non-cash financing activities:
Common stock and convertible debentures were issued
as part of the reverse acquisition (refer note 1)
</TABLE>
See accompanying notes
22
<PAGE>
HYCOMP, INC.
Notes to Financial Statements - December 31, 1998
(Information as of September 30, 1999 and for the nine months then ended is
unaudited)
1. Summary of Significant Accounting Policies
Description of Business
The principal business of HyComp, Inc. (HyComp) is conducted through its
wholly owned subsidiary eieiHome, which operates an Internet service,
information and e-commerce web site. The web site provides information and
related products and services for homeowners, home buyers, and home
service providers. This Internet service was introduced in two Canadian
test markets, Vancouver and Toronto, in June 1999 with the intent of
expanding to additional metropolitan markets in Canada and the United
States over the next year. Operations, while currently in Canada will be
rolled out into the United States beginning in spring 2000. The business
plan calls for 40 U.S. cities within three years. The Company sells
advertising space to national and local home service providers and
manufacturers of home-related products. For local and national accounts,
the Company also provides Internet web hosting, web page design, and
e-mail services.
Basis of Presentation
On October 14, 1999, a Massachusetts corporation then known as HyComp
acquired all of the issued and outstanding common stock of eieiHome.com
Inc. (eieiHome) (formerly Chargnet Inc.) in exchange for 5,250,000 common
shares of HyComp, a $2,000,000 convertible debenture (note 4), and five
year warrants (note 5). In addition, HyComp issued 1,125,000 common shares
to each of the two founding shareholders of eieiHome in consideration for
the cancellation of their option to repurchase up to 30% of eieiHome in
the event that eieiHome was sold to another party. HyComp have also agreed
to issue 500,000 common shares to a non-related party as a finders fee.
All preferred stock (53 shares) of the Company was redeemed for $5,300.
Although the acquisition of eieiHome occurred on October 14, 1999, the
financial statements presented have been prepared on the basis that the
transaction effectively occurred on September 30, 1999. At the time of the
1999 acquisition, HyComp had no significant assets or operations.
eieiHome is accounted for as the acquiring party and the surviving
accounting entity because the former stockholders of eieiHome received an
amount of voting shares which constitutes an effective controlling
interest in the combined corporation. The shares issued by HyComp pursuant
to the 1999 acquisition have been accounted for as if those shares had
been issued upon the organization of eieiHome. The outstanding capital
stock of HyComp immediately prior to the 1999 acquisition has been
accounted for as shares issued by eieiHome to effect the reverse
acquisition as of September 30, 1999.
Because eieiHome is the accounting survivor, the financial statements
presented for all periods are those of eieiHome. All intercompany accounts
and transactions are eliminated on consolidation. All financial statements
are in the currency of the United States.
At September 30, 1999, additional paid-in capital ($17,501) and
accumulated deficit ($84,487) have been adjusted to effect the difference
in par value of HyComp and eieiHome. Additionally, the $2,000,000
convertible debenture (note 4) has been recorded as a distribution to
shareholders at September 30, 1999.
The outstanding common stock at the time of the 1999 acquisition was held
principally by Officers of the combined corporation.
The financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business. As shown in the
accompanying financial statements, the company has a working capital
deficit of $798,635 and a stockholders' (deficit) of $2,761,583 at
September 30, 1999. As a result, doubt exists about the Company's ability
to continue to fund future operations using its existing resources. The
Company is currently being financed by a related party, but substantial
doubt exists about the related party's ability to fund future operations
using its existing resources.
23
<PAGE>
HYCOMP, INC.
Notes to Financial Statements - December 31, 1998
(Information as of September 30, 1999 and for the nine months then ended is
unaudited)
1. Summary of Significant Accounting Policies - continued
Management plans to begin executing the expanded business plan during the
fiscal year ended December 31, 2000. In order to do so the Company will
have to raise substantial financing to provide the necessary funding for a
media advertising campaign in each new market.
The Board of Directors has authorized a new issue of subordinated
convertible debt to a maximum of $250,000, of which a portion has been
received by the Company prior to December 31, 1999. Management is
confident that the debenture will be fully subscribed for during the month
of January 2000. It is anticipated that the proceeds of this financing
will provide the necessary funding to operate the business for
approximately sixty days, after which additional third party financing
will be required. Management is in discussions with several parties on a
substantial permanent financing, which will provide funding to begin
executing the business plan. Although management expects to be successful
in raising the required funds, there is no assurance that the required
funds will be raised.
Unaudited interim financial information
The accompanying interim financial statements as of September 30, 1999 and
for the periods ended September 30, 1999 and September 30, 1998 are
unaudited but include all adjustments, consisting of only normal recurring
adjustments, which management considers necessary to present fairly, in
all material respects, the financial position and results of operations
and cash flows for the periods ended September 30, 1999 and 1998. Results
of the period ended September 30, 1999 are not necessarily indicative of
results for the entire year.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from these
estimates, and such differences could be material.
Property and equipment
Property and equipment is recorded at cost. Depreciation is computed using
the declining balance method, ranging from 20% to 30% per annum, over the
estimated useful lives of the related assets.
Advertising and Marketing Costs
The Company expenses the costs of advertising and marketing as incurred.
The Company incurred $398,000 of advertising and marketing expenses for
the nine month period ended September 30, 1999 which are included in
selling, general and administrative expenses.
Income taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes. Under SFAS No. 109, deferred tax assets and liabilities are
determined based on temporary differences between the financial statement
and tax bases of assets and liabilities and net operating loss and credit
carryforwards using enacted tax rates in effect for the year in which the
differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized. A provision for income tax expense is recognized for income
taxes payable for the current period, plus the net changes in deferred tax
amounts.
24
<PAGE>
HYCOMP, INC.
Notes to Financial Statements - December 31, 1998
(Information as of September 30, 1999 and for the nine months then ended is
unaudited)
1. Summary of Significant Accounting Policies - continued
Revenue recognition and deferred revenue
The Company earns revenue from corporate advertisers by charging fees for
banner advertisements on the web site in addition to charging fees for
merchants to advertise their home renovations expertise on the web site.
The Company recognizes revenues when the earning activities take place and
the revenue is measurable and collectable. Monies paid in advance are
recorded as deferred revenue and recognized when earned.
Business risk
The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by
companies in new and rapidly evolving markets for internet products and
services. These risks include the failure to develop and extend the
Company's online data base, the rejection of the Company's services by web
consumers and/or advertisers and the inability of the Company to maintain
and increase the levels of traffic on its online services, as well as
other risks and uncertainties. Failure to address these risks successfully
may have a material adverse impact on the Company's operations and
financial position.
Financial Instruments
The fair values of the financial assets and liabilities are indicated by
their carrying value.
Net loss per share
For the purpose of computing earnings per share, the number of shares
outstanding for the period from the beginning of the fiscal period to the
date of the reverse acquisition (note 1) is deemed to be the number of
shares issued by the legal parent (HyComp). Convertible debentures,
warrants and options to purchase stock are included as common stock
equivalents when dilutive.
Foreign currency
The functional currency of the Company is the Canadian dollar.
For reporting purposes, the financial statements are presented in United
States dollars and in accordance with Statement of Financial Accounting
Standard No. 52, "Foreign Currency Translation". The balance sheets are
translated into United States dollars at the exchange rates prevailing at
the balance sheet dates and the statements of operations and cash flows at
the average rates for the relevant periods. Gains and losses resulting
from translation will be included as a component of accumulated other
comprehensive income (loss). To date such transactions have not been
material.
2. Note Payable
Note payable consists of an unsecured demand note to a shareholder in the
amount of $500,000, bearing interest at 8% per annum and repayable in full
upon the completion of a debt or equity financing of not less than
$1,000,000.
3. Due to Related Parties and Related Party Transactions
Due to related parties consists of amounts due to companies under common
control and are non-interest bearing with no specific terms for repayment.
25
<PAGE>
HYCOMP, INC.
Notes to Financial Statements - December 31, 1998
(Information as of September 30, 1999 and for the nine months then ended is
unaudited)
4. Convertible Debenture
The convertible debenture was issued as part of the reverse acquisition
(note 1) and consists of an unsecured debenture to a shareholder in the
amount of $2,000,000, bearing interest at 8% per annum, repayable in
principal payments of $200,000 plus interest in quarterly instalments
commencing October 15, 2000 until the maturity date of April 15, 2003.
This debenture is convertible at the option of the holder at $1 per share
for all or any part of the outstanding part of the principal plus accrued
and unpaid interest. Management has determined that the value attached to
the conversion feature is insignificant and therefore no amount has been
recorded in the accounts.
5. Warrants
Included as consideration for the 1999 reverse acquisition (note 1),
5,000,000 five year warrants to purchase an aggregate of 5,000,000 common
shares, at exercise prices of between $1 per share and $3 per share, were
issued to a shareholder as follows:
Number of Exercise
Exercise date Expiry date shares price
October 14, 1999 October 14, 2004 1,000,000 $ 1.00
October 14, 2000 October 14, 2005 1,000,000 1.50
October 14, 2001 October 14, 2006 1,000,000 2.00
October 14, 2002 October 14, 2007 1,000,000 2.50
October 14, 2003 October 14, 2008 1,000,000 3.00
Management has determined that the value attached to the warrants is
insignificant and therefore no amount has been recorded in the accounts.
6. Capital Structure
Liquidation preference
In the event of liquidation, dissolution or winding up of the Company,
after payment of all outstanding debts, the remaining assets of the
Company available for distribution will be distributed to the holders of
common stock.
Voting rights
The holders of shares of Common Stock are entitled to receive notice of,
attend and vote at all meetings of the shareholders of HyComp. Each share
of common stock carries one vote at such meetings.
Stock options
The Company has established a Compensatory Stock Option Plan (CSO) for
employees, directors and consultants or other advisors. The Company has
issued options to purchase 1,100,000 common shares granted under the CSO
plan to former directors and officers of the Company. The expiration date
for exercising these options has been extended to provide sufficient time
for the former directors and officers to evaluate the effect of the
reverse acquisition (note 1) on the Company. The option price is $.013 per
share and at September 30, 1999, 250,000 options have been exercised,
100,000 options have been cancelled and 750,000 options remain.
26
<PAGE>
7. Income Taxes
Deferred tax assets result from net operating loss carryforwards of
$735,000, as of September 30, 1999 (unaudited) and net operating loss
carryforwards of $115,000 as of December 31, 1998. These operating loss
carryforwards expire in 2006 and 2005, respectively.
The deferred tax assets and valuation allowances are as follows:
<TABLE>
<CAPTION>
Period from
June 25, 1998 Nine months
(inception) to ended
December 31, September 30,
1998 1999
(Unaudited)
<S> <C> <C>
Deferred tax assets resulting from loss carryforwards $ 51,000 $ 326,000
Valuation allowance (51,000) (326,000)
----------------------------------------------------------------------------------------------------
$ -- $ --
====================================================================================================
</TABLE>
The Company has recorded a 100% valuation allowance against the deferred
tax assets due to uncertainties surrounding their realization.
8. Commitments and Contingencies
Commitments
The Company is committed under an operating lease for rental of premises
to May 30, 2002. Future minimum annual payments required over the next
three years are as follows:
2000 $ 49,382
2001 49,382
2002 32,921
As part of the reverse acquisition (note 1), the Company entered into a
management services agreement with Simmonds Capital Limited (SCL), a
controlling shareholder, with the Company paying SCL $15,000 per month for
certain management services.
Legal Contingency
The Company has been advised by MicroTel International, Inc. (MicroTel),
their former parent company, that a claim is being made against MicroTel
for warranty reimbursement for defective products in the amount of
$185,661. MicroTel has agreed to accept responsibility for this claim and
to indemnify the Company should it be found to be liable in any respect.
The Company is advised that the third party and MicroTel are attempting to
negotiate a settlement. Management believes that the outcome of such
actions or proceedings is not expected to have any material adverse effect
on the financial position or results of operations of the Company and
accordingly, no provision has been made in these financial statements.
27
<PAGE>
Part III
Item 1. Index to Exhibits.
The following exhibits are filed as part of this registration statement as
Attachment B hereto:
Exhibit No. 99.1 Proxy Statement, dated February 7, 2000, in respect
of the Special Meeting of Stockholders.
28
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Amendment No. 1 to this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 17, 2000
HYCOMP, INC.
By: /s/ Angelo MacDonald
-------------------------------------
Name: Angelo MacDonald
Title: Director and Chief Executive
Officer
29
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Angelo MacDonald Chief Executive Officer February 17, 2000
- --------------------------- and Director
Angelo MacDonald
/s/ Paul Hickey Chairman and Director February 17, 2000
- ---------------------------
Paul Hickey
/s/ David O'Kell Secretary and Director February 17, 2000
- ---------------------------
David O'Kell
/s/ Larry Fox Director February 17, 2000
- ---------------------------
Larry Fox
/s/ John Simmonds Director February 17, 2000
- ---------------------------
John Simmonds
30
HYCOMP, INC.
67 Wall Street, Suite 2411
New York, New York 10005
SPECIAL MEETING OF STOCKHOLDERS
--YOUR VOTE IS VERY IMPORTANT--
The Board of Directors of HyComp, Inc. proposes to undertake a number
of steps to strengthen the Company's ability to develop the business of its
wholly-owned Canadian subsidiary, eieiHome.com Inc. Several of the steps require
stockholder approval and the Company is holding a special meeting of
stockholders on February 29, 2000 in Boston, Massachusetts to allow you to
consider and vote for the following proposals: (i) changing the Company's
jurisdiction of incorporation from Massachusetts to Delaware by merging the
Company into a to be formed Delaware company also called eieiHome.com Inc.; (ii)
changing the Company's name to eieiHome.com Inc.; (iii) increasing the number of
authorized shares of common stock of the Company; (iv) adopting the 2000 Stock
Option Plan; and (v) re-electing the current directors.
The affirmative vote of stockholders entitled to exercise two thirds of
the voting power of HyComp, Inc. is required to adopt the merger agreement which
will effect the change of the Company's jurisdiction of incorporation from
Massachusetts to Delaware. The affirmative vote of stockholders entitled to
exercise a majority of the voting power of HyComp, Inc. is required to approve
the name change and to increase the Company's authorized capital. The
affirmative vote of the holders of a majority of the shares of common stock
voting on the matter is required to adopt the 2000 Stock Option Plan and the
affirmative vote of a plurality is required for the election of directors.
Your vote is very important. Whether or not you plan to attend the
special meeting of stockholders, please take the time to vote by completing and
mailing the enclosed proxy card to us. If you sign, date and mail your proxy
card without indicating how you want to vote, we will vote your proxy in favor
of each of the motions and in favor of re-electing all five directors. If you
fail to return your card, unless you appear in person at the special meeting of
stockholders, the effect may be that a quorum will not be present at the special
meeting of stockholders and no business will be able to be conducted.
The date, time and place of the special meeting of stockholders are as
follows:
February 29, 2000
11:00 a.m. (local time)
Marriott Boston Copley Square
Boston, Massachusetts 02116
This proxy statement provides you with detailed information about the
proposals and a copy of the merger agreement is attached as Appendix A to the
proxy statement. You may also obtain information about HyComp, Inc. from
documents filed with the United States Securities and Exchange Commission. We
encourage you to read this entire document, including the appendices, completely
and carefully.
After careful consideration, your Board of Directors has determined that
the proposals are fair to and in the best interests of HyComp, Inc. and its
stockholders. Your Board of Directors has approved the Reincorporation Proposal,
the Change of Name Proposal, the Increase in Common Stock Proposal, and the 2000
Stock Option Plan Proposal and it recommends that you vote "FOR" each of the
proposals at the special meeting.
This proxy statement is dated February 7, 2000 and is first being mailed
to stockholders on or about February 8, 2000.
Sincerely,
/s/ Angelo G. Macdonald
ANGELO G. MACDONALD
Chief Executive Officer
<PAGE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the transactions described in this
proxy statement, or passed upon the fairness or merits of the transactions or
the adequacy or accuracy of this proxy statement. Any representation to the
contrary is a criminal offense.
We have not authorized anyone to give any information or make any
representation about the Company or its plans that differs from or adds to the
information in this proxy statement or in our documents that are publicly filed
with the Securities and Exchange Commission. Therefore, if anyone does give you
different or additional information, you should not rely on it.
The information contained in this proxy statement speaks only as of its
date unless the information specifically indicates that another date applies.
As allowed by the rules of the Securities and Exchange Commission, this
proxy statement incorporates important business and financial information about
HyComp, Inc. which is not included in or delivered with the proxy statement.
This information is available to HyComp, Inc. stockholders without charge upon
written request to Angelo G. MacDonald, HyComp, Inc., 67 Wall Street, Suite
2411, New York, New York, 10005. Telephone requests may be directed to Angelo G.
MacDonald at (212) 344-0351. To obtain timely delivery, stockholders must
request this information no later than February 20, 2000.
<PAGE>
HYCOMP, INC.
67 Wall Street, Suite 2411
New York, New York 10005
-----
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 29, 2000
-----
To Our Stockholders:
You are cordially invited to attend the Special Meeting of the
Stockholders of HyComp, Inc., a corporation organized under the laws of
the Commonwealth of Massachusetts, which will be held at 11:00 a.m.,
local time, on February 29, 2000, at the Marriott Boston Copley Square,
Boston, Massachusetts 02116, to consider and vote upon the following:
1. a proposal to change the jurisdiction of incorporation of the Company
from the Commonwealth of Massachusetts to the State of Delaware by
merging the Company with eieiHome.com Inc., a company to be incorporated
in Delaware and to be a wholly-owned subsidiary of the Company and, in
connection with the move, to adopt the Agreement and Plan of Merger
attached to the proxy statement as Appendix A;
2. a proposal to change the Company's name from HyComp, Inc. to eieiHome.com
Inc.;
3. a proposal to increase the number of shares that the Company is
authorized to issue from 20,000,000 shares of common stock, par value
$0.01, to 75,000,000 shares of common stock, par value $0.001;
4. a proposal to adopt the 2000 Stock Option Plan, as described in the proxy
statement;
5. the re-election of the current directors of HyComp, Inc.; and
6. the transaction of any other business that may properly come before the
special meeting or any adjournment or postponement of the special
meeting.
Only stockholders of record at the close of business on February
2, 2000 are entitled to notice of and to vote at the special meeting or
any adjournment or postponement of the special meeting.
All stockholders are cordially invited to attend the special
meeting. To ensure your representation at the special meeting, please
complete and promptly mail your proxy in the return envelope enclosed.
This will not prevent you from voting in person, but will help to secure
a quorum and avoid added solicitation costs. Your proxy may be revoked at
any time before it is voted. A return envelope is included for your
convenience. If your shares are held in "street name" by your broker or
other nominee, only that holder can vote your shares. You should follow
the directions provided by your broker or nominee regarding how to
instruct them to vote your shares.
By Order of the Board of Directors
/s/ ANGELO G. MACDONALD
ANGELO G. MACDONALD
Chief Executive Officer
New York, New York
February 7, 2000
IMPORTANT
Please mark, sign, date and return your proxy promptly, whether or not
you plan to attend the special meeting.
If you use the enclosed envelope addressed to HyComp, Inc.,
no postage is required.
<PAGE>
TABLE OF CONTENTS
Page
----
Questions And Answers About The Meeting........................................1
The Special Meeting............................................................3
Date, Time And Place Of Special Meeting.....................................3
Purpose Of The Special Meeting..............................................3
Recommendation Of The HyComp Board..........................................3
Solicitation Of Proxies.....................................................3
Record Date; Quorum; Voting Rights; Proxies.................................4
Other Information...........................................................5
Information About The Company..................................................5
Security Ownership Of Certain Beneficial Owners And Management..............6
The Proposals
Proposal 1: To Change The State Of Incorporation From Massachusetts
To Delaware......................................................8
Principal Reasons For Changing The State Of Incorporation...................9
The Merger..................................................................9
Closing And Effective Time Of The Merger...................................10
The Surviving Corporation..................................................10
Board Of Directors And Executive Officers Of eieiHome Following The Merger.10
Description Of The Surviving Corporation's Capital Stock...................11
Comparison Of The Rights Of Holders........................................11
Changes In Certificate Of Incorporation And By-Laws........................11
Principal Differences Between Massachusetts And Delaware Corporation Laws..12
Rights Of Dissenting Stockholders..........................................18
Material United States Federal Income Tax Consequences.....................20
Vote Required For Approval Of The Reincorporation Proposal.................21
Proposal 2: To Approve The Change In The Company's Name To eieiHome.com Inc.22
Vote Required For Approval Of The Change Of Name Proposal..................22
Proposal 3: To Increase The Authorized Common Stock Of The Company By
55,000,000 Shares...............................................22
Vote Required For Approval Of The Increase In Common Stock Proposal........23
Proposal 4: Approval Of The 2000 Stock Option Plan And The Authorization Of
3,000,000 Shares For Issuance Under The Plan....................23
Vote Required For Approval Of The 2000 Stock Option Plan Proposal..........25
Proposal 5: Election Of Directors.......................................25
Stockholder Proposals.........................................................26
Other Matters ............................................................26
Where You Can Find More Information...........................................27
APPENDICES
Appendix A--Agreement And Plan Of Merger......................................28
Appendix B-- Form Of Certificate Of Incorporation Of eieiHome.com Inc.........33
Appendix C--Form Of By-Laws Of eieiHome.com Inc...............................35
Appendix D--2000 Stock Option Plan............................................41
Appendix E--Provisions Of The General Laws Of Massachusetts Relating To
The Rights Of Dissenting Stockholders.............................47
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q: Why am I receiving these materials?
A: The Board of Directors of HyComp, Inc. (which we refer to as either
"HyComp" or the "Company") is providing these proxy materials to give you
information to determine how to vote at a special meeting of HyComp
stockholders. The special meeting will take place on February 29, 2000 at 11:00
a.m. (local time) at the Marriott Boston Copley Square, Boston, Massachusetts
02116.
Q: What will be voted on at the special meeting?
A: There will be a vote on each of the proposals discussed in this proxy
statement, which we refer to as the Reincorporation Proposal, the Change of Name
Proposal, the Increase in Common Stock Proposal, the 2000 Stock Option Plan
Proposal and the re-election of directors.
Q: What is the effect of voting in favor of the Reincorporation Proposal?
A: If the Reincorporation Proposal is approved by the stockholders, then
the stockholders will effectively have approved each of the remaining proposals
as well. The Reincorporation Proposal includes the adoption of a merger
agreement, which changes the state of incorporation of HyComp from the
Commonwealth of Massachusetts to the State of Delaware by merging HyComp with
its to be formed wholly-owned subsidiary eieiHome.com Inc., a Delaware
corporation (which we refer to as "eieiHome" or the "surviving corporation").
The surviving corporation will be a Delaware corporation, its name will be
eieiHome.com Inc., it will have 75,000,000 authorized shares of common stock
(although its par value will be $0.001 rather than $0.01), it will have adopted
the 2000 Stock Option Plan in the form proposed in this proxy statement, and its
directors will be the same five directors proposed for election as directors of
HyComp in this proxy statement (i.e. making the remaining proposals, the Change
of Name Proposal, the Increase in Common Stock Proposal, the 2000 Stock Option
Plan Proposal, and the re-election of directors redundant if the Reincorporation
Proposal is approved by the stockholders).
Q: Why do I need to vote on each of the Proposals separately?
A: While the Company believes that the Reincorporation Proposal is in the
best interests of stockholders, it does require the vote of a greater number of
stockholders than the other proposals. As the Company also believes that it is
important to go ahead with the remaining proposals even if the Reincorporation
Proposal is not approved, you are being asked to vote on each of the other
proposals separately in case the Reincorporation Proposal is not approved.
Q: Will I still hold shares of HyComp common stock after the merger?
A: No. In the reincorporation merger, each share of HyComp common stock,
par value $0.01 (which we refer to as "HyComp common stock") will become one
share of eieiHome common stock, par value $0.001 (which we refer to as "eieiHome
common stock") except for shares held by stockholders who seek dissenter's
rights under Massachusetts law.
Q: Why will the new eieiHome capital stock have a different par value?
A: The change in par value of the HyComp capital stock does not have any
material effect on your rights as a stockholder or on the value of your shares
of HyComp common stock. The purpose and effect of the change in par value is to
minimize the annual franchise tax payable by the Company.
Q: Will any other matters be voted on at the special meeting?
A: Any other business that properly comes before the special meeting or
any adjournment or postponement of the special meeting may also be voted on.
However, we are currently not aware of any other business.
<PAGE>
Q: Who can vote at the special meeting?
A: All stockholders of record as of the close of business on February 2,
2000.
Q: What should I do now?
A: After carefully reading and considering the information contained in
this document, please vote. You are invited to attend the special meeting.
However, you should fill out and mail your signed and dated proxy card in the
enclosed envelope as soon as possible, so that your shares will be represented
at the special meeting in case you are unable to attend.
Q: What does it mean if I receive more than one proxy or voting
instruction card?
A: It means your shares are registered differently or are held in more
than one account. Please provide voting instructions for each proxy card that
you receive in the space provided for that on each proxy card.
Q: How can I vote shares held in my broker's name?
A: If your broker holds your shares in its name (or in what is commonly
called "street name"), then you should give your broker instructions on how to
vote. You should follow the directions provided by your broker regarding how to
instruct your broker to vote your shares. Without instructions, your broker is
not entitled to vote your shares and your shares will not be voted.
Q: Can I change my vote?
A: You may change your proxy instructions at any time prior to the vote
at the special meeting. For shares held directly in your name, you may
accomplish this by completing a new proxy or by attending the special meeting
and voting in person. Attendance at the special meeting alone will not cause
your previously granted proxy to be revoked unless you vote in person. For
shares held in "street name," you may accomplish this by submitting new voting
instructions to your broker or nominee.
Q: Do I need to send in my stock certificates with my proxy?
A: No. Do not send in your HyComp stock certificates now. Your old stock
certificate will remain valid and will represent an equal number of shares of
eieiHome common stock. If you wish to exchange your HyComp stock certificate for
a new eieiHome stock certificate, then you should contact eieiHome after the
merger is completed to receive written instructions on how to exchange.
Q: What vote is required to approve the proposals?
A: The affirmative vote of stockholders entitled to exercise two thirds
of the voting power is required to approve the Reincorporation Proposal. The
affirmative vote of stockholders entitled to exercise a majority of the voting
power is required to approve the Change of Name Proposal and the Increase in
Common Stock Proposal. The affirmative vote of the holders of a majority of the
shares of common stock voting on the matter is required to adopt the 2000 Stock
Option Plan Proposal and a plurality is required for the election of directors.
Q: Will I have dissenter's rights?
A: Yes. You will be entitled to dissenter's rights under Massachusetts
law as a result of the proposed reorganization merger. See the discussion at
page 18 of this proxy statement for further details.
Q: Who can help answer any questions I have?
A: If you have any questions about the mergers, please contact Angelo G.
MacDonald, HyComp, Inc., 67 Wall Street, Suite 2411, New York, New York 10005.
<PAGE>
THE SPECIAL MEETING
Date, Time and Place of Special Meeting
The special meeting of the HyComp stockholders will be held on February
29, 2000 at 11:00 a.m. local time at the Marriott Boston Copley Square, Boston,
Massachusetts 02116.
Purpose of the Special Meeting
At the special meeting, HyComp stockholders will consider and vote
upon:
1. a proposal to change the jurisdiction of incorporation of the
Company from the Commonwealth of Massachusetts to the State of
Delaware by merging the Company with eieiHome.com Inc., a company
to be incorporated in Delaware and to be a wholly-owned subsidiary
of the Company and, in connection with the move, to adopt the
Agreement and Plan of Merger attached as Appendix A to this proxy
statement and to approve the merger and the transactions
contemplated by the Merger Agreement (we refer to this proposal as
the "Reincorporation Proposal");
2. a proposal to change the Company's name from HyComp, Inc. to
eieiHome.com Inc. (we refer to this proposal as the "Change of
Name Proposal");
3. a proposal to increase the number of shares of common stock that
the Company is authorized to issue from 20,000,000 to 75,000,000
(we refer to this proposal as the "Increase in Common Stock
Proposal");
4. a proposal to adopt the 2000 Stock Option Plan, as described in
the proxy statement and to reserve 3,000,000 shares of HyComp
common stock for issuance under the plan (we refer to this
proposal as the "2000 Stock Option Plan Proposal");
5. the re-election of the current directors of HyComp, Inc. (we refer
to this proposal as the "re-election of directors"); and
6. the transaction of any other business that may properly come
before the special meeting or any adjournment or postponement of
the special meeting.
Recommendation of the HyComp Board
Your Board of Directors has approved the Reincorporation Proposal, the
Change of Name Proposal, the Increase in Common Stock Proposal and the 2000
Stock Option Plan Proposal, believes that each is fair and in the best interests
of HyComp and the HyComp stockholders, and recommends that you vote "FOR" each
of the proposals. For more information, see the discussion concerning
"Recommendations to Stockholders" with respect to each of the proposals.
Solicitation of Proxies
The solicitation of proxies in the form enclosed is made on behalf of
the Board of Directors. The expenses of the solicitation of proxies, including
preparing, handling, printing and mailing the proxy soliciting material, will be
borne by the Company. Solicitation will be made by use of the mail and, if
necessary, by electronic telecommunications or in person. In soliciting proxies,
the Company's management may use the services of its directors, officers and
employees, who will not receive any additional compensation, but who will be
reimbursed for their out-of-pocket expenses. The Company will reimburse banks,
brokers, nominees, custodians and fiduciaries for their expenses in forwarding
copies of the proxy soliciting material to the beneficial owners of the stock
held by these persons and in requesting authority for the execution of proxies.
-3-
<PAGE>
Record Date; Quorum; Voting Rights; Proxies
Record Date
Only stockholders of record of HyComp common stock at the close of
business on the record date of February 2, 2000 are entitled to notice of and to
vote at the special meeting of stockholders or any adjournment or postponement
of the special meeting.
As of the record date, there were 18,198,770 issued and outstanding
shares of HyComp common stock held by approximately 331 holders of record, each
of which is entitled to one vote per share on any matter that properly comes
before the special meeting.
Quorum
The presence in person or by properly executed proxy of holders of a
majority of the issued and outstanding shares of HyComp common stock entitled to
vote is necessary to constitute a quorum at the special meeting.
Voting Rights
Assuming a quorum is present in person or represented by proxy at the
special meeting, the General Laws of Massachusetts and the Articles of
Incorporation of HyComp require the affirmative vote of stockholders entitled to
exercise two thirds of the voting power of HyComp to approve the Reincorporation
Proposal. The affirmative vote of stockholders entitled to exercise a majority
of the voting power of HyComp is required to approve the Change of Name Proposal
and the Increase in Common Stock Proposal. The affirmative vote of the holders
of a majority of the shares of HyComp common stock voting on the matter is
required to approve the 2000 Stock Option Plan Proposal and a plurality is
required for the election of directors.
Proxies
If you are a HyComp stockholder, you may use the accompanying proxy if
you are unable to attend the special meeting in person or wish to have your
shares voted by proxy even if you do attend the special meeting. If your broker
has been instructed to vote your shares, you must follow directions received
from your broker.
All shares of HyComp common stock represented by properly executed
proxies will, unless these proxies have been previously revoked, be voted in
accordance with the instructions indicated in the proxies. If no instructions
are indicated on the proxies, these shares of HyComp common stock will be voted
in favor of the Reincorporation Proposal, the Change of Name Proposal, the
Increase in Common Stock Proposal and the 2000 Stock Option Plan Proposal and
for the re-election of each of the Company's five current directors.
HyComp does not know of any matters that are to come before the special
meeting other than the proposals set forth in this proxy. If any other matter is
properly presented for action at the special meeting, including a motion to
adjourn the meeting to another time or place, the persons named in the enclosed
form of proxy will have the discretion to vote on that matter in accordance with
their best judgment, unless authorization is withheld by notation on the proxy.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by written notice of revocation to the secretary of HyComp, by signing
and returning a later dated proxy, or by voting in person at the special
meeting. However, mere attendance at the special meeting will not have the
effect of revoking the proxy.
Votes cast by proxy or in person at the special meeting will be
tabulated by the election inspectors appointed for the meeting, who will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a vote.
Accordingly, since the affirmative vote of stockholders entitled to exercise two
thirds of the voting power of HyComp is required, an abstention will constitute
a vote against the Reincorporation Proposal. Similarly, since the affirmative
vote of stockholders entitled to exercise a majority of the voting power of
HyComp is required to
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approve the Change of Name Proposal and the Increase in Common Stock Proposal,
an abstention will constitute a vote against these proposals. If a broker
indicates on the proxy that it does not have authority to vote some shares on a
particular matter, those shares will be counted for purposes of determining the
presence of a quorum but will not be entitled to vote on that matter and will
constitute a vote against the relevant proposal. Without instruction from the
beneficial owner, brokers will not have authority to vote shares held in "street
name" at the special meeting.
Because approval of the Reincorporation Proposal requires the affirmative
vote of the holders of two thirds of outstanding shares of HyComp common stock,
abstentions and broker non-votes will have the same effect as negative votes.
Accordingly, the HyComp Board of Directors urges HyComp stockholders to
complete, date and sign the accompanying proxy and return it promptly in the
enclosed, postage-paid envelope.
Other Information
On the record date, the directors and officers of HyComp had voting
power regarding a total of 5,151,000 shares of HyComp common stock or
approximately 27.9% of the shares of HyComp common stock then outstanding.
HyComp currently expects that its directors and officers will vote all of these
shares in favor of each of the proposals.
HyComp also currently expects that its largest stockholder, Simmonds
Capital Limited, will vote all of the shares of HyComp common stock owned by
them in favor of each of the proposals. As of the record date, Simmonds Capital
Limited owned and had the right to vote a total of 5,401,700 shares of HyComp
common stock, or approximately 29.7% of the total shares outstanding on the
record date.
The matters to be considered at the special meeting are of great
importance to the HyComp stockholders. Accordingly, HyComp stockholders are
urged to read completely and carefully consider the information presented in
this proxy statement and the attached appendices and to complete, sign, date and
promptly return the enclosed proxy in the enclosed postage pre-paid return
envelope.
INFORMATION ABOUT THE COMPANY
The principal business of HyComp, Inc. (referred to as "HyComp" or the
"Company") is conducted through its wholly owned Canadian subsidiary,
eieiHome.com Inc. (referred to as "eieiHome (Canada)"). eieiHome (Canada)
operates an Internet service, information and e-commerce web site, providing
information and related products and services for homeowners, home buyers, and
home service providers. This Internet service was introduced in two Canadian
test markets, Vancouver and Toronto, in June 1999 with the intent of expanding
to additional metropolitan markets in Canada and the United States over the next
year. The Company sells advertising space to national and local home service
providers and manufacturers of home-related products. For local and national
accounts, the Company also provides Internet web hosting, web page design, and
e-mail services.
HyComp was incorporated in the Commonwealth of Massachusetts in 1969.
Through March 31, 1999, it was a designer, manufacturer and distributor of thin
film hybrid circuits, thin film resistor networks and various thin film
components mainly used for military purposes. In March 1999, HyComp sold all of
its assets, excluding cash and receivables. The buyer assumed all liabilities
other than commercial and inter-company debt.
On October 14, 1999 HyComp acquired all of the issued and outstanding
common stock of eieiHome (Canada) from Simmonds Capital Limited (referred to as
"SCL"). eieiHome (Canada) was incorporated in June 1998 in the province of
Ontario, Canada. It operated as Chargnet until June 20,1999 when it was acquired
by SCL and its name was changed to eieiHome.com Inc. eieiHome (Canada) is in its
first stage of development and operates an Internet web site for consumers
looking for home-related information, products and services.
See "Where You Can Find More Information" for additional information on
HyComp which is incorporated by reference into this proxy statement.
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Other Information Regarding Directors and Executive Officers.
Information relating to executive compensation, various benefit plans, including
HyComp's stock option plan and stock incentive plan, certain relationships and
related transactions and other related matters as to HyComp is contained in
HyComp's Report on Form 10-SB filed with the SEC on January 19, 2000, which is
incorporated in this proxy statement by reference.
Security Ownership of Certain Beneficial Owners and Management
The following tables set forth information regarding the beneficial
ownership of HyComp, Inc.'s common stock on January 12, 2000 by each beneficial
owner of more than five percent of the common stock, each director and each
named executive officer individually and all directors and executive officers as
a group. Unless otherwise indicated, all shares are owned directly and the
indicated owner has sole voting and dispositive power regarding these shares.
(a) As of January 12, 2000 there were 18,198,770 shares of HyComp
common stock issued and outstanding. To the knowledge of the Company, the
following persons are the beneficial owners of more than five percent of the
Company's voting securities:
Title of Class Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Company common stock, Simmonds Capital Limited 8,401,700(1) 39.6%(2)
par value $0.01 580 Granite Court
Pickering, ON L1W-3Z4
CANADA
Company common stock, Paul Dutton 1,375,000 7.6%
par value $0.01 590 King St., Suite 403
Toronto, ON M5V 1M3
CANADA
Company common stock, Max Hahne 1,375,000 7.6%
par value $0.01 590 King St., Suite 403
Toronto, ON M5V 1M3
CANADA
(1) This number includes 5,401,700 shares of HyComp
common stock, the right to receive 2,000,000 shares
of HyComp common stock upon conversion of a
convertible debenture, and the exercise of warrants
to purchase 1,000,000 shares of HyComp common stock,
not all of which may be converted or exercised, as
the case may be, until after the stockholders of the
Company have approved an increase in the Company's
authorized capital stock. It is anticipated that a
meeting of stockholders will be held to consider this
matter on or before March 1, 2000. See "Certain
Relationships and Related Transactions".
(2) The beneficial ownership percent is based upon a
total of 21,198,770 shares of HyComp common stock
assuming the conversion of the debenture and the
exercise of the warrants.
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(b) As of January 12, 2000, Directors and Officers of the Company had
the following beneficial interest in the shares of HyComp common stock:
Title of Class Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Company common stock, Angelo G. MacDonald 1,000 0.01%
par value $0.01 Director and Chief Executive
Officer
124 West 60th Suite 42H
New York, NY 10023
Company common stock, David C. O'Kell 2.7%
par value $0.01 Director and Secretary 500,000
185 Glencairn Ave.
Toronto, ON M4R 1N3
CANADA
Company common stock, Paul K. Hickey 250,000(1) 1.4%
par value $0.01 Director and Chairman
888 7th Avenue
New York, NY 10106
Company common stock, Lawrence Fox 2.7%
par value $0.01 Director 500,000
212 Crystal Court
Bluebell, PA 19422
Company common stock, John G. Simmonds(2) 3.6%
par value $0.01 Director 650,000
13980 Jane St.
King City, ON L7B 1A3
CANADA
Total Directors and Officers 5,151,000 27.9%
(8_persons)
(1) This number includes options to purchase 250,000
shares of HyComp common stock at $0.013 per share.
(2) This number includes shares of HyComp common stock
held by Deborah Simmonds and shares of HyComp common
stock held in trust for Jack Simmonds.
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THE PROPOSALS
The Company's Board of Directors has unanimously approved all of the
Proposals, including the Reincorporation Proposal, the Change of Name Proposal
and the Increase in Common Stock Proposal, which, although related, will be
voted upon separately by stockholders. The first matter is the change of the
Company's state of incorporation to Delaware from Massachusetts, which will be
effected by merging the Company with and into a wholly-owned Delaware subsidiary
of the Company which would be the surviving corporation (we refer to this as the
"Merger"). The second matter is the change of the Company's name to eieiHome.com
Inc., which would be effected by retaining the name of the Delaware subsidiary
as the name of the surviving corporation or, if the Reincorporation Proposal is
not approved, by changing the name of the Company. The third matter is the
authorization of an additional 55,000,000 shares of HyComp common stock which
would be effected by retaining the capitalization of the Delaware subsidiary as
the capitalization of the surviving corporation, or by changing the
capitalization of the Company if the Reincorporation Proposal is not approved.
If sufficient stockholders approve the Reincorporation Proposal, the
Change of Name Proposal, the Increase in Preferred Stock Proposal and the
Increase in Common Stock Proposal, the Board of Directors will consummate the
Merger and adopt the Certificate of Incorporation of the Delaware subsidiary
attached as Appendix B to this proxy statement as the Certificate of
Incorporation of the surviving corporation, thereby reincorporating the Company
in Delaware, changing its name to eieiHome.com Inc. and authorizing the
additional shares of HyComp common stock. If the stockholders approve the Change
of Name Proposal and/or the Increase in Common Stock Proposal, but fail to
approve the Reincorporation Proposal, the Board of Directors will consummate the
change in the Company's name and/or capitalization by amending its Massachusetts
Articles of Organization. If sufficient stockholders approve the Reincorporation
Proposal, but fail to approve the Change of Name Proposal and/or the Increase in
Common Stock Proposal, the Board of Directors will cause the Delaware
subsidiary's Certificate of Incorporation to be amended prior to the Merger so
that the name of the surviving corporation will be HyComp, Inc. and/or its
capitalization will be that of the Company. Even if sufficient stockholders
approve the Reincorporation Proposal, the Board of Directors has reserved the
right to terminate and abandon the Merger as described below.
If the stockholders approve the 2000 Stock Option Plan Proposal, the
Board of Directors will effect such Proposal by adopting the 2000 Stock Option
Plan and reserving 3,000,000 shares of common stock of the Company for issuance
pursuant to the Plan.
PROPOSAL 1: TO CHANGE THE STATE OF INCORPORATION
FROM MASSACHUSETTS TO DELAWARE
The proposed reincorporation will be effected by the merger of the
Company into a wholly-owned Delaware subsidiary of the Company organized for
such purpose. The Delaware corporation will be the surviving corporation in the
Merger. The Reincorporation Proposal will effect a change in the legal domicile
of the Company and other changes of a legal nature, the material aspects of
which are described in this Proxy Statement. Reincorporation will NOT result in
any significant change in the Company's business, management, fiscal year,
location of principal executive offices, telephone number, net worth, assets or
liabilities and the surviving corporation will assume all of the obligations of
the Company. The directors and officers of the surviving corporation will be the
same as those of the Company.
The form of Agreement and Plan of Merger (referred to as the "Merger
Agreement") attached as Appendix A to this proxy statement providing for the
Merger has been unanimously approved by the Company's Board of Directors. You
should note that the Merger Agreement allows the Board of Directors to terminate
the Merger Agreement and abandon the Merger if for any reason the Board of
Directors determines that it is inadvisable to proceed with the Merger. The
reasons may include, but are not limited to, the number of shares for which
appraisal rights have been exercised and the cost to the Company of the
exercise. See the discussion of "Rights of Dissenting Stockholders" below.
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Principal Reasons for Changing the State of Incorporation
For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many corporations
initially choose Delaware as their domicile and many others have reincorporated
in Delaware in a manner similar to that proposed by the Company. Because of
Delaware's long-standing policy of encouraging incorporation in that state, and
its consequent preeminence as the state of incorporation for many major
corporations, the Delaware courts have developed a considerable expertise in
dealing with corporate issues and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations. It is anticipated that Delaware corporate law will
continue to be interpreted and explained in a number of significant court
decisions which may provide greater predictability with respect to the Company's
corporate legal affairs. Certain aspects of Delaware corporate law have,
however, been publicly criticized on the ground that they do not afford minority
stockholders the same substantive rights and protection as are available in a
number of other states. In addition, franchise taxes in Delaware will be greater
than in Massachusetts.
For a discussion of certain differences in stockholders' rights and the
powers of management under the Delaware General Corporation Law (referred to as
the "Delaware GCL") and the General Laws of Massachusetts (the "Massachusetts
GCL") see the discussions concerning "Principal Differences Between
Massachusetts and Delaware Corporation Laws" and "Changes in Certificate of
Incorporation and By-Laws" below.
In the event the Reincorporation Proposal is not approved, the Company
will remain a Massachusetts corporation.
The Merger
The discussion of the Merger and the Merger Agreement in this proxy
statement is a summary and may not contain all the information that may be
important to you. You should read carefully the entire copy of the merger
agreement, which, with the exception of schedules and exhibits, is attached as
Appendix A to this proxy statement, before you decide how to vote.
The Certificate of Incorporation of the surviving corporation is
attached to this proxy statement as Appendix B and provides for the
authorization of 75,002,000 shares of capital stock of which (i) 75,000,000
shares are common stock, par value $0.001 per share and (ii) 2,000 shares are
preferred stock, par value $0.001 per share. Pursuant to the Merger Agreement,
each outstanding share of HyComp common stock will be converted into a fully
paid and non-assessable share of common stock of the surviving corporation.
Outstanding options, warrants and debentures to purchase or convert into any
number of shares of HyComp common stock will be converted into options, warrants
or debentures to purchase or convert into the same number of shares of the
surviving corporation's common stock at the same exercise price or conversion
rate. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR STOCK CERTIFICATES OF THE SURVIVING CORPORATION. OUTSTANDING
CERTIFICATES FOR SHARES OF COMMON STOCK OF THE COMPANY SHOULD NOT BE DESTROYED
OR SENT TO THE COMPANY.
The price per share of HyComp common stock was quoted on the NASD's OTC
Bulletin Board under the symbol "HYCP" prior to December 15, 1999 when the new
OTC Bulletin Board Eligibility Rule went into effect. This rule eliminates
listing of companies that were not previously subject to the reporting
requirements of the United States Securities and Exchange Commission (referred
to as the "SEC"). On January 19, 2000, HyComp filed a Form 10-SB registration
statement with the SEC, which will be amended following the Merger. The
Company's Board of Directors currently anticipates that the common stock of the
surviving corporation will be quoted on the NASD OTC Bulletin Board as soon as
practicable once the registration statement has been declared "effective" by the
SEC. Until the registration statement is effective, the Company's Board of
Directors anticipates that trading in shares of the common stock of the
surviving corporation will be quoted in the "pink sheets" published by the
National Quotation Bureau, Inc.
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Delivery of certificates for HyComp common stock issued prior to the
effectiveness of the Merger will constitute "good delivery" of shares in
transactions subsequent to the Merger. Certificates representing shares of the
surviving corporation's common stock will be issued with respect to transfers
consummated after the Merger. New certificates will also be issued upon the
request of any stockholder, subject to normal requirements as to proper
endorsement, signature guarantee, if required, and payment of applicable taxes.
AT THE EFFECTIVE TIME OF THE MERGER, THE COMPANY WILL BE GOVERNED BY
DELAWARE LAW, BY A NEW CERTIFICATE OF INCORPORATION AND NEW BY-LAWS, EACH OF
WHICH WILL RESULT IN CHANGES IN THE RIGHTS OF THE STOCKHOLDERS.
For additional information and details relating to these and other
changes, please refer to the Certificate of Incorporation and By-Laws for the
surviving corporation, which are attached to this proxy statement as Appendices
B and C respectively, and to the discussions in this Proxy Statement under
"Principal Reasons for Changing the State of Incorporation," "Principal
Differences Between Massachusetts and Delaware Corporation Laws" and "Changes in
Certificate of Incorporation and By-Laws." The discussion in this proxy
statement of the provisions of the surviving corporation's Certificate of
Incorporation and By-Laws are subject to, and qualified in their entirety by
reference to, all the provisions of the Certificate of Incorporation and
By-Laws, which are attached to this proxy statement as Appendices B and C,
respectively. Copies of the Articles of Organization and By-Laws of HyComp are
available for inspection at the principal office of the Company and copies will
be sent to stockholders upon request.
Closing and Effective Time of the Merger
We expect that the closing of the Merger will take place as soon as
practicable after the approval of HyComp stockholders at the special meeting
and, at the latest, in the first calendar quarter of 2000 or early in the second
calendar quarter of 2000. The Merger will become effective upon the filing of a
certificate of merger with the Secretary of State of the State of Massachusetts
or a later date as is specified in the certificate of merger. The filing of the
certificate of merger will occur as soon as practicable after the closing of the
Merger.
The Surviving Corporation
Board of Directors and Executive Officers of eieiHome Following the Merger
At the effective time of the Merger, the five current directors, and
the executive officers of HyComp will resign and will be re-appointed to serve
as the directors and executive officers of eieiHome. We list below the name, age
and position of each of the persons whom we expect will serve as a director or
executive officer of eieiHome following the merger:
Name Age Position
- ---- --- --------
Paul K. Hickey 67 Director and Chairman of the Board
Angelo G. MacDonald 41 Director and Chief Executive Officer
David C. O'Kell 48 Director and Secretary
Lawrence Fox 34 Director
John G. Simmonds 49 Director
Gary Hokkanen 43 Chief Financial Officer
For information about the experience of each of the proposed directors, see the
descriptions contained in the discussion of "Election of Directors" in this
proxy statement. For information about the experience of Gary Hokkanen, see the
information contained in the Form 10-SB filed by the Company with the SEC on
January 19,2000, a copy of which will be provided by the Company upon request
(see also "Where You Can Get More Information"). For information about the
security ownership of the proposed directors and executive officers, see the
section on "Information about the Company - Security Ownership of Certain
Beneficial Owners and Management."
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Description of the Surviving Corporation's Capital Stock
Common Stock
The surviving corporation's certificate of incorporation will authorize
it to issue up to 75,000,000 shares of common stock, par value $.001 per share.
Voting Rights
Holders of the surviving corporation common stock will be entitled to
one vote per share on all matters submitted to a vote of the stockholders
generally.
Dividend Rights
Dividends may be declared and paid on the common stock at the time and
in the amount that the Board of Directors of the surviving corporation in its
discretion will determine, subject to applicable law and the rights, if any, of
the holders of any outstanding series of preferred stock or any class or series
of stock having a preference over or the right to participate with the common
stock regarding the payment of dividends.
Liquidation Rights
Upon the dissolution, liquidation or winding up of the surviving
corporation, the holders of common stock will be entitled to receive the assets
of the corporation available for distribution to its stockholders ratably in
proportion to the number of shares held by them, subject to the rights of
holders of preferred stock or other securities having a preference over the
rights of holders of common stock regarding the dissolution, liquidation or
winding up of the surviving corporation.
Preferred Stock
The surviving corporation's Certificate of Incorporation will authorize
it to issue up to 2,000 shares of preferred stock, par value $.001 per share,
none of which will be issued and outstanding following the Merger.
Comparison of the Rights of Holders
As a consequence of the closing of the Merger, stockholders of HyComp,
a Massachusetts corporation, will become stockholders of eieiHome, a Delaware
corporation. As a result, the rights of a HyComp stockholder will change in the
following two principal ways:
o First, rights will be governed by the Certificate of
Incorporation and By-Laws of eieiHome instead of the amended
articles of incorporation and By-Laws of HyComp.
o Second, rights and the documents described above will be
governed by the DGCL, which governs Delaware corporations,
instead of the General Laws of Massachusetts, which governs
Massachusetts corporations.
The following comparison is a summary of the material differences
between the rights of HyComp stockholders and eieiHome stockholders. Because the
summary is not a complete statement of these rights, we urge you to read the
Certificate of Incorporation and By-Laws of eieiHome, which are attached to this
proxy statement as Appendices B and C, and the relevant provisions of the DGCL.
Changes in Certificate of Incorporation and By-Laws
The Certificate of Incorporation of the surviving corporation differs
from the Articles of Organization of the Company primarily as a result of
differences between the Delaware GCL and the Massachusetts GCL. The By-
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Laws of the two corporations likewise differ primarily as a result of
differences between the Delaware GCL and the Massachusetts GCL and the
Certificate of Incorporation of the surviving corporation and the Articles of
Organization of the Company. Set forth below is a discussion of certain
significant changes set forth in the Certificate of Incorporation of the
surviving corporation.
Change of Company Purposes. The purpose for which the Company was
formed as set forth in its Articles of Organization initially adopted in 1969
included purposes primarily related to the design, manufacture and distribution
of thin film hybrid circuits, thin film resistor networks and various thin film
components mainly used for military purposes. In March 1999, HyComp sold all of
its assets, excluding cash and receivables and discontinued all previous
operations. The Company is now engaged primarily in the business of its
wholly-owned Canadian subsidiary, which operates an Internet service,
information and e-commerce web site, providing information and related products
and services for homeowners, home buyers, and home service providers. Moreover,
the Company may elect to pursue other activities in the future. The surviving
corporation's Certificate of Incorporation states broadly that the Company's
purpose is to engage in any lawful activity, which is the customary purpose
clause for modern corporations.
Changes in Number and Par Value of Authorized Capital Stock. The
surviving corporation's Certificate of Incorporation authorizes the Company to
issue the same number of shares of Preferred Stock as does the Certificate of
Incorporation of the Company, but increases the number of authorized shares of
common stock from 20,000,000 to 75,000,000. The reasons for this change are
discussed in detail below as Proposal #2, the Increase in Common Stock Proposal.
The surviving corporation's Certificate of Incorporation also sets the par value
of both the common stock and the preferred stock at par value $0.001 per share
instead of the $0.01 par value per share of common stock and $100 par value per
share of preferred stock set forth in the Company's Articles of Organization.
The purpose and effect of this change is to minimize the annual franchise tax
payable by the Company.
Indemnification and Elimination of Liability. The Delaware Certificate
and the By-Laws of the Delaware Company contain indemnification provisions
requiring indemnification and advancement of expenses to directors and officers
and eliminating the personal liability of directors to the fullest extent
permitted by the Delaware GCL. The provision is parallel to the provision of the
Company's Articles of Organization eliminating the liability of directors of the
Company to the extent permitted by the Massachusetts GCL.
Principal Differences Between Massachusetts and Delaware Corporation Laws
The Merger will effect several changes in the rights of stockholders as
a result of differences between the Massachusetts GCL and the Delaware GCL. The
provisions of the Massachusetts GCL and Delaware GCL differ in many respects.
Summarized below are certain of the principal differences which could materially
affect the rights of stockholders. The following discussion summarizes the more
important differences in the corporation laws of Delaware and Massachusetts and
does not purport to be an exhaustive discussion of all of the differences. Such
differences can only be determined in full by reference to the Massachusetts
General Laws and to the Delaware General Corporation Law and to the case law
interpreting these statutes. In addition, both Massachusetts and Delaware law
provide that many of the statutory provisions, as they affect various rights of
holders of shares, may be modified by provisions in the charter or By-Laws of
the corporation.
Exculpation of Directors. Under Massachusetts law, a corporation's
Articles of Organization may limit the personal liability of its directors for
breaches of their fiduciary duties. This limitation is generally unavailable for
acts or omissions by a director that (i) were in violation of such director's
duty of loyalty, (ii) were in bad faith or that involved intentional misconduct
or a knowing violation of law or (iii) involved a financial profit or other
advantage to which the director was not legally entitled. Massachusetts law also
prohibits the elimination or limitation of director liability for unauthorized
loans to insiders or distributions that occur when a corporation is, or that
render a corporation, insolvent.
Delaware law permits a corporation to provide in its Certificate of
Incorporation that a director shall not be personally liable for monetary
damages stemming from breaches of fiduciary duties. Under Delaware law, a
charter provision limiting directorial liability cannot relieve a director of
personal liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
that involve
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intentional misconduct or a knowing violation of law, (iii) unlawful payment of
dividends or unlawful repurchases or redemptions of stock or (iv) any
transactions from which the director derived an improper personal benefit.
The Certificate of Incorporation of the surviving corporation provide
for limitations on director's liability to the fullest extent permitted by
Delaware law.
Indemnification of Directors, Officers and Others. Delaware law
generally permits indemnification of officers, directors, employees and agents
of a Delaware corporation against expenses (including attorneys' fees) incurred
in connection with a derivative action and against expenses (including
attorney's fees), judgments, fines and amounts paid in settlements incurred in
connection with a third party action, provided there is a determination by a
majority vote of disinterested directors or by a committee of such directors
designated by a majority vote of such directors, even though less than a quorum,
or, if there are no such directors, or if such directors so direct, by
independent legal counsel or by the stockholders that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be
in, or not opposed to, the best interests of the corporation (and, with respect
to any third party criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful). However, when the individual being
indemnified has successfully defended the action on the merits or otherwise,
Delaware law requires indemnification. In addition, without court approval no
indemnification may be made in respect of any derivative action in which such
person is adjudged liable to the corporation. Finally, Delaware law, unlike
Massachusetts law, does not permit a corporation to indemnify persons against
judgments in actions brought by or in the right of the corporation (although it
does permit indemnification in such situations if approved by the Delaware Court
of Chancery and for expenses of such actions).
Massachusetts law similarly permits indemnification of expenses in a
derivative or third party action, except that no indemnification shall be
provided for any person with respect to any matter as to which he shall have
been adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the corporation or, to the extent that
such matter relates to service with respect to any employee benefit plan, in the
best interests of the participants or beneficiaries of such benefit plan. Such
indemnification is permitted to the extent authorized in the corporation's
Articles of Organization or its By-Laws or as set forth in a stockholders' vote.
Expenses incurred by an officer or director in defending an action may
be paid in advance under Delaware and Massachusetts law if such director or
officer undertakes to repay such amounts should it be determined ultimately that
he is not entitled to indemnification. Delaware law also permits the advancement
of expenses to employees and agents of the corporation without such an
undertaking to repay such amounts. In addition, both Delaware and Massachusetts
law permit a corporation to purchase indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
The SEC has expressed its position that the indemnification of
directors, officers and controlling persons against liabilities arising under
the Securities Act, is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
The indemnification and limitation of liability provisions of
Massachusetts law, and not Delaware law, will apply to actions of the Company's
directors, officers, employees and agents taken prior to its merger into the
surviving corporation.
The By-Laws of the Company provide for indemnification. The By-Laws
also add that that in the event of a compromise or settlement, no
indemnification shall be provided if it is determined by a majority of the
disinterested directors then in office, or in their absence or at the request of
a majority of them, by the holders of a majority of the outstanding stock
entitled to vote for directors, voting as a single class, exclusive of any stock
owned by any interested person, that the person entitled to indemnification did
not act in good faith in the reasonable belief that his action was in the best
interest of the corporation. In lieu of the above, the corporation may deny
indemnification upon such a finding by independent legal counsel, if there has
been obtained, at the request of a majority of the directors then in office,
such an opinion in writing.
The Certificate of Incorporation of the surviving corporation provides
for indemnification to the fullest extent possible under Delaware law. The
By-Laws of the surviving corporation provide for indemnification. The
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By-Laws also add that, anything in the By-Laws notwithstanding, no elimination
of this bylaw, and no amendment of this bylaw adversely affecting the right of
any person entitled to indemnification shall be effective until the 60th day
following notice to such person of such action, and shall not thereafter deprive
any person of his or her rights arising our of alleged occurrences prior to such
60th day.
Approval of Business Combinations and Asset Sales: State Law.
Massachusetts law generally requires approval of mergers and consolidations and
sales, mortgages, leases or exchanges of all or substantially all of a
corporation's property by a vote of two-thirds of the shares of each class of
stock outstanding and entitled to vote thereon, except that (i) the Articles of
Organization may provide for a vote of a lesser proportion but not less than a
majority of each such class and (ii) unless required by the corporation's
articles of organization, an agreement providing for a merger need not be
submitted to the stockholders of a corporation surviving a merger but may be
approved by vote of its directors if (a) the agreement of merger does not change
the name, the amount of shares authorized of any class of stock or other
provisions of the Articles of Organization of such corporation, (b) the
authorized unissued shares or shares held in the treasury of such corporation of
any class of stock of such corporation to be issued or delivered pursuant to the
agreement of merger do not exceed 15% of the shares of such corporation of the
same class outstanding immediately prior to the effective date of the merger,
and (c) the issue by vote of the directors of any unissued stock to be issued
pursuant to the agreement of merger has been authorized in accordance with the
provision of Massachusetts law governing the issue of authorized but unissued
capital stock.
Delaware law generally requires that mergers and consolidations, and
sales, leases or exchanges of all or substantially all of a corporation's
property and assets, be approved both by the directors and by a vote of the
holders of a majority of the outstanding stock entitled to vote, though a
corporation's Certificate of Incorporation may require a greater-than-majority
vote. The Certificate of Incorporation of the surviving corporation will not so
provide. Under Delaware law, a corporation that is the surviving corporation in
a merger need not have stockholder approval for the merger if (i) each share of
the surviving corporation's stock outstanding prior to the merger remains
outstanding in identical form after the merger, (ii) there is no amendment to
its Certificate of Incorporation and (iii) the consideration going to
stockholders of the non-surviving corporation is not common stock (or securities
convertible into common stock) of the surviving corporation or, if it is such
stock or securities convertible into such stock, the aggregate number of shares
of common stock actually issued or delivered, or initially issuable upon
conversion, does not exceed 20% of the shares of the surviving corporation's
common stock outstanding immediately prior to the effective date of the merger.
Action By Consent of Stockholders. Under Massachusetts law, any action
to be taken by stockholders may be taken without a meeting only if all
stockholders entitled to vote on the matter consent to the action in writing,
and a corporation may not provide otherwise in its charter documents or By-Laws.
Under Delaware law and the surviving corporation's By-Laws, any action to be
taken by the stockholders may be taken without a meeting, without prior notice
and without a vote, if the stockholders having the number of votes that would be
necessary to take such action at a meeting at which all of the stockholders were
present and voted consent to the action in writing.
Dissenters' Rights. Under Massachusetts law, unless a vote of the
stockholders was not required to approve the action, dissenting stockholders who
follow prescribed statutory procedures are entitled to receive the appraised
value of their shares in connection with any merger or sale of substantially all
the assets of a corporation and in connection with certain mergers,
reclassifications and other transactions which may adversely affect the rights
or preferences of stockholders. There will be such dissenters' rights for the
merger pursuant to this Reincorporation Proposal. See "Rights of Dissenting
Stockholders" below.
Delaware law provides similar rights in the case of a merger or
consolidation of a corporation except that such rights are not provided when a
corporation will survive the merger or consolidation and no vote of its
stockholders is required to approve the merger. Also, such rights are not
provided as to shares of a corporation listed on a national securities exchange,
designated as a national market system security on an inter-dealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 stockholders where such stockholders are required to accept
in such a merger only (i) shares of the surviving or resulting corporation, (ii)
shares of a corporation listed on a national securities exchange or held of
record by more than 2,000 holders, (iii) cash in lieu of fractional shares, or
(iv) any combination thereof. Delaware law does not provide dissenters' rights
in connection with sales of substantially all of the assets of a corporation,
reclassifications of stock or other amendments to the Certificate of
Incorporation which adversely affect a class of stock; provided, however,
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that a corporation may provide in its Certificate of Incorporation that
appraisal rights shall be available as a result of an amendment to its
Certificate of Incorporation, a merger or a sale of all or substantially all of
its assets. The surviving corporation's Certificate of Incorporation, however,
does not provide for the appraisal rights described in the preceding sentence.
Interested Director Transactions. Delaware law provides that no
transaction between a corporation and a director or officer or any entity in
which any of them have an interest, is void or voidable solely for that reason,
solely because the director or officer is present at or participates in the
meeting of the board or committee which authorizes the contract or transaction,
or solely because his or their votes are counted for such purpose if (i) after
full disclosure of the material facts as to the interested director's or
officer's relationship or interest and as to the transaction, the transaction is
approved in good faith by the disinterested directors, which may be less than a
quorum, or the stockholders or (ii) the transaction is fair to the corporation
at the time it is approved. Delaware law also permits interested directors to be
counted in determining the presence of a quorum at a meeting of the board or of
a committee that authorizes an interested director or officer transaction.
Massachusetts law contains no provision comparable to that of Delaware,
expressly providing only that directors who vote for and officers who knowingly
participate in loans to officers or directors are jointly and severally liable
to the corporation for any part of the loan which is not repaid, unless (i) a
majority of the directors who are not direct or indirect recipients of such
loans or (ii) the holders of a majority of the shares entitled to vote for such
directors, have approved or ratified the loan as one which in the judgment of
such directors or stockholders, as the case may be, may reasonably be expected
to benefit the corporation.
Anti-Takeover Statutes. Business Combination Statutes. Delaware's
"business combination" statute is substantially similar to its Massachusetts
counterpart. However, whereas Delaware law provides that, if a person acquires
15% or more of the stock of a Delaware corporation without the approval of the
board of directors of that corporation, such person may not engage in certain
transactions with the corporation for a period of three years, in Massachusetts,
the threshold is only 5%, with certain persons being excluded. Both the Delaware
and Massachusetts statutes include certain exceptions to this prohibition. If,
for example, the board of directors approves the stock acquisition or the
transaction prior to the time that the person becomes an interested stockholder,
or if the interested stockholder acquires 85% (under the Delaware statute) or
90% (under the Massachusetts statute) of the voting stock of the corporation
(excluding voting stock owned by directors who are also officers and by certain
employee stock plans) in one transaction, or if the transaction is approved by
the board of directors and by the affirmative vote of two-thirds of the
outstanding voting stock that is not owned by the interested stockholder, then
the prohibition on business combinations is not applicable.
Massachusetts Control Share Acquisition Statute. Under the
Massachusetts Control Share Acquisition statute for Massachusetts corporations,
a person who acquires beneficial ownership of shares of stock of a corporation
in a threshold amount equal to or greater than one-fifth, one-third, or a
majority of the voting stock of the corporation (a "control share acquisition")
must obtain the approval of a majority of shares entitled to vote generally in
the election of directors (excluding (i) any shares owned by such person
acquiring or proposing to acquire beneficial ownership of shares in a control
share acquisition, (ii) any shares owned by any officer of the corporation and
(iii) any shares owned by any employee of the corporation who is also a director
of the corporation) in order to vote the shares that such person acquires in
crossing the foregoing thresholds. The statute does not require that such person
consummate the purchase before the stockholder vote is taken. Certain
transactions are excluded from the definition of "control share acquisition,"
including shares acquired pursuant to a tender offer, merger or consolidation if
the transaction is pursuant to an agreement of merger or consolidation to which
the corporation issuing the shares is a party.
The Massachusetts Control Share Acquisition statute permits, to the
extent authorized by a corporation's Articles of Organization or By-Laws,
redemption of all shares acquired by an acquiring person in a control share
acquisition for fair value (which is to be determined in accordance with
procedures adopted by the corporation) if (i) no control acquisition statement
is delivered by the acquiring person or (ii) a control share acquisition
statement has been delivered and voting rights were not authorized for such
shares by the stockholders in accordance with applicable law. The Massachusetts
Control Share Acquisition statute permits a Massachusetts corporation to elect
not to be governed by the statute's provisions, by including a provision in the
corporation's Articles of Organization or By-Laws pursuant to which the
corporation opts out of the statute.
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Dividends and Stock Repurchases. Under Massachusetts law, the directors
of a corporation will be jointly and severally liable if a payment of dividends
or a repurchase of a corporation's stock is (i) made when the corporation is
insolvent, (ii) renders the corporation insolvent or (iii) violates the
corporation's Articles of Organization. Stockholders to whom a corporation makes
any distribution (except a distribution of stock of the corporation) if the
corporation is, or is thereby rendered, insolvent, are liable to the corporation
for the amount of such distribution made, or for the amount of such distribution
that exceeds that which could have been made without rendering the corporation
insolvent, but in either event only to the extent of the amount paid or
distribution to them, respectively. In such event, a stockholder who pays more
than such holder's proportionate share of such distribution or excess shall have
a claim for contribution against the other stockholders.
Under Delaware law, the directors of a corporation are jointly and
severally liable for negligently or willfully making improper dividend payments,
stock repurchases or redemptions. Directors held to be liable pursuant to this
provision of Delaware law are entitled to be subrogated to the rights of the
corporation against stockholders receiving dividends on, or assets for the sale
or redemption of, their stock with knowledge that such dividend, repurchase or
redemption was unlawful. Under Delaware law, a corporation generally is
permitted to declare and pay dividends out of surplus or out of net profits for
the current and/or preceding fiscal year, provided that the capital of the
corporation is not less than the aggregate amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets. For purposes of declaring and paying dividends, the
board of directors of a Delaware corporation may increase the corporation's
surplus pursuant to a revaluation thereto in accordance with Delaware law. In
addition, a corporation may generally redeem or repurchase shares of its stock
if the capital of the corporation is not impaired and if such redemption or
repurchase will not impair the capital of the corporation.
Inspection Rights. Inspection rights under Delaware law are more
extensive than under Massachusetts law. Under Massachusetts law, a corporation's
stockholders have a right to inspect only the corporation's charter, By-Laws,
records of all meetings of incorporators and stockholders and transfer records.
Under Delaware law, stockholders, upon the demonstration of a proper purpose,
have the right to inspect a corporation's stock ledger, stockholder lists and
other books and records.
Annual Meeting of Stockholders. Under Massachusetts law, the notice of
the annual meeting must contain the purpose of the meeting, while the purpose of
the annual meeting need not be included in the notice of the annual meeting
under Delaware law. The By-Laws of the Company require that the notice of the
annual meeting be given at least seven days before the meeting, while the
surviving corporation's By-Laws require that such notice be given at least ten
days before the annual meeting.
Special Meetings of Stockholders. A special meeting of stockholders of
a Massachusetts corporation with a class of voting stock registered under the
Securities Exchange Act of 1934, as amended, may be called by the holders of
shares entitled to cast not less than 40% of the votes at the meeting.
Stockholders of a Delaware corporation do not have a right to call special
meetings unless it is conferred in the corporation's Certificate of
Incorporation or By-Laws. The surviving corporation's By-Laws permit a special
meeting of the stockholders to be called at any time by the board of directors
or the President.
Proxies. Massachusetts law permits the authorization by a stockholder
to vote by proxy to be valid for no more than six months. Delaware law permits a
proxy to be valid for up to three years unless the proxy provides for a longer
period.
Classified Board. Massachusetts law requires, unless a corporation
chooses otherwise, and Delaware law permits, but does not require, a board of
directors to be divided into classes with each class having a term of office
longer than one year. Massachusetts law limits the term of directors on a
classified board to five (5) years. The Company has not historically had a
classified board and the surviving corporation does not currently intend to have
a classified board.
Removal of Directors. Under Massachusetts law, any director or the
entire board of directors may be removed, except as otherwise provided in the
Articles of Organization or By-Laws, with or without cause, by the holders of a
majority of the shares entitled to vote at an election of directors, except that
directors of a class elected by a particular
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class of stockholders may be removed only by the vote of a majority of the
shares of the particular class of stockholders entitled to vote for the election
of such directors. In addition, a director may be removed for cause by a vote of
the majority of the directors then in office. Massachusetts law and the
Company's By-Laws add that a director may be removed for cause only after
receiving reasonable notice and being given opportunity to be heard before the
body proposing to remove him or her.
Under Delaware law, a director serving on a board which is not
classified may be removed with or without cause by a majority of the outstanding
shares entitled to vote at an election of directors. In the case of a Delaware
corporation whose board is classified, holders of a majority of the outstanding
shares entitled to vote at an election of directors may effect such removal only
for cause unless the Certificate of Incorporation otherwise provides. The
surviving corporation will not have a classified Board of Directors. The By-Laws
of the surviving corporation state that stockholders can remove directors with
or without cause.
Change in Number of Directors. Under Massachusetts law, the number of
directors is determined in the manner provided in the corporation's By-Laws. The
board of directors may be enlarged by the stockholders or, if authorized by the
By-Laws, by vote of a majority of directors. The Company's By-Laws fix the
number of directors at not less than three nor more than nine. The number of
Directors of the Company is currently fixed at five.
Under Delaware law, the number of directors shall be fixed by or in the
manner provided in the By-Laws unless the number of directors is fixed in the
corporation's Certificate of Incorporation. The By-Laws of the surviving
corporation require that it have one or more directors, the number of which
shall be determined from time to time by the directors. Upon the consummation of
its merger with the Company, the surviving corporation will have five directors.
Filling Vacancies on the Board of Directors. Under Massachusetts law,
unless the Articles of Organization provide otherwise, any vacancy in the board
of directors, however occurring, including a vacancy resulting from enlargement
of the board and any vacancy in any other office, may be filled in the manner
prescribed in the By-Laws, or, in the absence of any such provision in the
By-Laws, by the directors. The Company's By-Laws state that by any vacancy in
the board of directors, other than a vacancy resulting from the enlargement of
the board of directors, may be filled the stockholder or, in the absence of
stockholders action, by the directors.
Under Delaware law, vacancies and newly created directorships may be
filled by a majority of directors then in office, unless otherwise provided in
the corporation's Certificate of Incorporation or By-Laws, provided that if, at
the time of filling any vacancy or newly created directorship, the directors
then in office constitute less than a majority of the entire board as
constituted immediately prior to any increase, the Delaware Court of Chancery
may, upon application of any stockholder or stockholders holding at least 10% of
the total number of shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships or to replace the directors chosen by
the directors then in office. The By-Laws of the surviving corporation state
that any vacancy may be filled for the balance of the term by a majority of the
directors then in office (even if they constitute less than a quorum) or by a
sole remaining director, or if the board of directors has not filled such
vacancy, by the stockholders.
Charter Amendments. Under Massachusetts law, a majority vote of each
class of stock outstanding and entitled to vote thereon is required to authorize
an amendment of the Articles of Organization effecting one or more of the
following: (i) an increase or reduction of the capital stock of any authorized
class; (ii) a change in the par value of authorized shares with par value, or
any class thereof; (iii) a change of authorized shares (or any class thereof)
from shares with par value to shares without par value, or from shares without
par value to shares with par value; (iv) certain changes in the number of
authorized shares (or any class thereof); or (v) a corporate name change.
Subject to certain conditions, a two-thirds vote of each class of stock
outstanding and entitled to vote thereon is required to authorize any other
amendment of the Articles of Organization, or, if the Articles of Organization
so provide for a vote of a lesser proportion but not less than a majority of
each class of stock outstanding and entitled to vote thereon. If any amendment
requiring a two-thirds vote would adversely affect the rights of any class or
series of stock a two-thirds vote of such class voting separately, or a
two-thirds vote of such series, voting together with any other series of the
same class adversely affected in the same manner, is also necessary to authorize
such amendment.
Under Delaware law, charter amendments require the approval of the
board of directors and both a general vote of a majority of all outstanding
shares entitled to vote thereon, and a class vote of a majority of outstanding
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shares of each class entitled to vote as a class. In addition, Delaware law
requires a class vote when, among other things, an amendment will adversely
affect the powers, preferences or special rights of a particular class of stock.
Under Delaware law, a provision in a corporation's Certificate of Incorporation
requiring a supermajority vote of the Board of Directors or stockholders may be
amended only by such supermajority vote. The Articles of Incorporation of the
surviving corporation state that the corporation reserves all rights to repeal
in any manner now or hereafter prescribed by statute.
Amendments to By-Laws. Both Delaware and Massachusetts law provide that
stockholders may amend a corporation's By-Laws and, if so provided in its
charter, the board of directors may also have this power. Under Delaware law,
the power to adopt, amend or repeal By-Laws lies in the stockholders entitled to
vote; provided, however, that any corporation may, in its Certificate of
Incorporation, confer the power to adopt, amend or repeal By-Laws upon the
directors. Under Massachusetts law, the power to make, amend or repeal By-Laws
also lies in the stockholders entitled to vote; provided, that the directors may
also make, amend or repeal the By-Laws, except with respect to any provision
which the Articles of Organization or the By-Laws requires action by the
stockholders. Under the Articles of Organization of the Company the directors
are granted the power to amend or repeal the By-Laws, except with respect to any
provision thereof which by-law or the by-laws requires the action of the
stockholders. Under the Certificate of Incorporation of the surviving
corporation, the directors are granted the power to amend the By-Laws, subject
to the power of the stockholders to alter or repeal the By-Laws made or altered
by the board of directors. The By-Laws of the surviving corporation state that
the board of directors may make, alter or repeal the By-Laws, subject to the
power of the stockholders to repeal the By-Laws made or altered by the board of
directors.
Voting Requirements and Quorums for Stockholder Meetings. Under
Massachusetts law, unless the Articles of Organization or By-Laws provide
otherwise, a majority of the issued and outstanding stock entitled to vote at
any meeting constitutes a quorum. Except for the election of directors and other
fundamental matters, Massachusetts law does not prescribe the percentage vote
required for stockholder action.
Under the By-Laws of the Company, a majority of the shares entitled to
vote constitutes a quorum for the transaction of business. The Company's By-Laws
provide that (except where a larger vote is required by law, the Articles of
Organization of the Company or the By-Laws of the Company) action of the
stockholders on any matter properly brought before a meeting requires, and may
be effected by, the affirmative vote of the holders of a majority of the shares
of stock present or represented and entitled to vote and voting on such matter.
Under Delaware law, a majority of the issued and outstanding stock
entitled to vote at any meeting of stockholders shall constitute a quorum for
the transaction of business at such meeting, unless the Certificate of
Incorporation or By-Laws specify a different percentage, but in no event may a
quorum consist of less than one-third of the shares entitled to vote at the
meeting. Under Delaware law, the affirmative vote of the majority of shares
present in person or represented by proxy at a duly held meeting at which a
quorum is present and entitled to vote on the subject matter is deemed to be the
act of the stockholders, unless Delaware law, the Certificate of Incorporation
or the By-Laws specify a different voting requirement.
The By-Laws of the surviving corporation provide that, except as
otherwise provided by law or in the Certificate of Incorporation, the holders of
one third of the shares entitled to vote at a meeting of the shareholders shall
constitute a quorum for the transaction of business. The By-Laws of the
surviving corporation provide that when a quorum is present, action on a matter
is approved by the affirmative vote of a majority of the total vote cast, unless
the Certificate of Incorporation of the surviving corporation or Delaware law
requires a higher percentage of affirmative votes.
Rights of Dissenting Stockholders
Because the Company will not be technically the "surviving
corporation," stockholders of the Company who do not vote in favor of the
Reincorporation Proposal may have the right to seek to obtain payment in cash of
the fair value of their shares by complying with the requirements of Sections 86
through 98, inclusive, of Chapter 156B of the General Laws of Massachusetts.
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The following summary of the rights of dissenting stockholders is
qualified in its entirety by reference to the provisions of Sections 86 through
98, inclusive, of Chapter 156B of the General Laws of Massachusetts, a copy of
which is attached hereto as Appendix E.
Any stockholder (i) who files with the Company before the taking of the
vote on the approval of the Reincorporation Proposal written objection to the
proposed action stating that such stockholder intends to demand payment for such
stockholder's shares if the action is taken, and (ii) whose shares are not voted
in favor of such action, has or may have the right to demand in writing from the
surviving corporation within 20 days after the date of mailing to such
stockholder of notice in writing that the corporate action has become effective,
payment for his shares and an appraisal of the value thereof. The surviving
corporation and any such stockholder shall in such case have the rights and
duties and shall follow the procedure set forth in Sections 88 to 98, inclusive,
of Chapter 156B of the General Laws of Massachusetts.
A stockholder intending to exercise his dissenter's right to receive
payment for such stockholder's shares must file with the Company written
objection to the Reincorporation Proposal before the taking of the vote by the
stockholders on such Proposal and must not vote in favor of the Reincorporation
Proposal at the Special Meeting. A stockholder's failure to vote against the
Reincorporation Proposal will not constitute a waiver of such stockholder's
appraisal rights with respect to the Reincorporation Proposal, provided that
such stockholder does not vote in favor of the Reincorporation Proposal; and
provided, further, that a vote against the Reincorporation Proposal without the
filing of a written objection with the Company as described above will not be
deemed to satisfy notice requirements under Massachusetts law with respect to
appraisal rights. The written objection must state that the stockholder intends
to demand payment for such stockholder's shares if the Reincorporation Proposal
is consummated. Within 10 days after the reincorporation becomes effective, the
surviving corporation will give written notice of the effectiveness by
registered or certified mail to each stockholder who filed a written objection
and who did not vote in favor of the Reincorporation Proposal. Within 20 days
after the mailing of that notice, any stockholder to whom the surviving
corporation was required to give that notice may make written demand for payment
for such stockholder's shares from the surviving corporation and the surviving
corporation will be required to pay to such stockholder the fair market value of
such stockholder's shares within 30 days after the expiration of the 20-day
period.
If during the 30-day period the surviving corporation and the
dissenting stockholder do not agree as to the fair value of the shares, the
surviving corporation or the stockholder may, within four months after the end
of the 30-day period, have the fair value of stock of all dissenting
stockholders determined by judicial proceedings by filing a bill in equity in
the Superior Court in Middlesex County, Massachusetts. For the purposes of the
Superior Court's determination, the value of the shares of the Company would be
determined as of the date preceding the date of the vote of the stockholders
approving the Reincorporation Proposal and would be exclusive of any element of
value arising from the expectation or accomplishment of the reincorporation.
Upon making written demand for payment, the dissenting stockholder will not
thereafter be entitled to notices of meetings of stockholders, to vote, or to
dividends unless (i) no suit is filed within four months to determine the value
of the stock, (ii) any suit is dismissed as to that stockholder, or (iii) the
stockholder, with the written approval of the surviving corporation, withdraws
the objection in writing.
The enforcement by an objecting stockholder of his appraisal rights as
set forth in Sections 85 through 98, inclusive, of Chapter 156B of the
Massachusetts General Laws shall be an exclusive remedy except for the right of
any such objecting stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that the merger will be or is illegal or fraudulent
as to such objecting stockholder.
The provisions of Sections 85 through 98 of Chapter 156B of the
Massachusetts General Laws are technical in nature and are complex. Any
stockholder desiring to exercise his appraisal rights should consult legal
counsel for assistance since the failure to comply strictly with the provisions
may nullify such appraisal rights.
The foregoing does not purport to be a complete statement of the
provisions of Sections 85 through 98 of Chapter 156B of the Massachusetts
General Laws and is qualified in its entirety by reference to the Sections of
Chapter 156B.
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Because the Reincorporation Proposal does not involve any change in the
nature of the Company's business but is a technical matter only, the Board of
Directors hopes that no stockholder will exercise a dissenter's right. Under the
Merger Agreement, the Board of Directors may abandon the Merger, even after
stockholder approval, if for any reason the Board of Directors determines that
it is inadvisable to proceed with the Merger, including considering the number
of shares for which appraisal rights have been exercised and the cost to the
Company of the exercise. THE BOARD OF DIRECTORS CURRENTLY INTENDS TO ABANDON THE
MERGER IN THE EVENT THAT ITS CONSUMMATION WOULD RESULT IN STOCKHOLDERS
REPRESENTING MORE THAN A NOMINAL NUMBER OF SHARES BEING ENTITLED TO APPRAISAL
RIGHTS.
Material United States Federal Income Tax Consequences
The following discussion summarizes the material United States federal
income tax consequences of the Merger to HyComp and the shareholders of HyComp.
The discussion deals only with shareholders that hold shares of HyComp's common
stock as capital assets, which generally means property held for investment. The
discussion does not address all aspects of federal income taxation that may be
relevant to particular shareholders in light of their personal circumstances or
to some types of shareholders who are subject to special treatment under the
federal income tax laws, including some financial institutions, broker dealers,
insurance companies, tax-exempt organizations, foreign persons and persons
acquiring shares of HyComp's common stock pursuant to the exercise of employee
stock options or otherwise as compensation. In addition, the discussion does not
address any state, local or foreign tax consequences of any aspect of the
mergers. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), applicable Treasury regulations promulgated under the
Code, judicial decisions and current administrative pronouncements, all as in
effect as of the date of this proxy statement-prospectus, and which may change
at any time, potentially with retroactive effect. No ruling from the Internal
Revenue Service will be applied for with respect to the federal income tax
consequences discussed in this proxy statement-prospectus and, accordingly,
there can be no assurance that the Internal Revenue Service will agree with the
conclusions stated in this proxy statement-prospectus.
Although this discussion summarizes all material U.S. federal income
tax considerations generally applicable to shareholders of HyComp as a
consequence of the Merger, the discussion does not address every U.S. federal
income tax concern that may be applicable to a particular holder of HyComp
common stock in light of such holder's particular circumstances. All
shareholders are urged to consult their own tax advisors as to the particular
tax consequences to them of the mergers, including the applicable federal,
state, local and foreign tax consequences.
Characterization of the Merger for United States Federal Income Tax Purposes
The Merger Agreement contemplates a transaction that is intended to
qualify as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986. The material federal income tax consequences of
the characterization of the Merger as a tax-free reorganization are as follows:
Tax Consequences to the HyComp Shareholders
Holders of HyComp common stock who do not exercise their dissenters'
rights will not recognize gain or loss for United States federal income tax
purposes as a result of the Merger and the conversion of their shares into
shares of the surviving corporation. The basis of the shares of the surviving
corporation in the hands of each stockholder will be the same as the basis of
the holder's shares of HyComp, and the holding period for the shares of the
surviving corporation will include the holding period for shares of HyComp.
HyComp shareholders who exercise dissenters' rights under applicable
state law will recognize gain or loss equal to the difference between the
proceeds received and the shareholders' stock bases. Such gain or loss will be
long-term capital gain or loss if the shares of HyComp were held for more than
one year, and if recognized by individual shareholders will be subject to a
maximum federal income tax rate of 20%. There are limitations on the
deductibility of capital losses.
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Tax Consequences to HyComp and the Surviving Corporation
Neither HyComp nor the surviving corporation will recognize any gain or
loss as a result of the Merger.
Information Reporting Requirements and Backup Withholding Tax
Under circumstances specified by the IRS, U.S. persons, as defined
under Section 7701 of the Code, may be subject to backup withholding at a rate
of 31% on payments made with respect to, or cash proceeds of a sale or exchange
of a capital asset. Backup withholding will apply only if the holder:
1. fails to furnish his or her taxpayer identification number
("TIN") which, for an individual, would be his or her Social
Security Number;
2. furnishes an incorrect TIN;
3. is notified by the IRS that he or she has failed properly to
report payments of interest and dividends or is otherwise
subject to backup withholding; or
4. under circumstances specified by the IRS, fails to certify,
under penalties of perjury, that he or she has furnishes a
correct TIN and (i) that he or she has not been notified by
the IRS that he or she is subject to backup withholding for
failure to report interest and dividend payments; or (ii) that
he or she has been notified by the IRS that he or she is no
longer subject to backup withholding. Backup withholding will
not apply with respect to payments made to recipients that are
exempt from such withholding, such as corporations and
tax-exempt organizations.
U.S. persons should consult their own tax advisors regarding their
qualifications for exemption from backup withholding and the procedure for
obtaining such an exemption. Backup withholding is not an additional tax.
Rather, the amount of any backup withholding with respect to a payment to a U.S.
person will be allowed as a credit against the U.S. person's United States
federal income tax liability and may entitle the U.S. person to a refund.
provided that the required information is furnished to the IRS.
Additional issues may arise pertaining to information reporting and
backup withholding for HyComp shareholders that are not U.S. persons. Non-U.S.
persons should consult their own tax advisors with regard to U.S. information
reporting and backup withholding.
Shareholders Should Seek Their Own Tax Advice
The preceding summary describes the material federal income tax
considerations potentially affecting HyComp shareholders and HyComp. This
discussion is based on the current state of the law, which is subject to
legislative, administrative or judicial actions, which may apply retroactively.
Moreover, as noted in the beginning of this section, the discussion does not
address considerations that may adversely affect the treatment of some
shareholders. All shareholders are urged to consult their own tax advisors as to
the particular tax consequences to them of the mergers.
Vote Required for Approval of the Reincorporation Proposal
Approval of the Reincorporation Proposal will require the affirmative
vote of the holders of two-thirds of the outstanding shares of common stock of
HyComp entitled to vote at the Special Meeting. Proxies solicited by the Board
of Directors will be voted for the Reincorporation Proposal, unless stockholders
specify otherwise.
The Board of Directors unanimously recommends that stockholders vote
FOR the Reincorporation Proposal.
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PROPOSAL 2: TO APPROVE THE CHANGE IN THE COMPANY'S NAME TO
EIEIHOME.COM INC.
In January 1995, the Board of Directors adopted, subject to stockholder
approval, an amendment of the Company's Articles of Organization to change the
name of the Company to "eieiHome.com Inc." The current name of the Company is
HyComp, Inc.
The Company was incorporated under the name HyComp, Inc. in 1969. As
the Company has discontinued its prior business and entered a new business, the
Board of Directors believe it is appropriate to change the Company's name to
identify it with its principal business, the operation of the eieiHome.com
Internet web site.
There will be relatively little cost associated with the name change.
Virtually no advertising will be required, for example, because the Company's
operations are already conducted under the name of its wholly-owned Canadian
subsidiary, also named eieiHome.com Inc.
If the Change of Name Proposal is adopted by the Company's
stockholders, such proposal will become effective on the date the Merger is
effected if the Reincorporation Proposal is approved by the Company's
stockholders, and on the date an amendment to the Company's Articles of
Organization is filed in Massachusetts, the Company's state of incorporation, if
the Reincorporation Proposal is not approved.
Vote Required For Approval of the Change of Name Proposal
Approval of the Change of Name Proposal requires the affirmative vote
of the holders of a majority of the outstanding shares of HyComp common stock
entitled to vote at the Special Meeting. Proxies solicited by the Board of
Directors will be voted for the Change of Name Proposal, unless stockholders
specify otherwise.
The Board of Directors unanimously recommends a vote FOR the change in
the Company's name.
PROPOSAL 3: TO INCREASE THE AUTHORIZED COMMON STOCK OF THE
COMPANY BY 55,000,000 SHARES
The Company's Articles of Organization currently authorizes the Company
to issue up to 20,000,000 shares of common stock. The Company currently has
issued and outstanding 18,198,770 shares of common stock and has reserved an
additional 750,000 shares of common stock for issuance upon exercise of options
authorized for issuance under the Company's stock option plans.
In addition, as part of the consideration for the Company's purchase of
its Canadian subsidiary eieiHome.com Inc., the Company gave Simmonds Capital
Limited a convertible debenture in the principal amount of U.S. $2,000,000,
convertible into shares of shares of HyComp common stock at a conversion price
of $1.00 per share (subject to adjustment as provided therein) and five year
warrants for the purchase of an aggregate of 5,000,000 shares of shares of
HyComp common stock (subject to adjustment as provided therein). The current
authorized number of shares of common stock of the Company is not sufficient to
cover the number of shares the Company may be required to issue upon conversion
of the debenture or exercise of the warrants. As a result, Simmonds Capital
Limited has agreed not to exercise any of its warrants or to convert any portion
of the debenture which would require the Company to issue shares of HyComp
common stock in excess of its current authorized capital, subject to the
Company's undertaking to hold this special meeting of its shareholders to ask
the shareholders to increase the number of shares of common stock that the
Company is authorized to issue to an amount that is sufficient to cover the
number of shares SCL would be entitled to were it to exercise all of its
warrants and to convert the entire debenture. If the shareholders do not approve
such an increase, then the Company may be in default under the agreement by
which it originally purchased its interest in eieiHome.com Inc.
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As the Company does not have enough authorized, non-designated shares
of common stock available for issuance by the Company to meet its current
commitments, it is likely not to have the ability to issue any additional shares
in the future. Hence, the Company has little or no flexibility with respect to
possible future stock splits, equity financings, stock-for-stock acquisitions,
stock dividends or other transactions that involve the issuance of common stock.
As the Company is currently in urgent need of financing to develop the
eieiHome.com Internet web site and to introduce it into U.S. markets, the
Company is negotiating with a number of parties interested in participating in a
convertible debenture issuance, in which the proposed terms provide 8% interest
paid semi-annually in arrears and allow the sale of a minimum of U.S. $250,000
up to 4,000,000 units, with each unit consisting of a convertible note
exercisable at any time at $0.25 per share plus a full warrant exercisable for
three years at $0.50 per share. Subject to the approval of this proposal by the
Company's shareholders, the issuance is expected to close on or about March 1,
2000.
The Increase in Common Stock Proposal, if adopted, will allow the
Company to increase the shares of authorized common stock to 75,000,000 from
20,000,000 and increase the number of authorized unissued and undesignated
shares of common stock to 56,051,230, which would cover the Company's current
commitments, allow it to consummate the proposed convertible debenture offering
and restore its ability to enter into future transactions that involve the
issuance of common stock..
If the Increase in Common Stock Proposal is adopted by the Company's
stockholders, such proposal will become effective on the date the Merger is
effected if the Reincorporation Proposal is approved by the Company's
stockholders, and on the date an amendment to the Company's Articles of
Organization is filed in Massachusetts, the Company's state of incorporation, if
the Reincorporation Proposal is not approved. If the Increase in Common Stock
Proposal is effected as part of the Merger, the par value of the new eieiHome
common stock will change from $0.01 to $0.001 per share. See the discussion in
"Proposal 1: To Change the State of Incorporation from Massachusetts to
Delaware" for further details.
Vote Required For Approval of the Increase in Common Stock Proposal
Approval of the Increase in Common Stock Proposal requires the
affirmative vote of the holders of a majority of the outstanding shares of
HyComp common stock entitled to vote thereon at the Special Meeting. Proxies
solicited by the Board of Directors will be voted for the Increase in Common
Stock Proposal, unless stockholders specify otherwise.
The Board of Directors unanimously recommends a vote FOR the
authorization of the additional shares of common stock.
PROPOSAL 4: APPROVAL OF THE 2000 STOCK OPTION PLAN AND THE
AUTHORIZATION OF 3,000,000 SHARES FOR ISSUANCE UNDER THE PLAN
On January 5, 2000, the Board of Directors adopted the 2000 Stock
Option Plan (the "Plan") effective as of January 5, 2000 and terminating on
January 5, 2010, subject to stockholder approval. The following discussion of
the Plan is qualified by and remains subject to the terms of the Plan, a copy of
which is attached to this proxy statement as Appendix D. All capitalized terms
used in the following discussion which have not been defined earlier in this
proxy statement have the meanings given to them in the Plan.
The Plan is intended to help the Company attract and retain employees
(including officers), directors, consultants and independent contractors of the
Company (or its subsidiaries or affiliates) and to furnish additional incentives
to such persons to enhance the value of the Company over the long term
encouraging them to acquire a proprietary interest in the Company. Provided that
the Increase in Common Stock Proposal is passed by the stockholders, the Board
of Directors also proposes to authorize for issuance under the Plan 3,000,000
shares of common stock, subject to the restriction that no single person may
hold more than 25% of the aggregate number of shares reserved for issuance under
the Plan.
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Provided that either the Reincorporation Proposal or the Change of Name
Proposal is passed by the stockholders, the Plan will be a plan of eieiHome.com
Inc. If neither proposal is passed, then the Plan will be a plan of HyComp, Inc.
The Board of Directors believes that in order to continue to retain and
attract qualified candidates for such positions who can contribute to the
Company's growth and development, and in light of the officers' and directors'
compensation being paid by other public companies, the Board of Directors
granted the following options, subject to stockholder approval: (i) to each of
the Company's five directors, options to purchase 300,000 shares of common stock
at the price of $0.25 per share, which vest immediately upon the receipt of
stockholder approval and remain exercisable anytime prior to January 5, 2003;
and (ii) to the Company's Chief Executive Officer, Angelo G. MacDonald, options
to purchase 400,000 shares of common stock at the price of $0.25 per share,
50,000 of which vest immediately upon the receipt of stockholder approval and
50,000 of which vest every six months from the date of the grant (subject to Mr.
MacDonald's continued employment by the Company or its successor and subject to
the immediate vesting of all options upon a change of control as defined in the
Plan or his termination other than for cause) and all of which remain
exercisable for a period of five years from the date of vesting. The price per
share of $0.25 was determined by the Board of Directors to be a reasonable
estimate of fair market value on the date of the grant based on the fact that
the Company had just negotiated $0.25 as the conversion rate per share for an
issuance of convertible debentures currently expected to close on or about March
1, 2000.
General
The Plan provides for the discretionary grant of options to purchase
shares of common stock to employees (including officers), directors, consultants
and independent contractors of the Company and its present or future
Subsidiaries and Affiliates (as defined in the Plan). The Plan shall be
administered by a Committee of the Board of Directors, which has the authority
to grant Options and to determine, subject to certain restrictions, the exercise
price per share of common stock purchasable under an Option and the term of each
Option. The Committee may also make rules relating to Options and may impose
additional terms, conditions, restrictions and performance criteria relating to
any Option or its exercise. The Committee may decide under what circumstances
Options may be settled, canceled, forfeited, exchanged or surrendered and has
the authority to make adjustments in the terms and conditions of, and the
criteria and performance objectives included in, Options in recognition of
unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations or
accounting principles. The Committee determines the terms and provisions of the
Stock Option Agreement (which need not be identical for each Optionee); and
makes all other determinations deemed necessary or advisable for the
administration of the Plan. The date on which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which such Option is
granted.
In general, an Option may only be exercised if the Optionee is then in
the employ or a director of, or then maintains an independent contractor
relationship with, the Company or any Subsidiary or Affiliate (or a company or a
parent or subsidiary company of such company issuing or assuming the Option in a
transaction to which Section 424(a) of the Internal Revenue Code applies), and
unless the Optionee has continuously maintained any of such relationships since
the date of grant of the Option; provided that, the Stock Option Agreement may
contain provisions extending the exercisability of Options, in the event or
specified terminations, to a date not later than the expiration date of such
Option. The Committee may establish a period during which the Beneficiaries of
an Optionee who died while an employee, director or independent contractor of
the Company or any Subsidiary or Affiliate or during any extended period
referred to in the immediately preceding proviso may exercise those Options
which were exercisable on the date of the Optionee's death; provided that no
Option shall be exercisable after its expiration date.
In the event of a Change in Control, any and all Options then
outstanding shall become fully exercisable and vested, whether or not
theretofore vested and exercisable.
The exercise price per share payable upon the exercise of each Option
granted under the Plan is to be determined by the Committee in good faith upon
the grant of such Option, subject to certain restrictions contained in the Plan.
You should examine the provisions of the Plan for details of these provisions.
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The Plan currently provides for the issuance of a total of up to
3,000,000 authorized and unissued shares of common stock, treasury shares and/or
shares acquired by the Company for purposes of the Plan. Generally, shares
subject to an option that remain unissued upon expiration or cancellation of the
option are available for other grants under the Plan. In the event of a stock
dividend, stock split, recapitalization or the like, the Committee of the Board
of Directors will equitably adjust the aggregate number of shares subject to the
Plan, the number of shares subject to each outstanding option, and the exercise
price of each outstanding option.
Vote Required for Approval of the 2000 Stock Option Plan Proposal
Approval of the 2000 Stock Option Plan Proposal and the authorization
of 3,000,000 shares of common stock for issuance under the Plan requires the
affirmative vote of the holders of a majority of the outstanding shares of
HyComp common stock entitled to vote thereon at the Special Meeting. Proxies
solicited by the Board of Directors will be voted for the 2000 Stock Option Plan
Proposal, unless stockholders specify otherwise.
The Board of Directors unanimously recommends a vote FOR the
authorization of the Plan Increase.
PROPOSAL 5: ELECTION OF DIRECTORS
The Board of Directors has nominated the individuals listed below
(referred to as the "Nominees") to serve as Directors of the Company (or the
surviving corporation if the Merger is consummated) until their successors have
been duly elected and qualified. We list below the name, age, current position
and business experience of each of the five Nominees:
Name Age Position
- ---- --- --------
Lawrence Fox 34 Director
Paul K. Hickey 67 Director and Chairman of the Board
Angelo G. MacDonald 41 Director and Chief Executive Officer
David C. O'Kell 48 Director and Secretary
John G. Simmonds 49 Director
Lawrence Fox, 34, has been a director of the Company since September 15, 1999.
Mr. Fox is an active private investor. He has provided merger and acquisition
advisory services, including structuring acquisitions and venture capital
investments to a number of public and private companies.
Paul K. Hickey, 67, has been a Director of the Company since July, 1979. He was
appointed Chairman of the Company effective September 15, 1999. Mr. Hickey is a
former licensed stock broker in New York. He is currently an investment banker
in New York, NY. Mr. Hickey also serves as a director on the boards of Gregory
and Howe Incorporated, American Homeowners Association and Diopsys, Inc.
Angelo G. MacDonald, 41, was appointed Chief Executive Officer and a Director of
the Company effective November 1, 1999. Mr. MacDonald holds a J.D. degree from
Villanova University School of Law. He is member of the bar in New York and New
Jersey, the Southern and Eastern federal districts of New York, the United
States Tax Court, the United States Court of International Trade, and the Court
of Appeals for the Armed Services. From 1986 to November 1999, Mr. MacDonald was
a Senior Trial Assistant District Attorney with the Office of the District
Attorney, Bronx county, New York City.
David C. O'Kell, 48, was appointed secretary and a Director of the Company
effective November 1, 1999. Mr. O'Kell is the Executive Vice President and
Secretary and a Director of SCL, a Toronto Stock Exchange listed company . Mr.
O'Kell joined SCL in July 1991 as Vice President Business Development. Prior to
joining SCL, Mr. O'Kell was the Vice President and Director of Business
Development with the Canadian head office of a multinational advertising agency.
Between September 1995 and November 1997, Mr. O'Kell served as the
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president and a Director of Ventel, Inc., a Vancouver Stock Exchange listed
venture capital company. Mr. O'Kell resigned as a Director upon the acquisition
by Ventel of Fifty-Plus.net in June, 1999.
John G. Simmonds, 49, has been a Director of the Company since October 15, 1999.
Mr. Simmonds is the founder of SCL. Since 1991, Mr. Simmonds has served as
Chairman, President and Chief Executive Officer of SCL. SCL is a diversified
management company with strategic investments in contract manufacturing,
electronics distribution, wireless communications, and internet service markets
including both equity investments and wholly owned operations. Since 1998, Mr.
Simmonds has been a director and the Chief Executive Officer of TrackPower,
Inc., an OTC Bulletin Board company which provides live horse racing video
service in the continental United States. From 1994 to 1996, Mr. John Simmonds
served as Director and Chief Executive Officer of INTEK Global Corporation
(formerly Intek Diversified Corp.), a Nasdaq-listed (Small-Cap) company. Intek
is involved in the US Specialized Mobile Radio market which owns and manages SMR
licenses in the 200 MHz frequency. Between September 1995 and November 1997, Mr.
Simmonds served as the Chairman and a Director of Ventel Inc., a Vancouver Stock
Exchange listed venture capital company. Mr. Simmonds resigned from the Board of
Directors of Intek during 1998 and resigned from the Board of Directors of
Ventel, upon the acquisition by Ventel of Fifty-Plus.net in June, 1999.
Compensation of Directors. The Board of Directors of the Company has
not yet approved any compensation for Directors at this time in recognition of
the Company's current financial condition, although Directors are reimbursed for
expenses incurred in connection with their attendance of meetings or conduct of
other Company business. Subject to shareholder approval of the 2000 Stock Option
Plan, the Directors will be granted stock options as an incentive to enhance
shareholder value. See discussion in "Proposal 4: Approval of the 2000 Stock
Option Plan and the Authorization of 3,000,000 Shares for Issuance Under the
Plan" and the 2000 Stock Option Plan attached as Appendix D for further
information. Following the Special Meeting of shareholders, the Board of
Directors will review the compensation scheme and may approve a compensation
plan for Directors. Such compensation plan will be consistent with compensation
plans for internet companies at a comparable development stage.
For information about the security ownership of the proposed Nominees,
see the section on "Information about the Company - Security Ownership of
Certain Beneficial Owners and Management."
Vote Required for the Election of Directors
Directors are elected by a plurality of the votes cast at the special
meeting, in person or by proxy. Proxies solicited by the Board of Directors will
be voted for the re-election of all five of the current directors of HyComp,
unless stockholders specify otherwise. Each of the Nominees has consented to
serve if elected and we know of no reason why any of the Nominees listed below
would be unable to serve if elected. If any of the Nominees is unable to serve
for any reason, proxies solicited by the Board of Directors will be voted for
another Nominee or Nominees selected by the Board of Directors.
STOCKHOLDER PROPOSALS
The Company will hold its 2000 annual meeting of HyComp stockholders
only if the Merger is not consummated. In the event that this meeting is held,
any proposals of stockholders intended to be presented at the 2000 annual
meeting of HyComp stockholders must be received by the Clerk of HyComp no later
than February 28, 2000 in order to be considered for inclusion in the HyComp
2000 annual meeting proxy materials.
OTHER MATTERS
Other than the matters specified above, the Company is unaware of any
matter that will be brought before the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the proxy in accordance with their best
judgment.
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WHERE YOU CAN FIND MORE INFORMATION
HyComp has filed a Form 10-SB Registration Statement and anticipates
filing annual, quarterly and special reports, proxy statements and other
information with the SEC following the effective date of the Registration
Statement. You may read and copy any reports, statements or other information
that HyComp files with the SEC at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. These
SEC filings are also available to the public from commercial document retrieval
services at the Internet world wide web site maintained by the SEC at
"http://www.sec.gov."
You should rely only on the information contained or incorporated by
reference in this proxy statement. HyComp has not authorized anyone to provide
you with information that is different from what is contained in this proxy
statement. You should not assume that the information contained in this proxy
statement is accurate as of any date other than February 7, 2000 or any other
date that this proxy statement indicates. The mailing of this proxy statement to
HyComp stockholders does not create any implication to the contrary.
The SEC allows HyComp to "incorporate by reference" information into
this proxy statement, which means that HyComp can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered part of this proxy
statement, except for any information superseded by information contained
directly in this proxy statement or in later filed documents incorporated by
reference in this proxy statement. This proxy statement incorporates by
reference the Form 10-SB that HyComp filed with the SEC on January 19, 2000.
This document contains important information about HyComp and its finances and
should be reviewed carefully and completely.
All documents filed by HyComp under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this proxy statement
and prior to the date of the special meeting will be considered to be
incorporated in this proxy statement by reference and to be a part of this proxy
statement from the date of their filing. Any statement contained in this proxy
statement or in a document incorporated or considered to be incorporated in this
proxy statement by reference will be considered to be modified or superseded for
purposes of this proxy statement to the extent that a statement contained in
this proxy statement or in any other subsequently filed document which also is,
or is deemed to be, incorporated in this proxy statement modifies or supersedes
that statement. Any statement so modified or superseded will not be considered
to constitute a part of this proxy statement, except as so modified or
superseded.
Any documents filed by HyComp with the SEC and incorporated by
reference, excluding exhibits, unless specifically incorporated in this proxy
statement, are available without charge upon written request to Angelo G.
MacDonald, HyComp, Inc., 67 Wall Street, Suite 2411, New York, New York 10005.
Telephone requests may be directed to Angelo MacDonald at 212-344-0351.
If you would like to receive documents from HyComp, please request them
by February 20, 2000, in order to receive them before the special meeting.
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Appendix A--Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made and entered into as of this
__ day of ___________, 2000 pursuant to Section 79 of the Massachusetts Business
Corporation Law and Section 252 of the Delaware General Corporation Law, by and
between eieiHome.com Inc., a Delaware corporation ("eieiHome") and HyComp, Inc.,
a Massachusetts corporation ("HyComp").
WITNESSETH:
WHEREAS, eieiHome and HyComp (individually sometimes called a
"Constituent Corporation" and together called the "Constituent Corporations")
desire that HyComp merge with and into eieiHome;
WHEREAS, the Certificate of Incorporation of eieiHome was filed in the
office of the Secretary of State of the State of Delaware on ______________,
2000;
WHEREAS, eieiHome has authorized capital stock of 75,000,000 shares of
Common Stock, par value $.001 per share (the "eieiHome Common Stock"), of which
one share is issued and outstanding as of the date hereof, and 2,000 shares of
Preferred Stock, par value $.001 per share (the "eieiHome Preferred Stock"), of
which no shares are issued and outstanding as of the date hereof;
WHEREAS, the Articles of Organization of HyComp were filed in the
office of the Secretary of State of the Commonwealth of Massachusetts on May 27,
1969 and HyComp has an authorized capital stock of 20,000,000 shares of Common
Stock, $.01 par value (the "HyComp Common Stock"), of which 18,198,770 shares
are issued and outstanding as of the date hereof, and 2,000 shares of Preferred
Stock, $100 par value (the "HyComp Preferred Stock"), of which no shares are
issued and outstanding as of the date hereof;
WHEREAS, the registered office of eieiHome in the State of Delaware is
located at 1209 Orange Street, Wilmington, Delaware and the name and address of
its registered agent is The Corporation Trust Company; and the principal office
of HyComp in the Commonwealth of Massachusetts is located at 67 Wall Street,
Suite 2411, New York, New York 10005; and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations desire that the merger provided for herein be a tax-free
reorganization pursuant to Section 386(a) of the International Revenue Code of
1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and provisions hereinafter contained, the Constituent Corporations do hereby
prescribe the terms and conditions of said merger and mode of carrying the same
into effect as follows:
FIRST: eieiHome hereby merges into itself HyComp and HyComp shall be
and hereby is merged with and into eieiHome, which shall be the surviving
corporation.
SECOND: The Certificate of Incorporation of eieiHome, as in effect on
the date of the merger provided for in this Agreement (the "Merger"), shall
continue in full force and effect as the Certificate of Incorporation of the
surviving corporation.
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of HyComp Common Stock, $.01 Par Value that is issued
and outstanding (other than shares of HyComp Common Stock, if any, held in the
treasury of HyComp on the date on which the Merger of HyComp with and into
eieiHome shall become effective shall, by virtue of the Merger and without
further action,
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cease to exist and shall be converted into one share of eieiHome Common Stock,
$.001 Par Value Per Share. There shall not be any issued and outstanding stock
of HyComp that will not be so converted.
(b) Each share of HyComp Common Stock, if any, that shall then be
held in the treasury of HyComp on the effective date of the Merger shall, by
virtue of the Merger and without further action, cease to exist and all
certificates representing such shares shall be cancelled.
(c) After the effective date of the Merger, each holder of an
outstanding certificate representing shares of HyComp Common Stock may surrender
the same to eieiHome and each holder shall be entitled upon such surrender to
receive certificates for an equal number of shares of eieiHome Common Stock on
the basis provided herein. Until so surrendered, the outstanding shares of the
common stock of HyComp to be converted into the common stock of eieiHome as
provided herein may be treated by eieiHome for all corporate purposes as
evidencing the ownership of shares of eieiHome, as though said surrender and
exchange had taken place.
(d) Each share of Common Stock of eieiHome issued and outstanding
immediately prior to the Merger shall cease to exist and shall be cancelled.
(e) Each holder of an option to purchase HyComp Common Stock which
shall be outstanding immediately prior to the Merger (the "Options") shall be
entitled upon exercise, in accordance with the terms of such Options, to
purchase after the effective date of the Merger that number of shares of
eieiHome Common Stock as is equal to the number of shares of HyComp Common Stock
for which such Options are currently exercisable at a price per share equal to
the price per share provided in such Options. Each such Option shall otherwise
remain subject to the same terms and conditions after the effective date of the
Merger (including, without limitation, the date and extent of exercisability) as
were applicable to such Option immediately prior to the effective date of the
Merger.
FOURTH: The other terms and conditions of the Merger are as follows:
(a) The By-Laws of eieiHome as they shall exist on the effective
date of the Merger shall be and remain the By-Laws of the surviving corporation
until the same shall be altered, amended or repealed as therein provided.
(b) The directors and officers of eieiHome as of the effective date
of the Merger shall be the directors and officers of the surviving corporation
and shall continue in office as provided in the By-Laws and charter of eieiHome.
(c) The Merger shall become effective upon filing with the
Secretary of State of Delaware a Certificate of Merger pursuant to Section 252
of the General Corporation Law of the State of Delaware and with the Secretary
of State of Massachusetts Articles of Merger pursuant to paragraph (c) of
Section 79 of the Massachusetts Business Corporation Law.
(d) Upon the effective date of the Merger, all property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of HyComp shall be transferred to, vested
in and devolved upon eieiHome without further act or deed and all property
rights, and every other interest of eieiHome and HyComp shall be as effectively
the property of eieiHome as they were of eieiHome and HyComp, respectively. All
rights of creditors of HyComp and all liens upon any property of HyComp shall be
preserved unimpaired, and all debts, liabilities, obligations and duties of
HyComp, including all liabilities and obligations under Options of HyComp,
subject to ARTICLE THIRD hereof, may be enforced against eieiHome to the same
extent as if said debts, liabilities, obligations and duties had been incurred
or contracted by it. At any time, or from time to time, after the effective date
of the Merger, the last acting officers of HyComp, or the corresponding officers
of eieiHome, may, in the name of HyComp, execute and deliver or cause to be
executed and delivered all such deeds and instruments and to take or cause to be
taken such further or other actions as eieiHome may deem necessary or desirable
in order to vest in eieiHome title to and possession of any property of HyComp
acquired or to be acquired by reason of or as a result of the Merger and
otherwise to carry out the intents and purposes hereof, and the proper
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officers and directors of eieiHome are fully authorized in the name of HyComp or
otherwise to take any and all such action.
(e) eieiHome hereby (i) agrees that it may be served with process
in the Commonwealth of Massachusetts in any proceeding for the enforcement of
any obligation of HyComp and in any proceeding for the enforcement of the rights
of a dissenting stockholder of HyComp pursuant to Section 85 of the
Massachusetts Business Corporation Law; and (ii) irrevocably appoints the
Secretary of State of the Commonwealth of Massachusetts as its agent to accept
service of process in any such proceeding.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated and abandoned by the Board of Directors of the
Constituent Corporations at any time prior to the date that the requisite
Certificate of Merger and Articles of Merger are filed in the office of the
Secretary of State of the State of Delaware and the Secretary of State of the
Commonwealth of Massachusetts, respectively. This Agreement may be amended by
the Boards of Directors of the Constituent Corporations at any time prior to the
date on which the requisite Certificate of Merger and Articles of Merger are
filed in the office of the Secretary of State of Delaware and the Secretary of
State of Massachusetts, respectively, provided that an amendment made subsequent
to the approval of this Agreement by the stockholders of either Constituent
Corporation shall not (1) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
Constituent Corporation, (2) alter or change any term of the Certificate of
Incorporation of the surviving corporation to be effected by the Merger, or (3)
alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any class thereof of
such Constituent Corporation.
SIXTH:
(a) This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
Delaware.
(b) eieiHome and HyComp each agrees to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to consummate or
implement the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors, have caused this Agreement to be executed by the President
and attested to by the Secretary or Clerk of each party hereto as the respective
act, deed and agreement of each of said corporation, as of the __ day of
_______________, 2000.
EIEIHOME.COM INC.
ATTEST: (Delaware)
By:______________________ By:_____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
ATTEST: HYCOMP, INC.
(Massachusetts)
By:______________________ By:_____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
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I, ______________, Secretary of eieiHome.com Inc., a corporation
organized and existing under the laws of the State of Delaware, hereby certify
that the Agreement and Plan of Merger to which this certificate is attached,
after having been first duly signed on behalf of said corporation and having
been signed on behalf of HyComp, Inc., a corporation organized and existing
under the laws of the Commonwealth of Massachusetts, was duly submitted to the
stockholders of eieiHome.com Inc. by written action of said stockholders held
pursuant to Sections 228 and 252 of the General Corporation Law of Delaware on
the __ day of ________________, 2000 and that the Agreement and Plan of Merger
was approved by the affirmative vote of stockholders representing at least
two-thirds of the outstanding stock of said corporation entitled to vote
thereon.
WITNESS my hand on this __ day of ____________, 2000.
______________________________
Name:
Secretary
I, ____________________, Clerk of HyComp, Inc., a corporation organized
and existing under the laws of the Commonwealth of Massachusetts, hereby certify
that the Agreement and Plan of Merger to which this certificate is attached,
after having been first duly signed on behalf of said corporation and having
been signed on behalf of eieiHome.com Inc., a corporation organized and existing
under the laws of the State of Delaware, was duly submitted to the stockholders
of HyComp, Inc. by written action of said stockholders held pursuant to Sections
43 and 79 of the Business Corporation Law of the Commonwealth of Massachusetts
on the __ day of _________, 2000; and that the Agreement and Plan of Merger was
approved by the affirmative vote of stockholders representing at least
two-thirds of the outstanding stock of said corporation entitled to vote
thereon.
WITNESS my hand on this __ day of ____________, 2000.
______________________________
Name:
Clerk
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Appendix B-- Form of Certificate of Incorporation of eieiHome.com Inc.
CERTIFICATE OF INCORPORATION
OF
EIEIHOME.COM INC.
FIRST. The name of the Corporation is: eieiHome.com Inc.
SECOND. The address of its registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, and the name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law (the "Delaware General Corporation Law").
FOURTH. The total number of shares of stock which the Corporation is
authorized to issue is 75,000,000 shares of Common Stock, par value $.001 per
share and 2,000 shares of Preferred Stock, par value $.001 per share.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
Delaware General Corporation Law. The Board of Directors is authorized to define
the terms of the Preferred Stock and to increase or decrease the number of
authorized shares of Preferred Stock by the affirmative vote of a majority of
the Board of Directors of the Corporation.
FIFTH. The name and mailing address of the Sole Incorporator are as follows:
Name Mailing Address
---- ---------------
Dara R. Bernstein c/o Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
SIXTH. Except as required in the By-Laws, no election of Directors need
be by written ballot.
SEVENTH. The Board of Directors shall have the power to make, alter, or
repeal By-Laws subject to the power of the stockholders to alter or repeal the
By-Laws made or altered by the Board of Directors.
EIGHTH. The personal liability of the Directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss. 102 of the Delaware General Corporation Law. If the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a Director, then the liability of
a Director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
NINTH. The Corporation, to the fullest extent permitted by the
provisions of ss. 145 of the Delaware General Corporation Law, as the same may
be amended and supplemented, shall indemnify each person who is or was an
officer or Director of the Corporation and may indemnify any and all other
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director or officer and shall inure to the benefit
of the heirs, executors, and administrators of such a person.
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TENTH. The Corporation may purchase and maintain insurance , at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
ELEVENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation and all rights conferred upon stockholders herein are granted
subject to this reservation
Signed at New York, New York
on ____________ ____, 2000
-----------------------
Dara R. Bernstein
Sole Incorporator
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Appendix C--Form of By-Laws of eieiHome.com Inc.
BY-LAWS
OF
EIEIHOME.COM INC.
(A Delaware Corporation)
ARTICLE I
Stockholders
Section 1. Place of Meetings. Meetings of stockholders shall be held at
such place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors or the President.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held on a date to be fixed by
the Board of Directors or the President (which date shall not be a legal holiday
in the place where the meeting is to be held) at the time and place to be fixed
by the Board of Directors or the President and stated in the notice of the
meeting. If no annual meeting is held in accordance with the foregoing
provisions, the Board of Directors shall cause the meeting to be held as soon
thereafter as convenient. If no annual meeting is held in accordance with the
foregoing provisions, a special meeting may be held in lieu of the annual
meeting, and any action taken at that special meeting shall have the same effect
as if it had been taken at the annual meeting, and in such case all references
in these By-Laws to the annual meeting of the stockholders shall be deemed to
refer to such special meeting.
Section 3. Special Meetings. Special meetings of the stockholders may
be called at any time by the Board of Directors or the President.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special, shall
be given not less than 10 nor more than 60 days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notices of all
meetings shall state the place, date and hour of the meeting. The notice of a
special meeting shall state, in addition, the purpose or purposes for which the
meeting is called. If mailed, notice is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his or her address
as it appears on the records of the corporation.
Section 5. Quorum; Adjournments of Meetings. The holders of one third
of the issued and outstanding shares of the capital stock of the corporation
entitled to vote at a meeting, present in person or represented by proxy, shall
constitute a quorum for the transaction of business at such meeting; but, if
there be less than a quorum, the holders of a majority of the stock so present
or represented may adjourn the meeting or, if no stockholder is present, any
officer entitled to preside at or to act as Secretary of such meeting may
adjourn the meeting to another time or place, from time to time, until a quorum
shall be present, whereupon the meeting may be held, as adjourned, without
further notice, except as required by law, and any business may be transacted
thereat which might have been transacted at the meeting as originally called.
Section 6. Voting; Proxies. At any meeting of the stockholders every
registered owner of shares entitled to vote may vote in person or by proxy and,
except as otherwise provided by statute, in the Certificate of Incorporation or
these By-Laws, shall have one vote for each such share standing in his name on
the books of the corporation. Except as otherwise required by statute, the
Certificate of Incorporation or these By-Laws, all elections of directors shall
be decided by a plurality of votes cast, and all other matters shall be decided
by a majority of the votes cast.
Section 7. Inspectors of Election. The Board of Directors, or, if the
Board shall not have made the appointment, the chairman presiding at any meeting
of stockholders, shall have power to appoint one or more
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persons to act as inspectors of election at the meeting or any adjournment
thereof, but no candidate for the office of director shall be appointed as an
inspector at any meeting for the election of directors.
Section 8. Chairman of Meetings. The Chairman of the Board or, in his
absence, the President shall preside as chairman of a meeting of the
stockholders. In the absence of both the Chairman of the Board and the
President, a majority of the members of the Board of Directors present in person
at such meeting may appoint any other person to act as chairman of the meeting.
Section 9. Secretary of Meetings. The Secretary of the corporation
shall act as secretary of all meetings of the stockholders. In the absence of
the Secretary, the chairman of the meeting shall appoint any other person to act
as secretary of the meeting.
Section 10. Stockholders' Action Without Meetings. Any action required
or permitted to be taken at any annual or special meeting of the stockholders of
the corporation may be taken without a meeting, without prior notice and without
vote, if a consent in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote on such action were present and voted. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE II
Board of Directors
Section 1. Number of Directors. The Board of Directors shall consist of
one or more members, the number thereof to be determined from time to time by
resolution of the Board of Directors. Directors need not be shareholders.
Section 2. Vacancies. Whenever any vacancy shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or otherwise, it may be filled for the balance of the term by a
majority of the directors then in office (even if they constitute less than a
quorum) or by a sole remaining director; or, if the Board has not filled such
vacancy, it may be filled by the stockholders.
Section 3. First Meeting. The first meeting of each newly elected Board
of Directors, of which no notice shall be necessary, shall be held immediately
following the annual meeting of stockholders or any adjournment thereof at the
place the annual meeting of stockholders was held at which such directors were
elected, or at such other place as a majority of the members of the newly
elected Board of Directors who are then present shall determine, for the
election or appointment of a Chairman of the Board of Directors and officers for
the ensuing year and the transaction of such other business as may be brought
before such meeting.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors, other than the first meeting, may be held without notice at such
times and places as the Board of Directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by order of the Chairman of the Board or the President. Notice of
the time and place of each special meeting shall be given by or at the direction
of the person or persons calling the meeting by mailing the same at least three
days before the meeting or by telephoning, telegraphing or delivering personally
the same at least twenty-four hours before the meeting to each director. Except
as otherwise specified in the notice thereof, or as required by statute, the
Certificate of Incorporation or these By-Laws, any and all business may be
transacted at any special meeting.
Section 6. Place of Conference Call Meeting. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
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Section 7. Organization. Every meeting of the Board of Directors shall
be presided over by the Chairman of the Board, or, in his absence, the
President. In the absence of the Chairman of the Board and the President, a
presiding officer shall be chosen by a majority of the directors present. The
Secretary of the corporation shall act as secretary of the meeting, but, in his
absence, the presiding officer may appoint any person to act as secretary of the
meeting.
Section 8. Quorum; Vote. A majority of the directors then in office
(but in no event less than one-third of the total number of directors) shall
constitute a quorum for the transaction of business, but less than a quorum may
adjourn any meeting to another time or place from time to time until a quorum
shall be present, whereupon the meeting may be held, as adjourned, without
further notice. Except as otherwise required by statute, the Certificate of
Incorporation or these By-Laws, all matters coming before any meeting of the
Board of Directors shall be decided by the vote of a majority of the directors
present at the meeting, a quorum being present.
Section 9. Removal of Directors. Any one or more of the directors shall
be subject to removal with or without cause at any time by the stockholders.
Section 10. Committees. Except as otherwise required by statute, the
Certificate of Incorporation or these By-Laws, the Board of Directors may, by
resolution passed by a majority of the Board of Directors, designate one or more
committees, each committee to consist of two or more directors. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meetings
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise the powers and authority of the Board of Directors,
in the management of the business and affairs of the corporation with the
exception of any authority the delegation of which is prohibited by Section 141
of the General Corporation Law, the Certificate of Incorporation or these
By-Laws, and may authorize the seal of the corporation to be affixed to all
papers which may require it.
Section 11. Directors' Action Without Meetings. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent thereto
is signed by all members of the Board of Directors or such committee as the case
may be, and such written consent is filed with the minutes of proceedings of the
Board of Directors or committee.
Section 12. Compensation of Directors. Directors may be paid such
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation or any of its parent or subsidiary corporations in any other
capacity and receiving compensation for such service.
ARTICLE III
Officers
Section 1. General. The Board of Directors shall elect the officers of
the corporation, which shall include a President, a Secretary and a Treasurer
and such other or additional officers (including, without limitation, a Chairman
of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant
Vice Presidents, Assistant Secretaries and Assistant Treasurers) as the Board of
Directors may designate.
Section 2. Term of Office; Removal and Vacancy. Each officer shall hold
his office until his successor is elected and qualified or until his earlier
resignation or removal. Any officer shall be subject to removal with or without
cause at any time by the Board of Directors. Vacancies in any office, whether
occurring by death, resignation, removal or otherwise, may be filled by the
Board of Directors.
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Section 3. Powers and Duties. Each of the officers of the corporation
shall, unless otherwise ordered by the Board of Directors, have such powers and
duties as generally pertain to his office as well as such powers and duties as
from time to time may be conferred upon him by the Board of Directors.
Section 4. Power to Vote Stock. Unless otherwise ordered by the Board
of Directors, the Chairman of the Board and the President each shall have full
power and authority on behalf of the corporation to attend and to vote at any
meeting of stockholders of any corporation in which this corporation may hold
stock, and may exercise on behalf of this corporation any and all of the rights
and powers incident to the ownership of such stock at any such meeting and shall
have power and authority to execute and deliver proxies, waivers and consents on
behalf of the corporation in connection with the exercise by the corporation of
the rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other person or
persons.
Section 5. Salaries. Officers of the corporation shall be entitled to
such salaries, compensation or reimbursement as shall be fixed or allowed from
time to time by the Board of Directors.
ARTICLE IV
Capital Stock
Section 1. Issuance of Stock. Unless otherwise voted by the
stockholders and subject to the provisions of the Certificate of Incorporation,
the whole or any part of any unissued balance of the authorized capital stock of
the corporation or the whole or any part of any unissued balance of the
authorized capital stock of the corporation held in its treasury may be issued,
sold, transferred or otherwise disposed of by vote of the Board of Directors in
such manner, for such consideration and on such terms as the Board of Directors
may determine.
Section 2. Certificates of Stock. Certificates for stock of the
corporation shall be in such form as the Board of Directors may from time to
time prescribe and shall be signed by the Chairman of the Board or a Vice
Chairman of the Board or the President or any Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary.
Section 3. Transfer of Stock. Shares of capital stock of the
corporation shall be transferable on the books of the corporation only by the
holder of record thereof, in person or by duly authorized attorney, upon
surrender and cancellation of certificates for a like number of shares, with an
assignment or power of transfer endorsed thereon or delivered therewith, duly
executed, and with such proof of the authenticity of the signature and of
authority to transfer, and of payment of transfer taxes, as the corporation or
its agents may require.
Section 4. Ownership of Stock. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the owner thereof
in fact and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise expressly provided by
law.
ARTICLE V
Miscellaneous
Section 1. Corporate Seal. The seal of the corporation shall be
circular in form and shall contain the name of the corporation and the year and
state of incorporation.
Section 2. Fiscal Year. Except as from time to time otherwise
determined by the Directors, the fiscal year of the corporation shall be the
twelve months ending December thirty-first.
Section 3. Waiver of Notice. Whenever any notice whatsoever is required
to be given by law, by the Certificate of Incorporation or by these By-Laws, a
waiver of such notice either in writing signed by the person entitled to such
notice or such person's duly authorized attorney, or by telegraph, cable or any
other available method, whether before, at or after the time stated in such
waiver, or the appearance of such person or persons at such meeting in person or
by proxy, shall be deemed equivalent to such notice.
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Section 4. Evidence of Authority. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith be
conclusive evidence of such action.
Section 5. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
solely because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.]
Section 6. Severability. Any determination that any provision of these
By-Laws is for any reason inapplicable, illegal or ineffective shall not affect
or invalidate any other provision of these By-Laws.
Section 7. Pronouns. All pronouns used in these By-Laws shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
ARTICLE VI
Amendment
The Board of Directors shall have the power to make, alter or repeal
the By-Laws of the corporation subject to the power of the stockholders to alter
or repeal the By-Laws made or altered by the Board of Directors.
ARTICLE VII
Indemnification
Except to the extent expressly prohibited by the Delaware General
Corporation Law, the corporation shall indemnify each person made or threatened
to be made a party to any action or proceeding, whether civil or criminal, and
whether by or in the right of the corporation or otherwise, by reason of the
fact that such person or such person's testator or intestate is or was a
director or officer of the corporation, or serves or served at the request of
the corporation any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity while he or she was
such a director or officer (hereinafter referred to as "Indemnified Person"),
against judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, including attorneys' fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such indemnification shall
be made if a judgment or other final adjudication adverse to such Indemnified
Person establishes that either (a) his or her acts were committed in bad faith,
or were the result of active and deliberate dishonesty, and were material to the
cause of action so adjudicated, or (b) that he or she personally gained in fact
a financial profit or other advantage to which he or she was not legally
entitled.
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The corporation shall advance or promptly reimburse upon request any
Indemnified Person for all expenses, including attorneys' fees, reasonably
incurred in defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if such Indemnified Person is ultimately
found not to be entitled to indemnification or, where indemnification is
granted, to the extent the expenses so advanced or reimbursed exceed the amount
to which such Indemnified Person is entitled.
Nothing herein shall limit or affect any right of any Indemnified
Person otherwise than hereunder to indemnification or expenses, including
attorneys' fees, under any statute, rule, regulation, Certificate of
Incorporation, By-Law, insurance policy, contract or otherwise.
Anything in these By-Laws to the contrary notwithstanding, no
elimination of this By-Law, and no amendment of this By-Law adversely affecting
the right of any Indemnified Person to indemnification or advancement of
expenses hereunder shall be effective until the 60th day following notice to
such Indemnified Person of such action, and no elimination of or amendment to
this By-Law shall thereafter deprive any Indemnified Person of his or her rights
hereunder arising out of alleged or actual occurrences, acts or failures to act
prior to such 60th day.
The corporation shall not, except by elimination or amendment of this
By-Law in a manner consistent with the preceding paragraph, take any corporate
action or enter into any agreement which prohibits, or otherwise limits the
rights of any Indemnified Person to, indemnification in accordance with the
provisions of this By-Law. The indemnification of any Indemnified Person
provided by this By-Law shall be deemed to be a contract between the corporation
and each Indemnified Person and shall continue after such Indemnified Person has
ceased to be a director or officer of the Corporation and shall inure to the
benefit of such Indemnified Person's heirs, executors, administrators and legal
representatives. If the corporation fails to timely make any payment pursuant to
the indemnification and advancement or reimbursement of expenses provisions of
this Article VII and an Indemnified Person commences an action or proceeding to
recover such payment, the corporation in addition shall advance or reimburse
such Indemnified Person for the legal fees and other expenses of such action or
proceeding.
The corporation is authorized to enter into agreements with any of its
directors or officers extending rights to indemnification and advancement of
expenses to such Indemnified Person to the fullest extent permitted by
applicable law, but the failure to enter into any such agreement shall not
affect or limit the rights of such Indemnified Person pursuant to this By-Law,
it being expressly recognized hereby that all directors or officers of the
corporation, by serving as such after the adoption hereof, are acting in
reliance hereon and that the corporation is estopped to contend otherwise.
Persons who are not directors or officers of the corporation shall be similarly
indemnified and entitled to advancement or reimbursement of expenses to the
extent authorized at any time by the Board of Directors.
In case any provision in this By-Law shall be determined at any time to
be unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the intention of the
corporation to afford indemnification and advancement of expenses to its
directors or officers, acting in such capacities or in the other capacities
mentioned herein, to the fullest extent permitted by law whether arising from
alleged or actual occurrences, acts or failures to act occurring before or after
the adoption of this Article VII.
For purposes of this By-Law, the corporation shall be deemed to have
requested an Indemnified Person to serve an employee benefit plan where the
performance by such Indemnified Person of his or her duties to the corporation
also imposes duties on, or otherwise involves services by, such Indemnified
Person to the plan or participants or beneficiaries of the plan, and excise
taxes assessed on an Indemnified Person with respect to an employee benefit plan
pursuant to applicable law shall be considered indemnifiable fines. For purposes
of this By-Law, the term "corporation" shall include any legal successor to the
corporation, including any corporation which acquires all or substantially all
of the assets of the corporation in one or more transactions.
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Appendix D--2000 Stock Option Plan
THE [EIEIHOME.COM INC.]
2000 STOCK OPTION PLAN
1. Purpose.
The purpose of the 2000 Stock Option Plan (the "Plan") of eieiHome.com Inc., a
Delaware corporation (the "Company"), is to attract and retain employees
(including officers), directors, consultants and independent contractors of the
Company, or any Subsidiary or Affiliate which now exists or hereafter is
organized or acquired, and to furnish additional incentives to such persons to
enhance the value of the Company over the long term encouraging them to acquire
a proprietary interest in the Company.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity if, at the time of granting
of an Option, (i) the Company, directly, owns at least 50% of the combined
voting power of all classes of stock of such entity or at least 50% of the
ownership interest in such entity or (ii) such entity, directly or indirectly,
owns at least 50% of the combined voting power of all classes of stock of the
Company.
(b) "Beneficiary" means the person, persons, trust or trusts
which have been designated by an Optionee in his or her most recent written
beneficiary designation filed with the Company to receive the Optionee's rights
under the Plan upon the Optionee's death, or, if there is no such designation or
no such designated person survives the Optionee, then the person, persons, trust
or trusts entitled by will or applicable law to receive such rights or, if no
such person has such right then the Optionee's executor or administrator.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means a change in control of the
Company which will be deemed to have occurred if:
(i) any "person" as such term is used in Section 13(d) and 14(d) of the
Exchange Act (other than an Exempt Person) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding voting securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii) or (iv) of this
Section 2(d) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) 50% or more of the combined voting power of the
voting securities of the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinbefore defined), other than an Exempt Person,
acquired 50% or more of the combined voting power of the Company's then
outstanding securities; or
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(iv) the stockholders of the Company approve of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any transaction
having a similar effect).
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means the committee, consisting exclusively of
two or more Non-Employee Directors (as defined in Rule 16b-3), if and as the
same may be established by the Board to administer the Plan; provided, however,
that to the extent required for the Plan to comply with the applicable
provisions of Section 162(m) of the Code, "Committee" means either such
committee or a subcommittee of that committee, as the case may be, which shall
be constituted to comply with the applicable requirements of Section 162(m) of
the Code and the regulations promulgated thereunder.
(g) "Company" means eieiHome.com Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(i) "Exempt Person" means (1) the Company, (2) any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, (3) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
Stock, or (4) any person or group of persons who, immediately prior to the
adoption of this Plan, owned more than 50% of the combined voting power of the
Company's then outstanding voting securities.
(j) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
Committee. Notwithstanding the foregoing, the per share Fair Market Value of
Stock as of a particular date shall mean (i) if the shares of Stock are then
listed on a national securities exchange, the closing sales price per share of
Stock on the national securities exchange on which the Stock is principally
traded, for the last preceding date on which there was a sale of such Stock on
such exchange, or (ii) if the shares of Stock are then traded on the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the reported per share closing price of the Stock
on the day prior to such date or, if there was no such price reported for such
date, on the next preceding date for which such a price was reported, or (iii)
if the shares of Stock are then traded in an over-the-counter market other than
on the NASDAQ National Market System, the average of the closing bid and asked
prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iv)
if the shares of Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as the Committee, in its sole
discretion, shall determine in good faith.
(k) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(l) "NQSO" means any Option not designated as an ISO.
(m) "Option" means a right, granted to an Optionee under
Section 6(b) of the Plan, to purchase shares of Stock, subject to the terms and
conditions of this Plan. An Option may be either an ISO or an NQSO, provided
that ISOs may be granted only to employees of the Company or a Subsidiary.
(n) "Optionee" means a person who, as an employee, director,
officer, consultant or independent contractor of the Company, a Subsidiary or an
Affiliate, has been granted an Option.
(o) "Plan" means this eieiHome.com Inc. 1999 Stock Option
Plan, as amended from time to time.
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(p) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect, promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(q) "Stock" means the common stock, par value $[0.001] per
share, of the Company.
(r) "Stock Option Agreement" means any written agreement,
contract, or other instrument or document evidencing an Option.
(s) "Subsidiary" means any corporation in which the Company,
directly or indirectly, owns stock possessing 50% or more of the total combined
voting power of all classes of stock of such corporation.
(t) "Ten Percent Shareholder" means a person or persons who
own, directly or indirectly, more than 10% of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall
have the authority, in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the persons to whom and
the time or times at which Options shall be granted; to determine the type and
number of Options to be granted, the number of shares of Stock to which Options
may relate and the terms, conditions, restrictions and performance criteria
relating to any Options; to determine whether, to what extent, and under what
circumstances Options may be settled, canceled, forfeited, exchanged or
surrendered; to make adjustments in the terms and conditions of, and the
criteria and performance objectives included in, Options in recognition of
unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations or
accounting principles; to designate Affiliates; to construe and interpret the
Plan and any Options; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Stock Option
Agreement (which need not be identical for each Optionee); and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Optionee (or any person
claiming any rights under the Plan from or through any Optionee) and any
stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Option
granted hereunder.
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4. Eligibility.
Options may be granted in the discretion of the Committee to employees
(including officers), directors, consultants and independent contractors of the
Company and its present or future Subsidiaries and Affiliates. In determining
the persons to whom Options shall be granted and the type of Options granted
(including the number of shares to be covered by such Options), the Committee
shall take into account such factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan.
5. Stock Subject to the Plan.
The maximum number of shares of Stock reserved for the grant of Options
under the Plan shall be 3,000,000 shares of Stock, subject to adjustment as
provided herein. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in private transactions or otherwise. The number of shares of Stock
available for issuance under the Plan shall be reduced by the number of shares
of Stock subject to outstanding Options. If any shares subject to an Option are
forfeited, canceled, exchanged or surrendered or if an Option otherwise
terminates or expires without a distribution of shares to the Optionee, the
shares of Stock with respect to such Option shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Options under the Plan. In no event shall any Optionee acquire,
pursuant to any awards of Options under this Plan, more than 25% of the
aggregate number of shares of Stock reserved for awards under the Plan.
In the event that the Committee shall determine, in it sole discretion,
that any dividend or other distribution (whether in the form of cash, Stock, or
other property), recapitalization, stock split, reverse split, any
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, license arrangement, strategic alliance or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of any Optionees under
the Plan, then the Committee shall make such equitable changes or adjustments as
it deems necessary or appropriate to any or all of (i) the number and kind of
shares of Stock which may thereafter be issued in connection with Options, (ii)
the number and kind of shares of Stock issued or issuable in respect of
outstanding Options, and (iii) the exercise price, grant price, or purchase
price relating to any Option; provided that, with respect to ISOs, such
adjustment shall be made in accordance with Section 424(h) of the Code.
6. Specific Terms of Options.
(a) General. Options may be granted at the discretion of the
Committee. The term of each Option shall be for such period as may be determined
by the Committee. The Committee may make rules relating to Options, and may
impose on any Option or the exercise thereof, at the date or thereafter, such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grand Options to
Optionees on the following terms and conditions:
i) Type of Option. The Stock Option Agreement evidencing the grant
of an Option under the Plan shall designate the Option as an ISO (in the event
its terms, and the individual to whom it is granted, satisfy the requirements
for ISOs under the Code), or an NQSO.
ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee; provided that,
in the case of an ISO, (i) such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option or such
other exercise price as may be required by the Code, (ii) if the Optionee is a
Ten Percent Shareholder, such exercise price shall not be less than 110% of the
Fair Market Value of a share of Stock on the date of grant of such Option and in
no event shall the exercise price for the purchase of shares of Stock be less
than par value. The exercise price for Stock subject to an Option may be paid in
cash or by an exchange of Stock owned by the Optionee for at least six months
prior to the date of the exchange ("Mature Stock"), or a combination of both, in
an amount having a combined value equal to such exercise price. Any shares of
Mature Stock exchanged upon the exercise of any Option shall be valued at the
Fair Market Value on the date on which such shares
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are exchanged. An Optionee may also elect to pay all or a portion of the
aggregate exercise price by having shares of Stock with a Fair Market Value on
the date of exercise equal to the aggregate exercise price withheld by the
Company or sold by a broker-dealer in accordance with applicable law.
iii) Term and Exercisability of Options. The date on which the
Committee adopts a resolution expressly granting an Option shall be considered
the day on which such Option is granted. Options shall be exercisable over the
exercise period (which shall not exceed ten years from the date of grant), at
such times and upon such conditions as the Committee may determine, as reflected
in the Stock Option Agreement. An Option may be exercised to the extent of any
or all full shares of Stock as to which the Option has become exercisable, by
giving written notice of such exercise to the Company's Secretary and paying the
exercise price as described in Section 6(b)(ii).
iv) Termination of Employment, etc. An Option may not be exercised
unless the Optionee is then in the employ or a director of, or then maintains an
independent contractor relationship with, the Company or any Subsidiary or
Affiliate (or a company or a parent or subsidiary company of such company
issuing or assuming the Option in a transaction to which Section 424(a) of the
Code applies), and unless the Optionee has continuously maintained any of such
relationships since the date of grant of the Option; provided that, the Stock
Option Agreement may contain provisions extending the exercisability of Options,
in the event or specified terminations, to a date not later than the expiration
date of such Option. The Committee may establish a period during which the
Beneficiaries of an Optionee who died while an employee, director or independent
contractor of the Company or any Subsidiary or Affiliate or during any extended
period referred to in the immediately preceding proviso may exercise those
Options which were exercisable on the date of the Optionee's death; provided
that no Option shall be exercisable after its expiration date.
v) Nontransferability. Options shall not be transferable by an Optionee
except by will or the laws of descent and distribution and shall be exercisable
during the lifetime of an Optionee only by such Optionee.
vi) Other Provisions. Options may be subject to such other conditions
as the Committee may prescribe in it discretion.
7. Change in Control Provisions.
In the event of a Change in Control, any and all Options then
outstanding shall become fully exercisable and vested, whether or not
theretofore vested and exercisable.
8. General Provisions.
(a) Compliance with Legal and Exchange Requirements. The Plan,
the granting and exercising of Options thereunder, and the other obligations of
the Company under the Plan and any Stock Option Agreement, shall be subject to
all applicable federal and state laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Stock under
any Option until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any state, federal or
foreign law, rule or regulation as the Company may consider appropriate, and may
require any Optionee to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
Stock in compliance with applicable laws, rules and regulations.
(b) No Right to Continued Employment, etc. Nothing in the Plan
or in any Option granted or Stock Option Agreement entered into pursuant to the
Plan shall confer upon any Optionee the right to continue in the employ of, or
to continue as a director of or an independent contractor to, the Company, any
Subsidiary or any Affiliate, as the case may be, or to be entitled to any
remuneration or benefits not set forth in the Plan or such Stock Option
Agreement or to interfere with or limit in any way the right of the Company or
any such Subsidiary or Affiliate to terminate such Optionee's employment,
directorship or independent contractor relationship.
(c) Taxes. The Company or any Subsidiary or Affiliate is
authorized to withhold from any Option granted, any payment relating to an
Option under the Plan (including from a distribution of Stock), or any other
payment to an Optionee, amounts of withholding and other taxes due in connection
with any transaction involving an
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Option, and to take such other action as the Committee may deem advisable to
enable the Company and an Optionee to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Option. This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect thereof in satisfaction of an Optionee's
tax obligations.
(d) Amendment and Termination of the Plan. The Board may at
any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part; provided that, no amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3 or Sections
422 and 424 of the Code and the regulations promulgated thereunder shall be
effective unless the same shall be approved by the requisite vote of the
stockholders of the Company entitled to vote thereon. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Optionee, without such Optionee's consent, under any Option theretofore granted
under the Plan.
(e) No Rights to Options; No Stockholder Rights. No person
shall have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, an Optionee or transferor of an Option shall have no rights
as a stockholder with respect to any shares covered by the Option until the date
of the issuance of a stock certificate to such Optionee for such shares.
(f) Unfunded Status of Options. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. Nothing
contained in the Plan or any Option shall give any such Optionee any rights that
are greater than those of a general creditor of the Company.
(g) No Fractional Shares. No fractional shares of Stock shall
be issued or delivered pursuant to the Plan or any Option. The Committee shall
determine whether cash, other Options, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(h) Governing Law. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(i) Effective Date; Plan Termination.
(i) The Plan shall take effect upon its adoption by the Board (the
"Effective Date"), but the Plan (and any grants of Options made prior to the
stock holder approval mentioned herein), shall be subject to the approval of the
holder(s) of a majority of the issued and outstanding shares of voting
securities of the Company entitled to vote, which approval must occur within
twelve months of the date the Plan is adopted by the Board. In the absence of
such approval, such Options shall be null and void.
(ii) The Board may terminate the Plan at any tine with respect to any
shares of Stock that are not subject to Options. Unless terminated earlier by
the Board, the Plan shall terminate ten years after the Effective Date and no
Options shall be granted under the Plan after such date. Termination of the Plan
under this Section 8(i) will not affect the rights and obligations of any
Optionee with respect to Options granted prior to termination.
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Appendix E--Provisions of the General Laws of Massachusetts Relating to the
Rights of Dissenting Stockholders
(SECTIONS 86 TO 98 OF CHAPTER 156B OF THE GENERAL LAWS OF MASSACHUSETTS)
86. RIGHT OF APPRAISAL. If a corporation proposes to take a corporate
action as to which any section of this chapter provides that a stockholder who
objects to such action shall have the right to demand payment for his shares and
an appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall
apply except as otherwise specifically provided in any section of this chapter.
Except as provided in sections eighty-two and eighty-three, no stockholder shall
have such right unless (1) he files with the corporation before the taking of
the vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
87. NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS. The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting
and effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not voted
in favor of such action has or may have the right to demand in writing from the
corporation (or, in the case of a consolidation or merger, the name of the
resulting or surviving corporation shall be inserted), within twenty days after
the date of mailing to him of notice in writing that the corporate action has
become effective, payment for his shares and an appraisal of the value thereof.
Such corporation and any such stockholder shall in such cases have the rights
and duties and shall follow the procedure set forth in sections 88 to 98,
inclusive, of chapter 156B of the General Laws of Massachusetts."
88. NOTICE TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE. The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
89. DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER. If within twenty days
after the date of mailing of a notice under subsection (e) of section
eighty-two, subsection (f) of section eighty-three, or section eighty-eight any
stockholder to whom the corporation was required to give such notice shall
demand in writing from the corporation taking such action, or in the case of a
consolidation or merger from the resulting or surviving corporation, payment for
his stock, the corporation upon which such demand is made shall pay to him the
fair value of his stock within thirty days after the expiration of the period
during which such demand may be made.
90. DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT. If during the
period of thirty days provided for in section eighty-nine the corporation upon
which such demand is made and any such objecting stockholder fail to agree as to
the value of such stock, such corporation or any such stockholder may within
four months after the expiration of such thirty-day period demand a
determination of the value of the stock of all such objecting stockholders by a
bill in equity filed in the superior court in the county where the corporation
in which such objecting stockholder held stock had or has its principal office
in the commonwealth.
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91. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF ETC; PARTIES TO BILL ETC;
SERVICE OF BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES ETC. If the bill
is filed by the corporation, it shall name as parties respondent all
stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
92. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC; ENTRY OF DECREE
DETERMINING VALUE OF STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED. After
hearing the court shall enter a decree determining the fair value of the stock
of those stockholders who have become entitled to the valuation of and payment
for their shares, and shall order the corporation to make payment of such value,
together with interest, if any, as hereinafter provided, to the stockholders
entitled thereto upon the transfer by them to the corporation of the
certificates representing such stock if certificated or if uncertificated, upon
receipt of an instruction transferring such stock to the corporation. For this
purpose, the value of the shares shall be determined as of the day preceding the
date of the vote approving the proposed corporate action and shall be exclusive
of any element of value arising from the expectation or accomplishment of the
proposed corporate action.
93. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL,
ETC., TO SPECIAL MASTER TO HEAR PARTIES, ETC. The court in its discretion may
refer the bill or any question arising thereunder to a special master to hear
the parties, make findings and report the same to the court, all in accordance
with the usual practice in suits in equity in the superior court.
94. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY
BE REQUIRED TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF PENDENCY
OF BILL, ETC. On motion the court may order stockholder parties to the bill to
submit their certificates of stock to the corporation for notation thereon of
the pendency of the bill, and may order the corporation to note such pendency in
its records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
95. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS,
ETC.; INTEREST ON AWARD, ETC. The costs of the bill, including the reasonable
compensation and expenses of any master appointed by the court, but exclusive of
fees of counsel or of experts retained by any party, shall be determined by the
court and taxed upon the parties to the bill, or any of them, in such manner as
appears to be equitable, except that all costs of giving notice to stockholders
as provided in this chapter shall be paid by the corporation. Interest shall be
paid upon any award from the date of the vote approving the proposed corporate
action, and the court may on application of any interested party determine the
amount of interest to be paid in the case of any stockholder.
96. STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETINGS OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS. Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled
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to notice of any meeting of stockholders or to vote such stock for any purpose
and shall not be entitled to the payment of dividends or other distribution on
the stock (except dividends or other distributions payable to stockholders of
record at a date which is prior to the date of the vote approving the proposed
corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the resulting or
surviving corporation, deliver to it a written withdrawal of his objections to
and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
97. CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY
STOCK, ETC. The shares of the corporation paid for by the corporation pursuant
to the provisions of this chapter shall have the status of treasury stock or in
the case of a consolidation or merger the shares or the securities of the
resulting or surviving corporation into which the shares of such objecting
stockholder would have been converted had he not objected to such consolidation
or merger shall have the status of treasury stock or securities.
98. ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS
SHARES TO BE EXCLUSIVE REMEDY; EXCEPTION. The enforcement by a stockholder of
his right to receive payment for his shares in the manner provided in this
chapter shall be an exclusive remedy except that this chapter shall not exclude
the right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him.
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