<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[x] Preliminary Proxy Statement
[_] Confidential, for use of the
commission only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
INTERCELL CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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----------------------------
NOTICE OF SPECIAL MEETING
AND PROXY STATEMENT
SPECIAL MEETING TO BE HELD
___________, 2000
----------------------------
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to attend the
Special Meeting of Shareholders of Intercell Corporation to be held at
____________________, _________________, Denver, Colorado on _____________,
_________ __, 2000 at _______ local time.
The Notice of Special Meeting of Shareholders and the Proxy Statement that
follow describe the business to be conducted at the meeting.
Whether you own a few or many shares of stock of Intercell Corporation, it
is important that your shares of stock be represented. In addition to the
election of directors and the ratification of the selection of the Company's
independent auditors, there is one important proposal being presented at this
year's meeting for you to review. If you cannot personally attend the meeting,
we encourage you to make certain you are represented at the meeting by signing
and dating the accompanying proxy card and promptly returning it in the enclosed
envelope. Returning your proxy card will not prevent you from voting in person,
but will assure that your vote will be counted if you are unable to attend the
meeting.
Sincerely,
__________, 2000 /s/ Paul H. Metzinger
----------------------
Paul H. Metzinger,
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Notice of Special Meeting................................................................ 3
General Information...................................................................... 4
Question and Answer Summary: About the Meeting.......................................... 4
Proposal No. 1 - Election of Directors................................................... 8
Executive Compensation................................................................... 10
Proposal No. 2 - Ratification of Selection of Independent Auditors....................... 16
Proposal No. 3 - Change of the Company's State of Incorporation from Colorado to Nevada.. 17
Additional Matters in Connection with the Re-Incorporation............................... 33
Security Ownership of Certain Beneficial Owners and Management........................... 34
Change in Control of the Company......................................................... 37
Solicitation of Proxies.................................................................. 38
Annual Report............................................................................ 38
Shareholder Proposals for 2001 Annual Meeting............................................ 38
Other Matters............................................................................ 38
Notice to Banks, Broker-Dealers and Voting Trustees and Their Nominees................... 39
Proxy/Voting Instruction Card
Appendix A - Articles of Amendment and Restatement
Appendix B - Bylaws
Appendix C - Plan of Merger
Appendix D - Statutory Provisions Regarding Dissenting Shareholders' Rights
</TABLE>
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----------------------------------
NOTICE OF 2000 SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2000
----------------------------------
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders (the
"Meeting") of Intercell Corporation, a Colorado corporation (the "Company"),
will be held on ________ _____ __, 2000 at ______ local time, at
_______________, __________________, Denver, Colorado for the following
purposes:
1. To elect the Board of Directors of the Company.
2. To ratify the selection of Gelfond Hochstadt Pangburn & Co. as the
Company's independent auditors for the fiscal year ending September
30, 2000.
3. To consider and vote upon a proposal to change the state of
incorporation of the Company from Colorado to Nevada (the "re-
incorporation") and the name of the Corporation to Intercell
International Corporation. In connection with this proposal,
shareholders may be entitled to assert dissenters' rights pursuant to
Colorado Revised Statutes Sections 7-113-101 through 7-113-302,
inclusive, which are described in the accompanying Proxy Statement
under "PROPOSAL NO. 3 CHANGE OF THE COMPANY'S STATE OF INCORPORATION
FROM COLORADO TO NEVADA--What are my dissenters' rights and how do I
exercise them?" and which are attached to the Proxy Statement.
4. To transact such other business as may properly come before the Meeting
and at any postponements or adjournments thereof.
Only shareholders of record at the close of business on ___________, 2000
are entitled to notice of and to vote at the Meeting or at any postponements or
adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of Proxy and return it
promptly in the postage-paid, return-addressed envelope provided for that
purpose. By returning your Proxy promptly you can help the Company avoid the
expense of follow-up mailings to ensure a quorum so that the Meeting can be
held. Shareholders who attend the Meeting may revoke a prior proxy and vote in
person as set forth in the proxy statement.
The enclosed proxy is being solicited by the Board of Directors of the
Company. The Board of Directors recommends that you vote in favor of the
proposed items. Your vote is important.
By Order of the Board of Directors
/s/ Kristi J. Kampmann
-----------------------
Kristi J. Kampmann,
Secretary
Denver, Colorado
Dated: __________, 2000
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INTERCELL CORPORATION
370 Seventeenth Street
Suite 3580
Denver, Colorado 80202
(303) 592 - 1010
__________________________________________________
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To be held _______ __, 2000
__________________________________________________
GENERAL INFORMATION
We are providing you with this proxy statement in connection with the
solicitation of proxies by and on behalf of Intercell Corporation, a Colorado
corporation, for use at the Special Meeting of Shareholders to be held at
___________________, ________________, Denver, Colorado on ________, ___________
__, 2000 at _____ local time, and at any and all postponements or adjournments
thereof (the "Meeting"). This proxy statement, the accompanying form of proxy
and the Notice of Special Meeting will be first mailed or given to the Company's
shareholders on or about ________ __, 2000.
Because many of the Company's shareholders may be unable to attend the
Meeting in person, our board of directors solicits proxies by mail to give each
shareholder an opportunity to vote on all matters presented at the Meeting.
Shareholders are urged to:
(1) read this Proxy Statement carefully;
(2) specify their choice in each matter by marking the appropriate box on
the enclosed Proxy; and
(3) sign, date and return the Proxy by mail in the postage-paid, return-
addressed envelope provided for that purpose.
QUESTION AND ANSWER SUMMARY: ABOUT THE MEETING
What is being voted on at the Meeting?
Our board of directors is asking shareholders to consider three items at
this Special Meeting of Shareholders:
. to elect directors to our board of directors;
. to ratify the selection of Gelfond Hochstadt Pangburn & Co. as our
independent auditors for the fiscal year ending June 30, 2000; and
. to approve a plan of merger with Intercell International Corporation, a
Nevada corporation so that we can reorganize from a Colorado corporation
to a Nevada corporation and change the name of the Company.
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What are the main terms of the merger with Intercell International Corporation?
Intercell Corporation is currently governed by Colorado law. We are
proposing the merger with Intercell International Corporation solely to re-
incorporate under Nevada law. We need at least a majority of the votes entitled
to be cast to approve the merger for it to be adopted. If the merger is
adopted:
. We will merge into our newly organized subsidiary, "Intercell
International Corporation," a Nevada corporation.
. We will do business under the name of "Intercell International
Corporation."
. Our business, directors, management, fiscal year, assets or liabilities
or the location of our principal executive offices will not change as a
result of the merger.
. We will be governed by Nevada law and by the articles and bylaws of
Intercell International Corporation, which are substantially similar to
our articles and bylaws and are attached to this proxy statement as
appendices A and B, respectively.
. Unless you exercise your dissenters' rights under Colorado law, you will
automatically become a shareholder of Intercell International
Corporation. A copy of the applicable statutory provisions under
Colorado law is attached to this proxy statement as Appendix D.
The proposed merger with Intercell International Corporation is discussed in
more detail in "PROPOSAL NO. 3 - CHANGE OF THE COMPANY'S STATE OF INCORPORATION
FROM COLORADO TO NEVADA" below.
What rights do I have if I am opposed to the plan of re-incorporation?
You have dissenting shareholders' rights to have your shares of stock
redeemed at fair market value if you dissent to the plan of re-incorporation and
if you follow the procedures that are explained in more detail in "PROPOSAL NO.
3 - CHANGE OF THE COMPANY'S STATE OF INCORPORATION FROM COLORADO TO NEVADA"
below. The statutory provisions under Colorado law that govern dissenters'
rights are attached to this proxy solicitation statement as Appendix D.
Who can vote at the Meeting?
Our board of directors has set ____________, 2000 as the record date for
the Meeting. Only persons holding shares of our common stock, no par value, or
shares of our Series E preferred stock, of record at the close of business on
the record date will be entitled to receive notice of and to vote at the
Meeting. Each share of our common stock will be entitled to one vote and each
share of our Series E preferred stock will be entitled to 120,000 votes on each
matter properly submitted for vote to our shareholders at the Meeting. On the
Record Date there were 99,891,188 shares of our common stock outstanding held by
a total of 540 shareholders of record and 1,000 shares of our Series E preferred
stock outstanding. Therefore, there are a total of 219,891,188 votes that will
be entitled to be cast at the Meeting.
What constitutes a quorum for the Meeting?
Quorum for the Meeting is based on the number of votes that can be cast
rather than the number of actual shares of stock that are represented, because
each share of common stock has one vote per share, while each share of Series E
preferred stock has 120,000 votes per share. To have a quorum, we need
5
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one-third of the votes entitled to be cast to be present, in person or by proxy,
including votes as to which authority to vote on any proposal is withheld,
shares of stock abstaining as to any proposal, and broker non-votes (where a
broker submits a proxy but does not have authority to vote a customer's shares
of stock on one or more matters) on any proposal, will be considered present at
the Meeting for purposes of establishing a quorum for the transaction of
business at the meeting. Each will be tabulated separately. The Series E
preferred shares of stock represent more than enough votes for a quorum and the
holders of these shares have informed us that they will all be represented at
the Meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it
to us, it will be voted as you direct, unless you later revoke the proxy.
Unless instructions to the contrary are marked, or if no instructions are
specified, shares of stock represented by a proxy will be voted for the
proposals set forth on the proxy, and in the discretion of the persons named as
proxies on such other matters as may properly come before the Meeting. If you
are a registered shareholder, that is, if you hold your shares of stock in
certificate form, and you attend the Meeting, you may deliver your completed
proxy card in person. If you hold your shares of stock in "street name," that
is, if you hold your shares of stock through a broker or other nominee, and you
wish to vote in person at the Meeting, you will need to obtain a proxy form from
the institution that holds your shares of stock.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with our Secretary, at the
address indicated above, either a written notice of revocation, a duly executed
proxy bearing a later date, or if you vote in person at the Meeting. The powers
of the proxy holders will be suspended if you attend the Meeting in person and
so request. However, attendance at the Meeting will not by itself revoke a
previously granted proxy.
Any written notice of revocation sent to us must include the shareholder's
name and must be received prior to the Meeting to be effective.
What vote is required to approve each item?
Election of Directors. The election of each director nominee (Item 1)
requires the affirmative vote of a plurality of the votes cast in the election
of directors at the Meeting. Our shareholders are not entitled to cumulate
votes with respect to the election of directors. The Series E preferred shares
of stock represent more than enough votes to elect each director nominee and the
holders of those shares of stock have informed us that they will vote in favor
of the election of each director nominee.
Ratification of Independent Auditors. An affirmative vote of a majority of
the votes cast at the Meeting is required for ratification of the selection of
Gelfond Hochstadt Pangburn & Co. as our independent auditors (Item 2). The
Series E preferred shares of stock represent enough votes to ratify the
selection of the auditors and the holders of those shares of stock have informed
us that they intend to ratify the selection of the auditors.
The Re-incorporation. The approval of the merger with Intercell
International Corporation to reorganize under Nevada law (Item 3) requires the
affirmative vote of a majority of our outstanding votes that are entitled to be
cast at the Meeting. The Series E preferred shares of stock represent enough
votes to approve this proposal and the holders of those shares of stock have
informed us that they intend to approve the re-incorporation.
6
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Other Matters. If you hold your shares of stock in "street name," your
broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares of stock may not be voted
on those matters and will not be counted in determining the number of shares of
stock necessary for approval. Shares of stock represented by such "broker non-
votes" will, however, be counted in determining whether there is a quorum.
Abstentions are counted in tabulations of the votes cast on proposals
presented to shareholders, while, except for Proposal No. 3, broker non-votes
are not counted for purposes of determining whether a proposal has been
approved. Therefore, for all matters presented at the Meeting, abstentions will
have the same effect as a vote against the proposal and, for all matters
presented at the Meeting except Proposal No. 3, broker non-votes will have no
effect and for Proposal No. 3, broker non-votes will have the same effect as a
vote against the proposal.
Votes cast by proxy will be tabulated by an automated system administered
by Corporate Stock Transfer, Inc., our transfer agent. Votes cast by proxy or
in person at the Meeting will be counted by the independent persons appointed by
the Company to act as election inspectors for the Meeting.
7
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Special Meeting of Shareholders of Intercell Corporation (the
"Company") to be held on ________, _____________, 2000, and at any and all
postponements or adjournments thereof (the "Meeting"), it is intended that the
shares of the Company's common stock, no par value (the "Company's Common
Stock") and the shares of the Company's Series E Preferred Shares (the
"Company's Series E Preferred Stock" and, together with the Company's Common
Stock, the "Company's Stock") represented by properly executed proxies that are
enclosed herewith (each, a "Proxy") will be voted to elect the director
nominees, unless authority so to vote is withheld. Each nominee is currently a
member of the Board of Director's of Intercell (the "Board") and all of the
nominees have indicated a willingness to serve as a director if elected. If
elected, each nominee will serve until the 2001 Annual Meeting of Shareholders
or until his earlier removal or resignation. The Board has no reason to believe
that any of the director nominees will be unable to serve as directors or become
unavailable for any reason. If, at the time of the Meeting, any of the director
nominees shall become unavailable for any reason, the persons entitled to vote
the Proxy will vote, as such persons shall determine in his or her discretion,
for such substituted nominee or nominees, if any, nominated by the Board. There
are no family relationships among any directors and executive officers of the
Company.
The affirmative vote of a plurality of the votes present or represented to
vote at the Meeting is necessary to elect each director nominee. The Company's
Series E Preferred Stock represents more than enough votes to elect each
director nominee and the holders of that Stock have informed the Company that
they will vote for the election of each director nominee. Shareholders of the
Company will have an opportunity on their Proxy to vote in favor of one or more
director nominees while withholding authority to vote for one or more director
nominees.
THE BOARD RECOMMENDS THAT SHAREHOLDERS GRANT AUTHORITY FOR THE ELECTION OF THE
NOMINEES TO THE BOARD OF DIRECTORS
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Directors
The following table sets forth certain information with respect to the
directors of the Company:
<TABLE>
<CAPTION>
Principal Occupation or Employment During the Past Director of the
Name and Age Five Years; Other Directorships Company Since
- ------------------------ ----------------------------------------------------------------- --------------------
<C> <S> <C>
Paul H. Metzinger Mr. Metzinger has been President, Chief Executive Officer, Chief May 28, 1997
(61) Financial Officer and a director of the Company since May 28,
1997. In addition, he serves as the President and Chief
Executive Officer and a Director of Nanopierce Technologies,
Inc. ("Nanopierce"). Prior to becoming a director and officer
of the Company, Mr. Metzinger served as Intercell's General
Counsel and practiced securities law in Denver, Colorado for
over 30 years.
Charles E. Bauer, Ph.D. Dr. Bauer has served as a director of the Company since November November 22, 1996
(48) 22, 1996. Dr. Bauer has been the Managing Director of TechLead
Corporation, an international consulting firm, since 1990. Dr.
Bauer received his B.S. in Materials Science and Engineering
from Stanford University in 1972, his M.S. in Metallurgical
Engineering from Ohio State University in 1975, his Ph.D. in
Materials Science and Engineering from Oregon Graduate Center,
Beaverton, Oregon in 1980 and his M.B.A. from the University of
Portland in 1988.
Kevin B. Waide Mr. Waide has been a director of the Company since January 28, January 28, 1998
(48) 1998. Mr. Waide's experience includes six years of sales and
marketing for a large, independent, Denver-based accounting firm
and fourteen years in various positions in the securities
industry. Mr. Waide has an extensive background in business
analysis, mergers, acquisitions and franchising. Mr. Waide is a
graduate of Central College in Pella, Iowa.
R. Mark Richards Mr. Richards has been a director of the Company since February, February, 2000
(49) 2000. He has been the Program Administrator-Radiological
Engineering, Rocky Flats Environmental Technology Site, Denver,
Colorado, for the past eight years. Mr. Richards received his
BS from the Colorado School of Mines in Golden, Colorado.
Mallory Smith Mr. Smith has been a director of the Company since February, February, 2000
(50) 2000. Mr. Smith is a Certified Public Accountant and has
maintained his own accounting practice for the last 18 years.
Mr. Smith is a member of the board of directors of the Small
Business Finance Company which he has occupied since 1983. Mr.
Smith received his B.A. from Queens College in New York.
</TABLE>
Each of the persons named above has been nominated for election to the
Board of the Company.
Arrangements Regarding the Selection of Directors
The Series E Preferred Shareholders have agreed that they will vote in
favor of the re-election of each of the nominees listed above.
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Board of Directors Meetings; Committees
The Board held two meetings during the fiscal year ended September 30,
1999. The Board did not take any actions by unanimous written consent. During
a director's tenure, no director attended fewer than 75% of the aggregate of (a)
the total number of meetings of the Board during 1999; and (b) the total number
of meetings held by all committees of the Board on which he served during 1999.
The Board does not have standing audit, nominating or compensation committees.
Executive Officers and Significant Employees
Set forth below is information about the executive officers and employees
who are expected to make a significant contribution to the business of the
Company that are not also directors of the Company, including age, principal
occupation during the last five years and the date each became an executive
officer or employee of the Company. Similar information about Mr. Metzinger,
the Chief Executive Officer and Chief Financial Officer is provided above under
"-Directors."
<TABLE>
<CAPTION>
Name/Age Present Executive Office Executive Officer Since
- -------------------- --------------------------------------------------------------- ------------------------
<S> <C> <C>
Kristi J. Kampmann Ms. Kampmann has been Secretary of the Company since July July 1999
(27) 1999. In addition, she has served as the Secretary of
Nanopierce since February 1998 and the Chief Financial Officer
of Nanopierce since October 15, 1999. Since June 1997, she
has been the administrative assistant to the Chief Executive
Officer, Chief Financial Officer and the Executive Vice
President of Technology & Marketing and paralegal for both the
Company and Nanopierce. From April 1996 to June 1997, she
served as a paralegal and administrative assistant for Paul H.
Metzinger, P.C. Ms. Kampmann graduated from the Denver
Paralegal Institute in 1996. Ms. Kampmann received a B.A.
from the University of Minnesota in Morris in 1995, majoring
in Political Science with a minor in Business Management. She
currently is attending the University of Colorado at Denver,
where she is completing work on an M.B.A.
</TABLE>
EXECUTIVE COMPENSATION
Compensation of Directors
"Independent Directors" who are not employees of the Company or its
affiliates are entitled to receive a fee of $1,000 per meeting of the Board.
Due to a lack of operating capital, the meeting fee has not been paid by the
Company.
Directors who are employees of the Company are not paid director's fees,
but the Company does reimburse directors for travel expenses incurred in
connection with their activities on behalf of the Company.
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Summary Compensation Table
The following table sets forth the compensation awarded to, earned by, or
paid to (i) the Company's Chief Executive Officer ("CEO") during 1999, 1998 and
1997 and any other executive officer whose total compensation exceeded $100,000
during 1999, 1998 and 1997 (collectively, with the CEO, the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION:
- -----------------------------------------------------------------------------------------------------------
Name and Principal Year Salary ($) Bonus($) Other Annual
Positions Compensation ($)
<S> <C> <C> <C> <C>
Paul H. Metzinger 1999 17,500 -0- -0-
Director, Chairman of 1998 66,500 -0- -0-
the Board, Chief 1997 70,000 -0- -0-
Financial Officer and
Chief Executive
Officer(1)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION:
- --------------------------------------------------------------------------------------------------------------
Name and Principal Year Restricted Securities Long-Term All Other
Positions Stock Underlying Incentive Compensation
($) Options Stock Plan
Appreciation ("LTIP")
Rights ("SARs") Payouts ($)
(#)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul H. Metzinger 1999 -0- -0- -0- -0-
Director, Chairman of the 1998 -0- -0- -0- -0-
Board, Chief Financial 1997 -0- -0- -0- -0-
Executive and Chief
Executive Officer(2)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
_______________
(1) Paul H. Metzinger was elected President and Chief Executive Officer of the
Company on May 28, 1997. He is entitled to receive an annual salary of
$210,000 pursuant to an Employment Agreement with the Company, dated as of
June 1, 1998. During the period from October 1, 1997 to September 30, 1998,
Mr. Metzinger did not receive $143,500 in salary from the Company, which was
not paid due to lack of operating capital. From October 1, 1998 through
September 30, 1999, Mr. Metzinger did not receive $192,500 in salary from
the Company for the same reason.
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(2) Mr. Metzinger's wife, Cheri L. Metzinger is the holder of presently
exercisable options to acquire up to 650,000 of the Company's Common Stock
at an exercise price of $0.50 per share and an additional 1,700,000 shares
at an exercise price of $0.3750 per share. Each of these options was issued
on September 30, 1997 and expires September 30, 2007. Cheri L. Metzinger is
also the beneficial owner of 33,868,929 acquired but unissued shares of the
Company's Common Stock acquired by Corporate Advisors, Inc. that will be
issued at such time as the Company increases its authorized capital to
permit the issuance of such Shares, as well as an additional 3,852,544
shares of the Company's Common Stock. Mr. Metzinger should be deemed to be
the beneficial owner of such shares of the Company's Common Stock.
The foregoing compensation table does not include certain fringe benefits
made available on a nondiscriminatory basis to all Company employees such as
group health insurance, dental insurance, long-term disability insurance,
vacation and sick leave. In addition, the Company makes available certain non-
monetary benefits to its executive officers with a view to acquiring and
retaining qualified personnel and facilitating job performance. The Company
considers such benefits to be ordinary and incidental business costs and
expenses. The aggregate value of such benefits in the case of each executive
officer and of the group listed in the above table, which cannot be ascertained
but that is less than 10% of the cash compensation paid to each such executive
officer or to the group, respectively, is not included in such table.
Compensation Pursuant to Plans
Stock Option Plans. The Company has a stock option plan, the 1995
Compensatory Stock Option Plan (the "Stock Option Plan"), under which options
may currently be granted. Directors, executive officers, other key employees
and other key persons associated with the Company are eligible to receive
options under this plan.
The Board believe that stock-based compensation programs are a key element
in achieving the Company's anticipated financial and operational success. The
Company has established the Stock Option Plan to enable employees, agents and
directors of the Company, and advisors and consultants of the Company to
participate in the ownership of the Company to attract and retain such qualified
personnel and to otherwise provide additional incentive for option holders to
promote the success of the Company. Subject to adjustments for such matter as
re-capitalization, consolidation, merger, stock-split, reverse stock-split,
dividends payable in capital stock, re-incorporation, sale of substantially all
the corporate assets and other change-in-control transactions, the Company
reserved 14,000,000 of the Company's Common Stock, which equals 14.0% of the
Company's Common Stock outstanding as of April 1, 2000, for grant under the
Stock Option Plan. Subject to adjustment as described above, the Board may not,
without the approval of the shareholders of the Company, increase the maximum
number of shares of stock for which options may be granted or the classification
of persons enabled to receive options under the Stock Option Plan.
The Stock Option Plan is designed to attract and retain employees,
directors and agents of the Company, and advisors and consultants to the Company
and to provide incentives to such persons to maximize the Company's cash flow
available for distribution. The Stock Option Plan provides for the award to
employees of the Company or its subsidiaries or directors who are also employees
of the Company or its subsidiary, of incentive stock options and provides for
the award to directors, employees, directors and agents of the Company, as well
as advisors and consultants to the Company, of non-qualified stock options
(unless the context indicates to the contrary, the term "option" shall refer to
both incentive and non-qualified stock options).
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The Stock Option Plan is administered by the Board, unless and until a
compensation committee is appointed to administer the Stock Option Plan. The
Board or, if applicable, the compensation committee, shall construe and
interpret the Stock Option Plan and, subject to the express provisions of the
Stock Option Plan, is authorized to select from among the eligible employees of
the Company the individuals to whom options are to be granted and to determine
the number of the Company's Common Stock to be subject thereto and the terms and
conditions thereof. For purposes of acting with respect to the Stock Option
Plan, a majority of the Board shall constitute a quorum and any action may be
taken by a majority of those present and voting at any meeting. The Board is
also authorized to adopt, amend and rescind rules relating to the administration
of the Stock Option Plan.
Awards under the Stock Option Plan
Terms and Conditions of Options; Payment. The options shall be evidenced
by an option agreement executed on behalf of the Company and the option holder.
Incentive stock options and non-qualified options granted under the Stock Option
Plan are exercisable for a period that is determined by the Board; provided,
that the exercise period shall not exceed ten (10) years from the date of the
grant and may require a shorter exercise period under certain circumstances
specified in the Stock Option Plan, including but not limited to the termination
of the employment of an employee or the death of an option holder.
The vesting period for the options is determined by the Board. If, after
the vesting period, the optionee exercises the option, payment may be made
either in cash, certified check or other form of immediately available funds,
with previously issued Company's Common Stock (valued as of the date of the
option exercise), a combination of cash, certified check or other form of
immediately available funds and the Company's Common Stock or any other
consideration permitted under applicable law; provided, that payment of the
exercise price by delivery of the Company's Common Stock may be made only upon
the condition that such payment does not result in a charge to earnings for
financial accounting purposes, unless such condition is waived by the Board.
The Company will issue stock certificates from between 30 and 90 days from the
date of the receipt of notice and payment for the Company's Common Stock.
Non-qualified Stock Options. The Board may grant non-qualified stock
options to directors, officers, key employees of the Company, as well as agents,
directors of and advisors and consultants to the Company and such options may
provide for the right to purchase the Company's Common Stock at a specified
price which may be less than fair market value (but not less than par value) on
the date of grant as provided by the Board; provided, that the price shall not
be less than 50% of the fair market value of the stock determined as of the date
of grant of such Option or the date of modification of the exercise price of any
such option.
Incentive Stock Options. Incentive stock options are designed to comply
with the provisions of the Code and are subject to restrictions contained in the
Code, including a requirement that exercise prices are equal to at least 100% of
fair market value of the Company's Common Stock on the grant date and a ten-year
restriction on the option term, but may be subsequently modified to disqualify
them from treatment as incentive stock options. For purposes of the Stock
Option Plan, the fair market value of a Share as of a given date is the average
of the daily market price for the ten consecutive trading days immediately
preceding the valuation date. To the extent the aggregate fair market value of
the Company's Common Stock with respect to which incentive stock options are
exercisable for the first time by the optionee during any calendar year under
the Stock Option Plan exceeds $100,000, such options shall be treated as non-
qualified options to the extent required by the Code. In addition, if an
employee to whom an incentive stock option in granted possesses more than 10% of
the total combined voting power of all classes of stock of the Company or any
subsidiary, the option price shall not be less than 110% of
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<PAGE>
the fair market value of the stock determined at the time such option was
granted and such option shall not be exercisable after the expiration of five
years from the date such option is granted.
Notwithstanding anything to the contrary herein, the Company has not and
does not intend to issue any incentive stock options that are qualified under
the Code.
Employment Agreement
The Company has a written employment agreement (the "Employment Agreement")
with its CEO, Mr. Metzinger. The Employment Agreement is effective as of June
1, 1998, and terminates on May 31, 2002. Pursuant to the Employment Agreement,
Mr. Metzinger receives an annual salary of $210,000. During the period from
October 1, 1997 to September 30, 1998, Mr. Metzinger did not receive $143,500 in
salary from the Company, which was not paid due to lack of operating capital.
During the period from October 1, 1998 through September 30, 1999, Mr. Metzinger
did not receive $192,500 in salary from the Company for the same reason.
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
The following table provides information related to the exercise of stock
options during the fiscal year ended September 30, 1999 by the CEO and each of
the Named Executive Officers and the 1999 fiscal year-end value of unexercised
options. No options were exercised during the fiscal year ended September 30,
1999 and neither the CEO nor any of the Named Executive Officers were granted
stock option rights under the Stock Option Plan during the fiscal year ended
September 30, 1999.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
- -----------------------------------------------------------------------------------------------------
Value of
Unexercised In-
Number of Unexercised the-Money
Options/SARS Options/SARS
Shares of the at FY-End (#) at FY-End ($)
Company's --------------------- -----------------
Common Stock Value
Acquired Realized Exercisable/ Exercisable/
Name On Exercise (#) ($) Unexercisable Unexercisable (1)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul H. Metzinger 0 0 2,350,000/0 47,000/0
- ------------------------------------------------------------------------------------------------------
Charles E. Bauer 0 0 100,000/0 2,000/0
- ------------------------------------------------------------------------------------------------------
Kristi J. Kampmann 0 0 200,000/0 4,000/0
- ------------------------------------------------------------------------------------------------------
Kevin B. Waide 0 0 150,000/0 3,000/0
- ------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Market value of underlying Company's Common Stock on date of fiscal year-end
minus the exercise price. The closing price of the Company's Common Stock on
September 30, 1999 was $0.02.
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Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities ("10%
Shareholders") to file with the Securities and Exchange Commission (the
"Commission") reports of ownership and changes in ownership of equity securities
of the Company and to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge (based solely upon a review of the copies of
such Section 16(a) reports furnished to the Company and written representations
that no other reports were required), for the Company's fiscal year ended
December 31, 1999, the Company's officers, directors and 10% Shareholders have
complied with the Section 16(a) filing requirements.
15
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Gelfond Hochstadt Pangburn & Co. to serve as
independent auditors of the Company for the fiscal year ending September 30,
2000. The shareholders of the Company are being asked to ratify this selection
at the Meeting. Gelfond Hochstadt Pangburn & Co. has served as the Company's
independent auditors since September 30, 1998. Representatives of Gelfond
Hochstadt Pangburn & Co. will not be present at the Meeting.
Although it is not required to do so, the Board is submitting its selection
of the Company's independent auditors for ratification by the shareholders at
the Meeting in order to ascertain the views of shareholders regarding such
selection. A majority of the votes cast at the Meeting, if a quorum is present,
will be sufficient to ratify the selection of Gelfond Hochstadt Pangburn & Co.
as the Company's independent auditors for the fiscal year ending September 30,
2000. The Company's Series E Preferred Stock represents more than enough votes
to ratify the selection of the independent auditors and those holders have
informed the Company that they intend to ratify the selection of the independent
auditors. Whether the proposal is approved or defeated, the Board may
reconsider its selection.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2
16
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PROPOSAL NO. 3
CHANGE OF THE COMPANY'S
STATE OF INCORPORATION FROM COLORADO TO NEVADA
The Board believes that it is in the best interests of the Company and its
shareholders to reorganize (the "re-incorporation") the Company by changing the
state of incorporation of the Company from Colorado to Nevada. The re-
incorporation will be accomplished by merging the Company with and into
Intercell International Corporation (the "New Company"), a newly organized
Nevada corporation that is a wholly owned subsidiary of the Company. The New
Company currently has no operations and was created by the Company for the sole
purpose of effecting the re-incorporation. The New Company will be the
surviving corporation and after the re-incorporation will maintain the name of
the subsidiary, Intercell International Corporation and will have the same
capitalization as Intercell, as each outstanding security of Intercell will be
exchanged for a like security of the New Company. The following describes the
significant terms of the re-incorporation, including the procedures that must be
followed in connection therewith, the benefits and potential drawbacks of the
re-incorporation and the effect of the re-incorporation on shareholders' rights.
What are the benefits of the re-incorporation?
The purpose of the re-incorporation is to change the state of incorporation
of the Company from Colorado to Nevada. The re-incorporation is intended to
permit the Company to be governed by the Nevada Revised Statutes ("Nevada law")
rather than by the Colorado Revised Statutes ("Colorado law"). By re-
incorporating in Nevada, the Company would be governed by statutory provisions
that are similar to the laws of the State of Delaware, without being subject to
the higher tax rates applicable to a Delaware corporation.
Nevada law has several provisions that the Company believes are conducive
to the operations of the Company and are advantageous compared to Colorado law,
some of which include the following:
. Shareholders can act by written consent that does not have to be
unanimous;
. Management has more flexibility with respect to certain actions, such as
stock splits or reverse stock splits that can be effected by the
directors without a vote of the shareholders, so long as a corresponding
increase or decrease is made in the authorized capital of the
corporation;
. The minimum amount of notice that must be provided to the shareholders
under certain circumstances such as increasing authorized capital is
shorter, which allows for quicker and more efficient action by the
board; and
. Nevada law includes statutory provisions governing the change in control
of the corporation.
What are the disadvantages of the re-incorporation?
Despite the belief of the Board that the re-incorporation is in the best
interests of the Company and its shareholders, Colorado and Nevada law differ in
some respects. Nevada law may not afford shareholders the same rights as
Colorado law. For a comparison of shareholders' rights and the powers of
management under Nevada and Colorado law, see "--How do the rights of
shareholders compare before and after the re-incorporation" below.
What is the effect of the re-incorporation on the Company?
The re-incorporation has been unanimously approved by the Board, based on
the plan of merger that is attached hereto as Appendix C. Upon receiving
shareholder approval, the plan of merger will
17
<PAGE>
become effective (such time, the "Effective Time") when the approved plan of
merger is filed with and accepted for record by the Secretary of State of
Colorado and the Secretary of State of Nevada as Articles of Merger. This filing
is anticipated to be made as soon as possible after the Special Meeting. At the
Effective Time:
. The Company will be merged with and into the New Company, with the New
Company being the surviving corporation in the merger and the name of
the New Company will be Intercell International, Inc.;
. The first board of directors of the New Company (the "New Board") will
be the same as the Board;
. The Company will cease to be governed by Colorado law and will be
governed as the New Company under Nevada law; and
. The New Company will be governed by the Articles of Incorporation of the
New Company (the "New Articles") and Bylaws of the New Company (the "New
Bylaws"), which are included as Appendices A and B to this proxy
statement.
The re-incorporation is subject to conditions, including approval by a
majority of the votes of the Company entitled to be cast at the Meeting.
What is the effect of the re-incorporation on the holders of the Company's
securities?
The re-incorporation will have minimal effect on the existing security
holders of the Company. At the Effective Time, unless shareholders exercise
their dissenters' rights as described herein, all of the Company's securities
will be converted into securities of the New Company. At the Effective Time,
the conversion will occur as follows:
. All of the Company's Common Stock will be converted into shares of
common stock, no par value, of the New Company (the "New Company's
Common Stock"), as described in the New Articles;
. Each share certificate that represented a share of the Company's Common
Stock immediately prior to the Effective Time will thereafter be deemed
to represent one share of the New Company's Common Stock without any
action on the part of the holder;
. All shares of the Company's Preferred Stock will be converted into
shares of preferred stock of the New Company (the "New Company's
Preferred Stock" and, collectively with the New Company's Common Stock,
the "New Company's Stock"), as described in the New Articles;
. All share certificates that represented a share of the Company's
Preferred Stock immediately prior to the Effective Time will thereafter
be deemed to represent one share of the New Company's Preferred Stock on
the same terms, with the same designations, rights and preferences,
without any action on the part of the holder; and
. Each of the options, warrants, debentures and any other outstanding
securities of the Company immediately prior to the Effective Time will
thereafter be deemed to represent like securities of the New Company,
with like conversion rights into common shares of stock of the New
Company without any action on the part of the holder.
Will the Company's business change after the re-incorporation?
No. The re-incorporation will not result in any change in the Company's
business, directors, management, fiscal year, assets or liabilities or the
location of its principal executive offices. The New
18
<PAGE>
Company will also have its principal office located at 370 Seventeenth Street,
Suite 3580, Denver, Colorado 80202 (303) 592-1010. The New Company has no
current business operations, as it was incorporated for the sole purpose of
effecting the merger with the Company. Upon the merger of the Company into the
New Company, the New Company will conduct the business that is currently being
conducted by the Company. The directors that are elected by the Company at the
Meeting will be the directors of the New Company.
Each share of the New Company's Common Stock outstanding after the
Effective Time will entitle the holder thereof to voting rights (except as
provided below), dividend rights and liquidation rights equivalent to the rights
of holders of the Company's Common Stock prior to the effective time. Shares of
the Company's Common Stock are currently traded on the over-the-counter market
and are quoted on the OTC Bulletin Board under the symbol "INCE." Following the
Effective Time, share of the New Company's Common Stock will be traded on the
over-the-counter market and will be quoted on the OTC Bulletin Board under the
same symbol, "INCE."
If the re-incorporation is approved and the merger is completed, the
Company will take action as necessary to provide that all rights of participants
in the Company's Stock Option Plan to receive stock options and restricted
stock, will become substantially identical rights to receive grants of stock
options and restricted stock with respect to the New Company's Common Stock, and
the right to purchase the New Company's Common Stock, respectively. Such new
rights will be on substantially identical terms and conditions as set forth in
the Stock Option Plan.
What vote is required to approve the re-incorporation?
The approval of the re-incorporation requires the affirmative vote of a
majority of the Company's outstanding votes entitled to be cast on this proposal
at the Meeting. The Series E Preferred Stock represents more than enough votes
to approve the re-incorporation and the holders of those shares have informed
the Company that they intend to vote in favor of the re-incorporation. Except
as described herein, no federal or state regulatory requirements must be
complied with and no approval must be obtained in connection with the merger.
How do the rights of shareholders compare before and after the re-incorporation?
The Company is organized as a corporation under the laws of the State of
Colorado. If the re-incorporation is approved, the Company will be merged with
the New Company and will then be a corporation organized under the laws of the
State of Nevada following the merger. As a Colorado corporation, the Company is
governed by:
. Colorado law;
. the Company's Articles; and
. the Company's Bylaws.
As a Nevada corporation, following the re-incorporation, the Company will
be governed by:
. Nevada law;
. the New Articles attached hereto as Appendix A, as may be further
amended from time to time; and
. the New Bylaws attached hereto as Appendix B, as may be further amended
from time to time.
19
<PAGE>
The material differences between the applicable Colorado and Nevada law and
among these various documents are summarized below. The comparison of certain
rights of the shareholders of the Company before and after the re-incorporation
set forth below is not complete and is subject to and qualified in its entirety
by reference to Colorado law, Nevada law, the New Articles, the New Bylaws, and
the Articles and the Bylaws of the Company, copies of which may be obtained from
the Company by writing to Kristi J. Kampmann, Secretary of the Company at:
Intercell Corporation, 370 Seventeenth Street, Suite 3580, Denver, Colorado
80202.
FORM OF ORGANIZATION AND PURPOSE
The Company. The Company is a Colorado corporation. Under the Company's
Articles, the Company is authorized to engage in the communications business and
to carry on any business or activity related thereto and to carry on any lawful
business or activity and to have and exercise all of the powers and rights
conferred by the laws of the State of Colorado.
The New Company. The New Company is a Nevada corporation. Under the New
Articles, the New Company is authorized to engage in any lawful act or activity
for which corporations may be organized under Nevada law. The purpose of the
New Company, as set forth in the New Articles, shall be to engage in any lawful
business or activities under the laws of the State of Nevada.
CAPITALIZATION
The Company. The Company's Articles authorizes a total of 110,000,000
shares of stock consisting of 100,000,000 shares of the Company's Common Stock
and 10,000,000 shares of the Company's Preferred Stock. Separate certificates
of rights, designations and preferences classify 210,000 shares of the Company's
Preferred Stock as Series A, 1,000 Preferred Stock as Series B, 600 Preferred
Stock as Series C, 1,080 Preferred Stock as Series D and 1,000 of the Company's
Preferred Stock as Series E, respectively. As of April 1, 2000, 99,891,188
shares of the Company's Common Stock, 34 shares of the Company's Series C
Preferred Stock, 1,080 shares of the Company's Series D Preferred Stock and
1,000 shares of the Company's Series E Preferred Stock were issued and
outstanding. As of such date, the Company had approximately 540 holders of
record.
The New Company. The New Articles are substantially the same with respect
to authorized shares. Immediately following the Effective Time, the New
Company will have outstanding, based on a conversion ratio of one share of the
New Company's Common Stock for every share of the Company's Common Stock that
are outstanding immediately prior to the Effective Time, 99,891,188 shares of
the New Company's Common Stock. Immediately following the Effective Time, the
New Company will have outstanding, based on a conversion ratio of one share of
the New Company's Preferred Stock for every share of the Company's Preferred
Stock that is outstanding immediately prior to the Effective Time, 34 shares of
the New Company's Series C Preferred Stock, 1,080 shares of the New Company's
Series D Preferred Stock and 1,000 shares of the New Company's Series E
Preferred Stock.
AMENDMENT OF THE COMPANY'S ARTICLES AND THE NEW COMPANY'S ARTICLES
The Company. Under Colorado law, a corporation's articles of incorporation
may be amended by the board of directors without shareholder action for certain
limited purposes. The board of directors or the holders of shares representing
at least ten percent of all the votes entitled to be cast on the amendment may
propose an amendment to the articles of incorporation for submission to the
shareholders. In general, amendment of a corporation's articles of
incorporation requires the approval by the board of directors, and the approval
of at least a majority of the votes that are entitled to be cast, unless the
articles of incorporation require a higher vote. In addition, the holders of
the outstanding shares of a class are
20
<PAGE>
entitled to vote as a separate class on a proposed amendment, and must approve
the amendment by the same majority vote of each such class, if the amendment
would:
. increase or decrease the aggregate number of authorized shares of that
class;
. effect an exchange or reclassification of all or part of the shares of
the class into shares of another class;
. create the right of exchange or effect an exchange or reclassification,
of all or part of the shares of another class into shares of the class;
. change the designation, preferences, limitations, or relative rights of
all or part of the shares of the class;
. change the shares of all or part of the class into a different number of
shares of the same class;
. create a new class of shares having rights or preferences with respect
to distributions or dissolution that are prior, superior, or
substantially equal to the shares of the class;
. increase the rights, preferences, or number of authorized shares of any
class that, after giving effect to the amendment, have rights or
preferences with respect to distributions or to dissolution that are
prior, superior, or substantially equal to the shares of the class; or
. limit or deny an existing preemptive right of all or part of the shares
of the class.
The New Company. Under Nevada law, generally the directors of a
corporation cannot effect an amendment to the articles of incorporation without
a shareholder vote. In order to amend the articles of incorporation, the board
of directors must adopt a resolution setting forth and declaring advisable the
proposed amendment and direct that the proposed amendment be submitted to
shareholders for their consideration either at an annual or special meeting of
shareholders. The proposed amendment must then be approved by the affirmative
vote of a majority of all the shareholder votes entitled to be cast on the
matter, unless the articles of incorporation require a higher vote. The New
Articles have no provision requiring such a higher vote. In addition, a
majority of the shares of each class entitled to vote as a class, if any, must
approve the amendment. When the substantial rights of a class of shares will be
affected by an amendment, the holders of those shares are entitled to vote as a
class even if the shares are non-voting shares. When only one or more series in
a class of shares, and not the entire class, will be adversely affected by an
amendment, only the affected series may vote as a class. Notwithstanding the
foregoing, the board of directors can effect an amendment to the articles of
incorporation with respect to either a stock-split or a reverse stock-split, in
which, along with changing the number of outstanding shares of the corporation,
a corresponding change is made to the authorized capital of the corporation.
AMENDMENT OF THE BYLAWS
The Company. Unless the articles of incorporation reserve the right to
amend the bylaws to the shareholders or a particular bylaw expressly prohibits
such action by the board of directors, a corporation's bylaws may be amended by
action of the board of directors. The Articles contain no such reservation of
right. Also, if proper notice is given, the Company's shareholders may amend
the Company's Bylaws at an annual or special meeting of the shareholders.
The New Company. There is no provision in Nevada law that expressly
requires a grant of power to the directors in the articles in order to adopt
bylaws for a corporation. Rather, Nevada law provides that the board of
directors of a corporation may make the bylaws, but that such bylaws are subject
to those adopted by the shareholders, if any. Further, although not part of
Nevada law, an opinion of the Nevada Attorney General also provides that
directors may adopt bylaws for a corporation in the event the shareholders do
not; however, shareholders retain the right to adopt bylaws superseding those
adopted by
21
<PAGE>
directors. The New Bylaws provide that the New Board may amend the New Bylaws
without a vote of the holders of the New Company's Stock.
SHAREHOLDER VOTING RIGHTS GENERALLY
The Company. Under Colorado law, unless otherwise provided in the articles
of incorporation (for which the Articles do not so provide), and subject to
certain provisions of Colorado law, each shareholder is entitled to one vote for
each share of capital stock held by such shareholder. Each shareholder entitled
to vote at a meeting of shareholders or to express consent or dissent to
corporate action in writing without a meeting may authorize others to act for
such shareholder by proxy, but no proxy may be voted or acted upon after eleven
months from its date, unless the proxy specifically provides for its
effectiveness for a longer period. Colorado law further provides that in all
matters other than the election of directors, the affirmative vote of the
majority of votes present in person or represented by proxy at a duly held
meeting at which a quorum is present is deemed to be the act of the
shareholders, unless Colorado law, the articles of incorporation or the bylaws
specify a different voting requirement. Where a separate vote by a class or
classes is required, a majority of the outstanding votes of such class or
classes, present in person or represented by proxy, constitutes a quorum
entitled to take action with respect to that vote on that matter, and the
affirmative vote of the majority of votes of the class or classes present in
person or represented by proxy at the meeting is the act of that class. The
holders of the Company's Common Stock are entitled to one vote per share and the
holders of the Company's Series E Preferred Stock are entitled to 120,000 votes
per share voting together with the holders of the Company's Common Stock, on all
matters on which the holders of the Company's Common Stock are entitled to vote.
The holders of the Company's Series A, Series B, Series C and Series D Preferred
Stock, if any, are not entitled to any voting rights unless provided by Colorado
law. The Company's Articles further provide that any action to be taken by
shareholders that requires the concurrence of two-thirds of the outstanding
shares of the shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote of a majority of such shares or class or series.
The New Company. Under Nevada law, unless the articles of incorporation
provide for a greater or lesser number of votes per share or limits or denies
voting rights, each outstanding share of common stock is entitled to one vote on
each matter submitted to a vote at a meeting of shareholders. A shareholder may
vote the stock that the shareholder owns either in person or by proxy. A proxy
is not valid for more than six months after its date, unless it provides
otherwise. Unless Nevada law or the articles of incorporation specify a
different voting requirement for all matters (other than the election of
directors), a majority of all the votes cast at a duly held meeting at which a
quorum is present is deemed to be the act of the shareholders. Additionally,
unless Nevada law or the articles of incorporation provide otherwise, if two or
more classes of stock are entitled to vote separately on any matter for which
Nevada law requires approval, the matter must be approved by separate vote of
each class. The holders of the New Company's Common Stock are entitled to one
vote per share and the holders of the New Company's Series E Preferred Stock are
entitled to 120,000 votes per share voting together with the holders of the New
Company's Common Stock, on all matters on which the holders of the New Company's
Common Stock are entitled to vote. The New Company's Articles further provide
that any action to be taken by shareholders that requires the concurrence of
two-thirds of the voting power of the outstanding voting power of the
corporation, or of any class or series, such action may be taken by the vote of
a majority of the voting power of such shares or class or series.
SHAREHOLDER ACTION BY WRITTEN CONSENT
The Company. Under Colorado law, unless a corporation's articles of
incorporation require that such action be taken at a meeting of the shareholders
(for which the Articles do not so provide), any action that may be taken at any
annual or special meeting of shareholders may be taken without a
22
<PAGE>
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action, is signed by all of the shareholders entitled to
vote thereon.
The New Company. Under Nevada law, unless otherwise provided in a
corporation's articles of incorporation, any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting if a majority
of the voting power entitled to vote on the matter sign a written consent
setting forth the action or, if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required.
SPECIAL SHAREHOLDER MEETINGS
The Company. Special meetings of shareholders may be made on call of the
board of directors, by a person or persons authorized by the corporation's
bylaws, by a resolution of the board of directors to call such a meeting or a
written demand for the meeting that is signed and dated by the holders of shares
representing at least 10% of all of the votes entitled to be cast. The
Company's Bylaws provide that the President, or in the President's absence, the
Vice President, can also call a special meeting of the shareholders.
The New Company. Nevada law has no general rule for calling special
meetings. The New Bylaws provide that special meetings of shareholders may be
called by the president (or in his absence, by a vice president) of the New
Company or at the request in writing of shareholders entitled to cast at least
10% of all the votes entitled to be cast at the meeting.
INSPECTION RIGHTS
The Company. Under Colorado law, a shareholder is entitled to inspect and
copy, upon five day's notice, the following:
. articles of incorporation;
. bylaws;
. minutes of shareholders' meeting for the past three years;
. written communications within the past three years to shareholders;
. names and business addresses of current directors and officers;
. most recent corporate report; and
. all annual and published financial statements prepared for the past
three years.
In addition to the above, the shareholder is entitled to inspect and copy
excerpts from board, shareholders and committee minutes, accounting records and
the shareholder list. The right is limited to a shareholder who has been a
shareholder for at least three months preceding the demand or holds at least 5%
of all the outstanding shares of any class of shares and if the demand is made
in good faith and for a proper purpose, and the records are directly connected
with the described purpose.
The New Company. Any person who has been a holder of record for at least
six months or holds at least 5% of the outstanding stock of any class of stock
of a Nevada corporation is entitled to inspect and copy the corporation's books
of account and stock ledger and receive a written statement of the corporation's
affairs and a verified list of shareholders; provided, that such person provides
written demand at least five days before such inspection.
20
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NUMBER AND ELECTION OF DIRECTORS
The Company. The minimum number of directors of a Colorado corporation is
one. Colorado law provides that the number of directors shall be fixed by, or
in the manner provided in, the bylaws, unless the articles of incorporation
fixes the number of directors, in which case the number of directors may be
changed only by amendment of the articles of incorporation. Colorado law also
permits a corporation to establish a range for the size of the board of
directors in its bylaws by setting a minimum and maximum number of directors.
If established, the number of directors may be changed within such range by the
shareholders or the board of directors. In addition, Colorado law permits, but
does not require, a classified board of directors, with staggered terms under
which one-half or one-third of the directors are elected for terms of two or
three years, respectively. Colorado law also permits election of directors
based on a particular class of shareholders. Directors of a Colorado
corporation are elected by a plurality vote of the votes present in person or
represented by proxy at a shareholders meeting and entitled to vote on the
election of directors. Under Colorado law, there is cumulative voting unless the
articles of incorporation expressly state otherwise.
The Articles provide that the Bylaws will provide for the number of
directors and the Bylaws provide that their shall be not less than one director.
The current number of directors is five. The Articles provide that there is no
cumulative voting.
The New Company. The minimum number of directors of a Nevada Corporation
is one. The Nevada law provides that the corporation may provide in its
articles of incorporation or its bylaws for a fixed number of directors or a
variable number of directors within a fixed maximum and minimum, and for the
manner in which the number of directors may be increased or decreased. In
addition, Nevada law permits, but does not require, a classified board of
directors, with staggered terms, or with directors elected by particular classes
of stock, so long as at least one-fourth of the board of directors are up for
vote every year. Directors of a Nevada corporation are elected by a plurality
vote of the shares entitled to vote on the election of directors, whether that
is all of the voting shareholders or a particular class of shareholders. Under
Nevada law, cumulative voting is not available unless provided for in the
certificate or articles of incorporation. If any corporation fails to elect
directors within 18 months after the last election of directors, the district
court of Nevada has equity jurisdiction, upon application of any one or more
shareholders holding stock entitling them to at least 15% of the voting power,
to order the election of directors.
The New Articles provide that the New Bylaws will set forth the number of
directors and the New Bylaws will provide that there shall not be less than one
director. As set forth in the New Articles, the initial number of directors
will be five.
REMOVAL OF DIRECTORS
The Company. A director of a Colorado corporation may be removed with or
without cause, unless the articles provide that directors may only be removed
for cause, for which the Articles do not so provide. Generally, a director may
be removed by a majority of votes entitled to be cast. However, if a director
is elected by a voting group, only a majority vote of that voting group may
remove such director and if elected under cumulative voting, such director may
be removed only by the number of votes necessary to elect such director vote to
remove such director. Colorado law permits the removal of a director by
shareholders only at a meeting called for that purpose, upon notice of the
meeting which states that the purpose or one of the purposes thereof is the
removal of the director.
The New Company. A director of a Nevada corporation or the entire board of
directors may be removed with or without cause during their term of office only
by a vote of two-thirds of the voting
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power of then outstanding shares entitled to vote in the election of directors
or, if a director was elected by a particular class, then by a vote of two-
thirds of the voting power of the then outstanding shares of that class. With
respect to corporations that provide for election of directors by cumulative
voting, a director of such a corporation may only be removed upon the vote of
shareholders owning sufficient shares to prevent such director's election to
office at the time of removal.
VACANCIES ON THE BOARD OF DIRECTORS
The Company. As permitted by Colorado law, the Company's bylaws provide
that vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
However, if a vacant office was held by a director elected by holders of a
specific class or series of stock, only such shareholders or directors also
elected by holders of that class or series of stock may fill the vacancy.
The New Company. Nevada law provides that, unless the articles of
incorporation provide otherwise, a vacancy on the board of directors, whether
resulting from the increase in the number of directors or otherwise, may be
filled by the affirmative vote of a majority of the remaining directors in
office, even if the remaining directors do not constitute a quorum. The New
Bylaws provide that a vacancy on the board of directors shall be filled by an
affirmative vote of the remaining directors, even if such directors amount to
less than a quorum. In the case of a directorship to be filled as a result of
an increase in the number of directors on the board, the New Bylaws provide that
such director shall be appointed by a majority of directors then in office or by
the shareholders at an annual meeting or a special meeting called for that
purpose.
STANDARD OF CONDUCT
The Company. Under Colorado law, each director or officer shall discharge
such director's respective duties in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances;
and in a manner he or she reasonably believes to be in the best interests of the
corporation. In discharging those duties, a director or officer can rely on
certain information specified under Colorado law, unless such director has
knowledge that makes such reliance unwarranted. A director or officer would not
be liable to the corporation or its shareholders for actions taken or omitted
if, in connection with such action or omission, such director performed the
duties of such director's position in compliance with these standards.
The New Company. Nevada law provides that directors and officers shall
exercise their powers in good faith and with a view to the interests of the
corporation. In discharging their duties, a director or officer may rely on
certain information specified under Nevada law. Directors and officers, in
deciding upon matters of business, are presumed to act in good faith, on an
informed basis and with a view to the interests of the corporation. That
presumption applies even to the extent that a director or officer takes action
to resist a change or potential change in control of a corporation which impedes
the exercise of the right of shareholders to vote for or remove directors,
insofar as the directors have reasonable grounds to believe that a threat to
corporate policy and effectiveness exists and the action taken is reasonable in
relation to that threat. The presumption discussed in the preceding two
sentences does not apply to actions that only affect the time of the exercise of
shareholders' voting rights; or, the adoption or execution of plans that deny
rights to a holder of shares or voting; and, such presumption does not permit
directors or officers to abrogate any right conferred by statute or articles of
incorporation.
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CONFLICTING INTEREST TRANSACTION
The Company. Under Colorado law certain transactions between a corporation
and one of the corporation's directors are restricted but may be permissible if
certain requirements are met. Colorado law defines a "conflicting interest
transaction" as:
. a loan or other assistance by a corporation to a director of the
corporation or to an entity in which a director of the corporation
has a financial interest;
. a guaranty by a corporation of an obligation of a director of the
corporation or an obligation of an entity in which a director of
the corporation has a financial interest; or
. a contract or transaction between a corporation and a director of
the corporation or between the corporation and an entity
in which a director of the corporation has a financial interest.
Under Colorado law, a conflicting interest transaction is not void or
voidable and does not give rise to an award of damages in a proceeding by a
shareholder solely because the conflicting interest transaction involves a
director of the corporation or an entity in which a director of the corporation
has a financial interest or because the director is present at the meeting that
authorizes, approves or ratifies the conflicting interest transaction. Instead,
the conflicting interest transaction is permissible under Colorado law if:
. the material facts regarding the director's interest and the conflicting
interest transaction are disclosed to the board of directors and the
board of directors in good faith authorizes, approves or ratifies the
conflicting interest transaction by an affirmative vote of a majority
of the disinterested directors (even if less than a quorum); or
. the material facts regarding the director's interest and the conflicting
interest transaction are disclosed or known to the shareholders
entitled to vote and the conflicting interest transaction is
authorized, approved or ratified in good faith by a vote of the
shareholders; or the conflicting interest transaction is fair to the
corporation.
The New Company. Nevada law does not automatically void contracts or
transactions between a corporation and one of the corporation's directors. Under
Nevada law, a contract or transaction is not void or voidable solely because:
. the contract is between the corporation and a director of the
corporation or an entity in which a director of the corporation has a
financial interest;
. an interested director is present at the meeting of the board of
directors that authorizes or approves the contract or transaction; or
. the vote or votes of an interested director are counted for the purpose
of authorizing or approving the contract or transaction involving the
interested transaction.
Instead, under Nevada law, contracts or transaction such as those described
above are permissible if:
. the facts surrounding the contract or transaction are known to the
board of directors and the board of directors authorize, approves or
ratifies the contract or transaction in good faith by a vote without
counting the vote of the interested director; or
. the facts or circumstances surrounding the contract or transaction are
made known to the shareholders and they authorize, approve or ratify
the contract or transaction in good faith by
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a majority vote of the shares entitled to vote,
including the votes, if any, of the interested director; or
. the fact that the contract or transaction will prove to be in the
interested director's financial interest is unknown to the interest
director at the time it is brought before the board of directors; or
. the contract or transaction is fair as to the corporation at the time
it is authorized or approved.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company. Under Colorado law, directors and officers may be indemnified
as a party to a proceeding to the extent of reasonable expenses incurred in
connection with the proceeding in connection with their position with the
corporation (other than any action brought by or in the right of the corporation
or which they derived an improper personal benefit ), if (a) they acted in good
faith; (b) they reasonably believed (i) with respect to conduct in an official
capacity, their conduct was in the best interests of the corporation and (ii)
with respect to all other conduct, their conduct was at least not opposed to the
corporation's best interests and (c) in the case of any criminal proceeding,
they had no reasonable cause to believe their conduct was unlawful.
Colorado law mandates that, unless limited by its articles of
incorporation, directors and officers shall be indemnified for their reasonable
expenses in the event that a director is successful in the defense of any
proceeding in which the director was a party due to that director's status as a
director. Colorado law also requires mandatory indemnification of an employee,
fiduciary or agent under circumstances set forth in the preceding sentence and
permits indemnification of an employee, fiduciary, or agent who is not a
director, to any greater extent than the indemnification of a director, if not
inconsistent with public policy, and if provided for in the bylaws, by action of
the board of directors or by contract.
Under Colorado law, indemnification payments are subject to a case-by-case
determination that Colorado standards of conduct have been met and such a
determination is decided by a majority of the board of directors, but only when
a quorum is present. Only a director not party to the proceeding may be counted
for satisfying the quorum. If a quorum cannot be obtained, the board of
directors may select a committee of at least two directors each not party to the
proceeding to make the determination by majority vote. If a quorum cannot be
obtained or a committee selected, the determination is made by independent legal
counsel or the shareholders of the Company.
Under Colorado law, the corporation may, if so provided in the articles of
incorporation (for which the Articles do so provide), eliminate or limit the
personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director; provided, that any
such provision shall not eliminate or limit the liability of a director to the
corporation or to its shareholders for:
. a breach of the director's duty of loyalty to the corporation or to its
shareholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
. unlawful distributions, or any transaction from which the director
directly or indirectly derived an improper personal benefit.
Notwithstanding other common-law protections that an officer or director
may have, no director or officer shall be personally liable for any injury to
person or property arising out of a tort committed by an employee unless such
director or officer was personally involved in the situation giving rise to the
litigation or unless such director or officer committed a criminal offense in
connection with such situation.
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The New Company. Nevada law provides that a corporation may indemnify a
director, officer, employee or agent for any expenses incurred in connection
with such person's position with the corporation, provided such person acted in
good faith and in a manner which they reasonably believed to be in or not
opposed to the best interests of the corporation. Nevada law requires, unless
ordered by a court, a finding to be made, that the officer, director, employee
or agent has met the above-described standard of conduct, by (a) a majority vote
of the board of directors for which the quorum does not consist of parties to
the proceeding; (b) independent legal counsel in a written opinion; or (c)
shareholder approval.
Under Nevada law, a corporation is required to indemnify any director,
officer, employee or agent for any expenses, including attorneys' fees, incurred
by such person in connection with their position with the corporation if such
director, officer, employee or agent is successful on the merits of the
proceeding.
The New Articles provide that the New Company may indemnify any director,
officer, employee, or agent for any expense reasonably incurred by reason of
being or having been a director, officer, employer or agent of the New Company
to the fullest extent permitted by Nevada law.
The New Articles contain a provision that eliminates the personal liability
of the directors of the New Company to the New Company and its shareholders for
monetary damages resulting from a director's breach of fiduciary duty in such
director's capacity as director. Nevada law permits a corporation to eliminate
or limit the personal liability of its directors (and officers), except for
liability arising in connection with (a) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (b) the payment
of distributions in violation of Nevada law. However, the New Articles also
provide that such elimination of personal liability of a director does not
pertain to the personal liability of a director for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, or for the payment of unlawful distributions in violation of Nevada law.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Company. Under Colorado Law, unless prohibited by the articles of
incorporation, the authorization by the board of directors and payment by the
corporation of distributions, including the repurchase of stock, is generally
permissible unless after giving effect to the dividend or distribution, the
corporation would be unable to pay its debts as they became due in the usual
course of business, or if the total assets of the corporation would be less than
the sum of its total liabilities plus the amount that would be needed, if the
corporation were dissolved at the time the dividend was paid, to satisfy the
preferential rights of shareholders whose preferential rights upon dissolution
of the corporation are greater than those of the shareholders receiving the
dividend.
The New Company. Under Nevada law, unless prohibited by the articles of
incorporation, the authorization by the board of directors and payment by the
corporation of distributions, including the repurchase of stock, is generally
permissible unless after giving effect to the dividend or distribution, the
corporation would be unable to pay its debts as they became due in the usual
course of business, or if the total assets of the corporation would be less than
the sum of its total liabilities plus the amount that would be needed, if the
corporation were dissolved at the time the dividend was paid, to satisfy the
preferential rights of shareholders whose preferential rights upon dissolution
of the corporation are greater than those of the shareholders receiving the
dividend.
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DISSENTER'S RIGHTS
The Company Under Colorado law, a shareholder of a corporation
participating in certain major corporate transactions may be entitled to dissent
from the transaction and exercise rights to receive cash in the amount of the
fair market value of his or her shares in lieu of the consideration he or she
otherwise would receive in the transaction. Under Colorado Law, a properly
dissenting shareholder is entitled to receive the appraised value of the shares
owned by the shareholder when the corporation votes (a) to sell, lease, or
exchange all or substantially all of its property and assets other than in the
regular course of the corporation's business, (b) to merge or consolidate with
another corporation, (c) to engage in a share exchange whereby the corporation's
shares will be acquired or (d) to conduct a reverse split of the corporation's
stock which would result in a reduction of the number of shares owned by the
shareholder to a fraction of a share, if such fraction of a share is to be
acquired for cash. A right to dissent and receive the appraised value of a
shareholder's shares may also be granted within the by-laws of the corporation
or by a resolution of the directors.
Dissenting shareholders are not entitled to the right to receive fair value
for shares of any class or series of stock, if the stock was, at the record date
fixed to determine shareholders entitled to receive notice and vote on such
transaction, either:
. listed on a national securities exchange registered under the Securities
Exchange Act of 1934, as amended;
. listed on the national market system of the National Association of
Security Dealers automated quotation system; or
. held of record by more than 2,000 holders.
Dissenters' rights will not be subject to the limitations described above
if the shareholder will receive for the shareholder's shares, anything except:
. shares of stock of the corporation surviving or resulting from such
merger;
. shares of stock of any other corporation which at the date of the merger
either will be listed on a national securities exchange or on the
national market system of the National Association of Securities
Dealers automated quotation system, or will be held of record by more
than 2,000 holders;
. cash in lieu of fractional shares; or
. any combination of the shares of shares or cash in lieu of fractional
shares.
If a proposed corporate action creating dissenters' rights is to be
submitted to a vote at a shareholders' meeting, a shareholder who wants to
exercise his or her dissenters' rights must give the corporation, before the
vote is taken, notice of intent to demand payment for the shareholders' shares
if the proposed corporation action is taken and must refrain from voting shares
in favor of the proposed corporation action. With respect to a proposed
corporation action creating dissenters' rights that is to be authorized without
a meeting of shareholders, a shareholder may assert his or her dissenters'
rights by not executing a written consent to the proposed transaction. Once
notice of intent to demand payment is made in the manner set forth above, a
shareholder may demand payment by causing the corporation to receive a payment
demand form and depositing his or her certificates for certificated shares. A
shareholder who fails to provide notice of intent to demand payment is not
entitled to demand payment for his or her shares, and a shareholder who fails to
demand payment and submit his or her certificates to the corporation by the date
set by the corporation is not entitled to payment for his or her shares. The
Company will pay, at the address shown on the Company's current record of
shareholders, the amount the Company estimates to be the fair value of the
dissenter's shares, plus accrued interest. The Company will, within 60 days,
provide with the payment a copy of the Company's balance sheet as of the end of
the
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most recent fiscal year and a statement of the Company's estimate of the
fair value of the shares, an explanation of how interest was calculated and a
statement of the dissenters' right to demand additional payment if the dissenter
believes the amount paid is less than the fair value of the shares. The
dissenter waives the right to demand payment unless such dissenter provides the
Company notice within 30 days after the Company offered payment for the
dissenter's shares.
The New Company. Nevada law provides that a shareholder is entitled to
dissent from and obtain payment of the fair market value of his or her shares in
the event of the following corporate actions: (a) consummation of a plan of
merger to which the domestic corporation is a party (i) if approval by the
shareholders is required for the merger and he is entitled to vote on the
merger, or (ii) in certain circumstances, if the domestic corporation is a
subsidiary and is merged with its parent; (b) consummation of a plan of exchange
to which the domestic corporation is a party as the corporation whose subject
owner's interests will be acquired, if he is entitled to vote on the plan; or
(c) any corporate action taken pursuant to a vote of the shareholders to the
extent that the articles of incorporation, bylaws or a resolution of the board
of directors provide that voting or nonvoting shareholders are entitled to
dissent and obtain payment for such shareholder's shares. No appraisal rights
are available if the shares of such corporation are listed on a national
securities exchange or the Nasdaq National Market or held by at least 2,000
shareholders of record unless the articles of incorporation of the corporation
provide otherwise or if the shareholder will receive for the shareholder's
shares, anything except:
. shares of stock of the corporation surviving or resulting from such
merger;
. shares of stock of any other corporation which at the date of the merger
either will be listed on a national securities exchange or on the
national market system of the National Association of Securities
Dealers automated quotation system, or will be held of record by more
than 2,000 holders;
. cash in lieu of fractional shares; or
. any combination of the shares of shares or cash in lieu of fractional
shares.
With respect to a proposed corporate action creating dissenters' rights, a
shareholder seeking to assert such shareholder's dissenters' rights must deliver
to the corporation written notice of intent to demand payment for his or her
shares if the proposed corporate action is taken and must refrain from voting in
favor of the proposed action. After notice of intent to demand payment is made,
a shareholder asserting such shareholder's dissenters' rights must demand
payment; certify that such shareholder's acquired ownership prior to a date set
by the corporation and set forth in the dissenters' notice; and deposit his or
her certificates, if any, in accordance with terms set by the corporation.
Under Nevada law, the corporation will pay, at the address shown on the
corporation's current record of shareholders, the amount the corporation
estimates to be the fair value of the dissenter's shares, plus accrued interest.
The corporation must, within 30 days, provide with the payment a copy of the
corporation's balance sheet as of the end of the most recent fiscal year and a
statement of the corporation's estimate of the fair value of the shares, an
explanation of how interest was calculated and a statement of the dissenters'
right to demand additional payment if the dissenter believes the amount paid is
less than the fair value of the shares. The dissenter waives the right to
demand payment unless such dissenter provides the corporation notice within 30
days after the corporation offered payment for the dissenter's shares.
MERGER, CONSOLIDATION, SHARE EXCHANGE AND
TRANSFER OF ALL OR SUBSTANTIALLY ALL ASSETS
The Company. Under Colorado law, the sale, lease, or exchange of all or
any portion of a corporation's assets in the corporation's usual and regular
course of business may be authorized by the corporation's directors, without
approval of the corporation's shareholders. Sale, lease, or exchange of all or
substantially all of a corporation's assets other than in the usual and regular
course of the corporation's
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business, or a merger or consolidation of the corporation into any other
corporation, requires approval of the directors and the vote of the holders of a
majority or, in some cases, two-thirds, of each class of outstanding stock
entitled to vote thereon, although the corporation's articles of incorporation
or bylaws may require a higher vote. Colorado law permits a parent corporation
owning at least ninety percent of the outstanding shares of a subsidiary
corporation to either merge such subsidiary into itself or merge itself into
such subsidiary. In the case of the merger of a parent and subsidiary
corporation, where the subsidiary is the surviving entity, approval of the board
of directors and the vote of the holders of a majority of each class of shares
entitled to vote is necessary to consummate the merger.
The New Company. Under Nevada law, a corporation may sell, lease or
exchange all of its assets and property, upon terms that the board of directors
find to be in the best interest of the corporation, when authorized by a
majority vote (or such greater amount as set forth in the articles of
incorporation) of shareholders entitled to vote. For a merger or share
exchange, Nevada law requires that the board of directors prepare a plan of
merger or exchange that they present to the shareholders. Approval of a plan of
merger or exchange requires (i) a recommendation by the board of directors to
the shareholders that the plan be adopted and (ii) majority approval by the
shareholders entitled to vote on such plan of merger or exchange.
CHANGE IN CONTROL
The Company. In recent years, a number of states have adopted special laws
designed to make certain kinds of "unfriendly" corporate takeovers, or other
transactions involving a corporation and one or more of its significant
shareholders, more difficult. Colorado has no such statute.
The New Company. There are various provisions of Nevada law that are
designed to encourage a person seeking control of a Nevada corporation to
negotiate with the target corporation's board of directors and shareholders.
This is accomplished by allowing the target corporation's board of directors and
shareholders determine the voting rights, if any, of the acquiring person.
Under Nevada law, a person acquiring shares amounting to a "controlling
interest" obtains voting rights in such shares only as are conferred by a
resolution of the shareholders of the corporation, approved at a special meeting
or annual meeting of the shareholders. When an acquiring person has acquired a
control interest in a corporation, such acquiring person may request in an
offeror's statement that the board of directors convene a special meeting for
the purpose of determining the voting rights of the acquiring person. The
offeror's statement is to identify the acquiring person and persons affiliated
with the acquiring person, the number of shares owned by the acquiring person
and when purchased, and the percentage of voting securities held by the
acquiring person. Provided that the acquiring person agrees to pay all expenses
associated with the calling of a special meeting, within 10 days of the receipt
of the offeror's statement, the board of directors shall call a special meeting
of the shareholders to determine the voting rights to be accorded the shares
held by the acquiring person. When calling such a meeting, the board of
directors must provide notice to the shareholders, which must include a complete
copy of the offeror's statement and a statement of the board of directors
regarding its position with respect to the acquiring person's actions. A
resolution of the shareholders to grant voting rights to the shares held by the
acquiring person must be approved by the holders of a majority of the voting
power of the corporation and, if the acquisition will alter or change any
preference or right given to any class or series of securities of the
corporation, by the holders of a majority of each such class so affected.
If provided in the articles of incorporation or the bylaws of the
corporation, the corporation may call for the redemption of the shares held by
the acquiring person if (a) the acquiring person fails to deliver to the board
of directors the offeror's statement within 10 days of acquiring a controlling
interest in the corporation, or (b) the offeror's statement is timely delivered,
but the shares held by the acquiring
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person are not accorded full voting rights. In such circumstances the
corporation must redeem the shares held by the acquiring person within 60 days
by paying the average price paid by the acquiring person for such shares.
If full voting rights are accorded to the shares held by the acquiring
person and the acquiring person has acquired shares amounting to or greater than
a majority of all voting power, any shareholder of record, other than the
acquiring person, who did not vote in favor of granting voting power to the
shares held by the acquiring person may demand payment for the fair value of
such shareholder's shares. Within 20 days of the vote according the shares of
the acquiring person voting rights, the corporation shall send notice to any
shareholders who did not vote in favor of such action notifying them of their
right to demand payment for shares. Within 20 days of receipt of such notice, a
shareholder must demand payment for such shareholder's shares and the
corporation must comply within 30 days.
Nevada law provides that the provisions described above apply to all
corporations, unless the articles of incorporation or the bylaws of the
corporation in effect on the tenth day after an acquiring person acquires a
controlling interest provide that such provisions do not apply to the
corporation. The New Articles and the New Bylaws do not provide that these
provisions will not apply to the New Company.
An "acquiring person" means any person who, individually or in association
with others, acquires or offers to acquire, directly or indirectly, a
controlling interest in an issuing corporation, but the term does not include
any person who, in the ordinary course of business and without an intent to
avoid the requirements set forth above, acquires voting shares for the benefit
of others, in respect of which such person is not specifically authorized to
exercise or direct the exercise of voting rights. "Controlling interest" means
the ownership of outstanding voting shares of an issuing corporation sufficient,
but for the fact that voting rights have not yet been accorded by the
shareholder in the manner set forth above, to enable the acquiring person,
directly or indirectly and individually or in association with others, to
exercise one-fifth to a majority or more of all the voting power of the
corporation in the election of directors.
DISSOLUTION
The Company. Under Colorado law, after shares have been issued,
dissolution must be approved by a resolution of the board of directors and such
dissolution must also be approved by each voting class of shareholders entitled
to vote by a majority of the votes entitled to be cast on the matter, unless a
higher vote is required by the articles of incorporation or by the bylaws.
The New Company. Under Nevada law, if the board decides after the issuance
of stock or the beginning of business, that the corporation should be dissolved,
it must adopt a resolution to that effect and such dissolution must also be
approved by a majority of the shareholders votes cast, unless a higher vote is
required by the articles of incorporation or by the bylaws.
What are the material federal income tax consequences of the re-incorporation?
Counsel to the Company has advised the Company that, based on the
information provided to counsel, the re-incorporation should be treated for
United States federal income tax purposes as a re-incorporation within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Accordingly, (1) no gain or loss will be recognized by the Company as
a result of the re-incorporation; and (2) no gain or loss will be recognized by
any shareholder of the Company who receives the New Company's Common Stock in
exchange for the Company's Common Stock.
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What are my dissenters' rights and how do I exercise them?
The shareholders of the Company are entitled to vote on the proposed re-
incorporation merger and, if they choose to dissent, have a right to receive
fair value for their shares under Colorado law. The following discussion is a
summary of the dissenting shareholders' rights to receive fair value for their
shares under Colorado law. A copy of the statutory provisions governing the
exercise of dissenters' rights is attached to this Proxy Statement as Appendix
D.
A shareholder of the Company that wishes to assert its dissenters' rights
must cause the corporation to receive, before the vote is taken, written notice
of the shareholder's intention to demand payment for the shareholder's shares if
the proposed corporate action is effectuated, and must not vote in favor of the
proposed corporate action.
If the re-incorporation merger is authorized, the Company shall give a
written dissenters' notice to all shareholders who are entitled to demand
payment for their shares of stock no later than ten days after the effective
date of the corporate action creating dissenters' rights. The written
dissenters' notice shall state that the corporate action was authorized and
state the effective date or proposed effective date of the corporate action;
shall state an address at which the corporation will receive payment demands and
the address of a place where certificates for certificated shares must be
deposited; shall inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received; shall
supply a form for demanding payment, which form shall request a dissenter to
state an address to which payment is to be made; shall set the date by which the
corporation must receive the payment demand and certificates for certificated
shares, which date shall not be less than 30 days after the written dissenters'
notice is given; and shall be accompanied by a copy of the article of Colorado
law governing dissenters' rights (a copy of which is included as Appendix D).
A shareholder of the Company that wishes to assert its dissenters' rights
must deliver a payment demand to the Company and must deposit the shareholder's
certificates for certificated shares. Unless the Company fails to provide
notice to the shareholders of the Company of their dissenting shareholder rights
or fails to pay for the shares on a timely basis, the demand for payment and
deposit of certificates are irrevocable. The Company will pay, at the address
shown on the Company's current record of shareholders, the amount the Company
estimates to be the fair value of the dissenter's shares, plus accrued interest.
The Company will, within 60 days, provide with the payment a copy of the
Company's balance sheet as of the end of the most recent fiscal year and a
statement of the Company's estimate of the fair value of the shares, an
explanation of how interest was calculated and a statement of the dissenters'
right to demand additional payment if the dissenter believes the amount paid is
less than the fair value of the shares. The dissenter waives the right to
demand payment unless such dissenter provides the Company notice within 30 days
after the Company offered payment for the dissenter's shares.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3
ADDITIONAL MATTERS IN CONNECTION WITH THE RE-INCORPORATION
If the re-incorporation is approved, apart from the matters described
above, the New Board will consider effecting a reverse-stock split of the New
Company's Common Stock, with a corresponding decrease in the New Company's
Common Stock authorized in the New Articles and will separately consider
soliciting shareholder proxies to amend the New Articles to increase the
authorized number of the New Company's Common Stock that can be issued. Any
such actions, if undertaken, are not part of Proposal No. 3, and a vote for
Proposal No. 3 will not constitute a vote for any such action.
30
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of April 1, 2000, regarding
beneficial ownership of the Company's Common Stock and the Company's Series E
Preferred Stock by (a) each director of the Company, (b) the CEO and each of the
Named Executive Officers, (c) all directors and executive officers of the
Company as a group and (d) all persons known to the Company to be the beneficial
owner of 5% or more of the outstanding Company's Common Stock or Company's
Series E Preferred Stock. Unless otherwise noted in the footnotes following the
table, the persons as to whom information is given have sole voting and
investment power over the Company's Common Stock or Company's Series E Preferred
Stock beneficially owned, as the case may be.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Percent of
Company's
Company's Company's Series E Common Stock(1)/
Common Stock Common Stock Preferred Stock Percent of
Name and Address Beneficially acquirable in Beneficially Company's Series E
of Beneficial Owner Owned 60 days Owned Preferred Stock
------------------- ------------- ------------- --------------- ------------------
<S> <C> <C> <C> <C>
Corporate Advisors, Inc.(2) 33,868,929(3) 2,350,000(4) 0 35.42% / 0%
3236 Jellison Street
Wheatridge, CO 80202
Cheri L. Metzinger(5) 37,721,473(3) 2,350,000(4) 0 36.89 / 0
3236 Jellison Street
Wheat Ridge, CO 80033
Triad Technologies, LLC(6) 7,602,583 2,580,000(7) 300 9.94 / 30
3005 Anderson Drive, Suite 204
Raleigh, NC 27609
H. Glenn Bagwell, Jr.(8) 7,602,583 3,046,000(9) 300 10.34 / 30
3005 Anderson Drive, Suite 204
Raleigh, NC 27609
Gemini Investments, Ltd.(10) 9,627,881 0 0 9.64 / 0
Cayman National Trust Co., Ltd.
Cayman National Building Elgin Avenue
Grand Cayman Islands, BWI
Timothy Solomon(11) 9,627,881 0 0 9.64 / 0
Cayman National Trust Co., Ltd.
Cayman National Building Elgin Avenue
Grand Cayman Islands, BWI
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Percent of
Company's
Company's Company's Series E Common Stock(1)/
Common Stock Common Stock Preferred Stock Percent of
Name and Address Beneficially acquirable in Beneficially Company's Series E
of Beneficial Owner Owned 60 days Owned Preferred Stock
------------------- --------------- ---------------- --------------- -------------------
<S> <C> <C> <C> <C>
Technology Investors, LLC(12) 0 6,020,000(13) 700 5.68 / 70
3892 Weld County Road 45
P.O. Box 388
Hudson, CO 80642
R. Mark Richards, Director (14) 0 6,020,000(13) 700 5.68 / 70
3892 Weld County Road 45
P.O. Box 388
Hudson, CO 80642
UBS AG(15) 5,300,000 0 0 5.31 / 0
Bahnhofstrasse 45
8021, Zurich, Switzerland
Paul H. Metzinger,(16) 37,721,473(3)(17) 2,350,000(4) 0 36.89 / 0
President, Chief Executive Officer and Director
370 Seventeenth Street, Suite 3580
Denver, CO 80202
Kristi J. Kampmann, Secretary 0 200,000(18) 0 0.20 / 0
370 17th Street, Suite 3580
Denver, CO 80202
Charles E. Bauer, Chief Operating
Officer and Director 0 100,000(19) 0 0.10 / 0
313121 Island Drive
Evergreen, CO 80439
Kevin B. Waide, 0 100,000(20) 0 0.10 / 0
Director
5790 Yukon Street
Arvada, CO 80002
Mallory Smith, Director(21) 0 0 0 0 / 0
11211 E. Arapahoe Rd., #116
Englewood, CO 80112
Directors and executive officers 37,721,473 2,750,000 0 39.43 / 0
as a group(22)
(5 persons)
</TABLE>
(1) The percentages are calculated as follows: the numerator includes all of the
securities that the person has the right to acquire within 60 days pursuant
to options, warrants, conversion privileges or other rights,
35
<PAGE>
and the denominator is the sum of (a) 99,891,188, which represents the total
number of outstanding shares of the Company's Common Stock as of April 1, 2000,
and (b) all of the securities that the person has the right to acquire within 60
days pursuant to options, warrants, conversion privileges or other rights.
(2) Corporate Advisors, Inc. is controlled by its President, Cheri L. Metzinger.
(3) Includes 33,868,929 acquired but unissued shares of the Company's Common
Stock acquired by Corporate Advisors, Inc. that will be issued at such time as
the Company increases its authorized capital to permit the issuance.
(4) Includes Mr. Metzinger's options to purchase 650,000 shares of the Company's
Common Stock exercisable at $0.50 per share that expire on September 30, 2007
and Mr. Metzinger's options to purchase 1,700,000 shares of the Company's Common
Stock exercisable at $0.3750 per share that expire on September 30, 2007 held
through Corporate Advisors, Inc.
(5) Cheri L. Metzinger is the President of Corporate Advisors, Inc. and is the
wife of Paul H. Metzinger. The shares included in columns (b), (c) and (e) also
include shares of the Company's Common Stock that are beneficially owned by
Cheri L. Metzinger through Corporate Advisors, Inc. and through her husband,
Paul H. Metzinger.
(6) H. Glenn Bagwell, Jr. is the controlling member of Triad Technologies, Inc.
(7) Includes 2,580,000 shares of the Company's Common Stock issuable upon the
conversion of 300 shares of the Company's Series E Preferred Stock.
(8) The shares included in columns (b) through (e) include the shares of the
Company's Common Stock and Series E Preferred Stock beneficially owned by H.
Glenn Bagwell, Jr. through Triad Technologies, LLC.
(9) Includes 2,580,000 shares of the Company's Common Stock issuable upon the
conversion of 300 shares of the Company's Series E Preferred Stock and 266,000
shares of the Company's Common Stock held by Global Public Relations Group, Inc.
and a warrant held by The Hamilton Fund, LLC to purchase 200,000 shares of the
Company's Common Stock exercisable at $0.15 per share, issued on December 3,
1997, expiring on December 3, 2002. Mr. Bagwell is the sole controlling member
of Global Relations Group, Inc. and The Hamilton Fund, LLC.
(10 Timothy Solomon is the controlling director of Gemini Investments, Ltd.
(11) The shares included in columns (b) and (e) includes the shares of the
Company's Common Stock beneficially owned by Timothy Solomon through Gemini
Investments, Ltd.
(12) R. Mark Richards is the President of Technology Investors, LLC and is a
director elect for Triad Technologies, LLC and Technology Investors, LLC.
(13) All 6,020,000 shares of Common Stock are issuable upon conversion of the
700 shares of the Company's Series E Preferred Stock.
(14) The shares included in columns (b), (d) and (e) includes the shares of the
Company's Common Stock and Series E Preferred Stock beneficially owned by R.
Mark Richards through Technology Investors, LLC.
(15) Based on an amended Schedule 13G that was filed with the SEC on February
16, 2000, UBS AG is not the beneficial owner of such shares of the Company's
Common Stock, but manages them in several separate accounts on a discretionary
basis, none of which has 5% or more of the outstanding shares of the Company's
Common Stock.
(16) The shares included in columns (b), (c) and (e) include the number of
Shares of Corporate Advisors, Inc., controlled by his wife, Cheri L. Metzinger,
as well as the number of Shares beneficially owned by Cheri L. Metzinger.
(17) Includes 3,852,544 shares of the Company's Common Stock held by Cheri L.
Metzinger.
(18) Includes options to purchase 50,000 shares of the Company's Common
exercisable at $0.3750 per share, issued on September 30, 1997, expiring on
September 30, 2007 and options to purchase 150,000 shares of the Company's
Common Stock exercisable at $0.05 per share issued on June 1, 1998, expiring on
June 1, 2008.
(19) Includes options to purchase to purchase 100,000 shares of the Company's
Common Stock, exercisable at $0.3750 per share, issued on September 30, 1997,
expiring on September 30, 2007.
36
<PAGE>
(20) Includes options to purchase 100,000 shares of the Company's Common Stock
exercisable at $0.10 per share, issued on February 6, 1998, expiring on February
6, 2008.
(21) Mallory Smith is the director elect for Triad Technologies, LLC and
Technology Investors, LLC.
(22) The in columns (b), (c) and (e) include the shares of Mr. Metzinger held
through Mr Metzinger's wife, Cheri L. Metzinger and through Corporate Advisors,
Inc.
CHANGE IN CONTROL OF THE COMPANY
On February 14, 2000, the Board authorized the issuance of a newly created
series of preferred stock of the Company, the Series E Preferred Stock. The
issuance of the 1,000 shares of the Company's Series E Preferred Stock on March
30, 2000 effected a temporary change in control of the Company. While the
Company is unaware of any person that controlled the Company before the issuance
of the Company's Series E Preferred Stock, as a result of such issuance, the
holders thereof will have effective voting control of the Company in that they
will vote as a class with the Company's Common Stock and will have in excess of
50% of the voting rights with respect to such class at any regular or special
meeting of the stockholders of the Company. This change in control of the
Company is intended to be temporary, as, pursuant to the Certificate of
Designation and Rights for the Series E Preferred Stock, all of the Company's
Series E Preferred Stock will be automatically converted into the Company's
Common Stock representing 5% of the outstanding Company's Common Stock on the
date of conversion, assuming all outstanding exercisable and convertible
securities are converted into shares of the New Company's Common Stock, at such
time as the re-incorporation plan described in "PROPOSAL NO. 3" in this proxy
solicitation statement is approved and certain other actions are taken by the
Nevada Company.
Technology Investors, LLC ("Technology Investors") purchased, from cash
reserves, 700 shares of the Company's Series E Preferred Stock for $70,000.
Technology Investors is a Colorado limited liability company that is controlled
by R. Mark Richards. In addition, Triad Technologies, LLC ("Triad") purchased,
from its working capital, the remaining 300 shares of the Company's Series E
Preferred Stock for $30,000. Triad is a Nevada limited liability company that
is controlled by H. Glenn Bagwell, Jr., Esq and that is unaffiliated with
Technology Investors, Corporate Advisors (referred to below), Gemini (referred
to below) or with the Company. Collectively, Triad and Technology Investors are
referred to as the "Series E Holders." The Series E Holders purchased the
Company's Series E Preferred Stock pursuant to a Letter Agreement, dated as of
February 14, 2000. In connection with the purchase of the Company's Series E
Preferred Stock, the Board appointed two nominees of the Series E Holders to the
Board, who are R. Mark Richards and Mallory M. Smith. The Series E Holders have
agreed with each other and with the Company that they will vote in favor of the
re-incorporation plan.
As of the date of this report and as described below, the Series E Holders
and certain persons affiliated with the Company have invested additional funds
and have taken certain actions to rehabilitate the Company.
The Series E Holders purchased from the Company for $900,000, 1,500,000
shares of common stock of Nanopierce Technologies Inc., in order to provide
funds for the Company to compromise creditors, to acquire new businesses or
technologies and for operating capital. As of the date of this report, the
purchase price has been paid to the Company in the form of $700,000 in cash and
the remaining $200,000 of the purchase price is in the form of a promissory note
secured by 60,000 shares of common stock of Nanopierce Technologies, Inc.
For approximately $1,440,000, Triad purchased from an unaffiliated person
432 shares of the outstanding Series D Preferred Convertible Shares of the
Company (the "Company's Series D Preferred Stock") which were acquired to avoid
the conversion of such shares until such time as the Company has
37
<PAGE>
sufficient authorized capital. The Company's Series D Preferred Stock were and
are entitled to be converted into approximately 7,602,583 shares of the
Company's Common Stock.
To provide additional working capital and operating funds to the Company,
the father of R. Mark Richards, who has an outstanding note payable to the
Company in the amount of $422,500.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of this Proxy Statement and
the enclosed form of Proxy and Notice of Special Meeting, and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement, has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold the
Company's Stock in their name or custody, or in the name of nominees for others,
for their out-of-pocket expenses incurred in forwarding copies of the proxy
materials to those persons for whom they hold those Company's Stock. To obtain
the necessary representation of shareholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by officers of the
Company or selected securities dealers. It is anticipated that the cost of any
other supplementary solicitations, if any, will not be material.
ANNUAL REPORT
The Company has mailed with this proxy solicitation material the Company's
Annual Report on Form 10-K for the year ended September 30, 1999, including
financial statements and financial statement schedules, as filed with the
Securities and Exchange Commission.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholders are entitled to present proposals for action at shareholders'
meetings if they comply with the requirements of the proxy rules. In connection
with this Special Meeting, no shareholder proposals were presented. We did not
have an annual shareholders meeting in the year 2000. As a result, any
proposals intended to be presented at the next Annual Meeting of Shareholders
scheduled to be held in the year 2001 must be received at the Company's offices
a reasonable time before the Company begins to print and mail its proxy
materials for that meeting, in order to be considered for inclusion in the
Company's proxy statement and form of proxy relating to such meeting. If a
shareholder fails to submit the proposal by such date, the Company will not be
required to provide any information about the nature of the proposal in its
proxy statement, and the proposal will not be considered at the 2001 Special
Meeting of Shareholders.
Proposals should be sent to Paul H. Metzinger, President, at 370 Seventeenth
Street, Ste. 3580, Denver, Colorado 80202.
OTHER MATTERS
The Board is not aware of any matters to come before the Meeting, other than
those specified in the Notice of Special Meeting. However, if any other matter
requiring a vote of the shareholders should arise at the Meeting, it is the
intention of the persons named in the accompanying Proxy to vote such Proxy in
accordance with their best judgment.
38
<PAGE>
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners
of the Company's Stock for which proxies are being solicited from you, and, if
so, the number of copies of this Proxy Statement and other soliciting materials
you wish to receive in order to supply copies to the beneficial owners of the
Company's Stock.
It is important that proxies be returned promptly. Shareholders, whether
or not they expect to attend the meeting in person, are urged to complete, date
and sign the enclosed proxy card and return it promptly in the envelope provided
for that purpose. By returning your proxy card promptly you can held the
Company avoid the expense of follow-up mailings to ensure a quorum so that the
meeting can be held. Shareholders who attend the meeting may revoke a prior
proxy and vote their proxy in person as set forth in this proxy statement.
By Order of the Board of Directors
/s/ Kristi J. Kampmann
-----------------------
Kristi J. Kampmann,
Secretary
Denver, Colorado
________ __, 2000
39
<PAGE>
PROXY/VOTING INSTRUCTION CARD
INTERCELL CORPORATION
c/o Corporate Stock Transfer, Inc.,
3200 South Cherry Creek Drive, Suite 403
Denver, Colorado 80209
SPECIAL MEETING DATE: ________ __, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF
DIRECTORS
The undersigned shareholder of Intercell Corporation (the "Company"), a Colorado
corporation, hereby constitutes and appoints Paul H. Metzinger and Kevin B.
Waide, and each of them, proxies, with full power of substitution, for and on
behalf of the undersigned to vote, as designated below, according to the number
of shares of the Company's no par value common stock held of record by the
undersigned on ___________ __, 2000, and as fully as the undersigned would be
entitled to vote if personally present, at the Special Meeting of Shareholders
to be held at ____________________________________, Denver, Colorado on
_______________, __________ __, 2000 at ____ a.m. local time, and at any
postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED IN FAVOR OF THE ELECTION OF ALL LISTED NOMINEES TO THE BOARD OF
DIRECTORS AND FOR EACH OF THE OTHER ITEMS SET FORTH ON THE PROXY.
Please mark boxes [X] in ink. Sign, date and return this Proxy promptly, using
the enclosed envelope.
1. Election of Directors.
[ ] FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
Paul H. Metzinger, Charles E. Bauer, Ph.D., Kevin B. Waide, R. Mark Richards and
Mallory Smith.
2. Proposal to ratify the selection of Gelfond, Hochstadt, Pangburn & Co. as
the Company's independent auditors for the fiscal year ending September 30,
2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to change the state of incorporation of the Company from Colorado
to Nevada.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In the discretion of such proxy holders, upon such other business as may
properly come before the Meeting or any and all postponements or adjournments
thereof.
<PAGE>
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders, dated _______ __, 2000 and the Proxy Statement
furnished therewith.
Dated 2000
---------------------------------
------------------------------------------
Authorized Signature
------------------------------------------
Title
------------------------------------------
Authorized Signature
------------------------------------------
Title
- --FOLD HERE
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf of corporations or partnerships,
should so indicate when signing.
TO SAVE THE COMPANY ADDITIONAL VOTE SOLICITATION EXPENSES, PLEASE SIGN, DATE AND
RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
NON-VOTING INSTRUCTIONS
[ ] SPECIAL MEETING. Please check here to indicate that you plan to attend
the Special Meeting of Shareholders on ________ __, 2000.
- --FOLD HERE
<PAGE>
APPENDIX A
ARTICLES OF INCORPORATION
OF
INTERCELL INTERNATIONAL CORPORATION
The undersigned, acting as incorporator of Intercell International
Corporation, under Title 7, Chapter 78 of the Nevada Revised Statutes, adopts
the following Articles of Incorporation.
ARTICLE I
NAME AND ADDRESS
The name of the corporation shall be: Intercell International Corporation.
The mailing address of the corporation shall be 370 17th Street, Suite 3580,
Denver, CO 80202.
ARTICLE II
PERIOD OF DURATION
This corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Nevada unless dissolved according to law.
ARTICLE III
OBJECTS AND PURPOSES
The objects and purposes for which the said corporation is organized and
the nature of the business to be carried on by it are to engage in any lawful
business or activities under the laws of the State of Nevada; and to have and
exercise all of the powers and rights conferred by the laws of the State of
Nevada upon corporations formed under such laws.
ARTICLE IV
AUTHORIZED CAPITAL
The authorized capitalization of the Corporation is as follows:
(a) Classes of Shares. The proprietary interest of the Corporation shall
be divided into two classes of stock, which are collectively referred to herein
as "Shares." The first is a class of common stock, no par value per share, and
the second is a class of preferred stock, also no par value per share. An
individual share within the respective classes of stock shall be referred to
appropriately as either a "Common Share" or a "Preferred Share." The Corporation
has the authority to issue 100,000,000 Common Shares and 10,000,000 Preferred
Shares.
(b) Authorization to Issue Shares. Shares may be issued from time to time
for such consideration in money or property (tangible or intangible) or labor or
services actually performed as the board of directors of the Corporation (the
"Board of Directors") may determine in their sole judgment and without the
necessity of action by the holders of Shares. The authority of the Corporation
to issue Shares
<PAGE>
may also be limited by resolution of the Board of Directors. Common Shares may
not be issued in series. Shares may not be issued until paid for and, when
issued, are nonassessable. Fractional Shares may not be issued by the
Corporation and, in the event fractional shares are or may become outstanding,
the Corporation shall redeem said shares at the then market price.
(c) Preferred Shares. The designation, preferences, relative rights, and
limitations of Preferred Shares are as follows:
(i) Issuance in Series. The Board of Directors is authorized to act
by resolution, subject to limitations prescribed by the laws of the Sate of
Nevada, the Articles of Incorporation, the Bylaws of the Corporation (the
"Bylaws"), and previous resolutions by the Board of Directors limiting this
authorization, to provide for the issuance of Preferred Shares in series.
To exercise this authority the Board of Directors must first designate the
series so established, and, secondly, fix and determine the relative
rights, preferences, and limitations of the Preferred Shares in the series
established to the extent not fixed and determined by these Articles of
Incorporation. The extent of this authority, with respect to each series
established, is to be determined by reference to the laws of the State of
Nevada. Without limiting the generality of the foregoing, this authority
includes fixing and determining the following:
(A) the number of Preferred Shares which may be issued under
the series established, and the designation of such series, each of
which can be subsequently changed at any time by the Board of
Directors;
(B) the rate of dividend on Preferred Shares of that series,
if any, the time of payment of dividends, whether dividends shall be
cumulative, and, if cumulative, the date from which dividends shall
begin accruing;
(C) whether Preferred Shares of that series may be redeemed,
and, if redeemable, the redemption price, terms, and conditions of
redemption;
(D) whether to establish a sinking fund or make other
provisions for the redemption or purchase of Preferred Shares of that
series;
(E) the amount payable per Preferred Share of that series in
the event of the dissolution, liquidation, or winding up of the
Corporation, whether voluntarily or involuntarily;
(F) voting powers, if any, of the series; and
(G) whether the series shall have conversion privileges, and,
if convertible, the terms and conditions upon which Preferred Shares
of that series shall be convertible, including, without limitation,
the provision, if any, for adjustment of the conversion rate and the
payment of additional amounts by holders of such shares upon the
exercise of this privilege.
All Preferred Shares shall be identical to each other in all respects,
except as those relative rights, preferences, and limitations established
by the Board of Directors pursuant to its authority as determined by
reference to the Nevada Corporation Code and as established in Section
(c)(i)(A) through (c)(i)(G), inclusive, as to which there may be variations
between series.
<PAGE>
(ii) Dividend Rights. The holders of Preferred Shares are entitled
to receive when, as, and if declared by the Board of Directors in its sole
discretion, but only out of funds available therefor under the laws of the
State of Nevada, cumulative, partially cumulative, and non-cumulative
dividends, as the case may be. Dividends may be paid in such cash,
property, or Preferred Shares of the same series (including Preferred
Shares of the same series held as treasury Preferred Shares) as the Board
of Directors in its sole discretion may determine upon the date fixed and
at the intervals determined by the Board of Directors. Dividends will
accrue, if cumulative or partially cumulative, whether or not earned or
declared from the date or dates determined by the Board of Directors. Full
dividends on the Preferred Shares of all series for all past periods and
for the then current period must be paid, or declared and a sum sufficient
for such payment be set apart, before any dividends may be declared or paid
upon or set apart for, or before any other distribution may be declared or
made in respect of, the Common Shares. Accruals of dividends shall not bear
interest.
As long as Preferred Shares are outstanding, the Corporation shall
not declare, set apart for payment, pay any dividends (other than dividends
payable in Common Shares), make any distribution on any Common Shares,
redeem, purchase or to otherwise acquire, or permit any subsidiary to
purchase, or otherwise acquire any Common Shares if at the time of making
such declaration, payment, distribution, redemption, purchase, or
acquisition the Corporation is in default with respect to any dividend
payable on, or any obligation to redeem or retire, Preferred Shares.
Notwithstanding the foregoing, however, the Corporation may at any time (i)
redeem, purchase, or otherwise acquire Common Shares in exchange for, or
out of the net cash proceeds from the sale of Common Shares and (ii)
acquire Common Shares that are held by firms or corporations acquired by
the Corporation, whether by merger, consolidation, purchase of assets,
exchange of securities, or otherwise.
(iii) Redemption. On the sole authority and option of the Board of
Directors the Corporation may redeem all or any part of any series of
Preferred Shares outstanding upon the terms (including redemption price)
and conditions, in the manner, and upon such notice as is determined by the
Board of Directors. No redemption may be made, however, until all dividends
accrued to the redemption date on all series of Preferred Shares have been
paid, or until declared and a sum sufficient in amount set aside for such
payment. If less than all the Preferred Shares of a series are to be
redeemed on any one date set for redemption, the shares designated for
redemption may be in such amount and determined by such method, whether by
lot, pro rata or otherwise, and subject to such other provisions as the
Board of Directors may from time to time determine in its sole discretion.
Preferred Shares of any series which have been redeemed (whether by
sinking fund or otherwise) shall have the status of authorized and unissued
Preferred Shares, unless the Board of Directors in its sole discretion
cancels such shares. Preferred Shares which have been redeemed, unless
canceled, may be reissued as a part of the series of which they were
originally a part, or may be reclassified and reissued as part of a new
series of Preferred Shares created by resolution of the Board of Directors
or as part of any other series of Preferred Shares.
(iv) Liquidation Rights. In the event of any liquidation,
dissolution, or winding up of the Corporation, whether voluntarily or
involuntarily, which results in any distribution of the assets of the
Corporation to its Shareholders, the holders of Preferred Shares then
outstanding shall be entitled to an amount per share equal to that amount
fixed by the Board of Directors upon the initial issuance of the Preferred
Share of the series of which the Preferred Shares in question are a part
before any distribution of the assets of the Corporation may be made to or
set apart for the holders of Common Shares.
<PAGE>
If assets of the Corporation distributable to the holders of Preferred
Shares are insufficient for the payment to them of the full preferential
amount described above, such assets shall be distributed ratably among the
holders of the Preferred Shares of all series in accordance with the
amounts which would be payable on such distribution if all sums payable
were discharged in full unless the Board of Directors upon the initial
issuance of any series of Preferred Shares has provided otherwise. After
payment in full of the preferential amounts required to be paid to the
holders of the Preferred Shares than outstanding, the holders of Common
Shares shall be entitled, to the exclusion of the holders of Preferred
Shares, to share in all remaining assets of the Corporation in accordance
with their respective interests unless the Board of Directors upon the
initial issuance of any series of Preferred Shares, or otherwise, has
provided otherwise.
For purposes of this article and any statement filed pursuant to law
setting forth the designation, description, and term of any series of
Preferred Shares the voluntary sale, lease, exchange, or transfer (for
cash, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or its consolidation or merger
with, any other corporation or corporations shall not be deemed to be a
liquidation, dissolution, or winding up of the Corporation, voluntarily or
involuntarily.
(v) Voting Rights. Except as otherwise provided by the laws of the
State of Nevada or Section (c)(i)(F) of these Articles of Incorporation,
the holders of Preferred Shares of all series shall not have the right to
vote at any meeting of Shareholders in respect to any matter upon which the
vote of Shareholders is required.
Except as otherwise provided by the laws of the State of Nevada,
these Articles of Incorporation, the Bylaws, or the Board of Directors
acting pursuant to the authority set forth in Section (c)(i) and for so
long as any Preferred Shares are outstanding, the Corporation shall not:
(A) without the affirmative vote or written consent of the
holders of at least 50% of the then outstanding voting power of the
Preferred Shares voting separately by class without regard to series (a)
create any class of stock ranking prior to the Preferred Shares as to
dividends or liquidation, (b) increase the authorized number of shares of
any such class of stock, or (c) alter or change any of the provisions
hereof so as to adversely affect the preferences or the special rights or
powers given to the Preferred Shares; or
(B) without the affirmative vote or written consent of the
holders of at least 50% of the then outstanding voting power of all series
of Preferred Shares voting separately as a series, alter or change any of
the provisions hereof or in the resolution adopted by the Board of
Directors providing for the issuance of a series, if such series has been
issued and Preferred Shares of that series are then outstanding, so as to
adversely affect the preferences, special rights, or powers to such series.
(vi) Conversion Rights. The holders of Preferred Shares shall have
such rights as are set forth by the Board of Directors in its resolution
authorizing the issuance of the series of which such Preferred Shares are a
part to convert their shares into any other class or series of Shares at
such price or prices or at such rates of exchange and with such adjustments
as shall be determined by the Board of Directors. Preferred Shares so
converted shall have the status of authorized and unissued Preferred Shares
and may be reissued as part of the series of which they were originally a
part, or may be reclassified and reissued as part of a new series of
Preferred Shares to be created by resolution of the Board of Directors or
as part of any other series of Preferred Shares.
<PAGE>
(d) General Provisions. Subject to the foregoing provisions, dividends,
whether in cash, Shares or otherwise, as may be determined by the Board of
Directors in its sole discretion may be declared and paid on the Common Shares
from time to time in accordance with the laws of the State of Nevada; however,
Preferred Shares shall not be entitled to participate in any such dividends
whether payable in cash, Shares, or otherwise.
(e) Voting. Each record holder of Common Shares (and to the extent, if
any, provided by the laws of the State of Nevada or by the Board of Directors
acting pursuant to the authority set forth in Section (c)(i)(F) of these
Articles of Incorporation each record holder of Preferred Shares) shall have one
vote on each matter submitted to a vote for each Share standing in his name on
the books of the Corporation. Unless otherwise required under the laws of the
State of Nevada, these Articles of Incorporation, the Bylaws, or the resolution
of the Board of Directors creating any series of Preferred Shares, no matter
submitted to a Shareholder vote shall require the approval of a class or series
of Shares; for voting purposes, all Shares shall make up a single class.
(f) Quorum. At all meetings of Shareholders, one-third (1/3) of the
voting power entitled to vote at such meeting, whether represented in person or
by proxy, shall constitute a quorum and at any meeting at which a quorum is
present the affirmative vote of a majority of the voting power represented at
such meeting and entitled to vote on the subject matter shall be the act of the
Shareholders.
(g) Distributions to Shareholders. Distributions to liquidate, dissolve,
or wind up the Corporation may be made, after paying or adequately providing for
the payment of all the debts and liabilities of the Corporation, from the assets
of the Corporation to the holders of Shares in the order of priority established
by the laws of the State of Nevada, these Articles of Incorporation, the Bylaws,
and the resolutions of the Board of Directors in providing for the issuance of
Shares by class or series. In addition, the Board of Directors may from time to
time distribute to the holders of Shares in partial liquidation out of either
capital or capital surplus of the Corporation a portion of the assets of the
Corporation in cash or property, subject to any limitations imposed by the laws
of the State of Nevada, these Articles of Incorporation, the Bylaws, and any
resolution of the Board of Directors in providing for the issuance of Shares by
class or series. Further, dividends in cash, property, or Shares may be paid,
as, when, and if declared by the Board of Directors in its sole discretion out
of funds of the Corporation to the extent and in the manner prescribed by the
laws of the State of Nevada, these Articles of Incorporation, the Bylaws, and
the resolutions of the Board of Directors in providing for the issuance of
Shares by class or series.
(h) Stock Rights and Options. The Corporation is authorized to create and
issue, whether or not in connection with the issuance and sale of any of the
Shares or other securities of the Corporation, rights or options entitling the
holders thereof to purchase Shares or other securities from the Corporation.
These rights and options shall be evidenced in such manner as the Board of
Directors approves and must set forth the terms upon which, the time within
which, the Shares and the number of Shares acquirable, and the price at which
the options or rights may be exercised.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
This Corporation shall indemnify each director, officer, and any employee,
fiduciary or agent of the corporation, his heirs, executors and administrators,
against expenses reasonably incurred or any amounts paid by him in connection
with any action, suit or proceeding to which he may be made a party by reason of
his being or having been a director, officer, employee, fiduciary or agent of
the corporation
<PAGE>
to the full extent permitted by the laws of the State of Nevada now existing or
as such laws may hereafter be amended.
ARTICLE VI
SHAREHOLDER VOTING
One-third of the voting power, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.
When, with respect to any action to be taken by shareholders of this
Corporation, the laws of the State of Nevada require the vote or concurrence of
the holders of two-thirds of the outstanding voting power, of the Shares
entitled to vote thereon, or of any class or series, such action may be taken by
the vote or concurrence of a majority of such voting power or class or series
thereof.
ARTICLE VII
AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
ARTICLE VIII
INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation is
The Corporation Trust Company of Nevada, 6100 Neil Road, Suite 500, Reno, Nevada
89511, and the name of the corporation's initial registered agent at that
address is The Corporation Trust Company of Nevada.
ARTICLE IX
INITIAL BOARD OF DIRECTORS
The number of directors of the corporation shall be fixed by the bylaws of
the corporation except the initial board of directors of the corporation shall
consist of five directors. The names and addresses of the persons who shall
serve as directors until the first annual meeting of shareholders or until their
successors are elected and shall qualify are as follows:
<PAGE>
Name Address
Paul H. Metzinger 370 17th Street, Suite 3580
Denver, CO 80202
Charles E. Bauer, Ph.D. 31321 Island Drive
Evergreen, CO 80439
Kevin B. Waide 5790 Yukon Street
Arvada, CO 80002
R. Mark Richards 3892 Weld County Road 45
P.O. Box 388, Hudson, CO 80642
Mallory Smith 11211 E. Arapahoe Rd., #116
Englewood, CO 80112
ARTICLE X
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
Paul H. Metzinger 370 17th Street, Suite 3580
Denver, CO 80202
ARTICLE XI
LIMITATION OF DIRECTOR LIABILITY
No director shall be personally liable to this Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; or (ii) the payment of unlawful distributions in violation of
Section 78.300 of the Nevada Statutes. No amendment to or repeal of this
Article XI shall apply to or have any effect on the liability or alleged
liability of any director of this Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
<PAGE>
ARTICLE XII
BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, and that the board of directors may not
amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by the
directors.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator, for the purpose of
forming a corporation under the laws of the State of Nevada, has executed these
Articles of Incorporation this 2nd day of May 2000.
/s/ Paul H. Metzinger
------------------------------------------
Paul H. Metzinger, Incorporator
STATE OF COLORADO
CITY AND
COUNTY OF DENVER
I, the undersigned, a Notary Public, hereby certify that on the 2nd day of
May 2000, personally appeared before me, Paul H. Metzinger who, being by
me first duly sworn, declared that he is the person who signed the foregoing
document as incorporator and that the statements therein contained are true.
Jenifer Wech
------------------------------------------
Notary Public
My Commission Expires:
11-25-03
- ------------------------------------------
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Title 7, Chapter 28 of the Nevada Revised Statutes, the
following is submitted:
That Intercell International Corporation desiring to organize under the
laws of the State of Nevada with its initial registered office, as indicated in
its Articles of Incorporation, at c/o The Corporation Trust Company of Nevada,
6100 Neil Road, Suite 500, Reno, Nevada 89511, has named The Corporation Trust
Company of Nevada as its agent to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of Title 7, Chapter 28 of the Nevada
Revised Statutes, and am familiar with, and accept, the obligations of that
position.
THE CORPORATION TRUST COMPANY OF NEVADA
By
-----------------------------------------
Name
---------------------------------------
Title
--------------------------------------
<PAGE>
APPENDIX B
BYLAWS
OF
INTERCELL INTERNATIONAL CORPORATION
ARTICLE I
Principal Office and Corporate Seal
Section 1. The principal office and place of business of the business of the
Corporation in the State of Colorado shall be at 370 17th Street, Suite 3580,
Denver, CO 80202. Other offices and places of business may be established from
time to time by resolution of the board of directors or as the business of the
Corporation may require.
Section 2. The seal of the Corporation shall have inscribed thereon the name
of the Corporation and shall be in such form as may be approved by the board of
directors, which shall have power to alter the same at pleasure. The Corporation
may use the seal by causing it, or a facsimile thereof, to be impressed or
affixed or in any other manner reproduced.
ARTICLE II
SHARES AND TRANSFER THEREOF
Section 1. The shares of this Corporation shall be represented by
certificates signed by the president or a vice president and the secretary or an
assistant secretary of the Corporation, and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the president or vice
president and the secretary or assistant secretary upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registrar, other than the Corporation itself or an employee of the Corporation.
In case any officer who has signed a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of its issue.
Section 2. No new certificates evidencing shares shall be issued unless and
until the old certificate or certificates, in lieu of which the new certificate
is issued, shall be surrendered for cancellation, except as provided in Section
3 of this Article II.
Section 3. In case of loss or destruction of any certificate of shares,
another certificate may be issued in its place upon satisfactory proof of such
loss or destruction and, at the discretion of the corporation, upon giving to
the Corporation a satisfactory bond of indemnity issued by a corporate surety in
an amount and for a period satisfactory to the board of directors.
Section 4. For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for a stated period, but not to
exceed 60 days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of, or to
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vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than 60 days and, in case of a meeting of shareholders, not less than ten days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the board of directors does not order the stock
transfer books closed, or fix in advance a record date, as above provided, then
the record date for the determination of shareholders entitled to notice of, or
to vote at any meeting of shareholders entitled to notice of, or to vote at any
meeting of shareholders, or any adjournment thereof, or entitled to receive
payment of any dividend, or for the determination of shareholders for any proper
purpose shall be 30 days prior to the date on which the particular action
requiring such determination of shareholders is to be taken.
ARTICLE III
Shareholders and Meetings Thereof
Section 1. Only shareholders of record on the books of the Corporation shall
be entitled to be treated by the Corporation as holders in fact of the shares
standing in their respective names, and the Corporation shall not be bound to
recognize any equitable or other claim to, or interest in, any shares on the
part of any other person, firm or corporation, whether or not it shall have
express or other notice thereof, except as expressly provided by the laws of
Nevada.
Section 2. Meetings of shareholders shall be held at such locations as
determined by the Corporation's board of directors.
Section 3. In the absence of a resolution of the board of directors
providing otherwise, the annual meeting of shareholders of the Corporation for
the election of directors, and for the transaction of such other business as may
properly come before the meeting, shall be held on the last Thursday of February
in each year, if the same be not a legal holiday, and if a legal holiday, then
on the next succeeding business day.
Section 4. Special meetings of shareholders may be called by the president
(or in his absence by a vice president).
Section 5. Written or printed notice stating the place, day and hour of the
shareholders' meeting, and in case of a special meeting of shareholders, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten days nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the president, the secretary,
the board of directors, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid. Failure to deliver such
notice or obtain a waiver thereof shall not cause the meeting to be void, but it
shall be adjourned by the shareholders present for a period not to exceed 60
days until any deficiency in notice or waiver shall be supplied.
Section 6. The officer or agent having charge of the stock transfer books
for shares of this Corporation shall make, at least ten days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office of
the Corporation, whether within or outside Nevada, and shall be subject to
inspection by any shareholder at any time during usual business hours.
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Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
Section 7. A quorum at any meeting of shareholders shall consist of a
majority of the voting power of the Corporation, represented in person or by
proxy. If a quorum is present, the affirmative vote of a majority of the voting
power represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law, the articles of incorporation or these
bylaws.
Section 8. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney in fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
ARTICLE IV
Directors, Powers and Meetings
Section 1. The business and affairs of the Corporation shall be managed by a
board of not less than one director and directors need not be shareholders of
the Corporation or residents of the State of Nevada and shall be elected at the
annual meeting of shareholders or some adjournment thereof. Directors shall hold
office until the next succeeding annual meeting of shareholders or until their
successors shall have been elected and shall qualify.
Section 2. The annual meeting of the board of directors shall be held at the
same place as, and immediately after, the annual meeting of shareholders, and no
notice shall be required in connection therewith. The annual meeting of the
board of directors shall be for the purpose of electing officers and the
transaction of such other business as may come before the meeting.
Section 3. Special meetings of the board of directors may be called at any
time by the president (or in his absence by a vice president), or by any
director, and may be held within or outside the State of Nevada at such time and
place as the notice or waiver thereof may specify. Notice of such meetings shall
be mailed or telegraphed to the last known address of each director at least
five days, or shall be given to a director in person or by telephone at least
forty-eight hours, prior to the date or time fixed for the meeting. Special
meetings of the board of directors may be held at any time that all directors
are present in person or by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other, except as otherwise provided by law. Unless specifically required by law,
the articles of incorporation or these bylaws, neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 4. A quorum at all meetings of the board of directors shall consist
of a majority of the number of directors then holding office, but a smaller
number may adjourn from time to time without further notice, until a quorum be
secured. The act of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the board of directors, unless the act of
a greater number is required by articles of incorporation of these bylaws.
Section 5. Any vacancy occurring in the board of directors may be filled by
the affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, and shall hold
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<PAGE>
such office until his successor is duly elected and shall qualify. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by the affirmative vote of a majority of the directors then in
office or by an election at an annual meeting, or at a special meeting of
shareholders called for that purpose. A director chosen to fill a position
resulting from an increase in the number of directors shall hold office until
the next annual meeting of shareholders and until his successor shall have been
elected and shall qualify.
Section 6. Directors may receive such fees as may be established by
appropriate resolution of the board of directors for attendance at meetings of
the board, and in addition thereto, shall receive reasonable traveling expenses,
if any are required, for attendance at such meetings.
Section 7. The board of directors may by resolution designate two or more
directors to constitute an executive committee which shall have and may exercise
such authority in the management of the Corporation as shall be provided in such
resolution.
Section 8. The shareholders may, at a meeting called for the express purpose
of removing directors, by the concurrence of two-thirds of the voting power of
the Corporation, remove the entire board of directors or any lesser number, with
or without cause.
ARTICLE V
Officers
Section 1. The elective officers of the Corporation shall be a president,
one or more vice presidents, a secretary and a treasurer, who shall be elected
by the board of directors at its first meeting after each annual meeting of
shareholders. Unless removed in accordance with procedures established by law
and these bylaws, the said officers shall serve until the next succeeding annual
meeting of the board of directors and until their respective successors are
elected and shall qualify.
Section 2. The board may elect or appoint such other officers and agents as
it may deem advisable, who shall hold office at the pleasure of the board, and
shall be paid such compensation as may be directed by the board.
Section 3. The officers of the Corporation shall respectively exercise and
perform the respective powers, duties and functions as are stated below, and as
may be assigned to the officers by the board of directors.
(a) The president shall be the chief executive officer of the
Corporation and shall, subject to the control of the board of directors,
have general supervision, direction and control of the business and
officers of the Corporation. He shall preside at all meetings of the
shareholders and of the board of directors. The president or a vice
president, unless some other person is specifically authorized by the board
of directors, shall sign all stock certificates, bonds, deeds, mortgages,
leases and contracts of the Corporation. The president shall perform all
the duties commonly incident to his office and such other duties as the
board of directors shall designate.
(b) In absence or disability of the president, the vice president or
vice presidents, in order of their rank as fixed by the board of directors,
and if not ranked, the vice presidents in the order designated by the board
of directors, shall perform all the duties of the president, and when so
acting shall have all the powers of, and be subject to all the restrictions
on the president. Each vice president shall have such other powers and
perform such other duties as may from time to time be assigned to him by
the president.
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(c) The secretary shall keep accurate minutes of all meetings of the
shareholders and the board of directors. The secretary shall keep, or cause
to be kept a register of the shareholders of the Corporation and shall be
responsible for the giving of notice of meetings of the shareholders or the
board of directors. The secretary shall be custodian of the records and of
the seal of the Corporation and shall attest the affixing of the seal of
the Corporation when so authorized. The secretary shall perform all duties
commonly incident to the office and such other duties as may from time to
time be assigned by the president.
(d) An assistant secretary may, at the request of the secretary, or in
the absence or disability of the secretary, perform all of the duties of
the secretary. The assistant secretary shall perform such other duties as
may be assigned by the president or by the secretary.
(e) The treasurer, subject to the order of the board of directors,
shall have the care and custody of the money, funds, valuable papers and
documents of the Corporation. The treasurer shall keep accurate books of
accounts of the Corporation's transactions, which shall be the property of
the Corporation, and shall render financial reports and statements of
condition of the Corporation when so requested by the board of directors or
president. The treasurer shall perform all duties commonly incident to the
office and such other duties as may from time to time be assigned by the
president.
(f) An assistant treasurer may, at the request of the treasurer, or in
the absence or disability of the treasurer, perform all the duties of the
treasurer. The assistant treasurer shall perform such other duties as may
be assigned by the president or by the treasurer.
Section 4. All officers of the Corporation may receive salaries or other
compensation if so ordered and fixed by the board of directors. The board shall
have authority to fix salaries in advance for stated periods or render the same
retroactive as the board may deem advisable.
Section 5. In the event of absence or inability of any officer to act, the
board of directors may delegate the powers or duties of such officer to any
other officer, director or person whom it may select.
Section 6. Any officer or agent may be removed by the board of directors or
by the executive committee, if any, whenever in its judgment the best interest
of the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not, of itself, create contract rights.
ARTICLE VI
Finance
Section 1. The board of directors, in its uncontrolled discretion, may set
aside from time to time, out of the net profits or earned surplus of the
Corporation, such sum or sums as it deems expedient as a reserve fund to meet
contingencies, for equalizing dividends, for maintaining any property of the
Corporation, and for any other purpose.
Section 2. The moneys of the Corporation shall be deposited in the name of
the Corporation in such bank or banks or trust company or trust companies, as
the board of directors shall designate, and may be drawn out only on checks
signed in the name of the Corporation by such person or persons as the board of
directors by appropriate resolution may direct. Notes and commercial paper, when
authorized by
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the board, shall be signed in the name of the Corporation by such officer or
officers or agent or agents as shall thereunto be authorized from time to time.
Section 3. The fiscal year of the Corporation shall be determined by
resolution of the board of directors.
ARTICLE VII
Waiver of Notice
With any notices required by law or under these bylaws to be given to any
shareholder or director of the Corporation, a waiver thereof in writing signed
by the person entitled to such notice, whether before, at, or after the item
stated therein shall be the equivalent to the giving of such notice.
ARTICLE VIII
Action Without a Meeting
Any action required to be taken at a meeting of the directors, executive
committee members or shareholders of this Corporation, or any action which may
be taken at a meeting of directors, executive committee members, or
shareholders, may be without a meeting if a consent in writing, setting forth
the action so taken is signed by all directors or executive committee members,
or the minimum number of shareholders as is required by the laws of the State of
Nevada, depending on the subject matter thereof. Notice of such action shall be
provided according to statute.
ARTICLE IX
Indemnification of Directors, Officers and Others
Section 1. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or complete
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorney's fees,
judgments fines and amounts paid in settlement actually and reasonably incurred
in connection with the action, suit or proceeding if he acted in good faith and
in a manner which is reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of the Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good
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faith and in a manner he reasonably believed to be in or not opposed to the best
interest of the Corporation, except that no indemnification shall be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the corporation or for amounts paid in settlement to
the corporation, unless and only to the extent that the court in which such
action or suit was brought or other court of competent jurisdiction shall
determine upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
Section 3. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1 and 2 of this Article IX, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses, including attorneys' fees actually and reasonably incurred by
him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article IX
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the officer,
director, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 1 and 2 of this Article
IX. Such determination shall be made (a) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the affirmative vote of the
holders of a majority of the voting power of stock entitled to vote and
represented at a meeting called for such purpose.
Section 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the board of directors as
provided in Section 4 of this Article IX upon receipt of any undertaking by or
on behalf of the director, officer, employee or agent to repay such amount if it
is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the Corporation as authorized in this Article IX.
Section 6. The board of directors may exercise the Corporation's power to
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability hereunder or otherwise.
(a) The other financial arrangements referred to under this Section
may include: (i) the creation of a trust fund; (ii) the establishment of a
program of self-insurance; (iii) the securing of its obligation of
indemnification by granting a security interest or other lien on any assets
of the Corporation; or (iv) the establishment of a letter of credit,
guaranty or surety.
(b) No financial arrangement made pursuant to this Section may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to the
advancement of expenses or indemnification ordered by a court.
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(c) Any insurance or other financial arrangement made on behalf of a
person pursuant to this Section may be provided by the Corporation or any
other person approved by the board of directors, even if all or part of the
other person's stock or other securities is owned by the corporation.
(d) In the absence of fraud, (i) the decision of the board of
directors as to the propriety of the terms and conditions of any insurance
or other financial arrangement made pursuant to this Section and the choice
of the person to provide the insurance or other financial arrangement is
conclusive; and (ii) the insurance or other financial arrangement is not
valid or voidable; and does not subject any director approving it to
personal liability for his action, even if a director approving the
insurance or other financial arrangement is a beneficiary of the insurance
or other financial arrangement.
Section 7. The indemnification provided by this Article IX shall not be
deemed exclusive of any other rights or limitations to which those seeking
indemnification may be entitled or limited under the Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, the
Nevada Revised Statutes, 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, officer, employee
or agent and shall inure to the benefit of the heirs and personal
representatives of such a person.
ARTICLE X
Amendments
These bylaws may be altered, amended or repealed at the annual meeting of
the board of directors or at any special meeting of the board called for that
purpose.
ARTICLE XI
Gender
Whenever in these bylaws the masculine gender is used, it shall be deemed
to include the feminine gender.
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The above bylaws approved and adopted by the Board of Directors on
_____________, 2000.
_____________________________
Paul H. Metzinger
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APPENDIX C
PLAN OF MERGER
Pursuant to Section 7-111-107 of the Colorado Revised Statutes, Intercell
Corporation ("Intercell"), a Colorado corporation and, pursuant to Section
92A.100 of the Nevada Revised Statutes, Intercell International Corporation
("Intercell International"), a Nevada corporation, adopt the following plan of
merger (the "Plan of Merger").
(a) Intercell Corporation, a Colorado corporation will merge into Intercell
International Corporation, a Nevada corporation. The surviving
corporation with be Intercell International Corporation.
(b) The terms and conditions of the Plan of Merger are as follows:
(1) All of the outstanding securities of Intercell will be converted
into like securities of Intercell International as described in
paragraph (c).
(2) The shareholders of Intercell will become shareholders of
Intercell International and will be governed by Nevada law rather
than Colorado law and will be governed by the Articles and Bylaws
of Intercell International rather than the Articles and Bylaws of
Intercell.
(3) All rights of participants in Intercell's 1995 Compensatory Stock
Option Plan (the "Stock Option Plan") adopted July 7, 1995 to
receive stock options and restricted stock, will become
substantially identical rights to receive grants of stock options
and restricted stock with respect to Intercell International's
common stock, and the right to purchase Intercell International's
common stock, respectively. Such new rights will be on
substantially identical terms and conditions as set forth in the
Stock Option Plan.
(c) The manner and basis of converting the outstanding securities of
Intercell into securities of Intercell International is as follows:
(1) Each outstanding share of common stock of Intercell will be
exchanged on a one for one basis for a share of common stock of
Intercell International. Each share certificate that represented a
share of Intercell's common stock before the effective time of the
merger will thereafter be deemed to represent one share of
Intercell International's common stock without any action on the
part of the holder.
(2) Each outstanding share of preferred stock of Intercell will be
exchanged on a one for one basis for a share of preferred stock of
Intercell. Each share certificate that represented a share of
Intercell's preferred stock before the effective time of the
merger will thereafter be deemed to represent one share of
preferred stock of Intercell International with the same
designation, rights and preferences and without any action on the
part of the holder.
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(3) Each of the options, warrants, debentures and any other
outstanding securities of Intercell immediately prior to the
effective time of the merger will thereafter be deemed to
represent like securities of Intercell International, with like
conversion rights into common shares of stock of Intercell
International without any action on the part of the holder.
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APPENDIX D
STATUTORY PROVISIONS FROM COLORADO LAW
REGARDING DISSENTING SHAREHOLDERS' RIGHTS
(EXCERPTED FROM WEST'S COLORADO REVISED STATUTES ANNOTATED)
(S) 7-113-101. Definitions
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section 7-107-
204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-102. Right to dissent
(1) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
if:
(I) Approval by the shareholders of that corporation is required for the
merger by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
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(c) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended,
[FN1] or on the national market system of the national association of securities
dealers automated quotation system, or were held of record by more than two
thousand shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall
not apply if the shareholder will receive for the shareholder's shares, pursuant
to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the plan
of merger or share exchange either will be listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, or on the national market system of the national association of
securities dealers automated quotation system, or will be held of record by more
than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) Deleted by Laws 1996, H.B.96-1285, s 30, eff. June 1, 1996.
(2.5) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
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(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994. Amended by Laws 1996,
H.B.96-1285, s 30, eff. June 1, 1996.
/1/ 15 U.S.C.A. s 78a et seq.
(S) 7-113-103. Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the
shares held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-201. Notice of dissenters' rights
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting, the notice
of the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7- 113-202(1).
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(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7- 113-202(2).
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994. Amended by Laws 1996,
H.B.96-1285, s 31, eff. June 1, 1996.
(S) 7-113-202. Notice of intent to demand payment
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting and if
notice of dissenters' rights has been given to such shareholder in connection
with the action pursuant to section 7-113-201(1), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201(2) a
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1)
or (2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994. Amended by Laws 1996,
H.B.96-1285, s 32, eff. June 1, 1996.
(S) 7-113-203. Dissenters' notice
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
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(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must be
deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103(3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-204. Procedure to demand payment
(1) A shareholder who is given a dissenters' notice pursuant to section 7-
113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203(2)(d), duly completed, or
may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the demand
for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-205. Uncertificated shares
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
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(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-206. Payment
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section 7-
113-209; and
(e) A copy of this article.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-207. Failure to take action
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the corporation must receive the payment demand
as provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections 7-113-
204 to 7-113-209 shall again be applicable.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
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(S) 7-113-208. Special provisions relating to shares acquired after announcement
of proposed corporate action
(1) The corporation may, in or with the dissenters' notice given pursuant
to section 7-113-203, state the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action creating
dissenters' rights under section 7-113-102 and state that the dissenter shall
certify in writing, in or with the dissenter's payment demand under section 7-
113-204, whether or not the dissenter (or the person on whose behalf dissenters'
rights are asserted) acquired beneficial ownership of the shares before that
date. With respect to any dissenter who does not so certify in writing, in or
with the payment demand, that the dissenter or the person on whose behalf the
dissenter asserts dissenters' rights acquired beneficial ownership of the shares
before such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-209. Procedure if dissenter is dissatisfied with payment or offer
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section 7-
113-208 and demand payment of the fair value of the shares and interest due, if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207(1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
(S) 7-113-301. Court action
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where the
corporation's principal office is located or, if the
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corporation has no principal office in this state, in the district court of the
county in which its registered office is located. If the corporation is a
foreign corporation without a registered office, it shall commence the
proceeding in the county where the registered office of the domestic corporation
merged into, or whose shares were acquired by, the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to such order. The
parties to the proceeding are entitled to the same discovery rights as parties
in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994. Amended by Laws 1996,
H.B.96-1285, s 33, eff. June 1, 1996.
(S) 7-113-302. Court costs and counsel fees
(1) The court in an appraisal proceeding commenced under section 7-113-301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
Added by Laws 1993, H.B.93-1154, s 1, eff. July 1, 1994.
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