SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11
or Rule 14a-12
NUCLEUS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NUCLEUS, INC.
401 NORTH MICHIGAN AVENUE, SUITE 745
CHICAGO, ILLINOIS 60611
________ ___, 2000
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Nucleus, Inc., which will be held on Friday, July 14, 2000, at 2:00 p.m.,
Chicago time, at ____________________________.
The attached Notice of the Annual Meeting and Proxy Statement describe the
formal business to be transacted at the annual meeting. Our directors and
officers will be present at the annual meeting to respond to any questions that
our stockholders may have regarding the business to be transacted.
Our board of directors has determined that the matters to be considered at
the annual meeting are in the best interests of our company and you, the
stockholders. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE MATTERS TO
BE CONSIDERED.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF OUR COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the board of directors and our employees, I thank you for your
continued interest and support.
Sincerely yours,
John C. Paulsen
Chairman of the Board
<PAGE>
NUCLEUS, INC.
401 NORTH MICHIGAN AVENUE, SUITE 745
CHICAGO, ILLINOIS 60611
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JULY 14, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Nucleus,
Inc. will be held on Friday, July 14, 2000 at 2:00 p.m., Chicago time, at
________________________.
The purpose of the annual meeting is to consider and vote upon the
following matters:
1. Elect our directors.
2. Change our name to "eNucleus, Inc."
3. Reincorporate Nucleus in Delaware from Nevada.
4. Subject to approval of Proposal 3, include certain anti-takeover
measures in the new Certificate of Incorporation and By-laws of
Nucleus to be effective upon the reincorporation, as follows:
a. Implement a classified board of directors who are removable only
for cause;
b. Set limits on the ability to call a special meeting;
c. Eliminate the right of stockholders to take action by written
consent;
d. Adopt procedures to be followed before matters can be brought
before a stockholders' meeting; and
e. Approve (by separate votes) super-majority vote requirements for:
i. Certain extraordinary corporate transactions;
ii. Amendments to Nucleus Delaware's Certificate of
Incorporation; and
iii. Amendments to Nucleus Delaware's By-laws.
5. Approve the eNucleus 2000 Omnibus Stock Incentive Plan.
6. Approve other matters as may properly come before the annual meeting,
including whether or not to adjourn the meeting.
The board of directors has established May 24, 2000 as the record date for
the determination of stockholders entitled to receive notice of and to vote at
the annual meeting and at any adjournments thereof. Only record holders of
Nucleus common stock as of the close of business on the record date will be
entitled to vote at the annual meeting. In the event there are not sufficient
votes for a quorum, the annual meeting may be adjourned in order to permit
further solicitation of proxies. A list of stockholders entitled to vote at the
annual meeting will be available at Nucleus, Inc., 401 South Michigan Avenue,
Suite 745, Chicago, Illinois 60611, for a period of ten days prior to the annual
meeting and will also be available at the annual meeting itself.
By Order of the Board of Directors
John C. Paulsen
Chairman of the Board
Chicago, Illinois
_________ ___, 2000
<PAGE>
NUCLEUS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 2000
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to Nucleus stockholders in
connection with the solicitation by the board of directors of proxies to be used
at the annual meeting of stockholders to be held on Friday, July 14, 2000, at
2:00 p.m., Chicago time, at ___________________________, and at any adjournments
thereof. A proxy form accompanies this proxy statement, which is first being
mailed to record holders of common stock on or about ________ ___, 2000.
You are requested to vote by completing the enclosed proxy form and
returning it signed and dated in the enclosed postage-paid envelope. You are
urged to indicate your vote in the spaces provided on the proxy card. Proxies
solicited by the board will be voted in accordance with the directions given on
the proxy card. If no direction is given, signed proxy forms will be voted FOR
each of the matters submitted for stockholder approval.
Your proxy may be revoked at any time prior to the vote by giving notice to
us in writing or at the annual meeting or by duly executing a proxy bearing a
later date.
Other than the matters listed on the attached Notice of Annual Meeting of
Stockholders, we are not aware of any additional matter that will be presented
for consideration at the annual meeting. Your execution of a proxy, however,
confers on the designated proxy holders discretionary authority to vote the
shares in accordance with their best judgment on such other business, if any,
that may properly come before the annual meeting, including whether or not to
adjourn the annual meeting.
The cost of solicitation of proxies on behalf of management will be borne
by us. In addition to the solicitation of proxies by mail, proxies may be
solicited personally or by telephone by our directors, officers and employees,
without additional compensation. We will request persons, firms and corporations
holding shares in their names, or in the name of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners, and will reimburse such holders for their reasonable
expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the annual meeting consist of Nucleus
common stock, with each share entitling its owner to one vote on all matters to
be voted on at the annual meeting.
The close of business on May 24, has been fixed by the board as the record
date for the determination of stockholders of record entitled to notice of and
to vote at the annual meeting. The total number of shares of common stock
outstanding on the record date was 13,550,141 shares.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of the outstanding shares of common stock present in person
or represented by proxy and entitled to vote is necessary to constitute a quorum
at the annual meeting. In the event that there are not sufficient votes for a
quorum at the time of the annual meeting, the annual meeting may be adjourned in
order to permit the further solicitation of proxies.
Each share of common stock is entitled to one vote for each nominee for the
directorships to be filled. The nominees receiving the greatest number of votes
will be elected. The approval of the name change, reincorporation in Delaware,
adoption of the anti-takeover provisions, and the eNucleus 2000 Stock Incentive
Plan will require the vote of a majority of the shares of common stock present
and entitled
<PAGE>
to vote at the annual meeting. Abstentions will be treated as shares present and
entitled to vote for purposes of determining whether a quorum is present at the
annual meeting, but not voted for purposes of determining the approval of any
matter submitted to the stockholders for a vote. Abstentions will have the
effect of voting against the name change, reincorporation, the anti-takeover
provisions and the eNucleus 2000 Stock Incentive Plan.
The number of shares of common stock held by our directors, nominees for
directors and officers constitute approximately 40.1% of the outstanding shares
of common stock as of the date of this Proxy Statement. These stockholders have
indicated to us that they will vote in favor of each of the proposals described
in this Proxy Statement and submitted at the annual meeting.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF NOMINEES FOR DIRECTOR AND
EXECUTIVE OFFICERS
The table set forth below includes the number of shares of common stock
beneficially owned as of May 24, 2000 by (i) each person known by us to
beneficially own more than 5% of the common stock of Nucleus, (ii) each of our
nominees for director, (iii) our executive officers and (iv) all nominees for
director and executive officers as a group. A beneficial owner of a security
includes any person who has the power to vote or sell the shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------ --------- -----
<S> <C> <C>
John C. Paulsen (1)............................. 5,514,394(2) 40.0%
Vincent Sanchez................................. 200,000(3) 1.5
Dennis Chookaszian.............................. 400,000(4) 2.9
David Eskra..................................... 400,000(4) 2.9
Stephen Calk.................................... 255,380(5) 1.9
Jeffrey R. Wescott.............................. 80,000(5) *
Frederick H. Kopko.............................. -- --
J. Theodore Hartley............................. 233,333(3) 1.7
Mark Fera....................................... 116,667(3) *
Jeffrey R. Lundal............................... 116,667(3) *
All nominees for director and executive
officers, as a group (10 persons)............ 7,316,441(6) 48.0%
- -------------
* Less than 1.0%.
(1) Mr. Paulsen's mailing address is 401 North Michigan Avenue, Suite 745,
Chicago, Illinois 60611.
(2) Includes 1,029,394 shares held directly by Mr. Paulsen, 2,985,000 shares
held indirectly through a family trust, for which Mr. Paulsen acts as
majority general partner, 1,250,000 shares which have been pledged as
collateral to secure a loan from Nucleus and 250,000 shares that may be
purchased upon exercise of options.
(3) Represents shares that may be purchased pursuant to options exercisable
within 60 days.
(4) Includes 400,000 shares that may be purchased pursuant to warrants
exercisable within 60 days.
(5) Includes or represents 80,000 shares that may be purchased upon exercise of
options exercisable within 60 days.
(6) Includes 876,667 shares that may be purchased pursuant to options and
800,000 shares that may be purchased pursuant to warrants exercisable
within 60 days.
</TABLE>
PROPOSAL NO. 1. ELECTION OF DIRECTORS
Our board of directors consists of seven members. The board has nominated
the persons named below, three of whom presently serve as directors, for
election at the annual meeting. Each nominee will be elected to serve as a
director until the next annual meeting or until their successors are elected and
qualified. If Proposal 4a is adopted, the nominees elected will be appointed to
the director classes and will serve for the terms specified in "Proposal
4a-Classified Board; Removal." Unless you instruct otherwise, the shares
represented by the enclosed proxy will be voted FOR the nominees named below.
Although
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<PAGE>
we anticipate that all of the nominees will be able to serve, if any nominee is
unable to serve at the time of the meeting, the proxy will be voted for a
substitute nominee chosen by us.
NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table contains certain information with respect to the
nominees for director and our executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
NOMINEES FOR DIRECTOR:
John C. Paulsen 37 Chairman of the Board and Chief Executive
Officer
Vincent Sanchez 58 President and Chief Operating Officer and
Nominee for Director
Dennis Chookaszian 55 Nominee for Director
David Eskra 58 Nominee for Director
Stephen Calk 34 Director
Jeffrey R. Wescott 41 Director
Frederick H. Kopko 44 Nominee for Director
EXECUTIVE OFFICERS:
J. Theodore Hartley 32 Executive Vice President, Chief Financial
Officer and Secretary
Mark Fera 33 Vice President, Corporate Development
Jeffrey R. Lundal 31 Vice President, Client Services
</TABLE>
John C. Paulsen has served as Chief Executive Officer and Chairman of the
Board of Nucleus since April 1999. From April 1999 until May 24, 2000, Mr.
Paulsen also served as our President. Prior thereto, Mr. Paulsen served as the
President of Nucleus Holding Company. From 1995 to 1997, Mr. Paulsen served as
President and CEO of MetroLink Communications, Inc., a long-distance carrier.
From 1990 to 1995, Mr. Paulsen served as President and CEO of American
Teletronics Long Distance, Inc., a reseller of long-distance telecommunications
services.
Vincent Sanchez was appointed as President and Chief Operating Officer of
Nucleus on May 24, 2000. Prior thereto, Mr. Sanchez served as a consultant to
Nucleus beginning in January 2000. From 1994 to January 2000, Mr. Sanchez was
Senior Vice President, Operations of G. E. Financial Assurance. Prior to 1999,
Mr. Sanchez held several senior management and consulting positions with
different firms in the areas of operations, staffing and acquisitions, including
the position of Vice President for Pansophic Systems, Inc. from 1988 through
1991.
Dennis Chookaszian has been an advisor to Nucleus since August 1999. In
November 1999, Mr. Chookaszian was named Chairman and CEO of Mpower, the leading
provider of online retirement investment advice. From 1992 to 1999, Mr.
Chookaszian was Chairman and CEO of CNA. He is a director of the American
Council of Life Insurance, and is also a member of the Financial Accounting
Standards Board Financial Instruments Task Force, the Public Oversight Board
Panel on Audit Effectiveness and the Board of Trustees of the American Institute
of Chartered Property Underwriters and the Insurance Institute of America. He
serves on the advisory boards of Northwestern University's J. L. Kellogg
Graduate School of Management and the University of Chicago's Graduate School of
Business.
David Eskra has been an advisor to Nucleus since August 1999. Since 1991,
Mr. Eskra has been a private investor and consultant to numerous companies and
has participated in a variety of management positions with such companies. From
1979 to 1991 he was President and CEO of
3
<PAGE>
Pansophic Systems, Inc., an enterprise software company. Mr. Eskra is a board
member of GoMembers.com, McHugh Software and ISA, Inc.
Stephen Calk has served as a Director of Nucleus since April 1999. Since
October 1995, Mr. Calk has served as President of Chicago Bancorp.
Jeffrey R. Wescott has served as a Director of Nucleus since April 1999.
Mr. Wescott is currently Vice President for Bank of America in Chicago. He is a
marketing executive with 18 years of active involvement in the financial
services industry. Mr. Wescott has worked for a number of financial institutions
including Continental Illinois National Bank, Citicorp North America and Bank of
America.
Frederick H. Kopko has been a partner with the law firm of McBreen & Kopko,
in Chicago, Illinois, since January 1990. Mr. Kopko practices in the area of
corporate law. He has been a director of Sonic Foundry, Inc. since 1995, a
director of Butler International, Inc. since 1985 and a director of Mercury
Air Group, Inc. since 1992.
J. Theodore Hartley has served as Executive Vice President and Chief
Financial Officer since April 1999, and was a Director of Nucleus from
April 1999. Mr. Hartley also currently serves as Secretary of Nucleus. From 1997
to 1998, Mr. Hartley was an investment banker with Exvere Investment Banking, a
merger and acquisition firm headquartered in Seattle, Washington. From 1990 to
1997, Mr. Hartley held a variety of positions with Deloitte & Touche LLP (D&T),
an international accounting and consulting firm. Most recently, he served in
D&T's New York National Office providing merger and acquisition consulting
services to private equity investors and multinational corporations. Mr. Hartley
is a certified public accountant.
Mark Fera has served as Vice President, Corporate Development since April
1999, and was a Director of Nucleus from April 1999. From 1997 through 1999
Mr. Fera was Manager Strategic Accounts at i2 Technologies. Prior to his
affiliation with i2, from 1993 to 1997 he was with Systems Software Associates.
Prior to 1993 he served in both sales and marketing capacities at American
Software and Management Assistance, Incorporated.
Jeffrey R. Lundal has served as Vice President, Client Services since
April 1999. From 1997 to 1998 Mr. Lundal was Director of Business Development
for Harrison Marketing Services, a marketing communications firm located in
Chicago, Illinois. From 1995 to 1997, Mr. Lundal was Major Accounts Manager for
Marsh Company, a manufacturer of automated product identification solutions.
From 1990 to 1995, Mr. Lundal held a variety of sales and marketing positions
with Wilton Corporation, an industrial products conglomerate headquartered in
Chicago.
BOARD RECOMMENDATION
The board of directors unanimously recommends that stockholders vote FOR
each of the nominees for director.
BOARD OF DIRECTORS
The board of directors of Nucleus consists of seven members. Five members
are currently serving, including Messrs. Paulsen, Hartley, Fera, Calk and
Wescott. Steven H. Walker and Adrianne Belinne served on the board during 1999
but resigned effective September 1, 1999.
Directors are elected each year at the annual meeting of stockholders.
The board of directors of Nucleus met or took action by written consent six
times during 1999. Each of the directors then serving participated in 75% of
such meetings. The board of directors has established an audit committee, an
executive committee and a compensation committee.
The audit committee recommends the annual appointment of Nucleus' auditors
and reviews the scope and results of the audit and other services provided by
our independent auditors. Messrs. Walker and Wescott served on the audit
committee during 1999. The audit committee did not meet during 1999.
The compensation committee reviews and approves Nucleus' compensation and
benefits for our executive officers, administers our compensation and stock
option plans and makes recommendations to the board
4
<PAGE>
of directors regarding such matters. Messrs. Calk, Paulsen and Wescott served on
the compensation committee in 1999. The compensation committee took action by
written consent twice in 1999.
The executive committee manages the business and affairs of Nucleus.
Messrs. Calk, Fera, Hartley and Paulsen served on the executive committee in
1999. The executive committee did not meet in 1999.
In July 1999, the compensation committee approved terms for the
compensation of outside directors. According to these terms, Messrs. Wescott and
Calk were awarded stock options to purchase 60,000 shares of our common stock at
$1.50 per share with immediate vesting. Messrs. Wescott and Calk also received
options to purchase 60,000 shares at $1.50 with vesting over a three-year
period. No other compensation is currently being paid to our directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and persons who own more than 10% of our equity
securities, to file initial reports of ownership and reports of changes in
ownership of our common stock and other equity securities with the Securities
and Exchange Commission. Executive officers, directors and 10% owners are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file.
To our knowledge, the following officers, directors and greater than 10%
owners failed to file on a timely basis Form 3s, Form 4s (with respect to the
number of transactions indicated in parentheses), and Form 5s during or with
respect to fiscal year 1999: John C. Paulsen (5), J. Theodore Hartley, Mark
Fera, Jeffrey R. Lundal, Stephen Calk and Jeffrey R. Wescott.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid during 1999 to our
chief executive officer and other executive officer who earned over $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) WARRANTS (#) COMPENSATION ($)
- ---------------------------- ---- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
John C. Paulsen, President and Chief 1999 350,000 -- -- 3,775(2)
Executive Officer(1)
J. Theodore Hartley, Executive Vice 1999 105,590 -- -- --
President(1)
- -------------
(1) From April 15, 1999.
(2) Consists of premiums paid for term life insurance under which Mr. Paulsen
is the beneficiary.
</TABLE>
COMPENSATION PURSUANT TO STOCK OPTIONS/WARRANTS
There were no options/warrants granted or issued to our executive officers
during fiscal year 1999.
AGGREGATE OPTION/WARRANT EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/WARRANT VALUES
As of December 31, 1999, warrants to purchase 11,900 shares of common stock
were held by Mr. Walker.
5
<PAGE>
STOCK INCENTIVE PLANS
The board of directors approved, subject to ratification by the
shareholders at our 2000 annual meeting of stockholders, the eNucleus 2000
Omnibus Stock Incentive Plan. Pursuant to the plan, stock options, stock
appreciation rights, restricted stock and common stock or cash as a payout
medium for payments under the plan, specifically stock appreciation rights,
performance units and performance shares, may be granted to our key employees
and directors.
The purpose of the plan is to advance the interests of Nucleus by
encouraging and providing for the acquisition of an equity interest in our
success by key employees and directors, by providing additional incentives and
motivation toward superior performance of Nucleus, and by enabling us to attract
and retain the services of key employees upon whose judgment, interest, and
special effort the successful conduct of our operations is largely dependent.
The plan will be administered, construed and interpreted by either the
board of directors, the compensation committee or such other committee to whom
the board may delegate this function. The committee may at any time alter,
amend, suspend or terminate the plan. Participants in the plan shall be selected
by the committee from among those employees who are recommended for
participation by the Chief Executive Officer and who, in the opinion of the
committee, are key employees in a position to contribute materially to our
continued growth and development and to our long-term financial success, and
from among the directors. Unless earlier terminated by the board of directors,
the plan will terminate on May 1, 2010. No award may be granted under the plan
on or after May 1, 2010.
The total number of shares of stock subject to awards under the plan may
not exceed 20,000,000 (of this total number up to 5,000,000 shares may be issued
in restricted stock). Such number of shares shall be subject to adjustment upon
occurrence of certain events described in the plan. The shares to be delivered
under the plan may consist, in whole or in part, of authorized but unissued
stock or treasury stock not reserved for any other purpose.
Officers who have been granted options under the plan, the number of
options, exercise prices and dollar value of the options as of May 24, 2000
(the date of grant) are set forth in the following table.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
ENUCLEUS 2000 OMNIBUS STOCK INCENTIVE PLAN
OPTION AWARDS
NAME AND POSITION NO. OF SHARES EXERCISE PRICE DOLLAR VALUE(1)
- ------------------------------------------- --------------- ---------------- ------------------
<S> <C> <C> <C>
John C. Paulsen, 616,667(2) $1.50 $404,534
Chairman and Chief Executive Officer 133,333(3) 2.38 --
Vincent Sanchez, 366,667(2) 1.50 240,534
President and Chief Operating Officer 133,333(3) 2.156 --
J. Theodore Hartley,
Executive Vice President and Chief 566,667(2) 1.50 371,734
Financial Officer 133,333(3) 2.156 --
Mark Fera,
Vice President, Corporate 216,667(2) 1.50 142,134
Development 133,333(3) 2.156 --
Jeffrey Lundal, 216,667(2) 1.50 142,134
Vice President, Client Services 133,333(3) 2.156 --
Executive officers as a group 1,783,335(2) 1.50 1,169,868
666,665(3) 2.156 --
Non-Executive officers as a group 133,334(2) 1.50 87,467
266,666(3) 2.156 --
- -------------
(1) Based on the difference between the exercise price and 2.156, the average
of the high and low trading price of our common stock as reported on the
OTC Bulletin Board on May 24, 2000.
(2) Represents nonqualified stock options.
(3) Represents incentive stock options.
</TABLE>
6
<PAGE>
The compensation committee granted Frederick H. Kopko, a nominee for
director, options to purchase 300,000 shares of our common stock under the plan.
The grant will be effective upon the election of Mr. Kopko to our board. The
options will vest over a three year period beginning one year after the date of
the annual meeting and will have an exercise price equal to the average of the
high and low bid prices for our common stock on the date of the annual meeting.
No other compensation is currently being paid to our nominees.
We also have a Stock Purchase Plan for nonqualified options and an
Incentive Stock Option Plan for incentive stock options. As of March 31, 2000,
we had granted nonqualified stock options for 423,000 shares of common stock
under the Stock Purchase Plan. We do not intend to issue any additional options
under these plans.
EMPLOYMENT AGREEMENTS
Our executive officers have entered into employment agreements dated May
24, 2000. The employment agreements provide for a base salary and bonuses and
one-time awards of stock options as set forth in the table below.
<TABLE>
<CAPTION>
PERFORMANCE NUMBER OF SHARES
BASED UNDERLYING
NAME BASE SALARY BONUS STOCK OPTIONS(1)
- ------------------------------- ------------- ----------- ---------------------
<S> <C> <C> <C>
John C. Paulsen................ $275,000 $300,000 750,000
Vincent Sanchez ............... 200,000 300,000 500,000
J. Theodore Hartley............ 120,000 200,000 700,000
Mark Fera...................... 120,000 200,000 350,000
Jeffrey R. Lundal.............. 120,000 170,000 350,000
- -------------
(1) Awarded under the eNucleus 2000 Omnibus Stock Incentive Plan which is
subject to stockholder ratification at our 2000 Annual meeting of
Stockholders. See "-Stock Incentive Plans" above.
</TABLE>
The employment agreements for Messrs. Paulsen, Sanchez and Hartley contain
severance benefits in the event of a change in control or termination of
employment without cause by Nucleus or for good reason by the executive.
Severance benefits include lump sum payments of salary and bonus for three years
for Mr. Paulsen, two years for Mr. Sanchez and one year for Mr. Hartley and full
vesting of options. A "change of control" will be deemed to have occurred if (i)
any person, subject to certain exceptions including John C. Paulsen, acquires
beneficial ownership, directly or indirectly, of 50% or more of the then
outstanding voting securities of Nucleus; (ii) during any two-year period,
individuals who constitute the board of directors at the beginning of the
period, or who are elected or nominated to the board by at least two-thirds of
directors, cease to constitute a majority of the board; or (iii) stockholders of
Nucleus approve a liquidation, a sale of all or substantially all of the assets
or a merger or consolidation of Nucleus; provided, however, that a merger or
consolidation of Nucleus with another corporation will not be deemed to be a
change in control if the stockholders of Nucleus own at least 55% of the voting
securities of the other corporation immediately after such merger or
consolidation.
The employment agreements also bar the executives from using or disclosing
confidential information and from engaging in a competing business for a period
of one year after termination of employment.
7
<PAGE>
CONSULTING AGREEMENTS
Effective November 1, 1999, Nucleus entered into consulting agreements with
Dennis Chookaszian and David Eskra to provide general consulting services to
Nucleus. Pursuant to the terms of those agreements, each of Messrs. Chookaszian
and Eskra received warrants to purchase an aggregate of 600,000 shares of
Nucleus common stock at $1.50 per share. Of the total number of warrants,
300,000 are exercisable at any time on or prior to the earlier of the date
Nucleus closes a permanent equity offering of $6 million or more or September
30, 2000. The remaining warrants vest ratably over a three-year period
commencing January 1, 2000. These agreements bar Messrs. Chookaszian and Eskra
from using or disclosing confidential information and from engaging in a
competing business for a period of two years after the termination of the
consulting agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is responsible for recommending the compensation
of our executive officers. John C. Paulsen, a member of the compensation
committee, presently serves as Chief Executive Officer and Chairman of the Board
of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, John C. Paulsen, our Chairman and Chief Executive Officer,
made cash loans to Nucleus and cash payments to Nucleus vendors totaling
$711,000. Nucleus made cash repayments and other cash advances to Mr. Paulsen of
$782,000 during the period. As of December 31, 1999, Nucleus carried a payable
to Mr. Paulsen of $121,000, which represented the balance of the cash provided
net of deferred compensation and interest recorded for Mr. Paulsen for 1999.
During the first quarter of 2000, Mr. Paulsen made cash loans to Nucleus
totaling $154,000. Nucleus made cash repayments to Mr. Paulsen of the payable
outstanding and repurchased from Mr. Paulsen 264,078 shares of Nucleus common
stock for $1.50 per share.
On May 24, 2000, in consideration of past and current personal guarantees
provided by John C. Paulsen on various obligations of Nucleus and for advancing
funds from time to time to Nucleus, Mr. Paulsen was provided the opportunity to
purchase 1,250,000 shares of our common stock for $2.156 per share. Nucleus
loaned Mr. Paulsen the full amount of the purchase price for the stock. Mr.
Paulsen has pledged the stock as security for the loan. The stock is subject to
certain repurchase rights exercisable by Nucleus, which lapse as to one-third of
the shares on the first, second and third anniversaries of the loan.
During 1999, Henry Paulsen, John Paulsen's father, made loans to Nucleus of
$216,000 and received repayments and other cash advances from Nucleus of
$311,000. As of December 31, 1999, Nucleus carried a receivable from Henry
Paulsen of $26,000, representing the balance of the cash provided net of
deferred compensation and interest recorded for Henry Paulsen for 1999. During
the first quarter 2000, Nucleus repurchased from Henry Paulsen 170,480 shares
of Nucleus common stock for $1.50 per share. The amount paid for the stock
included the receivable due from Henry Paulsen carried over from 1999.
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PROPOSAL NO. 2. NAME CHANGE TO "eNUCLEUS, INC."
Our board of directors has unanimously approved, and is recommending to the
stockholders for approval at the annual meeting, a change in our name to
"eNucleus, Inc." In the judgment of our board, the name change more effectively
conveys our e-business and Internet orientation. The new name identifies us as a
provider of Internet based technology and aligns our product and services with
the new digital economy. We believe "eNucleus" will enhance our brand awareness
and facilitate marketing to our target market.
If approved by stockholders, the name change will take effect upon the
reincorporation in Delaware assuming Proposal No. 3 is adopted by the
stockholders at the annual meeting. If Proposal No. 3 is not approved, the name
change will be effected by filing an amendment to our articles of incorporation
after the annual meeting.
BOARD RECOMMENDATION
The board of directors unanimously recommends that stockholders vote FOR
the name change.
PROPOSAL NO. 3. REINCORPORATION IN DELAWARE
To accomplish the proposed change in Nucleus' state of incorporation to
Delaware from Nevada, the board of directors has unanimously adopted an
Agreement and Plan of Merger between Nucleus and its wholly-owned subsidiary,
eNucleus, Inc. ("Nucleus Delaware"). Under the merger agreement, Nucleus will be
merged into Nucleus Delaware and each share of Nucleus common stock (other than
shares with respect to which the holder has asserted statutory dissenter's
rights) will automatically be converted into one share of common stock, par
value $0.001 per share of Nucleus Delaware. A copy of the merger agreement is
attached as Appendix A to this Proxy Statement. Nucleus Delaware was recently
formed by Nucleus under the Delaware General Corporation Law ("DGCL") for the
purpose of effecting the reincorporation. If the reincorporation is approved by
the stockholders and the merger is completed, Delaware law and the Certificate
of Incorporation and By-laws of Nucleus Delaware will govern the rights of
stockholders in the surviving entity. See "Comparative Rights of Stockholders of
Nucleus and Nucleus Delaware."
The reincorporation will not result in any change in the business,
management, assets, liabilities, or fiscal year of Nucleus, nor will the
reincorporation require a change in the location of Nucleus's principal
executive offices. The directors and officers of Nucleus will be the directors
and officers of Nucleus Delaware. All employee benefit plans of Nucleus,
including Nucleus' incentive stock plans, will be assumed by Nucleus Delaware.
Nucleus stock certificates will be deemed automatically to represent an equal
number of shares of Nucleus Delaware. Following the reincorporation, previously
outstanding Nucleus stock certificates may be delivered in effecting sales of
shares of Nucleus Delaware common stock. Nucleus will, however, request that all
stockholders exchange their Nucleus stock certificates for stock certificates of
Nucleus Delaware after the reincorporation takes effect.
It is a condition to the merger that stockholders owning not more than 1%
of the outstanding shares of common stock of Nucleus exercise dissenter's
rights. This condition may be waived in the sole discretion of the respective
boards of directors of Nucleus and Nucleus Delaware.
If consented to by Nucleus' stockholders, it is anticipated that the
reincorporation by means of the merger will be completed as soon as practicable
after such consent. However, the merger may be abandoned, and the merger
agreement may be amended, either before or after stockholder consent if
circumstances arise which, in the opinion of the board of directors, make such
action advisable, although subsequent to stockholder consent none of the
principal terms may be amended without further stockholder approval.
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No Federal or state regulatory requirements must be complied with or
approval must be obtained in connection with the reincorporation.
PURPOSE OF THE REINCORPORATION
The board of directors determined to reincorporate Nucleus in Delaware
primarily because of its desire to take advantage of the fact that Delaware has
adopted comprehensive, modern and flexible corporate laws that are periodically
updated and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. Although the Nevada General Corporation
Law ("NGCL") is relatively similar to the DGCL, there is a lack of
predictability under Nevada law resulting from the limited body of case law
interpreting the NGCL. By contrast, the Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware corporate law and establishing
public policies with respect to corporate activities, thereby providing greater
predictability with respect to corporate legal affairs.
COMPARATIVE RIGHTS OF STOCKHOLDERS OF NUCLEUS AND NUCLEUS DELAWARE
Upon consummation of the reincorporation, the outstanding shares of Nucleus
common stock (other than shares with respect to which the holder has asserted
statutory dissenter's rights) will be converted into shares of Nucleus Delaware
common stock. Consequently, Nucleus stockholders, whose rights as stockholders
are currently governed by Nevada law and Nucleus's Articles of Incorporation and
By-laws, will become stockholders of Nucleus Delaware whose rights will be
governed by Delaware law and the Nucleus Delaware's Certificate of Incorporation
and By-laws. Copies of the Certificate of Incorporation and By-laws of Nucleus
Delaware which are proposed to be in effect upon the consummation of the
reincorporation appear later in this Proxy Statement as Appendices B and C,
respectively. Anti-takeover provisions to be included in Nucleus Delaware's
Certificate of Incorporation and By-laws are subject to the separate approval of
the stockholders. See "Proposal No. 3. Anti-Takeover Provisions Requiring
Approval of Stockholders."
In most respects the rights of holders of Nucleus common stock are similar
to those of Nucleus Delaware common stock. Certain aspects of the rights of
holders of Nucleus common stock and Nucleus Delaware common stock are discussed
below. The following summary does not purport to be a complete statement of the
rights of Nucleus's stockholders under applicable Nevada law and the Nevada
Charter Documents as compared with the rights of the Delaware stockholders under
applicable Delaware law and the Delaware Charter Documents and is qualified in
its entirety by the DGCL and the NGCL to which stockholders are referred.
Authorized Capital Stock. Nucleus' authorized capital stock currently
consists of 900 million shares of common stock, par value $0.001 per share, and
eight million shares of preferred stock, no par value per share. Nucleus
Delaware's authorized capital stock at the Effective Time of the reincorporation
will consist of 100 million shares of Nucleus common stock, par value $0.001 per
share, and 20 million shares of preferred stock, par value $0.001 per share.
Both the Nucleus Articles and the Nucleus Delaware Certificate provide that
their respective boards of directors are entitled to determine the powers,
preferences and rights and the qualifications, limitations or restrictions, of
the authorized and unissued preferred stock. Although they have no present
intention of doing so, the board of directors of Nucleus Delaware, without
stockholder approval, could authorize the issuance of preferred stock in the
future upon terms or with any rights, preferences and privileges which could
have the effect of delaying or preventing a change in control of Nucleus
Delaware or modifying the effective rights of holders of Nucleus Delaware's
common stock under applicable Delaware law. The board of directors could also
utilize such shares for financings, possible acquisitions and other uses.
Amendment to Charter and Bylaws. Delaware and Nevada law require the
approval of the holders of a majority of all outstanding shares entitled to vote
(with, in each case, each stockholder being entitled to one vote for each share
so held) to approve proposed amendments to a corporation's charter.
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Neither state requires stockholder approval for the board of directors of a
corporation to fix the voting powers, designation, preferences, limitations,
restrictions and rights of a class of stock provided that the corporation's
charter documents grant such power to its board of directors. The holders of the
outstanding shares of a particular class are entitled to vote as a class on a
proposed amendment if the amendment would alter or change the power, preferences
or special rights of one or more series of any class so to affect them
adversely. The number of authorized shares of any such class of stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the stock entitled to vote
thereon (without a class vote) if so provided in any amendment to the
certificate of incorporation or resolutions creating such class of stock.
Stockholder Approval of Certain Business Combinations. Both Nevada law and
Delaware law provide certain protections to stockholders in connection with
certain business combinations. These protections can be found in Sections 78.411
- - 78.444 of the NGCL and Section 203 of the DGCL.
Under Section 203, certain "business combinations" with "interested
stockholders" of Nucleus Delaware are subject to a three-year moratorium unless
specified conditions are met. For purposes of Section 203, the term "business
combination" is defined broadly to include (i) mergers with or caused by the
interested stockholder; (ii) sales or other dispositions to the interested
stockholder (except proportionately with the corporation's other stockholders)
of assets of the corporation or a subsidiary equal to ten percent or more of the
aggregate market value of the corporation's consolidated assets or its
outstanding stock; (iii) the issuance or transfer by the corporation or a
subsidiary of stock of the corporation or such subsidiary to the interested
stockholder (except for transfers in a conversion or exchange or a pro rata
distribution or certain other transactions, none of which increase the
interested stockholder's proportionate ownership of any class or series of the
corporation's or such subsidiary's stock); or (iv) receipt by the interested
stockholder (except proportionately as a stockholder), directly or indirectly,
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date on which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested stockholder; (ii) the interested stockholder owns 85 percent of the
corporation's voting stock upon consummation of the transaction which made him
or her an interested stockholder (excluding from the 85 percent calculation
shares owned by directors who are also officers of the target corporation and
shares held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or (iii) on or
after the date such person becomes an interested stockholder, the board approves
the business combination and it is also approved at a stockholder meeting by
two-thirds (66-2/3%), of the voting stock not owned by the interested
stockholder.
Nevada law regulates combinations more stringently. First, an interested
stockholder is defined as a beneficial owner of 10% or more of the voting power.
Second, the three-year moratorium can be lifted only by advance approval by a
corporation's board of directors, as opposed to Delaware's provision that allows
interested stockholder combinations at the time of the transaction with
stockholder approval. Finally, after the three-year period, combinations remain
prohibited unless (i) they are approved by the board of directors, the
disinterested stockholders or a majority of the outstanding voting power not
beneficially owned by the interested party or (ii) the interested stockholders
satisfy certain fair value requirements. As in Delaware, a Nevada corporation
may opt-out of the statute; however, Nucleus has not done so. Similarly, the
Delaware certificate of incorporation does not authorize such an opt-out.
Classified Board of Directors. Delaware law permits any Delaware
corporation to classify its board of directors into as many as three classes
with staggered terms of office. The stockholders elect only one class each year
and each class has a term of office at least one year but no longer than three
years. Subject to stockholder approval, the By-laws of Nucleus Delaware will
provide for a staggered board.
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Nevada law also permits corporations to classify boards of directors
provided that at least one-fourth of the directors is elected annually. Nucleus
does not presently have a staggered board.
Cumulative Voting. Cumulative voting for directors entitles each
stockholder to cast a number of votes that is equal to the number of voting
shares held by such stockholder multiplied by the number of directors to be
elected and to cast all such votes for one nominee or distribute such votes
among up to as many candidates as there are positions to be filled. Cumulative
voting may enable a minority stockholder or group of stockholders to elect at
least one representative to the board of directors where such stockholders would
not be able to elect any directors without cumulative voting.
Nevada law permits cumulative voting in the election of directors as long
as certain procedures are followed. Although Delaware law does not explicitly
grant cumulative voting, a Delaware corporation may provide for cumulative
voting in the corporation's certificate of incorporation. Nucleus presently
denies cumulative voting in the election of directors. Similarly, the
Certificate of Incorporation for Nucleus Delaware will not provide for
cumulative voting.
Vacancies. Subject to the rights, if any, of any series of preferred stock
to elect directors and to fill vacancies on the board of directors, vacancies
during the year shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum. Any director
appointed shall hold office for the remainder of the term of the class of
directors in which the vacancy occurred.
Removal of Directors. Under Delaware law, the holders of a majority of
voting shares of each class entitled to vote at an election of directors may
vote to remove any director or the entire board without cause unless (i) the
board is a classified board in which case directors may be removed only for
cause, or (ii) the corporation has cumulative voting in which case if less than
the entire board is to be removed no director may be removed without cause if
the vote cast against his removal would be enough to elect him. Nevada law
requires at least two-thirds of the majority of voting shares or class entitled
to vote at an election of directors to remove a director. Furthermore, Nevada
law does not make a distinction between removals for cause and removals without
cause.
Under Delaware law, a director of a corporation that does not have a
classified board or permit cumulative voting may be removed, without cause, by
the affirmative vote of a majority of the outstanding shares entitled to vote at
an election of directors. Subject to stockholder approval, Nucleus Delaware will
have a staggered board.
Actions by Written Consent of Stockholders. Nevada law and Delaware law
each provide that any action required or permitted to be taken at a meeting of
the stockholders may be taken without a meeting if the holders of outstanding
stock having at least the minimum number of votes that would be necessary to
authorize or take such action at a meeting consents to the action in writing. In
addition, Delaware law requires the corporation to give prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent to those stockholders who did not consent in writing. Subject to
stockholder approval, the Certificate of Incorporation of Nucleus Delaware will
not permit stockholder action by written consent.
Stockholder Vote for Mergers and Other Corporate Reorganizations. Unless
the charter specifies a higher percentage, both jurisdictions require
authorization by an absolute majority of outstanding shares entitled to vote, as
well as approval by the board of directors with respect to the terms of a merger
or a sale of substantially all of the assets of the corporation. Neither Nevada
law nor Delaware law requires approval by the stockholders of a surviving
corporation in a merger or consolidation as long as the surviving corporation
issues no more than 20% of its voting stock in the transaction.
Subject to stockholder approval, the Delaware certificate of incorporation
will require the vote of the holders of two-thirds (66-2/3%) of the outstanding
shares entitled to vote to approve certain corporate transactions. Nucleus'
Articles do not specify a higher percentage.
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Stockholders' Dissenter's Rights. In both jurisdictions, dissenting
stockholders of a corporation engaged in certain major corporate transactions
are entitled to appraisal rights. Appraisal rights permit a stockholder to
receive cash equal to the fair market value of the stockholder's shares (as
determined by agreement by the parties or by court) in lieu of the consideration
such stockholder would otherwise receive in any such transaction.
Under Delaware law, appraisal rights are generally available for the shares
of any class or series of stock of a corporation in a merger or consolidation,
provided that no appraisal rights are available for the shares of any class or
series of stock which, at the record date for the meeting held to approve such
transaction, were either (i) listed on a national security exchange or
designated as a national market system security on an inter-dealer quotation
system by the National Association of Securities Dealers, Inc. (NASD) or (ii)
held of record by more than 2,000 stockholders. Even if the shares of any class
or series of stock meet the requirements of clause (i) or (ii) above, appraisal
rights are available for such class or series if the holders thereof receive in
the merger or consolidation anything except: (i) shares of stock of the
corporation surviving or resulting from such merger or consolidation; (ii)
shares of stock of any other corporation which at the effective date of the
merger or consolidation is either listed on a national securities exchange, or
designated as a national market system security on an interdealer quotation
system by the NASD or held of record by more than 2,000 stockholders; (iii) cash
in lieu of fractional shares; or (iv) any combination of the foregoing. No
appraisal rights are available to stockholders of the surviving corporation if
the merger did not require their approval.
Under Nevada law, a stockholder is entitled to dissent from, and obtain
payment for the fair value of his shares in the event of consummation of, a plan
of merger or plan of exchange in which the corporation is a party and any
corporate action taken pursuant to a vote of the stockholders to the extent that
the articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting stockholders are entitled to dissent and
obtain payment for their shares. As with Delaware law, Nevada law provides an
exception to dissenter's rights. Holders (i) of securities listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the NASD or (ii) of securities held by 2,000
stockholders of record are generally not entitled to dissenter's rights. See
"--Dissenter's Rights" below.
Stockholder Inspection Rights. Delaware law grants any stockholder the
right to inspect and to copy for any proper purpose the corporation's stock
ledger, a list of its stockholders, and its other records. A proper purpose is
one reasonably related to such person's interest as a stockholder. Directors
also have the right to examine the corporation's stock ledger, a list of its
stockholders and its other records for a purpose reasonably related to their
positions as directors.
Nevada law provides that any person who has been a stockholder of record of
a corporation for at least six months immediately preceding his demand, or any
person who owns or has been authorized by the holders of at least 5% of all of
its outstanding shares, is entitled to inspect and copy the stock ledger.
Furthermore, any person who has been a stockholder of record of any corporation
and owns or has been authorized by the holders of at least 15% of all of its
outstanding shares, is entitled to inspect and copy other corporate records.
Dividends and Distributions. Nevada law prohibits distributions to
stockholders when the distributions would (i) render the corporation unable to
pay its debts as they become due in the usual course of business; and (ii)
render the corporation's total assets less than the sum of its total liabilities
plus the amount that would be needed to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to those
receiving the distribution.
Delaware law permits a corporation to pay dividends out of either (i)
surplus or (ii) in case there is no surplus, out of its net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year,
except when the capital is diminished to an amount less than the aggregate
amount of the capital represented by issued and outstanding stock having a
preference on the distribution of assets. Delaware law defines surplus as the
excess, at any time, of the net assets of a corporation (determined on a fair
market value, as opposed to historical cost, basis) over its stated capital.
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To date, neither Nucleus nor Nucleus Delaware has paid dividends on its
common stock. The payment of dividends, if any, is within the discretion of the
board of directors of Nucleus Delaware and will depend upon Nucleus Delaware's
earnings, its capital requirements and financial condition, and other relevant
factors. The board of Nucleus Delaware does not intend to declare any dividends
in the foreseeable future, but instead intends to retain all earnings, if any,
for use in Nucleus Delaware's business operations.
Limitation of Liability and Indemnification Matters. Nevada law and
Delaware law each permit corporations to adopt provisions in their charter
documents that eliminate or limit the personal liability of directors to the
corporation or their stockholders for monetary damages for breach of a
director's fiduciary duty, subject to the differences discussed below.
In suits that are not brought by or in the right of the corporation, both
jurisdictions permit a corporation to indemnify directors, officers, employees
and agents for attorney's fees and other expenses, judgments and amounts paid in
settlement. The person seeking indemnity may recover as long as he acted in good
faith and believed his actions were either in the best interests of or not
opposed to the best interests of the corporation. Similarly, the person seeking
indemnification must not have had any reason to believe his conduct was
unlawful.
In derivative suits, a corporation in either jurisdiction may indemnify its
agents for expenses that the person actually and reasonably incurred. A
corporation may not indemnify a person if the person was adjudged to be liable
to the corporation unless a court otherwise orders. Delaware law does not permit
corporations to indemnify parties for amounts paid in derivative actions if they
were adjudged liable to the corporation without court approval.
No corporation may indemnify a party unless it makes a determination that
indemnification is proper. In Delaware, the corporation through its
stockholders, directors or independent legal counsel will determine that the
conduct of the person seeking indemnity conformed with the statutory provisions
governing indemnity. In Nevada, the corporation through its stockholders,
directors or independent counsel must only determine that the indemnification is
proper.
Delaware law provides that a corporation may advance attorney's fees to a
director, officer or employee upon receipt of an undertaking to repay the
corporation if the person seeking the advance is ultimately found not to be
entitled to indemnification. Nevada law does not require employees to give the
undertaking. Both jurisdictions preclude liability limitation for acts or
omissions not in good faith or involving intentional misconduct and for paying
dividends or repurchasing stock out of other than lawfully available funds.
Nevada law does not expressly preclude a corporation from limiting liability for
a director's breach of the duty of loyalty or preclude a corporation from
limiting liability for any transaction from which a director derives an improper
personal benefit.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The following is a summary discussion of certain federal income tax
consequences of the reincorporation to stockholders who receive Nucleus Delaware
common stock in exchange for their common stock. The discussion does not address
all the federal income tax consequences of the reincorporation and, in
particular, does not address the federal income tax consequences that may be
relevant to particular stockholders, such as dealers in securities, holders of
stock options or those stockholders who acquired their shares upon the
"exercise" of stock options.
Nucleus has not requested a ruling from the Internal Revenue Service (the
"IRS") with respect to the federal income tax consequences of the
reincorporation under the Internal Revenue Code of 1986, as amended. Nucleus is
of the opinion, however, that: (a) the reincorporation will constitute a
tax-free reorganization under section 368(a) of the Internal Revenue Code of
1986; (b) no gain or loss will be recognized by holders of Nucleus common stock
upon receipt of Nucleus Delaware common stock pursuant to the reincorporation;
(c) the aggregate tax basis of Nucleus Delaware common stock received by each
stockholder will be the same as the aggregate tax basis of common stock held by
such stockholder
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immediately prior to the reincorporation; and (d) the holding period of Nucleus
Delaware common stock received by each stockholder will include the period
during which such stockholder held the Nucleus common stock surrendered in
exchange therefor, provided that such Nucleus common stock was held by such
stockholder as a capital asset at the time of the reincorporation.
Although Nucleus is of the opinion that the federal income tax consequences
to the reincorporation will be as described above, such opinion is not binding
upon the IRS nor does it preclude the IRS from taking a contrary position. There
can be no assurance that the federal income tax consequences described above
will not be challenged by the IRS or, if challenged, will be decided favorably
to the parties to the reincorporation.
A successful IRS challenge to the tax-free status of the reincorporation
would result in a stockholder recognizing gain or loss with respect to each
share of Nucleus common stock surrendered equal to the difference between that
stockholder's basis in such share and the fair market value, as of the time of
the reincorporation, of Nucleus Delaware common stock received in exchange
therefor. In such event, a stockholder's aggregate basis in the shares of
Nucleus Delaware common stock received in the exchange would equal such fair
market value, and such stockholder's holding period for such shares would not
include the period during which such stockholder held Nucleus common stock.
No information is provided herein with respect to the tax consequences, if
any, under applicable state, local or foreign tax laws. In addition, the federal
income tax discussion set forth above is for general information only. Because
the stockholders' tax circumstances may differ, stockholders are urged to
consult their own tax advisors with respect to these and other tax consequences
of the reincorporation.
DISSENTER'S RIGHTS
Under the NGCL, in connection with the reincorporation, a stockholder of
Nucleus will be entitled to dissent from the proposed merger and obtain payment
of the fair value of his shares under Nevada Revised Statutes 92A.300 to
92A.500, inclusive. A copy of the Nevada Statute is attached hereto as Appendix
D. The statutory right to obtain fair value is subject to strict compliance by a
stockholder with the procedures set forth in the Nevada statute and described
below. Failure to follow any of these procedures may result in a termination or
waiver of the right to dissent and obtain payment of the fair value of the
stockholder's shares of the Nucleus common stock currently held. In addition,
the merger agreement makes it a condition to the merger that stockholders owning
not more than 1% of the outstanding shares of common stock of Nucleus properly
exercise dissenter's rights. This condition may be waived by the boards of
directors of Nucleus and Nucleus Delaware, but no assurance can be given that
the respective boards would in fact waive the condition.
A stockholder of record of Nucleus may assert dissenter's rights as to
fewer than all shares registered in his name only if he dissents with respect to
all shares beneficially owned by any one person and notifies Nucleus in writing
of the name and address of each person on whose behalf he asserts dissenter's
rights. The rights of a partial dissenter are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
stockholders. A beneficial stockholder of Nucleus common stock may assert
dissenter's rights as to shares held on his behalf only if he submits to Nucleus
the written consent of the stockholder of record to the dissent not later than
the time the beneficial stockholder asserts dissenter's rights and he does so
with respect to all shares of which he is the beneficial stockholder or over
which he has the power to direct the vote. A "beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
A stockholder who wishes to assert dissenter's rights must deliver to
Nucleus, before the annual meeting, written notice of his intent to demand
payment for his shares of Nucleus common stock if the reincorporation is
effectuated and must not vote his shares of Nucleus common stock in favor of the
merger agreement. A stockholder who does not satisfy such requirements is not
entitled to payment for his shares under the Nevada statute.
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If the reincorporation is approved at the annual meeting, Nucleus will, no
later than 10 days after the Effective Date, deliver a written dissenter's
notice to all stockholders who satisfied the requirements to assert those
rights. The dissenter's notice will (i) state where the demand for payment must
be sent, (ii) where and when certificates for shares must be deposited, (iii)
supply a form for demanding payment that includes the date of the first
announcement of the terms of the reincorporation and requiring the person
asserting dissenter's rights to certify whether or not he acquired beneficial
ownership of the shares before that date and (iv) set a date by which Nucleus
must receive the demand for payment, which will not be less than 30 nor more
than 60 days after the date the notice is delivered.
A stockholder to whom a dissenter's notice is sent must demand payment,
certify whether he acquired beneficial ownership of the shares before the date
set forth in the dissenter's notice for this certification and deposit his
certificates in accordance with the terms of the notice. A stockholder who does
not demand payment or deposit his certificates where required by the date set
forth in the dissenter's notice is not entitled to payment for his shares under
the Nevada statute.
Within 30 days after receipt of a demand for payment, Nucleus will pay each
dissenter who complied with the Nevada statute the amount Nucleus estimates to
be the fair value of his shares, plus accrued interest from the Effective Date
at the average rate paid by Nucleus on its principal bank loans, or if it has no
bank loans, at a rate that is fair and equitable under all of the circumstances.
The payment must be accompanied by the financial statements of Nucleus and a
statement of the estimate of fair value of the shares, together with an
explanation of how the interest was calculated. The dissenter may notify Nucleus
in writing of his own estimate of the fair value of his shares and the amount of
interest due, and demand payment of his estimate less any payment received from
Nucleus if he believes that the amount paid is less than the fair value of his
shares or that the interest due is incorrectly calculated.
Nucleus may elect to withhold payment from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenter's
notice as the date of first announcement of the reincorporation. To the extent
Nucleus elects to withhold payment, after the Effective Date it will estimate
the fair value of the shares plus accrued interest and shall offer to pay this
amount to each dissenter who agrees to accept it in full satisfaction of his
demand. Nucleus will send with its offer a statement of its estimate of the fair
value of the shares and an explanation of how the interest was calculated. The
dissenter may reject the offer and demand payment of the fair value of his
shares and interest due if he believes that the amount offered is less than the
fair value or that the interest due is incorrectly calculated.
If a demand for payment remains unsettled, Nucleus will commence a
proceeding in the district court of the county in Nevada where Nucleus's
registered office was located within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If Nucleus does not commence the proceeding within the 60 day period,
it will pay each dissenter whose demand remains unsettled the amount demanded.
EXCHANGE OF CERTIFICATES
Upon the reincorporation becoming effective, each outstanding share of
Nucleus common stock will be converted into one fully paid and non-assessable
share of Nucleus Delaware common stock. Stockholders are requested, but are not
required, to exchange their current share certificates for shares of Nucleus
Delaware. Stockholders who desire to exchange their shares may do so following
consummation of the reincorporation by surrendering them to Nucleus's transfer
agent, Illinois Stock Transfer, who will issue new certificates for shares of
Nucleus Delaware common stock upon receipt of old share certificates. Delivery
of stock certificates issued by Nucleus prior to the effectiveness of the
reincorporation will constitute "good delivery" of shares in transaction
subsequent to reincorporation. Certificates of Nucleus Delaware will be issued
with respect to transfers consummated after reincorporation.
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BOARD RECOMMENDATION
The board of directors unanimously recommends a vote "FOR" approval of the
proposed reincorporation.
PROPOSAL NO. 4. ANTI-TAKEOVER PROVISIONS REQUIRING
APPROVAL OF STOCKHOLDERS
The board of directors has determined that the Certificate of Incorporation
and By-laws of Nucleus Delaware should include provisions that would promote the
continuity and stability of Nucleus Delaware. These provisions are designed to
reduce the vulnerability of Nucleus to an unsolicited proposal for the
restructuring or sale of all or substantially all of the assets of Nucleus or an
unsolicited takeover attempt which is unfair to stockholders. The Certificate of
Incorporation and By-laws of Nucleus Delaware (as proposed) are likely to have
the effect of impeding the acquisition of control of Nucleus Delaware by means
of a tender offer, a proxy contest, open-market purchase or otherwise in a
transaction not approved by the board of directors. These provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the board of directors, but which individual stockholders may deem in their best
interests or in which stockholders may receive a substantial premium for their
shares over the then current market price. As a result, stockholders who might
desire to participate in such a transaction may not have an opportunity to do
so. Such provisions will also render the removal of the board of directors or
management of Nucleus Delaware more difficult.
The following anti-takeover provisions are presently included in the
Certificate of Incorporation and By-laws of Nucleus Delaware and will be
effective after the reincorporation if separately approved by the stockholders
of Nucleus. Nucleus Delaware's Certificate of Incorporation and By-laws appear
later in this Proxy Statement as Appendix B and C, respectively. A vote of
two-thirds (66-2/3%) of the outstanding shares of Nucleus common stock will be
required to approve each anti-takeover provision. Any anti-takeover provision
not approved will be removed from Nucleus Delaware's Certificate of
Incorporation or By-laws, as the case may be, prior to the effective time of the
reincorporation.
PROPOSAL 4a. CLASSIFIED BOARD; REMOVAL
The board of directors of Nucleus Delaware is divided into three classes.
Each class will be as nearly equal in number as possible. The term of office of
the first class expires at the annual meeting of stockholders in 2001, the
second class expires at the annual meeting in 2002, and the third class at the
annual meeting in 2003. At each subsequent annual meeting, directors will be
elected to succeed those directors whose terms expire for a three year term
which will expire at the third succeeding annual meeting of stockholders after
their elections.
The seven nominees to the board of directors of Nucleus will be the
directors of Nucleus Delaware when the reincorporation becomes effective. The
terms of office of the following directors of Nucleus Delaware will expire at
the annual meeting of stockholders in the years indicated:
2001 2002 2003
---- ---- ----
David Eskra Vincent Sanchez John C. Paulsen
Stephen Calk Jeffrey R. Wescott Dennis Chookaszian
Frederick H. Kopko
At each annual meeting of stockholders, commencing with the meeting in
2001, directors elected to succeed those in the class whose terms expire will be
elected for three year terms so that the term of office of one class of
directors will expire each year.
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Under Nevada law, one or more directors may be removed, with or without
cause, by the affirmative vote of the holders of two-thirds (66-2/3%) of a
majority of common stock entitled to vote. Under Delaware law and Nucleus
Delaware's By-laws, directors of a classified board can be removed only with
cause by a majority of shares entitled to vote at an election of directors.
The board of directors believes that a classified board serves the best
interests of Nucleus Delaware and its stockholders by promoting the continuity
and stability of Nucleus Delaware and its business. The staggered election of
directors ensures that at any given time, two-thirds of the directors serving
will have had prior experience on the board. Staggered terms for directors also
would moderate the pace of any change in the board by extending the time
required to elect a majority of directors from one to two years. The board also
believes that a classified board would better enable the board to protect the
interests of stockholders in the event that another entity seeks to accumulate a
substantial amount of Nucleus Delaware common stock in order to gain control of
Nucleus Delaware or replace its management. Under a three-class structure, at
least two annual stockholder meetings, instead of one, would generally be
required for such an acquiror to obtain control of the board of directors by
electing a majority of its representatives to the board. The classified board is
designed to make it more time-consuming to obtain majority control of the board
without its consent, and thus reduce the vulnerability of Nucleus Delaware to an
unsolicited takeover proposal or to an unsolicited proposal for the
restructuring or sale of all or part of Nucleus Delaware or to enter into any
other extraordinary transaction. The board believes that the classified board
will serve to encourage any person intending to attempt such a takeover or other
transaction to negotiate with the board, and that the board therefore will be
better able to protect the interests of all of Nucleus Delaware's stockholders.
PROPOSAL 4b. CALL OF SPECIAL MEETINGS OF STOCKHOLDERS
Under the laws of Nevada and Nucleus's By-laws, special meetings of the
stockholders may be called by the President or by a majority of the board of
directors, and must be called upon the written request of the holders of a
majority of the outstanding shares of Nucleus common stock. Nucleus Delaware's
By-laws provide that special meetings of stockholders may be called only by the
chairman of the board or the president. Consequently, stockholders who wish to
bring business before Nucleus Delaware stockholders can only do so at an annual
meeting.
PROPOSAL 4c. ACTION BY WRITTEN CONSENT
Under Nevada and Delaware law, the stockholders of a corporation may take
action by written consent of the holders of at least a majority of its
outstanding shares (unless, due to the nature of the matter, a greater number of
votes is required). The Delaware charter documents prohibit action by written
consent. The purpose of this limitation is to require that all stockholder
proposals be addressed at a duly called meeting of stockholders, thereby
creating sufficient opportunity to disseminate information to all stockholders
resulting in a more reasonable consideration of matters by the stockholders.
PROPOSAL 4d. NOTICE OF STOCKHOLDER BUSINESS
Under the Nevada charter documents, no specific procedures exist before
business can be properly brought before a meeting of stockholders. Consequently,
stockholder business can be made by stockholders from the floor at a special
meeting.
Nucleus Delaware's By-laws provide that only stockholder business that
is properly brought before an annual meeting will be considered at such a
meeting. To be properly brought before the annual meeting of stockholders,
business must be (i) specified in the notice of meeting given by or at the
direction of the board, (ii) otherwise properly brought before the meeting by or
at the direction of the board, or (iii) otherwise properly brought before the
meeting by a stockholder. For business to be properly brought before an annual
meeting of the stockholders, the stockholder must have given timely notice
thereof in
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writing to the President of Nucleus Delaware. To be timely, a stockholder's
written notice of intent to make a proposal or proposals must be personally
delivered to or mailed by United States mail, postage prepaid and received by
the President of Nucleus Delaware not less than 120 days prior to the meeting;
provided however, that in the event not less than 130 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders
(which notice or public disclosure shall include the date of the annual meeting
specified in these By-laws, if such By-laws have been filed with the Securities
and Exchange Commission and if the annual meeting is held on such date), notice
by the stockholder to be timely must be received not later than the close of
business on the 10th day following the day on which notice of the day of the
annual meeting was mailed or such public disclosure was made. A stockholder's
notice to the President must set forth as to each item of business the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the meeting, and in the case of a
nomination for election of director, such nominee's name and qualifications, and
the reasons for conducting business at the meeting, (ii) the name and the record
address of the stockholder or stockholders proposing such business, (iii) the
number of shares of stock of Nucleus Delaware which are beneficially owned by
such stockholder or stockholders, and (iv) any material interest of the
stockholder in such business. The chairman of the meeting may refuse to
acknowledge the proposal of any stockholder not made in compliance with the
foregoing.
In light of these requirements, a stockholder may be deterred from bringing
business before a meeting, including nominating an individual for election as a
director. This provision is designed to prevent business or nominations from the
floor at the annual meeting without advance notice and requires that sufficient
information be provided in advance. The board of directors believes that such
disclosure is beneficial and that the elimination of the element of surprise
will allow a more reasonable consideration of all business properly brought
before a meeting.
PROPOSAL 4e(i). STOCKHOLDER APPROVAL FOR CERTAIN CORPORATE TRANSACTIONS
Unless otherwise specified in the corporation's certificate of
incorporation, Delaware law only requires the vote of the holders of a majority
of the outstanding shares entitled to vote to approve the merger or sale of
substantially all of the assets of a corporation. The Certificate of
Incorporation of Nucleus Delaware will provide that any share exchange, merger
or consolidation involving Nucleus Delaware, issuance or transfer of all, or
substantially all, of its securities in exchange for cash, securities or other
property, the sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all, or substantially all, of the assets or property of Nucleus
Delaware, the adoption of any plan or proposal for the liquidation, dissolution,
or any recapitalization of Nucleus Delaware or any reclassification of its
securities will require a 66-2/3% vote of stockholders. Increasing the
stockholders vote requirement from a majority to 66-2/3% will make it more
difficult to approve these transactions thereby discouraging third parties from
making an unsolicited acquisition proposal that some stockholders may consider
beneficial.
PROPOSAL 4e(ii). AMENDMENTS TO NUCLEUS DELAWARE'S CERTIFICATE OF INCORPORATION
Under Delaware law, the affirmative vote of a majority of the outstanding
shares is sufficient to approve any amendment to a corporation's certificate of
incorporation, unless the certificate of incorporation specifies a higher
percentage. Article Fourteenth of Nucleus Delaware's Certificate of
Incorporation provides that the provisions of Paragraph C of Article Fourth
(super-majority vote provisions), Article Eleventh (no stockholder action by
written consent), and Fourteenth (amendment to certificate upon 66-2/3% vote) of
the Certificate may not be repealed or amended unless such action is approved by
the affirmative vote of the holders of 66-2/3% of the voting shares of Nucleus
Delaware. Increasing the stockholder vote requirements to 66-2/3% of the
outstanding voting stock to amend or repeal the foregoing provisions is designed
to prevent a stockholder with a simple majority from amending such provisions
and negating their anti-takeover effects.
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PROPOSAL 4e(iii). AMENDMENTS TO THE BY-LAWS OF NUCLEUS DELAWARE
The By-laws of Nucleus may be altered, amended or repealed by the
stockholders or the board of directors of Nucleus. Under Delaware law, the
stockholders may amend Nucleus Delaware's By-laws. Nucleus Delaware's By-laws
provide that the By-laws may also be amended by the board of directors. Nucleus
Delaware's By-laws further provide that the affirmative vote of at least 66-2/3%
of the voting power of the outstanding shares of Nucleus Delaware is required to
amend or repeal or adopt any provision inconsistent with the following By-law
sections: Section 2.2 (special meetings), Section 2.11 (action by stockholders),
Section 2.12 (notice of stockholder business), Section 3.2 (number, tenure and
qualifications of directors), Section 3.10 (vacancies and newly-created
directorships), Section 3.11 (removal of directors), or Section 13.2 (amendment
by stockholders).
Increasing the stockholder vote requirement to 66-2/3% of the outstanding
voting stock to amend or repeal or adopt any provision inconsistent with the
By-law provisions noted above is designed to prevent a stockholder with a simple
majority of Nucleus Delaware's stock from avoiding such provisions by amending
the By-laws. The board of directors believes that this provision will have the
effect of making it more difficult for stockholders to change the By-law
provisions that have an anti-takeover effect or would delay, prevent or impede a
change in control of Nucleus Delaware. The effect of these provisions will be to
further discourage potentially unfriendly bids for shares of Nucleus Delaware,
since a greater percentage of the outstanding voting stock will be needed before
the By-law provisions at issue could be amended, removed or changed to favor an
unfriendly bidder of shares of Nucleus Delaware. Further, the board will have
relatively greater control over the By-laws of Nucleus Delaware than the
stockholders, because the board could adopt, alter, amend or repeal the By-laws
upon a majority vote by the board.
BOARD RECOMMENDATION
The board of directors unanimously recommends that stockholders vote FOR
the anti-takeover provisions.
PROPOSAL NO. 5.--RATIFICATION OF eNUCLEUS 2000 OMNIBUS
STOCK INCENTIVE PLAN
DESCRIPTION OF THE PLAN
The board of directors approved, subject to ratification by the
shareholders at the annual meeting, the eNucleus 2000 Omnibus Stock Incentive
Plan. Pursuant to the plan, stock options, stock appreciation rights, restricted
stock and common stock or cash as a payout medium for payments under the plan,
specifically stock appreciation rights, performance units and performance
shares, may be granted to our key employees and directors. The full text of the
plan is set forth in Appendix E which appears later in this Proxy Statement.
The purpose of the plan is to advance the interests of Nucleus by
encouraging and providing for the acquisition of an equity interest in our
success by key employees and directors, by providing additional incentives and
motivation toward superior performance of Nucleus, and by enabling us to attract
and retain the services of key employees upon whose judgment, interest, and
special effort the successful conduct of our operations is largely dependent.
The plan will be administered, construed and interpreted by either the
board of directors, the compensation committee or such other committee to whom
the board may delegate this function. The committee may at any time alter,
amend, suspend or terminate the plan. Participants in the plan shall be selected
by the committee from among those employees who are recommended for
participation by the Chief Executive Officer and who, in the opinion of the
committee, are key employees in a position to contribute materially to our
continued growth and development and to our long-term financial success, and
from among the directors. Unless earlier terminated by the board of directors,
the plan will terminate on May 1, 2010 and no awards may be awarded under the
plan after such dates. The plan shall remain in
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effect, subject to the board's right to earlier terminate the plan, until all
stock subject to it shall have been purchased or acquired pursuant to the plan
provisions.
The total number of shares of stock subject to awards under the plan may
not exceed 20,000,000 (of this total number up to 5,000,000 shares may be issued
in restricted stock). Such numbers of shares shall be subject to adjustment upon
occurrence of certain events described in the plan. The shares to be delivered
under the plan may consist, in whole or in part, of authorized but unissued
stock or treasury stock, not reserved for any other purpose.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes our understanding of certain federal
income tax consequences associated with the plan.
Incentive Stock Options. No income will be recognized by a participant upon
the grant or the exercise of an incentive stock option. A participant will
recognize income if and when he disposes of the shares acquired under an ISO. If
the disposition does not occur within the later of two years after the grant of
an ISO or within one year after the shares were transferred to him, the gain
realized on such disposition will be characterized as long-term capital gain.
If shares acquired under an ISO are disposed of prior to the expiration of
the ISO holding period, the participant will recognize, as ordinary income, the
difference between the fair market value of the shares on the date of exercise
and the option price. Any gain in excess of that amount will be characterized as
either long-term or short-term capital gain, depending on the period the shares
were held by the participant.
Nucleus will not be entitled to a federal income tax deduction with respect
to the grant or exercise of an ISO unless the participant disposes of shares
acquired thereunder prior to the expiration of the ISO holding period. In that
event, the employer corporation (Nucleus or its affiliates) generally will be
entitled to a federal income tax deduction equal to the amount of ordinary
income recognized by the participant.
Nonqualified Stock Options and SARs. Upon the exercise of a non-qualified
stock option, the participant will recognize, as ordinary income, the difference
between the option price and the fair market value of the shares on the date
such NSO is exercised. Upon the exercise of an SAR, a participant will
recognize, as ordinary income, the amount of any cash plus the fair market value
of shares which are paid in settlement of the SAR. If shares received upon
exercise of an NSO or SAR are both non-transferable and subject to a substantial
risk of forfeiture, however, the date as of which income is recognized is
postponed until either condition lapses, unless the participant makes an "83(b)
election" (within 30 days of the receipt of shares that are subject to such
conditions) to be taxed as of the date of receipt. The participant's tax basis
in the shares received upon the exercise of an NSO or SAR will be the sum of the
amount of any income recognized and the amount paid in connection with the
exercise. Any gain or loss that a participant realizes on a subsequent
disposition of shares acquired upon the exercise of an SAR or NSO will be
treated as long-term or short-term capital gain or loss, depending on the period
during which the participant held such shares.
The exercise of a nonqualified option or SAR will entitle the employer
corporation (Nucleus or its affiliates) to claim a federal income tax deduction
equal to the amount of ordinary income recognized by the participant.
Restricted Stock. A participant will recognize ordinary income on account
of an award of restricted stock on the first day that the shares are either
transferable or not subject to a substantial risk of forfeiture. The income that
will be recognized will equal the fair market value of the shares on such date.
A participant's tax basis in the shares received on account of an award of
restricted stock will be the amount of any income recognized. Any gain or loss
that a participant realizes upon the sale of shares acquired pursuant to an
award of restricted stock will be treated as long-term or short-term capital
gain or
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loss, depending on the period that the participant held such shares. Even if the
shares are both nontransferable and subject to a substantial risk of forfeiture,
a participant may make a timely 83(b) election to recognize income, and have his
tax consequences determined, as of the date the award of restricted stock is
made.
The employer corporation (Nucleus or an affiliate) may claim a federal
income tax deduction equal to the amount of ordinary income recognized by a
participant on account of the award.
Performance Units or Shares. A participant will recognize ordinary income
on account of the settlement of an award of performance units or shares. The
amount of income recognized by the participant is equal to any cash that is paid
and to the fair market value of any shares (on the date that the shares are
first transferable or not subject to a substantial risk of forfeiture) that are
received in settlement of the award. A participant may file a timely 83(b)
election to be taxed on such shares as of the date received if the shares are
both nontransferable and subject to a substantial risk of forfeiture.
The participant's tax basis in any shares received on account of the
settlement of an award of performance units or shares will be the amount of any
income recognized with respect to any shares acquired pursuant to the settlement
of an award of performance units or shares. Any gain or loss that a participant
realizes upon the sale of shares acquired pursuant to the settlement of an award
of performance units or shares will be treated as a long-term or short-term
capital gain or loss, depending on the period that the participant held such
shares.
The employer corporation (Nucleus or an affiliate) may claim a federal
income tax deduction equal to the amount of ordinary income recognized by a
participant on account of the settlement of an award of performance units or
shares.
Change in Control. Payments with respect to awards under the plan that are
contingent upon a change in control may have adverse federal income tax
consequences with respect to the participants and Nucleus. The Code disallows a
deduction for any "excess parachute payment" and imposes a 20% excise tax on the
recipient of any excess parachute payment. Any payment, including vesting or
acceleration, with respect to a participant's Award under the plan that is
contingent upon a change of control may cause a portion of such participant's
compensation to be treated as an excess parachute payment for this purpose.
Whether and the extent to which a particular participant's compensation,
including an Award under the plan, is treated as an excess parachute payment is
determined, among other things, by the event constituting a change in control,
the compensation history of the participant, and on whether it can be
established that a payment is reasonable compensation for services actually
rendered.
BOARD RECOMMENDATION
The board of directors unanimously recommends that stockholders vote FOR
approval of this plan.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
If the reincorporation is approved by the stockholders, a stockholder
proposal must be received prior to __________, 2000, by the Secretary of Nucleus
at the address set forth on the first page of this Proxy Statement to be
considered for inclusion in Nucleus Delaware's proxy and form of proxy relating
to the 2001 annual meeting of stockholders.
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NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
If the reincorporation is approved, the By-laws of Nucleus Delaware will
set forth the procedures by which a stockholder may properly bring business
before a meeting of stockholders. Pursuant to the By-laws, only business brought
by or at the direction of the board of directors may be conducted at an annual
meeting. The By-laws of Nucleus Delaware provide an advance notice procedure for
a stockholder to properly bring business before an annual meeting. The
stockholder must give written advance notice to the Secretary of Nucleus
Delaware not less than 120 days before the date originally fixed for such
meeting; provided, however, that in the event that less than one hundred thirty
(130) days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the tenth (10th) day following
the date on which Nucleus Delaware's notice to stockholders of the annual
meeting date was mailed or such public disclosure was made. The advance notice
by a stockholder must include the stockholder's name and address, as they appear
on Nucleus Delaware's record of stockholders, a brief description of the
proposed business, the reason for conducting such business at the annual
meeting, the class and number of shares of Nucleus Delaware's capital stock that
are beneficially owned by such stockholder and any material interest of such
stockholder in the proposed business. In the case of nominations to the board of
directors, certain information regarding the nominee must be provided.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The board of directors knows of no business which will be presented for
consideration at the annual meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the annual meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the annual meeting, you are
urged to return your proxy form promptly. If you are then present at the annual
meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the annual meeting.
By Order of the Board of Directors
John C. Paulsen
Chairman of the Board
Chicago, Illinois
____________, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING
IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY FORM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as of
________, 2000, by and between Nucleus, Inc., a Nevada corporation ("Nucleus"),
and eNucleus, Inc., a Delaware corporation ("Nucleus Delaware"); (Nucleus and
Nucleus Delaware, collectively, the "Constituent Corporations").
The authorized capital stock of Nucleus consists of nine hundred million
(900,000,000) shares of common stock, $0.001 par value per share, and eight
million (8,000,000) shares of preferred stock, no par value per share. The
authorized capital stock of Nucleus Delaware, upon effectuation of the
transactions set forth in this Merger Agreement, will consist of one hundred
million (100,000,000) shares of common stock, $0.001 par value per share, and
twenty million (20,000,000) shares of preferred stock, $0.001 par value per
share.
The directors of the Constituent Corporations deem it advisable and to the
advantage of the Constituent Corporations that Nucleus merge with and into
Nucleus Delaware upon the terms and conditions provided herein.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that Nucleus shall
merge with and into Nucleus Delaware on the following terms, conditions and
other provisions:
1. TERMS AND CONDITIONS
1.1 MERGER. Nucleus shall be merged with and into Nucleus Delaware
(the "Merger"), and Nucleus Delaware shall be the surviving corporation (the
"Surviving Corporation") effective at 12:01 a.m., on the day following the date
the appropriate certificate reflecting the Merger is filed with the Secretary of
State of the State of Delaware (the "Effective Date").
1.2 SUCCESSION. On the Effective Date, Nucleus Delaware shall
continue its corporate existence under the laws of the State of Delaware, and
the separate existence and corporate organization of Nucleus, except insofar as
it may be continued by operation of law, shall be terminated and cease.
1.3 TRANSFER OF ASSETS AND LIABILITIES. On the Effective Date,
the rights, privileges, powers and franchises, both of a public as well as of a
private nature, of each of the Constituent Corporations shall be vested in and
possessed by the Surviving Corporation, subject to all of the disabilities,
duties and restrictions of or upon each of the Constituent Corporations; and all
and singular rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, of each of
the Constituent Corporations, and all debts due to each of the Constituent
Corporations on whatever account, and all things in action or belonging to each
of the Constituent Corporations shall be transferred to and vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest, thereafter shall be the property
of the Surviving Corporation as they were of the Constituent Corporations, and
the title to any real estate vested by deed or otherwise in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger; provided, however, that the liabilities of the Constituent
Corporations and of their stockholders, directors and officers shall not be
affected and all rights of creditors and all liens upon any property of either
of the Constituent Corporations shall be preserved unimpaired, and any claim
existing or action or proceeding pending by or against either of the Constituent
Corporations may be prosecuted to judgment as if the Merger had not been
consummated, except as they may be modified with the consent of such creditors,
and all debts, liabilities and duties of or upon each of the Constituent
Corporations shall attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it.
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1.4 COMMON STOCK AND PREFERRED STOCK OF NUCLEUS AND NUCLEUS DELAWARE.
On the Effective Date, by virtue of the Merger and without any further action on
the part of the Constituent Corporations or their respective stockholders:
(a) (i) each share of common stock of Nucleus issued and
outstanding immediately prior to the effective date shall be combined,
changed and converted into one (1) share of common stock of Nucleus
Delaware, in each case fully paid and nonassessable, and (ii) each share of
common stock of Nucleus Delaware issued and outstanding immediately prior
thereto shall be canceled and returned to the status of authorized but
unissued shares; and
(b) each share of preferred stock of Nucleus issued and
outstanding immediately prior to the Effective Date shall be combined,
changed and converted into one (1) share of preferred stock of Nucleus
Delaware, in each case fully paid and nonassessable.
1.5 STOCK CERTIFICATES. On and after the Effective Date, all
of the outstanding certificates that, prior to that time, represented shares of
common stock of Nucleus shall be deemed for all purposes to evidence ownership
of and to represent the shares of Nucleus Delaware into which the shares of
Nucleus represented by such certificates have been converted as herein provided
and shall be so registered on the books and records of the Surviving Corporation
or its transfer agents. The registered owner of any such outstanding stock
certificate shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any voting and other
rights with respect to and to receive any dividend and other distribution upon
the shares of Nucleus Delaware evidenced by such outstanding certificate as
above provided.
1.6 PURCHASE RIGHTS. On the Effective Date, the Surviving
Corporation will assume the outstanding obligations of Nucleus, if any, to issue
common stock or other capital stock pursuant to contractual purchase rights
granted by Nucleus, and the outstanding and unexercised portions of all
outstanding contractual rights to purchase common stock or other capital stock
of Nucleus shall be changed and converted into contractual rights to purchase
common stock or other capital stock, respectively, of Nucleus Delaware such that
a contractual right to purchase one (1) share of common stock or other capital
stock of Nucleus shall be converted into a contractual right to purchase one (1)
share of common stock or other capital stock, respectively, of Nucleus Delaware.
No other changes in the terms and conditions of such contractual purchase rights
will occur.
1.7 EMPLOYEE BENEFIT PLANS. On the Effective Date, the Surviving
Corporation shall assume all obligations of Nucleus under any and all
employee benefit plans in effect as of such date with respect to which employee
rights or accrued benefits are outstanding as of such date. On the Effective
Date, the Surviving Corporation shall adopt and continue in effect all such
employee benefit plans upon the same terms and conditions as were in effect
immediately prior to the Merger.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate
of Incorporation of Nucleus Delaware in effect on the Effective Date shall
continue to be the Certificate of Incorporation of the Surviving Corporation
without change or amendment until further amended in accordance with the
provisions thereof and applicable law. The Bylaws of Nucleus Delaware in effect
on the Effective Date shall continue to be the Bylaws of the Surviving
Corporation without change or amendment until further amended in accordance with
the provisions thereof and applicable law.
2.2 DIRECTORS. The directors of Nucleus immediately preceding
the Effective Date shall become the directors of the Surviving Corporation on
and after the Effective Date to serve until the expiration of their terms and
until their successors are elected and qualified.
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2.3 OFFICERS. The officers of Nucleus immediately preceding
the Effective Date shall become the officers of the Surviving Corporation on and
after the Effective Date to serve at the pleasure of its board of directors.
3. MISCELLANEOUS
3.1 FURTHER ASSURANCES. From time to time, and when required
by the Surviving Corporation or by its successors and assigns, the Surviving
Corporation shall execute and deliver, or cause to be executed and delivered,
such deeds and other instruments, and the Surviving Corporation shall take or
cause to be taken such further and other action as shall be appropriate or
necessary in order to vest or perfect in or to conform of record or otherwise,
in the Surviving Corporation the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Nucleus Delaware and otherwise to carry out the purposes of this
Merger Agreement, and the officers and directors of the Surviving Corporation
are authorized fully in the name and on behalf of Nucleus Delaware or otherwise
to take any and all such action and to execute and deliver any and all such
deeds and other instruments.
3.2 AMENDMENT. At any time before or after approval by the
stockholders of Nucleus, this Merger Agreement may be amended in any manner
(except that, after the approval of the Merger Agreement by the stockholders of
Nucleus, the principal terms may not be amended without the further approval of
the stockholders of Nucleus) as may be determined in the judgment of the
respective board of directors of Nucleus Delaware and Nucleus to be necessary,
desirable, or expedient in order to clarify the intention of the parties hereto
or to effect or facilitate the purpose and intent of this Merger Agreement.
3.3 CONDITIONS TO MERGER. The obligation of the Constituent
Corporations to effect the transactions contemplated hereby is subject to
satisfaction of the following conditions (any or all of which may be waived by
either of the Constituent Corporations in its sole discretion to the extent
permitted by law):
(a) the Merger shall have been approved by the stockholders of
Nucleus in accordance with applicable provisions of the Nevada General
Corporation Law; and
(b) Nucleus, as sole stockholder of Nucleus Delaware, shall
have approved the Merger in accordance with the Delaware General
Corporation Law; and
(c) any and all consents, permits, authorizations, approvals,
and orders deemed in the sole discretion of Nucleus to be material to
consummation of the Merger shall have been obtained; and
(d) stockholders owning not more than 1% of the issued and
outstanding shares of Common Stock of Nucleus shall have properly exercised
dissenter's rights under the Nevada General Corporation Law.
3.4 ABANDONMENT OR DEFERRAL. Notwithstanding the approval of
this Merger Agreement by the stockholders of Nucleus or Nucleus Delaware, at any
time before the Effective Date, (a) this Merger Agreement may be terminated and
the Merger may be abandoned by the board of directors of either Nucleus or
Nucleus Delaware or both or (b) the consummation of the Merger may be deferred
for a reasonable period of time if, in the opinion of the boards of directors of
Nucleus and Nucleus Delaware, such action would be in the best interests of such
corporations. In the event of termination of this Merger Agreement, this Merger
Agreement shall become void and of no effect and there shall be no liability on
the part of either Constituent Corporation or their respective boards of
directors or stockholders with respect thereto, except that Nucleus shall pay
all expenses incurred in connection with the Merger or in respect of this Merger
Agreement or relating thereto.
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3.5 COUNTERPARTS. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly approved
by the boards of directors of Nucleus and Nucleus Delaware, hereby is executed
on behalf of each such corporation and attested by their respective officers
thereunto duly authorized.
NUCLEUS, INC.
A Nevada corporation
By:________________________
John C. Paulsen
Chief Executive Officer
ATTEST:
________________________________
J. Theodore Hartley
Secretary
eNUCLEUS, INC.
A Delaware corporation
By:________________________
John C. Paulsen
Chief Executive Officer
ATTEST:
________________________________
J. Theodore Hartley
Secretary
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APPENDIX B
CERTIFICATE OF INCORPORATION
OF
eNUCLEUS, INC.
FIRST. The name of the corporation is eNUCLEUS, INC.
SECOND. The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware,
19801, County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD. The nature of business to be conducted or promoted and the purpose
of the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is one hundred twenty million (120,000,000), divided
into two classes as follows: one hundred million (100,000,000) of which shall be
common stock, $0.001 par value per share ("Common Stock"), and twenty million
(20,000,000) of which shall be preferred stock, $0.001 par value per share
("Preferred Stock").
The designations, powers, references and rights, and the qualifications,
limitations or restrictions of the above classes of stock are as follows:
A. CLASS I: PREFERRED STOCK
1. The board of directors is expressly authorized at any time, and from
time to time, to issue shares of Preferred Stock in one or more series, and for
such consideration as the board of directors may determine, with such voting
powers, full or limited but not to exceed one vote per share, or without voting
powers, and with such designations, preferences and relative, participating,
option or other special rights, and qualifications, limitations or restrictions
thereof, as shall be stated in the resolution or resolutions providing for the
issue thereof, and as are not stated in this Certificate of Incorporation, or
any amendment thereto. All shares of any one series shall be of equal rank and
identical in all respects.
2. No dividend shall be paid or declared on any particular series of
Preferred Stock unless dividends shall be paid or declared pro rata on all
shares of Preferred Stock at the time outstanding of each other series which
ranks equally as to dividends with such particular series.
3. Unless and except to the extent otherwise required by law or provided in
the resolution or resolutions of the board of directors creating any series of
Preferred Stock pursuant to this Class I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever. In no event
shall the Preferred Stock be entitled to more than one vote in respect of each
share of stock. Subject to the protective conditions or restrictions of any
outstanding series of Preferred Stock, any amendment to this Certificate of
Incorporation which shall increase or decrease the authorized capital stock of
any class or classes may be adopted by the affirmative vote of the holders of a
majority of the outstanding shares of voting stock of the Corporation.
4. Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the corporation, or which have been issued and
reacquired in any manner, shall, upon compliance with any applicable provisions
of the General Corporation Law of the State of Delaware have the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
board of
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directors as part of the series of which they were originally a part or may be
reclassified into and reissued as part of a new series or as part of any other
series, all subject to the protective conditions or restrictions of any
outstanding series of Preferred Stock.
B. CLASS II: COMMON STOCK
1. Subject to preferential dividend rights, if any, applicable to shares of
the Preferred Stock and subject to the applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for the Preferred Stock, the holder of the Common Stock shall be entitled to
receive to the extent permitted by law, such dividends as may be declared from
time to time by the board of directors.
2. In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of the Preferred Stock, holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation of whatever kind available
for distribution to stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
3. Except as may be otherwise required by law or this Certificate of
Incorporation, each holder of the Common Stock shall have one vote in respect of
each share of stock held by him or her of record on the books of the corporation
on all matters voted upon by the stockholders.
C. VOTING REQUIREMENTS
In addition to any affirmative vote required by law or this Certificate of
Incorporation: (a) the authorization of any share exchange, merger or
consolidation of the Corporation or any of its subsidiaries with any other
corporation; (b) the authorization of any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of all, or substantially all, assets or
property of the Corporation; (c) the issuance or transfer by the Corporation or
any of its subsidiaries of all, or substantially all, securities of the
Corporation or any of its subsidiaries to any purchaser in exchange for cash,
securities or other property (or a combination thereof) except pursuant to an
employee benefit plan of the Corporation or one of its subsidiaries; (d) the
adoption of any plan or proposal for the liquidation or dissolution of the
Corporation other than as may be proposed by the board of directors; or (e) any
reclassification of securities (including any reverse stock split) or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its subsidiaries or other transaction which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class or series of equity or convertible securities of
the Corporation or any subsidiary of the Corporation, shall require the
affirmative vote of the holders of at least 66 2/3% of the voting power of all
of the outstanding shares of each class of stock. However, if the stockholders
of the Corporation receive no cash or other consideration with respect to one of
the above-listed transactions, then the required vote of the stockholders shall
be as required by law. Such affirmative votes shall be required notwithstanding
that any other provisions of this Certificate of Incorporation, or any provision
of law, or any other agreement might otherwise permit a lesser vote or no vote.
FIFTH. The name and mailing address of the incorporator is as follows:
Steven J. Gray
Vedder, Price, Kaufman and Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
SIXTH. The number of directors of the corporation shall be fixed from time
to time by the By-Laws of the corporation. Election of directors need not be by
written ballot unless the By-Laws so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes)
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outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the By-laws of the corporation.
SEVENTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the board of directors is expressly
authorized and empowered, in the manner provided in the By-Laws of the
corporation, to make, alter, amend and repeal the By-laws of the corporation in
any respect not inconsistent with the laws of the State of Delaware or with the
Certificate of Incorporation.
In addition to the powers and authorities hereinbefore or by the statute
expressly conferred upon it, the board of directors may exercise all such powers
and do all such acts as may be exercised or done by the corporation, subject,
nevertheless, to the provisions of the laws of the State of Delaware, this
Certificate of Incorporation and the By-Laws of the corporation.
Any contract, transaction or act of the corporation or of the directors or
of any committee which shall be ratified by the holders of a majority of the
shares of stock of the corporation present in person or by proxy and voting any
annual meeting, or at any special meeting called for such purpose, shall,
insofar as permitted by law or by this Certificate of Incorporation, be as valid
and as binding as though ratified by every stockholder of the corporation.
EIGHTH. The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as amended from
time to time, indemnify all persons who it may indemnify pursuant thereto.
NINTH. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
TENTH. Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
ELEVENTH. Any action required by the laws of the State of Delaware, this
Certificate of Incorporation or the By-Laws of the corporation to be taken at
any annual or special meeting of the stockholders of the corporation, or any
action which may be taken at any annual or special meeting of the stockholders
must be effected at such a meeting, and the power of stockholders of the
corporation to consent in writing, without such a meeting, to taking any action
is specifically denied.
TWELFTH. A director of the corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise nor in the absence of fraud shall a
director of the corporation be liable to account to the corporation for any
profit realized by him from or through any transaction or contract of the
corporation by reason of the fact that he, or any firm of which he is a member,
or any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract if such transaction or contract has
been authorized, approved or ratified in the manner provided in the General
Corporation Law of Delaware for authorization, approval or
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ratification or transactions or contracts between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest.
THIRTEENTH. No director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit.
FOURTEENTH. Notwithstanding any other provision of this Certificate of
Incorporation or the By-laws of the corporation to the contrary and
notwithstanding that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least 66-2/3 of the voting power of the
outstanding shares of all classes of stock of the Corporation, voting together
as a single class, shall be required to amend or repeal, or adopt any provision
inconsistent with Paragraph C ("Voting Requirements") of Section Fourth, Section
Eleventh or Section Fourteenth of this Certificate of Incorporation.
The undersigned incorporator, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of Delaware, has signed
this Certificate this ___ day of ________, 2000.
_____________________________
Steven J. Gray
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<PAGE>
APPENDIX C
BYLAWS
OF
eNUCLEUS, INC.
ARTICLE I
OFFICES OF REGISTERED AGENT
Section 1.1 Registered Office and Agent. The Corporation shall have and
maintain a registered office in Delaware and a registered agent having a
business office identical with such registered office.
Section 1.2 Other Offices. The Corporation may also have such other
office or offices in Delaware or elsewhere as the board of directors may
determine or as the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 2.1 Annual Meeting. An annual meeting of the stockholders shall
be held on the date and at the time designated by the board of directors, for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall be
a legal holiday, such meeting shall be held on the next succeeding business day.
If the directors shall not be elected at the annual meeting, or at any
adjournment thereof, the board of directors shall cause the election to be held
as soon thereafter as may be convenient.
Section 2.2 Special Meetings. Special meetings of the stockholders may
be called at any time by the Chairman of the Board or the President for the
purpose or purposes stated in the call of the meeting.
Section 2.3 Place of Meeting. Annual meetings of stockholders shall be
held at such time and place as may be determined by the board of directors and
designated in the call and notice or waiver of notice of such meeting; provided,
that a waiver of notice signed by all stockholders may designate any time or
place as the time and place for the holding of such meeting. If no designation
is made, or if a special meeting be called, the place of meeting shall be at the
Corporation's principal place of business.
Section 2.4 Notice of Meeting. Written notice stating the place, date
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting, or, in the case of a
merger, consolidation or sale, lease or exchange of all or substantially all of
the Corporation's property and assets, at least twenty days before the date of
the meeting, either personally or by mail, by or at the direction of the
Chairman of the Board, the President, the Secretary or the persons calling the
meeting to each stockholder of record entitled to vote at such meeting. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken.
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Section 2.5 Fixing Record Date for Determination of Stockholders. For
the purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the board of directors may fix in advance a date as the record
date for any such determination of stockholders, such date to be not more than
sixty days prior to the date of a meeting of stockholders, the date of payment
of a dividend or the date on which other action requiring determination of
stockholders is to be taken, as the case may be. In addition, the record date
for a meeting of stockholders shall not be less than ten days, or in the case of
a merger, consolidation or sale, lease or exchange of all or substantially all
of the Corporation's property and assets, not less than twenty days immediately
preceding such meeting. When a determination of stockholders entitled to vote at
any meeting of stockholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof; provided, however, that
the board of directors may fix a new record date for the adjourned meeting. If
no record date is fixed for the determination of stockholders entitled to notice
of or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of stockholders.
Section 2.6 List of Stockholders Entitled to Vote. The officer or agent
who has charge of the stock ledger of the Corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, at any time during
usual business hours for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list of the stockholders, the corporate books, or to vote at any meeting of
the stockholders.
Section 2.7 Quorum and Manner of Acting. Unless otherwise provided by
the Certificate of Incorporation or these By-laws, a majority of the outstanding
shares of the Corporation, entitled to vote on a matter present in person or
represented by proxy, shall constitute a quorum for consideration of such
matter, at any meeting of stockholders; provided, that if less than a majority
of the outstanding shares entitled to vote on a matter are present in person or
represented by proxy at said meeting, a majority of the shares so present in
person or represented by proxy may adjourn the meeting from time to time without
further notice other than announcement at the meeting at which the adjournment
is taken of the time and place of the adjourned meeting. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. If a quorum is present, the affirmative
vote of the majority of the shares present in person or represented by proxy at
the meeting and entitled to vote shall be the act of the stockholders, unless
the vote of a greater number or voting by classes is required by the General
Corporation Law of the State of Delaware, the Certificate of Incorporation or
these By-laws.
Section 2.8 Voting Shares and Proxies. Each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder,
except as otherwise provided in the Certificate of Incorporation. Each
stockholder entitled to vote shall be entitled to vote in person, or may
authorize another person or persons to act for him by proxy executed in writing
by such stockholder or by his duly authorized attorney-in-fact, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
Section 2.9 Inspectors. At any meeting of stockholders, the chairman of
the meeting may, or upon the request of any stockholder shall, appoint one or
more persons as inspectors for such meeting.
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Such inspectors shall ascertain and report the number of shares represented at
the meeting, based upon the list of stockholders produced at the meeting in
accordance with Section 2.6 hereof and upon their determination of the validity
and effect of proxies, and they shall count all votes, report the results and do
such other acts as are proper to conduct the election and voting with
impartiality and fairness to all the stockholders. Each such report shall be in
writing and signed by at least a majority of the inspectors, the report of a
majority being the report of the inspectors, and such reports shall be prima
facie evidence of the number of shares represented at the meeting and the result
of a vote of the stockholders.
Section 2.10 Voting of Shares by Certain Holders. Shares of its own
stock belonging to the Corporation, unless held by it in a fiduciary capacity,
shall not be voted, directly or indirectly, at any meeting, and shall not be
counted in determining the total number of outstanding shares at any given time.
Shares standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the by-laws of such corporation may
prescribe, or, in the absence of such provision, as the board of directors of
such corporation may determine. Persons holding stock in a fiduciary capacity
shall be entitled to vote the shares so held. Persons whose stock is pledged
shall be entitled to vote, unless in the transfer by the pledgor on the books of
the Corporation he expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such stock and vote thereon.
Any number of stockholders may create an agreement for the purpose of conferring
upon a trustee or trustees the right to vote or otherwise represent their
shares, for any period of time determined by such agreement, by entering into a
written agreement specifying the terms and conditions of the agreement, and by
transferring their shares to such trustee or trustees for the purpose of the
agreement. Any such agreement shall not become effective until a counterpart of
the agreement is deposited with the Corporation at its registered office. The
counterpart of the agreement so deposited with the Corporation shall be subject
to the same right of examination by a stockholder of the Corporation, in person
or by agent or attorney, as are the books and records of the Corporation, and
shall be subject to examination by any beneficiary of the trust under the
agreement, either in person or by agent or attorney, at any reasonable time for
any proper purpose.
Section 2.11 Action by Stockholders. Any action required to be taken or
which may be taken at a meeting of stockholders must be effected at a duly
called annual or special meeting of the stockholders of the Corporation, and the
power of stockholders to consent in writing, without a meeting, to the taking of
any action is specifically denied.
Section 2.12 Notice of Stockholder Business. At an annual meeting of
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before the annual meeting of
stockholders, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board, (b) otherwise
properly brought before the meeting by or at the direction of the Board, or (c)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting of the stockholders, the
stockholder must have the legal right and authority to make the proposal for
consideration at the meeting and the stockholder must have given timely notice
thereof in writing to the President of the Corporation. To be timely, a
stockholder's written notice of intent to make a proposal or proposals must be
personally delivered to or mailed by United States mail, postage prepaid and
received by the President of the Corporation at the principal executive offices
of the Corporation not less than 120 days prior to the meeting; provided
however, that in the event not less than 130 days notice or prior public
disclosure of the date of the meeting is given or made to stockholders (which
notice or public disclosure shall include the date of the annual meeting
specified in these By-laws, if such By-laws have been filed with the Securities
and Exchange Commission and if the Annual Meeting is held on such date), notice
by the stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which notice of the day of the
annual meeting was mailed or such public disclosure was made. A stockholder's
notice to the President shall set forth as to each item of business the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the meeting, and in the case of a
nomination for election of director, such nominee's name and qualifications, and
the reasons for conducting business at the meeting, (b) the name and the record
address of the stockholder or stockholders proposing such business, (c) the
number of shares of stock of the Corporation which are beneficially owned by
such stockholder or stockholders, and (d) any material interest of the
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stockholder in such business. The chairman of the meeting may refuse to
acknowledge the proposal of any stockholder not made in compliance with this
Section 2.12. Notwithstanding anything in these By-laws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2.12.
ARTICLE III
DIRECTORS
Section 3.1 General Powers. The business and affairs of the Corporation
shall be managed by its board of directors, except as may be otherwise provided
by statute or the Certificate of Incorporation.
Section 3.2 Number, Tenure and Qualifications. The number of directors
shall be designated from time to time by the board of directors, and such number
may be fixed or changed from time to time by the board of directors or the
shareholders without further amendment to these By-laws. Unless and until said
number of directors is fixed or changed by a resolution duly adopted by the
board of directors or the shareholders, the number shall be the same as the
number fixed in the Certificate of Incorporation or at the organizational
meeting, as the case may be. No decrease in the number of directors shall have
the effect of removing any director from office prior to the expiration of his
term, but the number of directors may be decreased in conjunction with the
removal of a director in accordance with applicable law. Directors need not be
stockholders or residents of Delaware. Each director shall be elected to hold
office until the next annual meeting of stockholders or until his successor
shall have been elected and qualified.
The directors shall be divided into three (3) classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 2001 annual meeting of stockholders, the term of office of the second class
to expire at the 2002 annual meeting of stockholders and the third class
expiring at the 2003 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification, directors elected by the
stockholders to succeed those directors whose term expires shall be elected for
a term of office to expire at the third succeeding annual meeting of
stockholders after their election.
Section 3.3 Regular Meetings. A regular meeting of the board of
directors shall be held, without other notice than this Section, immediately
after and at the same place as the annual meeting of stockholders. The board of
directors may provide, by resolution, the time and place, either within or
without Delaware, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.4 Special Meetings. Special meetings of the board of
directors may be called at any time by the Chairman of the Board, the President
or any two directors. The person or persons who call a special meeting of the
board of directors may designate any place, either within or without Delaware,
as the place for holding such special meeting. In the absence of such a
designation the place of meeting shall be the Corporation's principal place of
business.
Section 3.5 Notice of Special Meetings. Notice stating the place, date
and hour of a special meeting shall be mailed not less than five days before the
date of the meeting, or shall be sent by telegram or be delivered personally or
by telephone not less than two days before the date of the meeting, to each
director, by or at the direction of the person or persons calling the meeting.
If mailed, such notice shall be deemed to be delivered when deposited with the
United States Postal Services so addressed, with postage thereon prepaid. If
notice is to be given by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company. Attendance of a
director at any meeting shall constitute a waiver of notice of such meeting
except where a director attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at nor the purpose of any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
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Section 3.6 Quorum and Manner of Acting. A majority of the number of
directors as fixed in Section 3.2 hereof shall constitute a quorum for the
transaction of business at any meeting of the board of directors; provided, that
if less than a majority of such number of directors are present at said meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors,
unless otherwise provided in the General Corporation Law of the State of
Delaware, the Certificate of Incorporation or these By-laws.
Section 3.7 Informal Action by Directors. Any action which is required
by law or by these By-laws to be taken at a meeting of the board of directors,
or any other action which may be taken at a meeting of the board of directors or
any committee thereof, may be taken without a meeting if a consent in writing,
setting forth the action to be taken, shall be signed by all of the directors
entitled to vote with respect to the subject matter thereof, or by all the
members of such committee, as the case may be. Such consent shall have the same
force and effect as a unanimous vote of all of the directors or all of the
members of such committee, as the case may be, at a duly called meeting thereof,
and shall be filed with the minutes of proceedings of the Board or committee.
Section 3.8 Telephonic Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, members of the board of directors
or of any committee designated by such Board, may participate in a meeting of
such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence at such meeting.
Section 3.9 Resignations. Any director may resign at any time by giving
written notice to the board of directors, the Chairman of the Board, the
President or the Secretary. Such resignation shall take effect at the time
specified therein; and, unless tendered to take effect upon acceptance thereof,
the acceptance of such resignation shall not be necessary to make it effective.
Section 3.10 Vacancies and Newly-Created Directorships. Vacancies and
newly-created directorships resulting from any increase in the authorized number
of directors elected by all of the stockholders having the right to vote as a
single class may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and the directors
so chosen shall hold office until the next election of the class for which such
director shall have been chosen and until their successors are elected and
qualified or until their earlier resignation or removal.
Section 3.11 Removal. Any director or the entire board of directors may
be removed with cause by the holders of a majority of the shares then entitled
to vote at an election of directors.
Section 3.12 Interested Directors.
(a) No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or
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(3) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the board of directors,
a committee thereof, or the shareholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
Section 3.13 Director Compensation. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, the board of directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expense, if any, of attendance at each meeting of the board of directors
and may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
ARTICLE IV
COMMITTEES
Section 4.1 Appointment and Powers. The board of directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation which, to the extent provided in said resolution or in these
By-laws, shall have and may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation (except that any such
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of such shares of stock adopted by the board of
directors, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation thereof, or amending the By-laws;
and, unless the resolution, By-laws or Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
Law.
Section 4.2 Absence or Disqualification of Committee Member. In the
absence or disqualification of any member of such committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not they constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such absent or
disqualified member.
Section 4.3 Record of Proceedings. The committees shall keep regular
minutes of their proceedings and when required by the board of directors shall
report the same to the board of directors.
ARTICLE V
OFFICERS
Section 5.1 Number and Titles. The officers of the Corporation shall be
a Chairman of the Board, a President, one or more Vice Presidents (the number
thereof to be determined by the board of directors), a Treasurer, a Secretary,
and if desired, any number of vice presidents, assistant treasurers, assistant
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secretaries, or other officers as may be elected by the board of directors. Any
two or more offices may be held by the same person.
Section 5.2 Election, Term of Office and Qualifications. The officers
shall be elected annually by the board of directors at the first meeting of the
board of directors held after the annual meeting of stockholders. If the
election of officers is not held at such meeting, such election shall be held as
soon thereafter as may be convenient. Vacancies may be filled or new offices
created and filled at any meeting of the board of directors. Each officer shall
be elected to hold office until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Election of an
officer shall not of itself create contract rights.
Section 5.3 Removal. Any officer may be removed by the board of
directors whenever in its judgment the best interests 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.
Section 5.4 Resignation. Any officer may resign at any time by giving
written notice to the board of directors, the Chairman of the Board, the
President or the Secretary. Such resignation shall take effect at the time
specified therein; and, unless tendered to take effect upon acceptance thereof,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5.5 Duties. In addition to and to the extent not inconsistent
with the provisions in these By-laws, the officers shall have such authority, be
subject to such restrictions and perform such duties in the management of the
business, property and affairs of the Corporation as may be determined from time
to time by the board of directors.
Section 5.6 Chairman of the Board. The Chairman of the Board shall be
elected by and from the membership of the board of directors. He shall be the
chief executive officer of the Corporation. Subject to the control of the board
of directors, the Chairman of the Board shall, in general, supervise and manage
the business and affairs of the Corporation and he shall see that the
resolutions and directions of the board of directors are carried into effect.
Except in those instances in which the authority to execute is expressly
delegated to another officer or agent of the Corporation, or a different mode of
execution is expressly prescribed by the board of directors or these By-laws, or
where otherwise required by law, the Chairman of the Board may execute for the
Corporation any contracts, deeds, mortgages, bonds or other instruments which
the board of directors has authorized to be executed or the execution of which
is in the ordinary course of the Corporation's business, and he may accomplish
such execution either under or without the seal of the Corporation and either
individually or with the Secretary, any Assistant Secretary, or any other
officer thereunto authorized by the board of directors or these By-laws. The
Chairman of the Board shall preside at all meetings of the stockholders and of
the board of directors (and of any executive committee thereof), and shall
perform such other duties as from time to time shall be prescribed by the board
of directors.
Section 5.7 President. The President shall be the chief operating
officer of the Corporation. In the absence of the Chairman of the Board or in
the event of his inability to act or while such office is vacant, the President
shall perform the duties of the Chairman of the Board and when so acting shall
have all of the powers and authority of, and shall be subject to all of the
restrictions upon, the Chairman of the Board. Except in those instances in which
the authority to execute is expressly delegated to another officer or agent of
the Corporation or a different mode of execution is expressly prescribed by the
board of directors or these By-laws or were otherwise required by law, he may
execute for the Corporation any contracts, deeds, mortgages, bonds or other
instruments which the board of directors has authorized to be executed or the
execution of which is in the ordinary course of the Corporation's business, and
he may accomplish such execution either under or without the seal of the
Corporation and either individually or with the Secretary, any Assistant
Secretary, or any other officer thereunto authorized by the board of directors
or these By-laws. In general, he shall perform such other duties as from time to
time may be prescribed by the Chairman of the Board or the Board of Directors.
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Section 5.8 Vice Presidents. In the absence of the President or in the
event of his inability or refusal to act, the Vice President (or in the event
there is more than one Vice President, the Vice President designated Executive
Vice President by the board of directors and thereafter, or in the absence of
such designation, the Vice Presidents in the order otherwise designated by the
board of directors, or in the absence of such other designation, in the order of
their election) shall perform the duties of the President, and when so acting,
shall have all the authority of and be subject to all the restrictions upon the
President. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the Corporation or a
different mode of execution is expressly prescribed by the board of directors or
these By-laws or where otherwise required by law, the Vice President (or each of
them if there are more than one) may execute for the Corporation any contracts,
deeds, mortgages, bonds or other instruments which the board of directors has
authorized to be executed, and he may accomplish such execution either under or
without the seal of the Corporation and either individually or with the
Secretary, any Assistant Secretary, or any other officer thereunto authorized by
the board of directors or these By-laws. The Vice Presidents shall perform such
other duties as from time to time may be prescribed by the Chairman of the
Board, the President or the board of directors.
Section 5.9 Treasurer. The Treasurer shall be the principal financial
and accounting officer of the Corporation, and shall (a) have charge and custody
of, and be responsible for, all funds and securities of the Corporation; (b)
keep or cause to be kept correct and complete books and records of account
including a record of all receipts and disbursements; (c) deposit all funds and
securities of the Corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with these By-laws; (d) from
time to time prepare or cause to be prepared and render financial statements of
the Corporation at the request of the President or the board of directors; and
(e) in general, perform all duties incident to the office of Treasurer and such
other duties as from time to time may be prescribed by the Chairman of the
Board, the President or the board of directors. If required by the board of
directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the board of directors
shall determine.
Section 5.10 Secretary. The Secretary shall (a) keep the minutes of the
proceedings of the stockholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all stock certificates prior to
the issue thereof and to all documents the execution of which on behalf of the
Corporation under its seal is necessary or appropriate; (d) keep or cause to be
kept a register of the name and address of each stockholder, which shall be
furnished to the Corporation by each such stockholder, and the number and class
of shares held by each stockholder; (e) sign with the president, or a
vice-president, or any other officer thereunto authorized by the board of
directors, certificates for shares of the Corporation, the issue of which shall
have been authorized by the board of directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these By-laws; (f) otherwise certify the By-laws,
resolutions of the stockholders and board of directors and committees thereof,
and other documents of the Corporation as true and correct copies thereof; (g)
have general charge of the stock transfer books; and (h) in general, perform all
duties incident to the office of Secretary and such other duties as from time to
time may be prescribed by the Chairman of the Board, the President or the board
of directors.
Section 5.11 Assistant Treasurers and Assistant Secretaries. In the
absence of the Treasurer or Secretary or in the event of the inability or
refusal of the Treasurer or Secretary to act, the Assistant Treasurer and the
Assistant Secretary (or in the event there is more than one of either, in the
order designated by the board of directors or in the absence of such
designation, in the order of their election) shall perform the duties of the
Treasurer and Secretary, respectively, and when so acting, shall have all the
authority of and be subject to all the restrictions upon such office. The
Assistant Treasurers and Assistant Secretaries shall also perform such duties as
from time to time may be prescribed by the Treasurer or the Secretary,
respectively, or by the Chairman of the Board, the President or the board of
directors. If required by the board of directors, an Assistant Treasurer shall
give a bond for the faithful
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discharge of his duties in such sum and with such surety or sureties as the
board of directors shall determine.
Section 5.12 Salaries. The salaries and additional compensation, if
any, of the officers shall be determined from time to time by the board of
directors; provided, that if such officers are also directors such determination
shall be made by a majority of the directors then in office.
ARTICLE VI
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 6.1 Stock Certificates. The issued shares of the Corporation
shall be represented by certificates, and no class or series of shares of the
Corporation shall be uncertificated shares. Stock certificates shall be in such
form as determined by the board of directors and shall be signed by, or in the
name of the Corporation by the Chairman of the Board, the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the Corporation. Any of or all the signatures on the
certificates may be a facsimile. All certificates of stock shall bear the seal
of the Corporation, which seal may be a facsimile, engraved or printed.
Section 6.2 Transfer of Shares. The shares of the Corporation shall be
transferable. The Corporation shall have a duty to register any such transfer
(a) provided there is presented to the Corporation or its transfer agents (i)
the stock certificate endorsed by the appropriate person or persons; and (ii)
reasonable assurance that such endorsement is genuine and effective; and, (b)
provided that (i) the Corporation has no duty to inquire into adverse claims or
has discharged any such duty; (ii) any applicable law relating to the collection
of taxes has been complied with; and (iii) the transfer is in fact rightful or
is to a bona fide purchaser. Upon registration of such transfer upon the stock
transfer books of the Corporation the certificates representing the shares
transferred shall be canceled and the new record holder, upon request, shall be
entitled to a new certificate or certificates. The terms and conditions
described in the foregoing provisions of this Section shall be construed in
accordance with the provisions of the Delaware Uniform Commercial Code, except
as otherwise provided by the Delaware General Corporation Law. No new
certificate shall be issued until the former certificate or certificates for a
like number of shares shall have been surrendered and canceled, except that in
case of a lost, destroyed, wrongfully taken or mutilated certificate a new one
may be issued therefor upon such terms and indemnity to the Corporation as the
board of directors, the Chairman of the Board or the President may prescribe
consistent with applicable law.
ARTICLE VII
DIVIDENDS
Section 7.1 Dividends. Subject to the provisions of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation,
the board of directors may declare and pay dividends upon the shares of its
capital stock. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification. The Corporation shall indemnify, to the
full extent that it shall have the power under the Delaware General Corporation
Law to do so and in a manner permitted by such law, any person made or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, 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,
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trust or other enterprise against liabilities and expenses reasonably incurred
or paid by such person in connection with such action, suit or proceeding. The
words "liabilities" and "expenses" shall include, without limitations:
liabilities, losses, damages, judgments, fines, penalties, amounts paid in
settlement, expenses, attorneys' fees and costs. Expenses incurred in defending
a civil, criminal, administrative, investigative or other action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding in accordance with the provisions of Section 145
of the Delaware General Corporation Law, as amended.
The indemnification and advancement of expenses provided by this By-law
shall not be deemed exclusive of any other rights to which any person
indemnified may be entitled under any by-law, statue, agreement, vote of
stockholders, or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be such director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
The Corporation may purchase and maintain insurance on behalf of any person
referred to in the preceding paragraph 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 under the provisions of this By-law or otherwise.
For purposes of this By-law, reference to "the Corporation" shall include,
in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation, as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this By-law with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
The provisions of this By-law shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while this By-law and the relevant provisions of the
Delaware General Corporation Law, as amended, or other applicable law, if any,
are in effect, and any repeal or modification of such law or of this By-law
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
such state of facts.
For purposes of this By-law, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the best interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner not opposed to the best interests of the Corporation.
ARTICLE IX
FISCAL YEAR
Section 9.1 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors.
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ARTICLE X
SEAL
Section 10.1 Seal. The corporation may adopt an official corporate seal
which shall have inscribed thereon the name of the Corporation and the words
"Corporate Seal" and "Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE XI
WAIVER OF NOTICE
Section 11.1 Waiver of Notice. Whenever any notice is required to be
given under these By-laws, the Certificate of Incorporation or the General
Corporation Law of the State of Delaware, a waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Contracts. The board of directors may authorize any
officer or agent to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and the Chairman of
the Board or the President may so authorize any officer or agent with respect to
contracts or instruments in the usual and regular course of its business. Such
authority may be general or confined to specific instances.
Section 12.2 Loans. No loan shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
Section 12.3 Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, or notes or other evidences of indebtedness issued in
the name of the Corporation shall be signed by such officer or agent as shall
from time to time be authorized by the board of directors.
Section 12.4 Deposits. The board of directors may select banks, trust
companies or other depositaries for the funds of the Corporation.
Section 12.5 Stock in Other Corporations. Shares of any other
corporation which may from time to time be held by the Corporation may be
represented and voted by the Chairman of the Board or the President, or by any
proxy appointed in writing by the Chairman of the Board or the President, or by
any other person or persons thereunto authorized by the board of directors, at
any meeting of stockholders of such corporation or by executing written consents
with respect to such shares where stockholder action may be taken by written
consent. Shares represented by certificates standing in the name of the
Corporation may be endorsed for sale or transfer in the name of the Corporation
by the Chairman of the Board, the President or by any other officer thereunto
authorized by the board of directors. Shares belonging to the Corporation need
not stand in the name of the Corporation, but may be held for the benefit of the
Corporation in the name of any nominee designated for such purpose by the board
of directors.
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ARTICLE XIII
AMENDMENT
Section 13.1 Procedure. These By-laws may be altered, amended or repealed
and new by-laws may be adopted by the board of directors.
Section 13.2 Amendment by Stockholders. Notwithstanding any other
provision of the Certificate of Incorporation or these By-laws of the
Corporation to the contrary and notwithstanding that a lesser percentage may be
specified by law, in the event these By-laws shall be amended by vote of
stockholders, the affirmative vote of the holders of at least two-thirds
(66 2/3) of the voting power of the outstanding shares of all classes of stock
of the Corporation, voting together as a single class, shall be required to
amend or repeal or adopt any provision inconsistent with Sections 2.2, 2.11,
2.12, 3.2, 3.10, 3.11 or 13.2 of these By-laws.
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APPENDIX D
NEVADA GENERAL CORPORATIONS LAWS
RIGHTS OF DISSENTING OWNERS
92A.300. DEFINITIONS. As used in NRS 92A.300 to 92A.500, inclusive, unless
the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
92A.305. "BENEFICIAL STOCKHOLDER" DEFINED. "Beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
92A.310. "CORPORATE ACTION" DEFINED. "Corporate action" means the action of
a domestic corporation.
92A.315. "DISSENTER" DEFINED. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
92A.320. "FAIR VALUE" DEFINED. "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before the effectuation of the
corporate action to which he objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable.
92A.325. "STOCKHOLDER" DEFINED. "Stockholder" means a stockholder of record
or a beneficial stockholder of a domestic corporation.
92A.330. "STOCKHOLDER OF RECORD" DEFINED. "Stockholder of record" means the
person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335. "SUBJECT CORPORATION" DEFINED. "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340. COMPUTATION OF INTEREST. Interest payable pursuant to NRS 92A.300
to 92A.500, inclusive, must be computed from the effective date of the action
until the date of payment, at the average rate currently paid by the entity on
its principal bank loans or, if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
92A.350. RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360. RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY COMPANY.
The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may,
provide that contractual rights with respect to the interest of a dissenting
member are
<PAGE>
available in connection with any merger or exchange in which the domestic
limited-liability company is a constituent entity.
92A.370. RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
92A.380. RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS AND
TO OBTAIN PAYMENT FOR SHARES.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a stockholder
is entitled to dissent from, and obtain payment of the fair value of his shares
in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic
corporation is a party:
(1) If approval by the stockholders is required for the merger
by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and he is
entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged
with its parent under NRS 92A.180.
(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.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
92A.390. LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES
OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
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(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the
plan of merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in
lieu of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national
securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held of record by
at least 2,000 holders of owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of
Paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A.130.
92A.400. LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY TO
SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
92A.410. NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.
1. If a proposed corporate action creating dissenter's rights is submitted
to a vote at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenter's rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenter's rights is taken by written
consent of the stockholder without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenter's rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
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<PAGE>
92A.420. PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.
1. If a proposed corporate action creating dissenter's rights is submitted
to a vote at a stockholders' meeting, a stockholder who wishes to assert
dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
92A.430. DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS.
1. If a proposed corporate action creating dissenter's rights is authorized
at a stockholders' meeting, the subject corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days after
the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500 inclusive.
92A.440. DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
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<PAGE>
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter.
92A.450. UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER DEMAND
FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460. PAYMENT FOR SHARES: GENERAL REQUIREMENTS.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject 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 rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470. PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenter's right to demand payment pursuant to NRS 92A.480.
D-5
<PAGE>
92A.480. DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
92A.490. LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.
1. If a demand for payment remains unsettled, the subject corporation shall
commence a proceeding within 60 days after receiving the demand and petition the
court to determine the fair value of the shares and accrued interest. If the
subject corporation does not commence the proceeding within the 60-day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 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 any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value
of his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
92A.500. LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS AND
FEES.
1. The court in a proceeding to determine fair value shall determine all of
the costs of the proceeding, including the reasonable compensation and expenses
of any appraisers appointed by the court. The court shall assess the costs
against the subject 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.
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<PAGE>
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters
if the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter 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 NRS 92A.300 to 92A.500, inclusive.
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 subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
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<PAGE>
- --------------------------------------------------------------------------------
eNUCLEUS
2000 OMNIBUS
STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1. Establishment, Purpose, and Effective Date of Plan.................1
1.1 Establishment................................................1
1.2 Purpose..................................................... 1
1.3 Effective Date...............................................1
Section 2. Definitions........................................................1
2.1 Definitions..................................................1
2.2 Gender and Number............................................3
Section 3. Eligibility and Participation......................................3
3.1 Eligibility and Participation................................3
Section 4. Administration.....................................................3
4.1 Administration...............................................3
Section 5. Stock Subject to Plan..............................................4
5.1 Number and Amount Available..................................4
5.2 Reuse........................................................4
5.3 Adjustment in Capitalization.................................4
Section 6. Duration of Plan...................................................4
6.1 Duration of Plan.............................................4
Section 7. Stock Options......................................................4
7.1 Grant of Options.............................................4
7.2 Option Agreement.............................................5
7.3 Option Price.................................................5
7.4 Exercise of Options..........................................5
7.5 Payment......................................................5
7.6 Limitations on ISOs..........................................5
7.7 Restrictions on Stock Transferability........................6
7.8 Termination of Employment Due to Death, Disability, or
Retirement...................................................6
7.9 Termination of Employment other than Due to Death,
Disability, or Retirement....................................6
7.10 Nontransferability of Options................................7
Section 8. Stock Appreciation Rights..........................................7
8.1 Grant of Stock Appreciation Rights...........................7
8.2 Exercise of SARs in Lieu of Options..........................7
8.3 Exercise of SARs in Addition to Options......................8
8.4 Exercise of SARs Independent of Options......................8
8.5 Exercise of SARs Upon Expiration of Options..................8
8.6 Payment of SAR Amount........................................8
8.7 Form and Timing of Payment...................................8
8.8 Limit of Appreciation........................................8
8.9 Term of SAR..................................................8
8.10 Termination of Employment....................................8
8.11 Nontransferability of SARs...................................8
Section 9. Restricted Stock...................................................8
9.1 Grant of Restricted Stock....................................8
9.2 Transferability..............................................8
<PAGE>
9.3 Other Restrictions...........................................9
9.4 Voting Rights................................................9
9.5 Dividends and Other Distributions............................9
9.6 Termination of Employment Due to Retirement..................9
9.7 Termination of Employment Due to Death or Disability.........9
9.8 Termination of Employment for Reasons Other than Death,
Disability, or Retirement....................................9
9.9 Nontransferability of Restricted Stock.......................9
Section 10. Performance Units and Performance Shares..........................9
10.1 Grant of Performance Units or Performance Shares.............9
10.2 Value of Performance Units and Performance Shares............9
10.3 Payment of Performance Units and Performance Shares.........10
10.4 Form and Timing of Payment..................................10
10.5 Termination of Employment Due to Death, Disability,
or Retirement...............................................10
10.6 Termination of Employment for Other Reasons.................10
10.7 Nontransferability..........................................10
10.8 Performance Goals...........................................10
Section 11. Beneficiary Designation..........................................10
11.1 Beneficiary Designation.....................................10
Section 12. Rights of Employees..............................................11
12.1 Employment..................................................11
12.2 Participation...............................................11
Section 13. Change in Control................................................11
13.1 In General..................................................11
13.2 Definition..................................................11
Section 14. Amendment, Modification, and Termination of Plan.................12
14.1 Amendment, Modification, and Termination of Plan............12
Section 15. Tax Withholding..................................................12
15.1 Tax Withholding.............................................12
15.2 Share Withholding...........................................12
Section 16. Indemnification..................................................12
16.1 Indemnification.............................................12
Section 17. Requirements of Law..............................................13
17.1 Requirements of Law.........................................13
17.2 Governing Law...............................................13
ii
<PAGE>
SECTION 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 Establishment. Nucleus, Inc., a Delaware corporation, hereby
establishes the "eNucleus 2000 OMNIBUS STOCK INCENTIVE PLAN" for key employees
and directors (the "Plan"). The Plan permits the grant of stock options, stock
appreciation rights, restricted stock, common stock, performance units,
performance shares, or cash as a payout medium for payments under the Plan.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company by encouraging and providing for the acquisition of an equity interest
in the success of the Company by key employees and directors, by providing
additional incentives and motivation toward superior performance of the Company,
and by enabling the Company to attract and retain the services of key employees
upon whose judgment, interest, and special effort the successful conduct of its
operations is largely dependent.
1.3 Effective Date. The Plan shall become effective immediately upon its
adoption by the board of directors of the Company, subject to ratification by
the shareholders of the Company. Awards may be granted hereunder on or after the
effective date but shall in no event be exercisable or payable to a Participant
prior to such stockholder approval; and, if such approval is not obtained within
twelve (12) months after the effective date, such Awards shall be of no force
and effect.
SECTION 2. DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:
(a) "Award" means any Stock Option, Stock Appreciation Right,
Restricted Stock, Performance Unit or Performance Share granted
under this Plan.
(b) "Board" means the board of directors of the Company.
(c) "Cause" shall mean any one of the following:
(i) gross negligence or willful misconduct in the performance of
the Employee's material duties for the Company or a
subsidiary; or
(ii) commission of any material act or dishonesty or breach of
trust resulting or intending to result in material personal
gain or enrichment of the Employee at the expense of the
Company of any of its subsidiaries; or
(iii) conviction for a felony involving moral turpitude, but
specifically excluding any conviction based entirely on
vicarious liability.
No act or failure to act will be considered "willful" unless it
is done, or omitted to be done, by the Employee in bad faith or
without reasonable belief that his action or omission was in the
best interests of the Company. In addition, no act or omission
will constitute Cause unless the Company has given detailed
written notice thereof to the Employee and, where remedial action
is feasible, he then fails to remedy the act or omission within a
reasonable time after receiving such notice.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the board of
directors or such other committee as may be appointed from time
to time by the board of directors to administer this Plan. To the
extent deemed appropriate by the Board, the Committee shall
consist of two or more members, each of whom shall qualify as a
"non-employee director," as the term (or similar or successor
term) is
<PAGE>
defined by Rule 16b-3, and as an "outside director" within the
meaning of Code Section 162(m) and regulations thereunder. In the
absence of a Committee, the Board shall act as the Committee
hereunder.
(f) "Company" means Nucleus, Inc., a Delaware corporation.
(g) "Director" means a director of the Company or any of its
subsidiaries who is not also an employee.
(h) "Disability" means totally and permanently disabled as determined
by the Committee.
(i) "Employee" means a regular salaried employee (including officers
and directors who are also employees) of the Company or any of
its subsidiaries, or any branch or division thereof.
(j) "Fair Market Value" means the value of the stock on a particular
date as determined by the Committee, provided, however, that in
the event the Stock is traded on an established securities
market, then "Fair Market Value" shall be the average of the
highest and lowest prices of the Stock as reported by such market
on a particular date. In the event that there are no Stock
transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there
were Stock transactions.
(k) "Good Reason" means any of the following:
(i) any substantial failure by the Company to comply with any of
the provisions of the employment agreement; or
(ii) the Company requiring the Employee to work from an office
located more than fifty (50) miles from Chicago; or
(iii) termination by the Employee for any reason during the sixty
(60) day period immediately after a Change of Control (as
defined in Section 13.2 of the Plan); or
(iv) any other action or omission specifically set forth in an
Employee's employment agreement which is approved by the
Committee or the Board.
(l) "Option" means the right to purchase Stock at a stated price for
a specified period of time. For purposes of the Plan an Option
may be either (i) an "Incentive Stock Option," or "ISO" within
the meaning of Section 422 of the Code, (ii) a "Nonstatutory
(Nonqualified) Stock Option," or "NSO," or (iii) any other type
of option encompassed by the Code.
(m) "Participant" means any Employee or Director designated by the
Committee to participate in the Plan.
(n) "Performance Unit" means a right to receive a payment equal to
the value of a Performance Unit as determined by the Committee
based on performance and pursuant to Section 10 of the Plan.
(o) "Performance Share" means a right to receive a payment equal to
the value of a Performance Share as determined by the Committee
based on performance and pursuant to Section 10 of the Plan.
2
<PAGE>
(p) "Period of Restriction" means the period during which the
transfer of shares of Restricted Stock is restricted pursuant to
Section 9 of the Plan.
(q) "Plan" means the eNucleus 2000 Omnibus Stock Incentive Plan as
set forth herein and any amendments hereto.
(r) "Restricted Stock" means Stock granted to a Participant pursuant
to Section 9 of the Plan.
(s) "Retirement" means termination of employment other than for
Cause, after the Participant's sixty-fifth (65th) birthday.
(t) "Rule 16b-3" means Rule 16b-3 or any successor or comparable rule
or rules applicable to Awards granted under the Plan promulgated
by the Securities and Exchange Commission under Section 16(b) of
the Securities Exchange Act of 1934, as amended.
(u) "Stock" means the Common Stock, par value $0.001 per share, of
the Company.
(v) "Stock Appreciation Right" and "SAR" mean the right to receive a
payment from the Company equal to the excess of the Fair Market
Value of a share of Stock at the date of exercise over a
specified price fixed by the Committee, which shall not be less
than 100% of the Fair Market Value of the Stock on the date of
grant. In the case of a Stock Appreciation Right which is granted
in conjunction with an Option, the specified price shall be the
Option exercise price.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among those Employees who are recommended for
participation by the Chief Executive Officer and who, in the opinion of the
Committee, are key employees in a position to contribute materially to the
Company's continued growth and development and to its long-term financial
success, and from among the Directors.
SECTION 4. ADMINISTRATION
4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof (whether
taken during a meeting or by written consent), is authorized to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, to provide for conditions and assurances deemed necessary or advisable to
protect the interests of the Company, and to make all other determinations
necessary or advisable for the administration of the Plan, but only to the
extent not contrary to the express provisions of the Plan. Determinations,
interpretations, or other actions made or taken by the Committee pursuant to the
provisions of the Plan shall be final and binding and conclusive for all
purposes and upon all persons whomsoever. To the extent deemed necessary or
advisable for purposes of Rule 16b-3 or otherwise, the Board may act as the
Committee hereunder.
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SECTION 5. STOCK SUBJECT TO PLAN
5.1 Number and Amount Available. The total number of shares of Stock
subject to Awards under the Plan may not exceed 20,000,000 (of this total number
up to 5,000,000 shares of Stock may be issued in Restricted Stock). Such numbers
of shares shall be subject to adjustment upon occurrence of any of the events
described in Section 5.3. The shares to be delivered under the Plan may consist,
in whole or in part, of authorized but unissued Stock or treasury Stock, not
reserved for any other purpose.
5.2 Reuse. If, and to the extent:
(a) An Option shall expire or terminate for any reason without having
been exercised in full (including, without limitation,
cancellation), or in the event that an Option is exercised or
settled in a manner such that some or all of the shares of Stock
related to the Option are not issued to the Participant (or
beneficiary) including as the result of the use of shares for
withholding taxes, the shares of Stock subject thereto which have
not become outstanding shall (unless the Plan shall have
terminated) become available for issuance under the Plan;
provided, however, that with respect to a share-for-share
exercise, only the net shares issued shall be deemed to have
become outstanding as a result thereof.
(b) Restricted Stock, Performance Shares or Performance Units under
the Plan are forfeited for any reason, or settled in cash in lieu
of Stock or in a manner such that some or all of the shares of
Stock related to the award are not issued to the Participant (or
beneficiary), such shares of Stock shall (unless the Plan shall
have terminated) become available for issuance under the Plan;
provided, however, that if any dividends paid with respect to
shares of Restricted Stock or Performance Shares were paid to the
Participant prior to the forfeiture thereof, such shares shall
not be reused for grants or awards.
(c) SARs expire or terminate for any reasons without having been
earned in full, an equal number of SARs shall (unless the Plan
shall have terminated) become available for issuance under the
Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of shares, or
other similar corporate change, the aggregate number of shares of Stock subject
to each outstanding Option, and its stated Option price, shall be adjusted
appropriately by the Committee, whose determination shall be conclusive;
provided, however, that fractional shares shall be rounded to the nearest whole
share. In such event, the Committee also shall have discretion to make
appropriate adjustments in the number and type of shares subject to Restricted
Stock grants then outstanding under the Plan pursuant to the terms of such
grants or otherwise.
SECTION 6. DURATION OF PLAN
6.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Section 14 hereof, until
all Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Award may be granted under
the Plan on or after April 1, 2010.
SECTION 7. STOCK OPTIONS
7.1 Grant of Options. Subject to the provisions of Section 5 and 6, Options
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee shall have complete discretion in
determining the number of Options granted to each Participant. The Committee may
grant any type of Option to purchase Stock that is permitted by law at the time
of grant.
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7.2 Option Agreement. Each Option shall be evidenced by an Option agreement
that shall specify the type of Option granted, the Option price, the duration of
the Option, the number of shares of Stock to which the Option pertains, and such
other provisions as the Committee shall determine.
7.3 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
7.4 Exercise of Options. Options awarded under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall approve, either at the time of grant of such Options or
pursuant to a general determination, and which need not be the same for all
Participants, provided that, to the extent required to comply with Rule 16b-3,
no Option shall be exercisable within the first six months of its term, unless
death or Disability of the Participant occurs during such period. Each Option
which is intended to qualify as an Incentive Stock Option pursuant to Section
422 of the Code, and each Option which is intended to qualify as any other type
of ISO which may subsequently be authorized by law, shall comply with the
applicable provisions of the Code pertaining to such Options.
7.5 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of shares of Stock with
respect to which the Option is to be exercised, accompanied by full payment for
the Stock. The Option Price upon exercise of any Option shall be payable to the
Company in full either:
(a) in cash or its equivalent (including, for this purpose, the
proceeds from a cashless exercise as permitted under Federal
Reserve Board's Regulation T, or other borrowed funds),
(b) by tendering previously-acquired Stock (held by the Participant
for at least six months) having an aggregate Fair Market Value at
the time of exercise equal to the total Option price (including,
for this purpose, Stock deemed tendered by affirmation of
ownership),
(c) by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law, or
(d) by a combination of (a), (b), and (c).
The exercise of an Option shall cancel any related SAR to the extent of the
number of shares as to which the Option is exercised. As soon as practicable
after receipt of each notice and full payment, the Company shall deliver to the
Participant a certificate or certificates representing acquired shares of Stock.
For purposes of the foregoing, Fair Market Value shall be determined on the date
of Option exercise.
7.6 Limitations on ISOs. Notwithstanding anything in the Plan to the
contrary, to the extent required from time to time by the Code, the following
additional provisions shall apply to the grant of Options which are intended to
qualify as Incentive Stock Options (as such term is defined in Section 422 of
the Code):
(a) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time
by any Participant during any calendar year (under all plans of
the Company) shall not exceed $100,000 or such other amount as
may subsequently be specified by the Code; provided that, to the
extent that such limitation is exceeded, any excess Options (as
determined under the Code) shall be deemed to be Nonstatutory
(Nonqualified) Stock Options.
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(b) Any Incentive Stock Option authorized under the Plan shall
contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain
or be deemed to contain all provisions required in order to
qualify the Options as Incentive Stock Options.
(c) All Incentive Stock Options must be granted within ten years from
the earlier of the date on which this Plan was adopted by the
board of directors or the date this Plan was approved by the
shareholders.
(d) Unless exercised, terminated, or canceled sooner, all Incentive
Stock Options shall expire no later than ten years after the date
of grant.
(e) Directors shall not be eligible to receive Incentive Stock
Options.
(f) The Option price for any Option granted pursuant to the Plan to a
Participant who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company
shall be at least 110% of the Fair Market Value of the Stock on
the date the Option is granted, and any such Option shall, unless
exercised, terminated or cancelled sooner, expire no later than
five years after the date of grant.
7.7 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under the applicable Federal securities law, under the requirements
of any stock exchange upon which such shares of Stock are then listed and under
any blue sky or state securities laws applicable to such shares.
7.8 Termination of Employment Due to Death, Disability, or Retirement. In
the event the employment of a Participant is terminated by reason of death,
Disability, or Retirement, any outstanding Options then exercisable may be
exercised at any time prior to the expiration date of the Options or within
three (3) years after such date of termination of employment, whichever period
is the shorter. However, in the case of Incentive Stock Options, the favorable
tax treatment prescribed under Section 422 of the Code shall not be available if
such options are not exercised within three (3) months after date of
termination, or twelve (12) months in the case of Disability, provided such
Disability constitutes total and permanent disability as defined in Section
22(e)(3) of the Code. If an Incentive Stock Option is not exercised within three
(3) months of termination due to Retirement, it shall be treated as a
Nonstatutory (Nonqualified) Stock Option for the remainder of its allowable
exercise period. Notwithstanding any other provision of this Plan, in the event
of a termination of employment by reason of death or disability, any Option
previously awarded to the Employee that is subject to a vesting schedule shall
immediately become vested and nonforfeitable as of the date immediately
preceding the date of such death or disability unless otherwise specified by the
Committee.
7.9 Termination of Employment other than Due to Death, Disability, or
Retirement. If the employment of the Participant shall terminate for any reason
other than death, Disability, Retirement, or involuntary dismissal for Cause,
the rights under any then outstanding Option granted pursuant to the Plan shall
terminate upon the expiration date of the Option or one month after such date of
termination of employment, whichever first occurs; provided, however, that in
the event such termination of employment occurs after a Change in Control (as
defined in Section 13.2 of the Plan), the rights under any then outstanding
Option granted pursuant to the Plan shall terminate upon the expiration date of
the Option or one year after such date of termination of employment, whichever
first occurs. Where termination of employment is involuntarily for Cause, rights
under all Options shall terminate immediately upon termination of employment.
Notwithstanding any other provision of this Plan, in the event of a termination
of employment without Cause, or a resignation by the Employee for Good Reason,
any option previously awarded to the Employee that is subject to a vesting
schedule shall immediately become vested and nonforfeitable as of the effective
date of such termination or resignation unless otherwise specified by the
Committee.
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7.10 Nontransferability of Options. Except as provided below, no Option
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution. Further, all Options granted to a Participant under the Plan shall
be exercisable during his lifetime only by such Participant. Notwithstanding the
foregoing, the Committee may, in its discretion, authorize all or a portion of
the Options (other than Incentive Stock Options) granted to a Participant to be
on terms which permit transfer by such Participant to:
(a) the spouse, children or grandchildren of the Participant
("Immediate Family Members");
(b) a trust or trusts for the exclusive benefit of such Immediate
Family Members, or;
(c) a partnership in which such Immediate Family Members are the only
partners,
provided that:
(i) there may be no consideration for any such transfer;
(ii) the Award Agreement pursuant to which such Options are
granted expressly provides for transferability in a manner
consistent with this Section 7.10; and
(iii) subsequent transfers of transferred Options shall be
prohibited except those in accordance with Section 11.
Following transfer, any such Options shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of
Section 11 hereof the term "Participant" shall be deemed to
refer to the transferee. The provisions of Sections 7 and 13
relating to the period of exercisability and expiration of
the Option shall continue to be applied with respect to the
original Participant, and the Options shall be exercisable
by the transferee only to the extent, and for the periods,
set forth in said Sections 7 and 13.
SECTION 8. STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. Subject to the provisions of
Sections 5 and 6, Stock Appreciation Rights ("SARs") may be granted to
Participants at any time and from time to time as shall be determined by the
Committee. An SAR may be granted at the discretion of the Committee in any of
the following forms:
(a) In lieu of Options,
(b) In addition to Options,
(c) Upon expiration of Options,
(d) Independent of Options,
(e) Each of the above in connection with previously awarded Options.
8.2 Exercise of SARs in Lieu of Options. SARs granted in lieu of Options
may be exercised for all or part of the shares of Stock subject to the related
Option upon the surrender of the right to exercise an equivalent number of
Options. The SAR may be exercised only with respect to the shares of Stock for
which its related Option is then exercisable. Option shares with respect to
which the SAR shall have been exercised may not be subject again to an Award
under this Plan. SARs granted pursuant to
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this Section 8.2 with respect to which the Option shares have been exercised
will immediately expire upon such exercise.
8.3 Exercise of SARs in Addition to Options. SARs granted in addition to
Options shall be deemed to be exercised upon the exercise of the related
Options.
8.4 Exercise of SARs Independent of Options. SARs granted independent of
Options may be exercised upon whatever terms and conditions the Committee, in
its sole discretion, imposes upon the SARs.
8.5 Exercise of SARs Upon Expiration of Options. SARs granted upon
expiration of Options shall be deemed to have been exercised upon the expiration
of the related Options as to the number of shares of Stock subject to the
Options. Notwithstanding Section 5.2 above, cancelled Options in an amount equal
to the related SARs shall not be available again for Awards under the Plan.
8.6 Payment of SAR Amount. Upon exercise of the SAR, the holder shall be
entitled to receive payment of an amount (subject to Section 8.8 below)
determined by multiplying:
(a) The difference between the Fair Market Value of a share of Stock
at the date of exercise over the price fixed by the Committee at
the date of grant, by
(b) The number of shares with respect to which the Stock Appreciation
Right is exercised.
8.7 Form and Timing of Payment. At the discretion of the Committee, payment
for SARs may be made in cash or Stock, or in a combination thereof.
8.8 Limit of Appreciation. At the time of grant, the Committee may
establish in its sole discretion, a maximum amount per share which will be
payable upon exercise of an SAR.
8.9 Term of SAR. The term of an SAR granted under the Plan shall not exceed
ten years and one day.
8.10 Termination of Employment. In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement, or any
other reason, any SARs outstanding shall terminate in the same manner as
specified for Options under Sections 7.8 and 7.9 herein.
8.11 Nontransferability of SARs. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
SECTION 9. RESTRICTED STOCK
9.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and
6, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be in writing.
9.2 Transferability. Except as provided in this Section 9, the shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated for such period of time as
shall be determined by the Committee and shall be specified in the Restricted
Stock grant, or upon earlier satisfaction of other conditions (which may include
the attainment of performance goals as defined in Section 10.8 hereof), as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock grant.
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9.3 Other Restrictions. The Committee shall impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable Federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
9.4 Voting Rights. Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those shares during
the Period of Restriction.
9.5 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held. If any such dividends or distributions are
paid in shares of Stock, the shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
9.6 Termination of Employment Due to Retirement. In the event a
Participant's employment terminates on or after his normal retirement date, the
Period of Restriction applicable to the Restricted Stock pursuant to Subsection
9.2 hereof shall automatically terminate and, except as otherwise provided in
Subsection 9.3, the shares of Restricted Stock shall thereby be free of
restrictions and freely transferable. In the event a Participant terminates
employment on or after his early retirement date but prior to Normal Retirement
Date, any shares of Restricted Stock still subject to restrictions at the date
of such termination automatically shall be forfeited and returned to the
Company; provided, however, that the Committee in its sole discretion may waive
the restrictions remaining on any or all shares of Restricted Stock or add such
new restrictions to those shares of Restricted Stock as it deems appropriate.
9.7 Termination of Employment Due to Death or Disability. In the event a
Participant terminates his employment with the Company because of death or
Disability during the Period of Restriction, the restrictions applicable to the
shares of Restricted Stock pursuant to Section 9.2 hereof shall automatically
terminate and, except as otherwise provided in Subsection 9.3, the shares of
Restricted Stock shall thereby be free of restrictions and freely transferable.
9.8 Termination of Employment for Reasons Other than Death, Disability, or
Retirement. In the event that a Participant terminates his employment with the
Company for any reason other than those set forth in Sections 9.6 and 9.7 hereof
during the Period of Restriction, then any shares of Restricted Stock still
subject to restrictions at the date of such termination automatically shall be
forfeited and returned to the Company; provided, however, that, in the event of
an involuntary termination of the employment of a Participant by the Company
other than for Cause, the Committee in its sole discretion may waive the
automatic forfeiture of any or all such shares and/or may add such new
restrictions to such shares of Restricted Stock as it deems appropriate.
9.9 Nontransferability of Restricted Stock. No shares of Restricted Stock
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution until the termination of the applicable Period of Restriction. All
rights with respect to Restricted Stock granted to a Participant under the Plan
shall be exercisable during his lifetime only by such Participant until the
termination of the applicable Period of Restriction.
SECTION 10. PERFORMANCE UNITS AND PERFORMANCE SHARES
10.1 Grant of Performance Units or Performance Shares. Subject to the
provisions of Sections 5 and 6, Performance Units or Performance Shares may be
granted to Participants at any time and from time to time as shall be determined
by the Committee. The Committee shall have complete discretion in determining
the number of Performance Units or Performance Shares granted to each
Participant.
10.2 Value of Performance Units and Performance Shares. Each Performance
Unit shall have an initial value of one hundred dollars ($100) and each
Performance Share initially shall represent one
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share of Stock. The Committee shall set performance goals in its discretion
which, depending on the extent to which they are met, will determine the
ultimate value of the Performance Unit or Performance Share to the Participant.
The time period during which the performance goals must be met shall be called a
performance period, and also is to be determined by the Committee.
10.3 Payment of Performance Units and Performance Shares. After a
performance period has ended, the holder of a Performance Unit or Performance
Share shall be entitled to receive the value thereof as determined by the extent
to which performance goals discussed in Section 10.2 have been met.
10.4 Form and Timing of Payment. Payment in Section 10.3 above shall be
made in cash, Stock, or a combination thereof as determined by the Committee.
Payment may be made in a lump sum or installments as prescribed by the
Committee. If any payment is to be made on a deferred basis, the Committee may
provide for the payment of dividend equivalents or interest during the deferral
period.
10.5 Termination of Employment Due to Death, Disability, or Retirement. In
the case of death, Disability, or Retirement, the holder of a Performance Unit
or Performance Share shall receive prorata payment based on the number of
months' service during the performance period but based on the achievement of
performance goals during the entire performance period. Payment shall be made at
the time payments are made to Participants who did not terminate service during
the performance period.
10.6 Termination of Employment for Other Reasons. In the event that a
Participant terminates employment with the Company for any reason other than
death, Disability or Retirement, all Performance Units and Performance Shares
shall be forfeited; provided, however, that in the event of an involuntary
termination of the employment of the Participant by the Company other than for
Cause, the Committee in its sole discretion may waive the automatic forfeiture
provisions and pay out on a pro rata basis.
10.7 Nontransferability. Performance Units or Performance Shares granted
under the Plan may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution until the termination of the applicable performance period. All
rights with respect to Performance Units and Performance Shares granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
10.8 Performance Goals. For purposes of Section 9.2 and 10.2 hereof,
"performance goals" shall mean the criteria and objectives, determined by the
Committee pursuant to the Plan, which shall be satisfied or met during the
applicable restriction period or performance period, as the case may be, as a
condition to the Participant's receipt, in the case of a grant of the Restricted
Stock or a grant of Performance Shares, of the shares of Stock subject to such
grant, or in the case of a Performance Unit Award, of payment with respect to
such Award. Such criteria and objectives may include, but are not limited to,
return on assets, return on equity, growth in net earnings, growth in earnings
per share, asset growth, deposit growth, loan growth, asset quality levels,
growth in the Fair Market Value of the Stock, or any combination of the
foregoing or any other criteria and objectives determined by the Committee. Upon
completion of the restricted period or the performance period, as the case may
be, the Committee shall certify the level of the performance goals attained and
the amount of the Award payable as a result thereof.
SECTION 11. BENEFICIARY DESIGNATION
11.1 Beneficiary Designation. Each Participant under the Plan may name,
from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee, and will be effective only when filed by
the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, benefits remaining unpaid at the Participant's
death shall be paid to his estate.
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SECTION 12. RIGHTS OF EMPLOYEES
12.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
12.2 Participation. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
SECTION 13. CHANGE IN CONTROL
13.1 In General. In the event of a Change in Control of the Company as
defined in Section 13.2 below, all Awards under the Plan shall vest 100%,
whereupon all Options shall become exercisable in full, the restrictions
applicable to Restricted Stock shall terminate, and Performance Units and
Performance Shares shall be paid out based upon the extent to which performance
goals during the performance period have been met up to the date of the Change
in Control, or at target, whichever is higher.
13.2 Definition. For purposes of the Plan, a "Change in Control" shall mean
any of the following events:
(a) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), excluding for this purpose John C. Paulsen, the Company
or of any subsidiary of the Company, or any employee benefit plan
of the Company or of any subsidiary or affiliate of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly of securities of
the Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding
securities, provided that no Change of Control shall be deemed to
have occurred solely as the result of an acquisition of
securities of the Company by the Company which, by reducing the
number of voting securities outstanding, increases the direct or
indirect percentage beneficial ownership interest of any person;
or
(b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Plan), individuals who at
the beginning of such two-year period constitute the board of
directors of the Company and any new director (except for a
director designated by a person who has entered into an agreement
with the Company to effect a transaction which would produce a
Change of Control described elsewhere in this section) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was so previously approved, cease for any reason to
constitute at least a majority thereof; or
(c) the stockholders of the Company approve a plan of complete
liquidation of the Company, an agreement for the sale or
disposition of the Company of all or substantially all of the
Company's assets, or a plan of merger or consolidation of the
Company with any other corporation, except for a merger or
consolidation in which the security owners of the Company
immediately prior to the merger or consolidation continue to own
at least fifty-five percent (55%) of the voting securities of the
new (or continued) entity immediately after such merger or
consolidation in substantially the same proportion as their
ownership of the Company prior to such merger or consolidation.
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The Board has final authority to determine the exact date on which a Change in
Control has been deemed to have occurred under (a) and (b) above.
SECTION 14. AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
14.1 Amendment, Modification, and Termination of Plan. The Board at any
time may terminate, and from time to time may amend or modify the Plan;
provided, however, that except as provided in Section 5.3 of the Plan, no such
action of the Board, without approval thereof by the shareholders of the Company
may:
(a) Increase the total amount of Stock which may be issued under the
Plan.
(b) Extend the period during which Awards may be granted.
(c) Extend the maximum period after the date of grant during which
Options may be exercised.
No amendment, modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
consent of the Participant.
SECTION 15. TAX WITHHOLDING
15.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, local and foreign taxes required by law or
regulation to be withheld with respect to any taxable event arising as a result
of the Plan.
15.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the expiration of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect to satisfy the withholding requirement, in
whole or in part, by having the Company withhold shares of Stock having a Fair
Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which would be imposed on the transaction; provided,
however, that in the event a deferral election is in effect with respect to the
shares deliverable upon exercise of an Option, then the Participant may only
elect to have such withholding made from the Stock tendered to exercise such
Option. All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
SECTION 16. INDEMNIFICATION
16.1 Indemnification. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of any judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
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SECTION 17. REQUIREMENTS OF LAW
17.1 Requirements of Law. The granting of Awards and the issuance of shares
of Stock upon the exercise of an Option shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
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NUCLEUS, INC.
401 NORTH MICHIGAN AVENUE, SUITE 745
CHICAGO, ILLINOIS 60611
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Nucleus, Inc., a Nevada corporation (the
"Company"), does (do) hereby constitute and appoint John C. Paulsen and Vincent
Sanchez, and each of them, the true and lawful attorney of the undersigned with
full power of substitution, to appear and act as the proxy or proxies of the
undersigned at the Annual Meeting of Stockholders of said corporation to be held
at _________, _________, Illinois _____ on July 14, 2000, at 2:00 p.m. and at
any adjournment thereof, and to vote all the shares of Nucleus, Inc. standing in
the name of the undersigned, or which the undersigned may be entitled to vote,
as fully as the undersigned might or could do if personally present, as set
forth below.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is made, this proxy
will be voted "FOR" the seven nominees for director set forth in Proposal 1 and
"FOR" each of the matters included in Proposals 2 through 6.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM
PROMPTLY USING THE ENCLOSED ENVELOPE
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For Withheld For Against Abstain
1. Election of seven (7) members of the b. Implement a classified board of |_| |_| |_|
Company's board of directors directors removable only for cause
John C. Paulsen............................ ___ ___ c. Set limits on the ability to call a |_| |_| |_|
Vincent Sanchez............................ ___ ___ special meeting
Dennis Chookasian.......................... ___ ___ d. Eliminate the right of |_| |_| |_|
David Eskra................................ ___ ___ stockholders to take action by written
Stephen Calk............................... ___ ___ consent
Jeff Wescott............................... ___ ___ e. Adopt procedures to be followed |_| |_| |_|
Frederick H. Kopko......................... ___ ___ before matters can be brought before
a stockholders' meeting
f. Approve (by separate votes) |_| |_| |_|
For Against Abstain supermajority vote requirements for:
2. Change the Company's name to i. Certain extraordinary |_| |_| |_|
"eNucleus, Inc." corporate transactions
3. Change the Company's state of |_| |_| |_| ii. Amendments to Nucleus' |_| |_| |_|
incorporation to Delaware from Certificate of Incorporation
Nevada by means of the merger of iii. Amendments to Nucleus' By- |_| |_| |_|
Nucleus into a wholly-owned laws
Delaware subsidiary of Nucleus 5. Ratify the eNucleus, Inc. 2000 |_| |_| |_|
4. Subject to the approval of Proposal 3, Omnibus Stock Incentive Plan.
include certain anti-takeover
measures in the Certificate of 6. Approve other matters as may |_| |_| |_|
Incorporation and By-laws of Nucleus properly come before the Annual
to be effective upon the reincorporation Meeting and at any adjournments
as follows: thereof, including whether or not to
adjourn the meeting
a. Provide the board of directors the |_| |_| |_|
power to set the number of directors
on the board and to fill vacancies on
the board
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PLEASE SIGN EXACTLY AS NAME APPEARS THEREON. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
_____________________________________________________________________
Signature
_____________________________________________________________________
Signature if held jointly
DATED________________________________________________________________
NO. OF SHARES OWNED AS OF THE RECORD DATE____________________________
