<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
NORRIS COMMUNICATIONS CORP.
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
NORRIS COMMUNICATIONS CORP.
12725 STOWE DRIVE, POWAY, CALIFORNIA 92064
NOTICE OF SPECIAL GENERAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 25, 1996
TO THE STOCKHOLDERS OF
NORRIS COMMUNICATIONS CORP.
Notice is hereby given that the special general meeting of NORRIS
COMMUNICATIONS CORP. (the "Corporation") will be held at Quality Suites, 9880
Mira Mesa Boulevard, San Diego, California, 92131 U.S.A., on Thursday, the 25th
day of July, 1996 at nine o'clock in the morning (9:00 a.m.) for the following
purposes:
1. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to change its domicile from Yukon Territory, Canada to
Wyoming, U.S.A., by way of a continuation under the Yukon Business
Corporations Act;
2. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to subsequently change its domicile from Wyoming to
Delaware to be accomplished by the merger of the Corporation with and
into a wholly-owned Delaware corporation formed solely for the purpose
of completing the merger;
3. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to increase in the number of shares of common stock
that the Corporation is authorized to issue from 30,000,000 to
60,000,000;
4. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to issue 5,000,000 shares of $.001 par value preferred
stock;
5. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to alter the procedure to change the number of members
of the Corporation's Board of Directors;
6. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to change the Corporation's name from "Norris
Communications Corp." to "Norris Communications, Inc.";
7. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to eliminate the personal liability of directors to
the fullest extent allowed under Delaware law;
8. to consider and if deemed advisable, to pass a resolution authorizing
the Corporation to provide officers, directors, employees and agents
of the Corporation certain indemnification rights in addition to those
currently provided;
9. to consider and if deemed advisable, to approve the action of the
Corporation's Board of Directors in amending the 1994 Stock Option
Plan; and
10. to transact such other business as may properly be brought before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on July 2, 1996 as
the record date for the determination of stockholders entitled to notice of and
to vote at the special general meeting.
IF YOU ARE UNABLE TO ATTEND THE SPECIAL GENERAL MEETING IN PERSON, KINDLY
READ THE NOTES ON THE REVERSE SIDE OF THE PROXY, THEN COMPLETE AND RETURN THE
PROXY WITHIN THE TIME SET OUT IN THE NOTES. THE PROXY IS SOLICITED BY
MANAGEMENT, BUT YOU MAY AMEND IT BY STRIKING OUT THE NAMES LISTED AND INSERTING
THE NAME OF THE PERSON YOU WISH TO REPRESENT YOU AT THE MEETING.
<PAGE> 3
Your attention is directed to the Proxy Statement (Information Circular)
accompanying this notice for a more complete statement regarding matters to be
acted upon at the special general meeting.
By Order of the Board of Directors
[SIG]
--------------------------------------
Robert Putnam, Secretary
Poway, California
July 3, 1996
<PAGE> 4
NORRIS COMMUNICATIONS CORP.
12725 STOWE DRIVE
POWAY, CALIFORNIA 92064
SPECIAL GENERAL MEETING
TO BE HELD JULY 25, 1996
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement (generally referred to in Canada as an Information
Circular, hereinafter referred to as "Proxy Statement") is furnished in
connection with the solicitation by the management of Norris Communications
Corp., a Yukon Territory, Canada, corporation (the "Corporation") of proxies to
be used at the special general meeting of stockholders of the Company to be held
at the time and place and for the purposes set forth in the accompanying Notice
of Special General Meeting. The solicitation of proxies is made on behalf of the
Corporation and all the expenses of soliciting proxies from stockholders will be
borne by the Corporation. In addition to the solicitation of proxies by use of
the mails, officers and regular employees may communicate with stockholders
personally or by mail, telephone, telegram or otherwise for the purpose of
soliciting such proxies, but in such event no additional compensation will be
paid to any such persons for such solicitation. The Corporation will reimburse
banks, brokers and other nominees for their reasonable out-of-pocket expenses in
forwarding soliciting material to beneficial owners of shares held of record by
such persons.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed proxy are directors or officers of the
Company. A stockholder desiring to appoint some other person to represent him at
the meeting may do so either by striking out the printed names and inserting
such person's name in the blank space provided in the form of proxy or by
completing another proper form of proxy, and in either case, depositing the
completed proxy with Robert Putnam, Secretary, Norris Communications Corp.,
12725 Stowe Drive, Poway, California 92064, not less than 48 hours, excluding
Saturdays and holidays, preceding the meeting or an adjournment of the meeting.
The other person need not be a stockholder of the Corporation.
A stockholder who has given a proxy may revoke it either (a) by signing a
proxy bearing a later date and depositing as aforesaid, or (b) by attending the
meeting in person and registering with the scrutineers as a stockholder
personally present, or (c) in any other manner provided by law.
PROPOSALS MUTUALLY CONDITIONED
Stockholders should note that Proposal 1 (seeking authorization for the
Corporation to change its domicile to Wyoming, U.S.A.) and Proposal 2 (seeking
authorization for the Corporation to subsequently reincorporate in Delaware,
U.S.A.) are mutually conditioned. As a consequence, a vote against either
proposal will constitute a vote against both proposals. Additionally, in the
event Proposals 1 and 2 are approved and any one or more of Proposals 3-8 are
not approved, the Corporation shall cause its Delaware subsidiary to amend its
Certificate of Incorporation or Bylaws, as the case may be, to eliminate the
provisions in such documents which do not receive stockholder approval prior to
merging with its Delaware subsidiary and consummating the Delaware
reincorporation.
EXERCISE OF DISCRETION BY PROXIES
The persons named in the enclosed form of proxy will vote the shares on any
poll in accordance with the direction of the stockholder appointing them. IN THE
ABSENCE OF ANY DIRECTION, IT IS INTENDED THE SHARES WILL BE VOTED FOR ALL
PROPOSALS SET OUT IN THE PROXY. The enclosed form of proxy confers discretionary
authority upon the persons named therein with respect to amendments or
variations to matters itemized in the accompanying Notice of Special General
Meeting.
<PAGE> 5
VOTING OF SHARES
On the date of the accompanying Notice of Special General Meeting the
Company was authorized to issue 30,000,000 common shares and had outstanding
22,023,013 shares each carrying the right to one vote so that the aggregate
number of votes attaching to all the outstanding shares is 22,023,013. July 2,
1996, has been fixed, in advance by the directors as the record date for the
purpose of determining members entitled to notice of the meeting and to vote
thereat. This proxy statement has been mailed on or about July 3, 1996, to all
stockholders of record at the close of business on July 2, 1996 and to
intermediaries in compliance with National Policy #41 of the Canadian Securities
Administrators.
To comply with section 10.10 of By-Laws No. 1, at least two persons present
in person, each being a stockholder entitled to vote thereat or a duly appointed
proxy or representative for an absent stockholder so entitled, and representing
in the aggregate not less than 5% of the outstanding shares of the Corporation
carrying voting rights at the special general meeting are required to constitute
a quorum. If a quorum is not present at the opening of the special general
meeting then the meeting shall stand adjourned to the same place, time and day
in the following week and if within one-half hour from the time appointed for
the adjourned meeting a quorum is not present then the person or persons at such
adjourned meeting or representing by proxy members entitled to attend and vote
shall constitute a quorum. The Corporation may adjourn the special general
meeting upon a vote of the stockholders. IF ADJOURNMENT IS PROPOSED BY THE
CORPORATION, THE PERSON NAMED ON THE ENCLOSED PROXY WILL VOTE SUCH SHARE FOR
WHICH THEY HAVE VOTING AUTHORITY IN FAVOR OF ADJOURNMENT.
Under Yukon law, a special resolution must be passed by a majority of not
less than two-thirds of the votes cast by the stockholders who voted in respect
of that resolution in order to pass. Abstentions and broker non-votes are
included in the determination of the number of shares present and entitled to
vote for purposes of determining a quorum. Abstentions and broker non-votes
however, do not constitute a vote "for" or "against" against any special
resolution and thus will be disregarded in the calculation of a plurality or of
"votes cast." Under Wyoming law, the proposed Delaware Reincorporation, as
hereinafter defined, must be passed by the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote.
Accordingly, abstentions and broker non-votes will have the same effect as a
vote against the Delaware Reincorporation.
To the knowledge of the directors and senior officers of the Corporation,
no person beneficially owns, director or indirectly, shares carrying more than
5% of the voting rights attached to all the common shares of the Corporation,
save and except:
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE PERCENT
CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
- ------------- ---------------------------- ------------------- --------
<S> <C> <C> <C>
Common Stock BKP Partners, L.P.(1) 1,987,048 9.2%
One Sansome St., Suite 3900
San Francisco, CA 94104
Common Elwood Norris(2) 1,399,538 6.4%
Stock...... 12725 Stowe Dr.
Poway, CA 92064
Common Cede & Company(3) 11,017,392 50.0%
Stock...... P.O. Box 20
Bowling Green Station
New York, NY 10274
</TABLE>
- ---------------
(1) Voting and dispositive powers with respect to these shares are held by
Robert K. Pryt, the managing general partner of BKP Partners, L.P.
(2) Includes 225,000 shares owned by American Technology Corporation as a result
of Mr. Norris' 36% beneficial ownership and presently exercisable options to
purchase 700,000 shares.
(3) These shares are held by Cede & Company on behalf of their various clients.
The beneficial ownership of these shares is unknown to management.
2
<PAGE> 6
The person duly appointed under any instrument of proxy will only be
entitled to vote the shares represented, thereby if the instrument of proxy
together with any instrument which may be required as set out in the instrument
of proxy is deposited with Interwest Transfer Company at the address aforesaid
not less than 48 hours, excluding Saturdays and holidays, preceding the meeting
or an adjournment of the meeting.
Notice of the meeting was filed in accordance with National Policy No. 41
of the Canadian Securities Administrators (Stockholder Communication) with
securities administrators of jurisdictions wherein the Corporation's registered
stockholders have their addresses, and given to stock exchanges upon which
securities of the Corporation are listed and clearing agencies.
Notice of the meeting was published in the Yukon News on June 24, 1996, in
accordance with Section 135(4) of the Yukon Business Corporations Act (the
"Yukon Corporations Act").
3
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended March 31, 1996,
1995 and 1994, the cash compensation of the Chief Executive Officer and the four
most highly compensated executive officers of the Corporation who received cash
compensation in excess of $100,000 in that year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION OPTIONS
NAME AND FISCAL ------------ (# OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SHARES) COMPENSATION
- --------------------------------- ------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
R. Gordon Root, President &...... 1996 $ 85,615 $ 20,000(1) 150,000 --
Chief Executive Officer 1995 $ -- -- -- --
1994 $ -- -- -- --
Elwood G. Norris, Chairman....... 1996 $163,500 -- -- --
and Chief Technology 1995 $120,384 -- 400,000 --
Officer 1994 $ 47,944 -- 300,000(2) --
</TABLE>
- ---------------
(1) Amount stated reflects fair market value of 13,333 common shares as of the
date of grant.
(2) During the fiscal year ended March 31, 1994, options on a total of 193,500
common shares granted in 1993 were repriced and 107,500 new options were
granted to Mr. Norris.
The following table sets forth information with respect to options to
purchase shares of the Corporation's Common Stock granted in the fiscal year
ended March 31, 1996 to the Chief Executive Officer and the Named Executive
Officer.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL 1995 (PER SHARE) DATE
- ------------------------------------------ ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
R. Gordon Root............................ 150,000 15.6% $ 1.50 10/09/99
Elwood G. Norris.......................... 400,000 41.5% $ 3.38 4/03/00
</TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
There were no options exercised by the Named Executive Officers during the
fiscal year ended March 31, 1996. The following table provides information on
unexercised options at March 31, 1996:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
MARCH 31, 1996 MARCH 31, 1996
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
R. Gordon Root............................. 50,000 100,000 $-- $--
Elwood G. Norris........................... 700,000 -- $-- $--
</TABLE>
4
<PAGE> 8
The Corporation has not awarded stock appreciation rights to any employee
of the Corporation and has no long-term incentive plans, as that term is defined
in United States Securities and Exchange Commission regulations. The Corporation
has no defined benefit or actuarial plans covering any person.
COMPENSATION OF DIRECTORS
The Corporation has no other arrangements to pay any direct or indirect
remuneration to any directors of the Corporation in their capacity as directors
other than in the form of reimbursement of expenses for attending directors' or
committee meetings. However, directors have received in the past and may receive
in the future stock options pursuant to the Corporation's stock option plans. No
options were issued to non-employee directors during the fiscal year ended March
31, 1996.
EMPLOYMENT CONTRACTS
In September 1995, the Corporation entered into an employment agreement
with Elwood G. Norris, the Corporation's former President and Chief Executive
Officer and current Chief Technology Officer. The employment agreement provides
for payment of a base salary of $115,000 per year until October 31, 1997, when
the base salary shall automatically increase 10% per year. The employment
agreement, which terminates on September 30, 1999, further provides that Mr.
Norris (or his estate) shall continue to receive his base salary for a period of
not longer than twelve months in the event Mr. Norris is unable to fulfill his
duties due to mental or physical disabilities or death. Under terms of the
employment agreement, Mr. Norris also is entitled to participate in the
Corporation's bonus pool and health insurance plan.
CHANGE OF DOMICILE TO WYOMING
AND SUBSEQUENT DELAWARE REINCORPORATION
(PROPOSALS ONE AND TWO)
INTRODUCTION
For the reasons set forth below, the Board of Directors believes that the
best interests of the Corporation and its stockholders will be served by
changing the domicile of the Corporation from the Yukon Territory, Canada, to
Delaware, U.S.A. (the "Delaware Reincorporation"). The effect of the change of
domicile will be that the Corporation shall cease to be a corporation within the
meaning of the Yukon Corporations Act and will be a corporation under the
Delaware General Corporation Law (the "Delaware Corporation Law") as if it had
been incorporated under the Delaware Corporation Law. STOCKHOLDERS ARE URGED TO
READ CAREFULLY THE FOLLOWING SECTIONS OF THE PROXY STATEMENT, INCLUDING THE
RELATED EXHIBITS, BEFORE VOTING ON PROPOSALS WHICH, IF APPROVED, WILL AUTHORIZE
THE CORPORATION TO CHANGE ITS DOMICILE INITIALLY TO WYOMING, U.S.A. AND THEN
SUBSEQUENTLY TO DELAWARE. Throughout this Proxy Statement, the term "Norris
Delaware" refers to the new Delaware corporation, a wholly-owned subsidiary of
the Corporation that was formed by the Corporation in preparation for the
Delaware Reincorporation and is the proposed successor to the Corporation.
Since Delaware voting requirements effectively preclude publicly-traded
Delaware corporations from transferring to a non-United States jurisdiction and
since continuances to jurisdictions not granting Yukon Territory corporations
reciprocal rights are not recognized under Yukon law, the Delaware
Reincorporation will be effected in two steps. The first step requires the
Corporation to initially change its domicile by filing Articles of Continuance
in the State of Wyoming ( a jurisdiction that grants Yukon Territory
corporations reciprocal rights with respect to continuances) (the "Wyoming
Continuation"). The discontinuance of the Corporation under the Yukon
Corporations Act requires (i) approval by a resolution of stockholders passed in
general meeting by a majority vote of not less than 66 2/3% of those voting at
the meeting ("special resolution"), at which meeting a quorum of two persons at
least holding or representing by proxy more than 5% of the issued shares of the
Corporation is present, and (ii) the issuance of a Certificate of Discontinuance
by the Registrar of Corporations pursuant to Yukon Corporations Act Section 191.
Upon receipt of such certificate, the Corporation intends to change its
domicile, briefly, to Wyoming by way of a continuation pursuant to Section
17-16-1710 of the Wyoming Business Corporation Act (the "Wyoming Corporation
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<PAGE> 9
Act") and immediately file the appropriate documents to change the Corporation's
domicile from Wyoming to Delaware. The change of domicile from Wyoming to
Delaware shall be accomplished by the merger (the "Merger") of the Corporation
with and into Norris Delaware.
The Merger will be effected in accordance with the terms of Reorganization
and Agreement Plan of Merger, a form of which is attached hereto as Exhibit A
(the "Merger Agreement"). Upon completion of the Merger, (i) the Corporation
will cease to exist, (ii) the stockholders of the Corporation's Common Stock
automatically will become the stockholders of Norris Delaware, (iii) the
stockholders' rights, as stockholders of Norris Delaware and no longer as
stockholders of the Corporation, will be governed by Delaware law, Norris
Delaware's Restated Certificate of Incorporation and Norris Delaware's Bylaws
rather than by Yukon law, the Articles of Incorporation and Bylaws of the
Corporation, (iv) all options and rights to purchase shares of the Corporation's
Common Stock automatically will be converted into options or rights to acquire
an equal number of equivalent shares of Norris Delaware's Common Stock, (v) no
change will occur in the physical location, business, management, assets,
liabilities or net worth of the Corporation and (vi) the incumbent directors and
officers of the Corporation will serve in their respective capacities as
directors and officers of Norris Delaware.
Upon consummation of the change of domicile to Wyoming and after the
effective time (the "Effective Time") of the Merger, the Corporation will become
a company governed by the Delaware Corporation Law. Differences between the
Yukon Corporations Act and the Delaware Corporation Law and between the
Corporation's existing Articles of Incorporation and Bylaws (the "Canadian
Constating Documents") and the Restated Certificate of Incorporation and Bylaws
of Norris Delaware (the "Delaware Constating Documents"), will result in various
changes to the capital structure of the Corporation and in the rights of current
stockholders of the Corporation. By approving the change of domicile to Wyoming
and the subsequent Merger and Delaware Reincorporation, stockholders of the
Corporation will be authorizing the replacement of the Canadian Constating
Documents with the Delaware Constating Documents, including those provisions of
Norris Delaware's Restated Certificate of Incorporation and Bylaws relating to
the limitation of director liability and expanded scope of indemnification of
directors, officers and key employees under Delaware law, and including those
provisions having "anti-takeover" implications, which may be of significance to
the Company and its stockholders in the future.
Pursuant to the Merger Agreement, each outstanding share of the
Corporation's Common Stock, no par value, automatically will be converted into
one share of Norris Delaware Common Stock, $0.001 par value, upon the Effective
Time. Each stock certificate representing issued and outstanding shares of the
Corporation's Common Stock will continue to represent the same number of shares
of Common Stock of Norris Delaware. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR NORRIS DELAWARE STOCK
CERTIFICATES. Stockholders, however, may exchange their certificates if they so
choose. The Common Stock of the Corporation is listed for trading on the
National Association of Securities Dealers Automated Quotation Small Cap Market
("NASDAQ"). Before the Merger, the shares of Norris Delaware's Common Stock will
be prequalified for such listing on NASDAQ under the symbol ("NORR"). After the
Merger, Norris Delaware's Common Stock will be traded on the NASDAQ without any
interruption having occurred to the trading of the Corporation's Common Stock
because of the Merger.
As part of the Delaware Reincorporation, Norris Delaware will assume all of
the obligations of the Corporation under the Corporation's 1992 Non-Qualified
Stock Option Plan (the "1992 Plan") and ("the 1994 Plan") as hereinafter
defined. If the Corporation's stockholders approve the Delaware Reincorporation,
outstanding stock options to purchase the Corporation's Common Stock assumed
under the Plans will be exercisable for equivalent shares of Norris Delaware
Common Stock, and all parties having participated in the Plans and holding such
options will be entitled to purchase shares of Norris Delaware Common Stock. As
part of the Delaware Reincorporation, Norris Delaware also will assume all other
employee benefit plans and arrangements of the Corporation. The stockholders'
approval of the Delaware Reincorporation will constitute their approval of the
assumption by Norris Delaware of the Plans and all other employee benefit plans
and arrangements of the Corporation.
6
<PAGE> 10
The discussion set forth below is qualified in its entirety, by reference
to the Merger Agreement, the Restated Certificate of Incorporation of Norris
Delaware (the "Certificate of Incorporation') and the Bylaws of Norris Delaware,
copies of which are attached hereto as Exhibits A, B and C, respectively.
APPROVAL BY THE STOCKHOLDERS OF THE CHANGE OF DOMICILE TO WYOMING AND
APPROVAL OF THE DELAWARE REINCORPORATION ARE MUTUALLY CONDITIONED. AS A
CONSEQUENCE, A VOTE AGAINST EITHER PROPOSAL WILL CONSTITUTE A VOTE AGAINST BOTH
PROPOSALS. APPROVAL BY THE STOCKHOLDERS OF PROPOSALS 1-8 WILL CONSTITUTE
APPROVAL OF THE DELAWARE REINCORPORATION, THE MERGER AGREEMENT, THE CERTIFICATE
OF INCORPORATION AND THE BYLAWS OF NORRIS DELAWARE AND ALL PROVISIONS THEREOF.
ADDITIONALLY, IN THE EVENT PROPOSALS 1 AND 2 ARE APPROVED AND ANY ONE OR MORE OF
PROPOSALS 3-8 ARE NOT APPROVED, THE CORPORATION SHALL CAUSE NORRIS DELAWARE TO
AMEND ITS CERTIFICATE OF INCORPORATION OR BYLAWS, AS THE CASE MAY BE, TO
ELIMINATE PROVISIONS IN SUCH DOCUMENTS WHICH HAVE NOT RECEIVED STOCKHOLDER
APPROVAL PRIOR TO MERGING WITH NORRIS DELAWARE AND CONSUMMATING THE DELAWARE
REINCORPORATION.
VOTE REQUIRED; BOARD RECOMMENDATION
Approval of the change of domicile to Wyoming is a condition precedent to
the Delaware Reincorporation. The change of domicile to Wyoming will require the
affirmative vote of two-thirds of the stockholders voting at the meeting.
Approval of the Delaware Reincorporation, which also will constitute approval of
(i) the Merger Agreement, the Certificate of Incorporation and the Bylaws of
Norris Delaware, (ii) the assumption by Norris Delaware of the Corporation's
obligations under the Plans and (iii) revisions in the Corporation's
indemnification agreements with its officers and directors to conform such
agreements to Delaware law, will require the affirmative vote of the holders of
a majority of the outstanding shares of the Corporation's Common Stock entitled
to vote. Each of the foregoing proposals is expressly conditioned upon passage
of the other.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTES "FOR" THE CHANGE OF
DOMICILE TO WYOMING AND "FOR" THE DELAWARE REINCORPORATION.
PRINCIPAL REASONS FOR THE DELAWARE REINCORPORATION
Advantages of Delaware Corporation Law. For many years, Delaware has
followed a policy of encouraging incorporation under its jurisdiction. In
furtherance of that policy, Delaware has long been the leading state in
adopting, construing and implementing comprehensive and flexible corporate laws
responsive to the legal and business needs of corporations. As a result,
Delaware's General Corporation Law has become widely regarded as the most
extensive and well-defined body of corporate law in the United States. Because
of Delaware's prominence as the state of incorporation for many major
corporations, both the legislature and courts in Delaware have demonstrated an
ability and a willingness to act quickly and effectively to meet changing
business needs. Moreover, the Delaware courts have rendered a substantial number
of decisions interpreting and explaining Delaware law. The Delaware
Reincorporation accordingly will be beneficial to the Corporation in that it
will give the Corporation (i) a greater degree of predictability and certainty
regarding how the Corporation's affairs should be conducted in order to comply
with applicable laws (such predictability and certainty resulting from a large
body of case law decided under those laws) and (ii) the comfort and security
resulting from the Corporation's awareness of the responsiveness of Delaware's
legislature and courts to the needs of corporations organized under Delaware's
jurisdiction. For these reasons, many American corporations that have initially
chosen their home state for their state of incorporation have subsequently
changed their corporate domicile to Delaware in a manner similar to the Delaware
Reincorporation.
Antitakeover Implications. Delaware, like many other states, permits a
corporation to adopt a number of measures (through amendment of the corporate
charter or bylaws or otherwise) designed to reduce a corporation's vulnerability
to unsolicited takeover attempts. The Delaware Reincorporation is not being
7
<PAGE> 11
proposed in order to prevent any known attempt to acquire control of the
Corporation, obtain representation on the Board of Directors or take any
significant action affecting the Corporation. Such anti-takeover measures, which
would enhance the ability of the Board of Directors to negotiate with an
unsolicited bidder, include, but are not limited to, the adoption of severance
agreements for the Corporation's management and key employees that become
effective upon the occurrence of a change in control of the Corporation and the
designation and issuance of preferred stock, the rights and preferences of which
are determined by the Board of Directors. Substantial judicial precedent also
exists in the Delaware courts as to the legal principles applicable to such
defensive measures and as to the conduct of the Board of Directors under the
business judgment rule with respect to unsolicited takeover attempts, and, in
the context of a future unsolicited takeover event, such precedent will give the
Board of Directors greater assurance and confidence that the defensive
strategies and conduct of the Board of Directors are in full compliance with
applicable laws and will be effective under the circumstances.
Certain effects of the Delaware Reincorporation may be considered to have
antitakeover implications. Section 203 of the Delaware General Corporation Law,
from which Norris Delaware does NOT intend to opt out, restricts certain
"business combinations' with "interested stockholders" for three years following
the date on which a person becomes an interested stockholder, unless the Board
of Directors approves the business combination. The Yukon Corporations Act does
not contain comparable provisions with respect to business combinations. See
"Comparison of Stockholder Rights -- Anti-Takeover Provisions and Interested
Stockholders."
The Board of Directors believes that unsolicited takeover attempts may be
unfair or disadvantageous to the Corporation and its stockholders because:
a. a non-negotiated takeover bid may be timed to take advantage of
temporarily depressed stock prices;
b. a non-negotiated takeover bid may be designed to foreclose or
minimize the possibility of more favorable competing bids; and
c. a non-negotiated takeover bid may involve the acquisition of only a
controlling interest in the Corporation's stock, without affording all
stockholders the opportunity to receive the same economic benefits.
By contrast, in a transaction in which an acquirer must negotiate with an
independent board of directors, such board of directors can and should take
account of the underlying and long term values of the Corporation's assets, the
possibilities for alternative transactions on more favorable terms, the possible
advantages of a tax-free reorganization, the anticipated favorable developments
in the Corporation's business not yet reflected in the stock price and the
equality of treatment of all the Corporation's stockholders.
Directors' Liability and Indemnification. Over the past decade, the
frequency and magnitude of claims and litigation against directors and officers
of corporations have increased. Over the same period, the cost of directors' and
officers' insurance policies has increased substantially, with the amount of
risk covered by such policies having significantly decreased. As a result, and
because potential personal liability associated with service as a director or
officer of a corporation can be significant, it has become increasingly
difficult for corporations to find and retain talented and experienced directors
and officers. The Delaware Reincorporation will enable the Corporation to reduce
the potential personal liability of members of the Board of Directors associated
with their service as directors and to expand the scope of the Corporation's
indemnification of its directors and officers, which should enable the
Corporation to continue finding and retaining talented and experienced directors
and officers.
POSSIBLE DISADVANTAGES
Despite the unanimous belief of the Board of Directors that the Delaware
Reincorporation is in the best interests of the Corporation and its
stockholders, it should be noted that Delaware law has been criticized by some
commentators on the grounds that it does not afford minority stockholders the
same substantive rights
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and protections as are available in a number of other states. For a comparison
of stockholders' rights and the powers of management under Delaware and Yukon
law, see "Comparison of Stockholder Rights."
Despite the unanimous belief of the Board of Directors as to the benefits
to stockholders of the Delaware Reincorporation, the Delaware Reincorporation
may be disadvantageous to the extent that it has the effect of discouraging a
future takeover attempt that is not approved by the Board of Directors but may
be deemed by a majority of the stockholders to be in their best interests
(because, for example, the possible takeover could cause stockholders to receive
a substantial premium for their shares over their then current market value or
over the stockholders' cost basis in such shares). As a result of such effects
of the Delaware Reincorporation, stockholders who might wish to participate in a
tender offer may not have an opportunity to do so. In addition, to the extent
that the Delaware Reincorporation will enable the Board of Directors to resist a
takeover or a change in control of the Corporation, the Delaware Reincorporation
could make it more difficult to change the existing Board of Directors and
management.
NO CHANGE IN THE BUSINESS, MANAGEMENT, EMPLOYEE PLANS OR LOCATION OF PRINCIPAL
FACILITIES OF THE
CORPORATION.
The change of domicile to Wyoming and the Delaware Reincorporation that
follows will effect only a change in the legal domicile of the Corporation and
other changes of a legal nature, certain of which are described in this Proxy
Statement. The Delaware Reincorporation will NOT result in any change in the
business, management, fiscal year, assets or liabilities or location of the
principal facilities of the Corporation. Norris Delaware will assume the
obligations of the Corporation under the Plans and all other employee benefit
plans of the Corporation, and upon the Effective Time each option issued
pursuant to such Plans automatically will be converted into an option to
purchase the same number of shares of Norris Delaware Common Stock, at the same
price per share, under the same terms and subject to the same conditions as set
forth in such Plans. Stockholders should note that their approval of the
Delaware Reincorporation also will constitute their approval of the assumption
by Norris Delaware of the Corporation's obligations under the Plans. Other
employee benefit arrangements of the Corporation also will be continued by
Norris Delaware under the terms and subject to the conditions currently in
effect. As noted above, after the Merger, the shares of Common Stock of Norris
Delaware will continue to be traded, without interruption, in the same principal
market and under the symbol ("NORR").
REGULATORY APPROVAL
The change of domicile of the Corporation from Yukon Territory, Canada to
Delaware, by way of continuation under the Wyoming Corporations Act and
subsequent Merger and Delaware Reincorporation may be deemed to constitute the
issuance and sale of securities within the meaning of the U.S. Securities Act of
1933, as amended (the "Securities Act"). The deemed issuance of securities will
not be registered under the Securities Act and will be effected in reliance upon
the exemption provided by Section 3(a)(10) thereunder. As a basis for that
exemption, and before the change of domicile to either Wyoming or Delaware
becomes effective, the terms and conditions of such changes of domicile must be
approved by the California Commissioner of Corporations as fair to the
Corporation's stockholders following a hearing at which all of the stockholders
of the Corporation are entitled to appear. A copy of the Notice of Hearing is
enclosed with this Proxy Statement.
Before mailing this Proxy Statement, the Corporation filed applications for
permits authorizing the sale and issuance of securities with the California
Commissioner of Corporations pursuant to Section 25121 of the California
Corporate Securities Law of 1968, and requested pursuant to Section 25142 that
the Commissioner hold a hearing upon the fairness of the terms and conditions of
the change of domicile to Wyoming and the subsequent Merger and Delaware
reincorporation to the Corporation's stockholders. The Corporation has advised
the Commissioner that, if the Commissioner determines the transactions to be
fair to the Corporation's stockholders, that determination will form the basis
for effecting the continuance without registration under the Securities Act in
reliance on the exemption provided by Section 3(a)(10).
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MATERIAL CHANGES IN CONSTATING DOCUMENTS
The Delaware Constating Documents effectively amend the Canadian Constating
Documents by (i) increasing the authorized number of shares of Common Stock that
the Corporation is authorized to issue from 30,000,000 to 60,000,000, (ii)
authorizing the issuance of 5,000,000 of $.001 par value Preferred Stock, (iii)
altering the procedure to change the number of members of the Corporation's
Board of Directors, (iv) changing the name of the Corporation, (v) eliminating
the personal liability of directors to the fullest extent allowed under Delaware
law and (vi) providing officers, directors and agents of the Corporation with
certain indemnification rights in addition to those currently provided. See
"Ratification of Material Changes in Constating Documents Affecting
Stockholders' Rights."
COMPARISON OF STOCKHOLDER RIGHTS
The Delaware Corporation Law and the Delaware Constating Documents differ
in many respects from the Yukon Corporations Act and the Canadian Constating
Documents. It is not practical to summarize all of those differences in the
Proxy Statement, however all of the principal differences which could materially
affect the rights of stockholders of the Corporation are discussed below. See
Certificate of Incorporation and Bylaws of Norris Delaware, copies of which are
attached to the Proxy Statement as Exhibits B and C, respectively.
Since the Corporation effectively is changing its jurisdiction of
incorporation, from the Yukon Territory, Canada to Delaware, and since the
proposed change of domicile to Wyoming will not occur unless the subsequent
Delaware Reincorporation is also approved, a description of the differences
between Wyoming and Delaware law has not been included in this Proxy Statement.
Quorum of Stockholders. Under the Canadian Constating Documents, a quorum
shall consist of two individuals present and holding , or representing by proxy
the holders of shares of the Corporation carrying 5% or more of the voting
rights eligible to be cast at the meeting. The Delaware Constating Documents
provide that the holders of a majority of the outstanding shares entitled to
vote shall constitute a quorum.
Notice, Adjournment and Place of Stockholders' Meetings. The Yukon
Corporations Act requires that notice of stockholders' meetings be given at
least 21 days but not more than 50 days before a meeting unless the stockholders
waive or reduce the notice period by unanimous consent in writing. The Delaware
Constating Documents require such notice to be given between ten and 60 days
before a meeting.
Both Yukon Territory and Delaware law provide for adjournments of
stockholders' meetings. If the meeting is adjourned for more than 30 days, the
Canadian Constating Documents require a minimum of 21 days' but not more than 50
days' notice of the adjournment. Delaware Corporation Law requires that if the
adjournment is for more than 30 days or if a new record date is fixed, notice
must be given to the stockholders as for an original meeting.
The Delaware Corporation Law provides that any action that may be taken at
a stockholders' meeting may be taken without a meeting, without prior notice and
without a vote if a consent in writing is signed and dated by the holders of
shares having at least the number of votes necessary to pass such a resolution
at a stockholders' meeting unless the Corporation's Certificate of Incorporation
provides otherwise. No written consent will be effective to take the corporate
action to which it refers, unless written consents sufficient to take the action
are delivered to the Corporation within 60 days of the earliest dated consent
delivered. The Delaware Constating Documents currently permit written consent in
lieu of a stockholder's meeting. The Yukon Corporations Act permits and the
Canadian Constating Documents provide that the stockholders may pass a
resolution in writing, however, it must be signed by all stockholders entitled
to vote on that resolution. If written consent of all of the stockholders is not
obtained, than the resolution is not effective and a meeting of the stockholders
must be held to carry out the business referred to in that resolution.
Director Qualifications, Election and Removal of Directors and Filling
Vacancies on the Board of Directors. The Canadian Constating Documents provide
that the Corporation shall have at least the minimum number of directors
required under the Yukon Corporations Act, but the Board of Directors may
appoint additional directors between annual general meetings of stockholders,
provided the number of additional directors does not exceed one-third the number
of directors elected or appointed at the last such
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meeting. The Yukon Corporations Act requires that a corporation have at least
three directors and permits the Board of Directors to appoint, between annual
general meetings, one additional director. The directors may not be persons
under the age of 19, undischarged bankrupts or persons found to be mentally
infirm.
Except as may otherwise be provided in the Certificate of Incorporation or
in specific provisions of the Delaware Corporation Law, a Delaware corporation
is required to be managed by a board of directors consisting of one or more
members. The number of directors or the manner of selecting them must be
included in the corporation's bylaws, unless the certificate of incorporation
fixes the number of directors. The certificate of incorporation or the bylaws
may prescribe certain requirements for directors, including that they be
stockholders. Norris Delaware's Certificate of Incorporation provides that the
size of its board of directors shall be fixed by resolution of the Board within
a set range but contains no provisions regarding directors' qualifications.
Under both the Canadian Constating Documents and the Delaware Constating
Documents, directors are elected at each annual meeting. Both the Canadian
Constating Documents and the Delaware Constating Documents provide that, subject
to certain limitations, vacancies on the Board may be filled by the remaining
directors for the remainder of the unexpired term. The Canadian Constating
Documents, however, provide that the remaining directors must constitute a
quorum of the Board of Directors, whereas the Delaware Constating Documents
permit directors constituting less than a quorum to fill vacancies. The Canadian
Constating Documents provide that if the remaining directors fail to call a
meeting, or if there are no directors then in office, any stockholder may call a
meeting. The Yukon Corporations Act and the Canadian Constating Documents also
provide that a vacancy that results from an increase in the number of directors
cannot be filled by the remaining directors, even if the vacancy was not filled
by the stockholders at a meeting where the increase was authorized. In this
regard, the Yukon Corporations Act provides that, if there has been a failure to
elect a minimum number of directors required by the Articles, the directors then
in office shall forthwith call a special meeting of the stockholders to fill the
vacancy. The Delaware Constating Documents provide that any vacancy resulting
from an increase in the number of directors may be filled by the remaining
directors for the remainder of the current term of the new directorship, unless
the Board passes a resolution providing that the newly created vacancy must be
filled by a vote of the stockholders.
Under the Yukon Corporations Act, directors generally may be removed before
the expiration of their term by an ordinary resolution approved by a majority of
the votes cast on the resolution at a meeting called for that purpose, and a
replacement for the director so removed may be appointed by an ordinary
resolution approved by a majority of the votes cast.
The Delaware Constating Documents provide that the directors may be removed
with cause by a vote of a majority of all holders of voting stock or without
cause by the affirmative vote of 66 2/3% of the voting stock.
Right to Call Special Meetings and Nomination of Directors. Under the
Yukon Corporations Act, stockholders holding in aggregate not less than 5% of
the shares having the right to vote at a meeting at which directors will be
elected may nominate directors by delivering such nomination to the
Corporation's registered office at least 90 days before the anniversary date of
the previous annual meeting of stockholders. The Yukon Corporations Act also
provides that the holders of 5% of the issued shares with a right to vote at a
general meeting can requisition the calling of a general meeting within four
months of the date of the requisition. If the directors do not, within 21 days
after receiving the requisition from the stockholders, call a meeting, any
stockholder who signed the requisition may call the meeting. The stockholders
may deliver to the Corporation's registered office at least eight days before
the date the Corporation is required to send out notice of the requisitioned
meeting a written statement not exceeding 200 words explaining the position of
the requisitionists for inclusion in the information circular being sent to
stockholders in respect of the meeting.
The Delaware Constating Documents provide that any stockholder may nominate
directors and bring other business before an annual stockholders meeting by
delivering written notice of the nomination or other business to the
Corporation's head office generally 120 days prior to the date specified in the
previous year's proxy materials for the current year's meeting. Under the
Delaware Corporation Law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the bylaws. The Delaware Constating Documents permit a
special meeting to be
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called by the president, the chairman of the board of directors, a majority of
the directors or stockholders entitled to cast at least 10% of the votes at the
meeting. A special meeting called by stockholders must be held between 35 and
120 days after the request for the meeting is received by the Corporation.
Amendment to Internal Affairs. Under the Yukon Corporations Act, any
amendment to the articles of a Corporation will generally require approval by
special resolution, which is a resolution passed by a majority of not less than
66 2/3% of the votes cast by stockholders entitled to vote on the resolution.
The Corporation also, by special resolution approved by 66 2/3% of the class of
stockholders whose shares are affected by such resolution (even if such shares
are non-voting), may create or add special rights or restrictions to such class
of issued shares.
A separate class resolution of preferred stockholders, if any, must be
approved by a separate resolution (a) consented to in writing by all holders of
preferred shares; or (b) presented at a meeting of holders of preferred shares,
called for such purpose, at which at least two stockholders must be present at
the meeting, representing an aggregate of not less than 5% of the issued and
outstanding preferred shares carrying voting rights at the meeting and passed by
the affirmative vote of at least 66 2/3 of the votes cast. Any stockholder who
dissents from the proposal is entitled to have his shares purchased by the
Corporation.
The Delaware Corporation Law requires the approval of the holders of a
majority of the outstanding stock entitled to vote for any amendment to the
certificate of incorporation unless the certificate of incorporation requires a
higher level of approval. Norris Delaware's Certificate of Incorporation
provides that the affirmative vote of at least two-thirds of the voting power of
all of the then-outstanding shares of voting stock shall be required to amend or
repeal certain provisions, including those concerning management of the
corporation by Norris Delaware's board of directors, the election, appointment
and removal of directors, and the two-thirds majority vote required by the
bylaws if the bylaws are amended by the stockholders. Whether or not provided in
the certificate of incorporation, holders of the outstanding shares of a class
are entitled to vote as a class upon a proposed amendment that would change the
number of shares authorized in the class, change the par value of the shares of
such class, or adversely change the powers, preferences, or special rights of
the shares of the class. The number of authorized shares in a class, however,
may be increased or decreased (but not below the number outstanding) by a
majority vote of the stockholders of the corporation without a class vote, if so
provided in (a) the original certificate of incorporation, (b) an amendment
creating the class or adopted before shares of the class were issued, or (c) an
amendment approved by a majority of the holders of shares of the class.
The Delaware General Corporation law provides that a corporation's bylaws
may be amended by the corporation's stockholders, or, if so provided in the
corporation's certificate of incorporation, by the corporation's directors.
Norris Delaware's Certificate of Incorporation provides that Norris Delaware's
directors may amend Norris Delaware's bylaws. In addition, Norris Delaware's
stockholders may amend the bylaws by a two-thirds majority of the outstanding
voting power.
Anti-takeover Provisions and Interested Stockholders. Except under certain
circumstances the Delaware Corporation Law prohibits a "business combination"
between the corporation and an "interested stockholder" within three years of
the stockholder becoming an "interested stockholder." Generally, an "interested
stockholder" is a person or group that directly or indirectly, controls 15% or
more of the outstanding voting stock or is an affiliate or associate of the
corporation and was the owner of 15% or more of such voting stock at any time
within the previous three years. A "business combination" includes a merger,
consolidation, sale or other disposition of assets having an aggregate value in
excess of 10% of the aggregate market value of the consolidated assets of the
corporation or its outstanding stock, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation. This provision does not apply where (a) the business combination is
approved by the corporation's board of directors prior to the date the
interested stockholder became an interested stockholder; (b) the interested
stockholder acquired at least 85% of the outstanding voting stock of the
corporation in the transaction in which the stockholder became an interested
stockholder excluding, for determining the number of shares outstanding, shares
held by persons who are directors and also officers and by employee stock plans
in which participants do not have the right to determine confidentially whether
shares held subject to the plan will be
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tendered; (c) the business combination is approved by a majority of the board of
directors and the affirmative vote of two-thirds of the votes entitled to be
cast by disinterested stockholders at an annual or special meeting, (d) the
corporation does not have a class of voting stock that is listed on a national
securities exchange, authorized for quotation on an interdealer quotation system
of a registered national securities association, or held by more than 2,000
stockholders unless any of the foregoing results from action taken, directly or
indirectly, by an interested stockholder or (e) the corporation has opted out of
this provision. Norris Delaware has not opted out of these provisions governing
business combinations as permitted under the Delaware Corporation Law.
The Yukon Corporations Act does not contain comparable provisions with
respect to business combinations. See "Transactions With Officers and Directors"
below.
Mergers, Sales of Assets and Other Extraordinary Transactions. Under the
Yukon Corporations Act, certain extraordinary corporate actions, such as certain
amalgamations, continuances, sales, leases or exchanges of all or substantially
all the assets of a corporation and other extraordinary corporate actions such
as liquidations, dissolutions or arrangements, are required to be approved by
special resolution (a resolution passed by a majority of not less than 66 2/3%
of the votes cast by the stockholders who voted on the resolution) and, in
certain cases, such special resolution is also required to be approved by
stockholders separately as a class or series.
The Delaware Corporation Law provides that, unless otherwise specified in a
corporation's certificate of incorporation or unless the provisions of the
Delaware Corporation Law relating to "business combinations" discussed above are
applicable, a sale or other disposition of all or substantially all of the
corporation's assets, a merger or consolidation of the corporation with another
corporation or a dissolution of the corporation requires the affirmative vote of
the board of directors of each constituent corporation plus, with certain
exceptions, the affirmative vote of a majority of the outstanding stock entitled
to vote on the proposal. In a merger, approval by the stockholders of a
constituent corporation is not required if (a) the constituent corporation will
be the surviving corporation, its certificate of incorporation will not be
amended in the merger, its common stock will not be diluted by more than 20% and
each share of its stock outstanding before the merger will be an identical
outstanding or treasury share after the effective date of the merger; or (b) the
corporation is a subsidiary of a parent corporation that owns at least ninety
percent 90% of the subsidiary's outstanding stock before the merger, and the
parent corporation is merging the subsidiary into itself or one (1) or more
other corporations of which the parent owns ninety percent 90% of the
outstanding stock.
Transactions With Officers and Directors. The Yukon Corporations Act
provides that every director who is in any way, directly or indirectly,
interested in a proposed contract or transaction with the Corporation must
disclose the nature and extent of such interest and is liable to account to the
Corporation for any profit made as a consequence of the Corporation entering
into such transaction unless he (a) disclosed his interest at the meeting where
the proposed transaction was first considered; (b) after his disclosure, the
transaction was approved by the directors and (c) he abstained from voting on
such transaction; or unless the contract or transaction was fair and reasonable
to the Corporation and, after full disclosure by the director, the transaction
is approved by the directors or the stockholders.
Under the Delaware Corporation Law, contracts or transactions in which a
director or officer is financially interested are not automatically void or
voidable, if approved by the stockholders or the directors under substantially
the same circumstances as in the Yukon Territory. Approval by the stockholders,
however, requires only a simple majority. Board approval must be by a majority
of the disinterested directors, but interested directors may be counted for
purposes of establishing a quorum.
Dissent Rights. The Yukon Corporations Act provides that stockholders of a
Yukon Territory Corporation are entitled to exercise dissent rights and to be
paid the fair value of their shares in connection with certain matters including
(a) the continuance of the Corporation into another jurisdiction; (b) the sale,
lease or disposition of substantially the whole of the business of the
Corporation; (c) the alteration of the Corporation's memorandum by changing any
restriction on the business to be carried on by the Corporation or on its
powers; (d) any amalgamation of the Corporation with another Corporation; (e)
where, in the event of the Corporation being wound up, the proposal to
distribute the property of the Corporation in kind (in which
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case a stockholder may petition the Yukon Supreme Court for an order requiring
the distribution of the property of the Corporation to be in money).
Stockholders who vote in favor of a resolution in connection with the foregoing
may not subsequently exercise dissent rights in respect of that resolution. See
"Stockholders Right to Dissent."
Under the Delaware Corporation Law, a person generally is entitled to
demand appraisal of and obtain payment of the fair value of the shares that the
person holds in a Delaware corporation, if the corporation is party to a plan of
merger or consolidation. However, the right to demand appraisal does not apply
to stockholders if: (a) they are stockholders of a surviving corporation and a
vote of the corporation's stockholders is not necessary to authorize the merger
or consolidation; (b) the shares held by the stockholders are of a class or
series registered on the New York Stock Exchange or the American Stock Exchange,
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc., or are held of
record by more than 2,000 stockholders on the date set to determine the
stockholders entitled to vote on the merger or consolidation. Notwithstanding
the above, appraisal rights are available for the shares of any class or series
of stock of a Delaware corporation if the holders are required by the terms of
an agreement of merger or consolidation to accept for their stock anything
except: (a) shares of stock of the corporation surviving or resulting from the
merger or consolidation; (b) shares of stock of any other corporation which, at
the effective date of the merger or consolidation, will be listed on the New
York Stock Exchange or the American Stock Exchange, designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of the corporations
described in (a) and (b); or (d) any combination of the shares of stock and cash
in lieu of fractional shares described in (a), (b) and (c).
In a short-form merger under Section 253 of the Delaware Corporation Law, a
parent corporation and one or more subsidiary corporations of which the parent
owns at least 90% of the outstanding shares may merge into the parent
corporation or one of the subsidiaries. Stockholders of the parent corporation
in the short-form merger are not entitled to appraisal rights, whether the
parent corporation survives the merger or not. Dissenting minority stockholders
of a disappearing subsidiary in a short-form merger under the Delaware
Corporation Law are entitled to appraisal rights.
A Delaware corporation may provide in its certificate of incorporation that
appraisal rights shall be available for the shares of any class or series of its
stock as the result of an amendment to its certificate of incorporation, any
merger or consolidation to which the corporation is a party, or a sale of all or
substantially all of the assets of the corporation. Norris Delaware's
Certificate of Incorporation does not expand the appraisal rights to which its
stockholders otherwise are entitled under the Delaware Corporation Law.
Derivative Actions. Under the Yukon Corporations Act, a stockholder,
director or any other person who, in the opinion of the court is a proper person
to apply (a "complainant") may, with leave of the court, bring an action in the
name of and on behalf of the Corporation to enforce a right, duty or obligation
owed to the Corporation or to obtain damages for any breach thereof. A
complainant (as defined above) also may defend, with leave of the court, in the
name and on behalf of the Corporation, any action brought against the
Corporation. A stockholder or director may apply to the court for such leave on
notice to the Corporation if (a) he has made reasonable efforts to cause the
directors of the Corporation to commence, diligently prosecute or defend the
action; (b) he is acting in good faith; (c) it is prima facie in the interests
of the Corporation that the action be brought or defended; and (d) in the case
of an application by a stockholder, he was a stockholder of the Corporation at
the time of the event giving rise to the cause of action. No action brought or
defended as a derivative action can be settled or discontinued without approval
of the court.
Derivative actions may be brought in Delaware by a stockholder on behalf
of, and for the benefit of the corporation. The Delaware Corporation Law
provides that a stockholder must aver in the complaint that he was a stockholder
of the corporation at the time of the transaction of which he complains, and the
stockholder must remain a stockholder until the derivative action is concluded.
However, no action may be brought by a stockholder unless he first seeks
remedial action on his claim from his corporation's board of directors, unless
such a demand for redress is excused. The board of directors of a Delaware
corporation can appoint an
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independent litigation committee to review a stockholder's request for a
derivative action, and the litigation committee, acting reasonably and in good
faith, can terminate the stockholder's action subject to court's review of such
committee's independence, good faith and reasonable investigation. Under the
Delaware Corporation Law, the court in a derivative action may apply a variety
of legal and equitable remedies on behalf of the corporation which vary
depending on the facts and circumstances of the case and the nature of the
action brought. Attorneys' fees may be awarded where prosecuting or settling the
action confers a specific and substantial benefit on the corporation.
Oppression Remedy. The Yukon Corporations Act contains an oppression
remedy that enables the court, if satisfied upon application by a complainant
(as defined above in "Derivative Action") that (a) the affairs of the
Corporation are being conducted or the powers of the directors are being
exercised in an oppressive manner, or (b) some act of the Corporation has been
done or is threatened or some resolution has been passed or is proposed that is
unfairly prejudicial, to make any order it considers appropriate, including the
cancellation of any transaction, the purchase of shares of any stockholder,
appointment of a receiver, the winding up of the Corporation, compensation to
the complainant and the rectification of any corporate record.
Delaware Corporation Law does not provide a statutory remedy specifically
like the Yukon Corporations Act oppression remedy. However, the Delaware law
provides a variety of legal and equitable remedies to a corporation's
stockholders for improper acts or omissions of a corporation, its officers and
directors. In an action alleging a breach of fiduciary duty by the directors of
a corporation the "business judgment rule" must be overcome. Simply stated, the
business judgment rule creates a rebuttable presumption in court that
disinterested directors' decisions have been made in good faith, with due care
and in the best interests of the corporation, absent a showing of intentional
misconduct or gross negligence.
Investigations. The Yukon Corporations Act provides that, on application
of a stockholder, or on application of a corporation, the court may appoint an
inspector to investigate the affairs and management of a corporation or its
affiliates.
The Delaware Corporation Law provides that any stockholder has the right to
inspect the books and records of the corporation upon written demand under oath
for a purpose reasonably related to such person's interest as a stockholder. The
stockholder may compel inspection by court order, if the corporation refuses to
permit such inspection or does not respond within five business days.
Indemnification of Officers and Directors; Limitation of Monetary
Liabilities of Directors. Under the Yukon Corporations Act and pursuant to the
Canadian Constating Documents, the Corporation will indemnify a director or
officer, a former director or officer or a person who acts or has acted at the
Corporation's request as a director or officer of a body corporate of which the
Corporation is or was a stockholder or creditor against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him in respect of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of the Corporation or such body corporate if (a) he
acted honestly and in good faith with a view to the best interests of the
Corporation and (b), in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful. In respect of an action by or on behalf
of Norris Delaware or such body corporate, a corporation may, with court
approval, provide indemnification against all costs, charges and expenses
reasonably incurred by such persons in connection with such action who fulfill
the conditions set forth in (a) and (b) immediately above. The Yukon
Corporations Act requires court approval of any indemnification by a Yukon
Territory corporation.
The Yukon Corporations Act permits, and the Canadian Constating Documents
provide that directors shall not be liable under certain circumstances to the
Corporation or its stockholders for monetary damages unless the loss, damage or
misfortune happened as a result of such director's failure to exercise his
powers and to discharge the duties of his office honestly and in good faith with
a view to the best interests of the Corporation and to exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
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The Delaware Corporation Law permits a corporation to adopt a provision in
its certificate of incorporation eliminating or limiting the personal liability
of a director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, with the following exceptions: (a) a
breach of the director's duty of loyalty; (b) payment of an unlawful stock
dividend or making an unlawful stock repurchase or redemption; (c) acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law; or (d) in any transaction in which the director derived an
improper personal benefit. Norris Delaware's Certificate of Incorporation
eliminates the liability of directors of the corporation for monetary damages to
the fullest extent permissible under Delaware law.
The Delaware Corporation Law permits a corporation to indemnify its
directors, officers, employees and other agents under circumstances similar to
those for which the Canadian Constating Documents provide. The Delaware
Constating Documents require Norris Delaware to indemnify its directors and
executive officers to the fullest extent not prohibited by the Delaware
Corporation Law. According to Norris Delaware's bylaws, however, Norris Delaware
may limit this right by individual contract, or it may deny indemnification in
any proceeding initiated by a director or executive officer or brought by such
person against the corporation or its directors, officers, employees or other
agents except in specified circumstances. Norris Delaware's bylaws require
Norris Delaware to advance expenses to a director or executive officer, provided
that (a) the director or executive officer undertakes to repay amounts advanced
if such person ultimately is determined not to be entitled to indemnification,
and (b) the disinterested directors or, if a quorum of disinterested directors
does not exist, independent legal counsel has not determined in accordance with
the bylaws that the facts demonstrate clearly and convincingly that the
applicant is not entitled to indemnification. The bylaws also permit Norris
Delaware to provide indemnification under the Delaware Corporation law to its
other officers, employees and agents.
Indemnification rights conferred on a person by Norris Delaware's bylaws
are deemed to be contractual, in that their repeal or modification shall have
prospective effect only and shall not affect rights in effect under the bylaws
at the time of an alleged occurrence, act or omission that is the basis of a
proceeding against the person or the corporation. Indemnification rights to
which a person becomes entitled under Norris Delaware's bylaws continue after
the person ceases to be a director, officer, employee or other agent of Norris
Delaware.
Indemnification rights under the Delaware Corporation Law are not
exclusive. Accordingly, Norris Delaware's bylaws specifically permit Norris
Delaware to indemnify its directors, officers, employees and other agents within
the limits established by law and public policy, pursuant to an express
contract, bylaw provision, stockholder vote or otherwise, any or all of which
may provide indemnification rights broader than those currently available under
the Yukon Territory or Delaware indemnification statutes.
Both the Delaware Constating Documents and Canadian Constating Documents
provide that Norris Delaware and the Corporation, respectively, may purchase
insurance on behalf of those persons entitled to be indemnified by the
Corporation.
For additional discussion, see "Ratification of Material Changes in
Constating Documents Affecting Stockholders' Rights -- Proposed Changes in the
Limited Liability of Directors and in the Indemnification Provided to the
Corporation's Directors, Officers, Employees and Agents."
Dividends and Distributions. Under the Yukon Corporations Act, directors
of a Corporation shall not declare or pay a dividend if there are reasonable
grounds for believing that the Corporation is, or would after the payment be,
insolvent.
The Delaware Corporation Law generally provides that a corporation may
declare and pay dividends out of surplus (defined as the excess, if any, of net
assets over stated capital) or, when no surplus exists, out of net profits for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year, subject to any restrictions contained in a corporation's certificate of
incorporation. Norris Delaware's Certificate of Incorporation contains no such
restrictions. Dividends may not be paid out of net profits if the stated capital
of the corporation is less than the amount of stated capital represented by
outstanding preferred stock, if any.
Preemptive Rights. Neither the Delaware Corporation Law, or the Yukon
Corporations Act, automatically provides for preemptive rights to acquire a
corporation's unissued stock. However, such right expressly
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may be granted to the stockholders in a corporation's certificate of
incorporation under the Delaware Corporation Law. Neither the Delaware
Constating Documents nor the Canadian Constating Documents provide for
preemptive rights.
Inspection of Stockholders List. Neither the Delaware Corporation Law, or
the Yukon Corporations Act, automatically provides for the absolute right of
stockholders to inspect the stockholder list for the Corporation. The Canadian
Constating Documents provide that directors may determine whether, to what
extent, at what time and under what circumstances the stockholder list shall be
open to inspection. The Delaware Constating Documents provide that the
stockholders list shall be prepared by the secretary of the Corporation at least
ten days prior to any stockholders meeting and be open to the examination of any
stockholder, for any purposes germane to the meeting, for a period of ten days
prior to the meeting and during the meeting itself.
STOCKHOLDERS' RIGHT TO DISSENT
Yukon Law. The Corporation is subject to the provisions of the Yukon
Corporations Act. Accordingly, stockholders have a right to dissent under
Section 193 of the Yukon Corporations Act if they are opposed to the proposal
respecting the Wyoming Continuation. The text of the resolution to be adopted
upon the approval of the Wyoming Continuation ("the Wyoming Continuance
Resolution") is set forth in Exhibit D attached hereto. A stockholder may
dissent only with respect to all of the shares held by the stockholder or on
behalf of any beneficial owner and registered in the stockholder's name.
In order to dissent, a stockholder is required to send to the Corporation
at or before the meeting, a written objection (an "Objection Notice") to the
Wyoming Continuance Resolution. Yukon Corporations Act 193(5). The notice should
be sent to the Corporation, 12725 Stowe Drive, Poway, California 92064,
Attention: Robert Putnam. A vote against the Wyoming Continuance Resolution , an
abstention, the return of a signed but unmarked proxy or the execution or
exercise of a proxy to vote against the Wyoming Continuance Resolution does not
constitute an Objection Notice, but a stockholder need not vote his shares
against the Wyoming Continuance Resolution in order to object. A vote in favor
of the Wyoming Continuance Resolution will deprive the stockholder of further
dissent rights with respect to the Wyoming Continuance Resolution, although the
mere return of a signed but unmarked proxy will not.
If any Objection Notices are received by the Corporation and if the Wyoming
Continuance Resolution is adopted either the Corporation or the dissenting
stockholder may apply to the Supreme Court of the Yukon Territory for an order
fixing the fair value of the shares of the dissenting stockholder. Yukon
Corporations Act 193(6). At least ten days before the hearing of the application
the Corporation must send to each dissenting stockholder a written offer (the
"Offer to Purchase") to pay for the shares an amount considered by the directors
of the Corporation to be the fair value thereof. Yukon Corporations Act
sec.sec. 193(7) and (8). Every Offer to Purchase shall be on the same terms and
shall be accompanied by a statement showing how the fair value was determined.
Yukon Corporations Act sec. 193(9).
The dissenting stockholder and the Corporation are free to come to an
agreement at any time prior to the hearing of the application by the Supreme
Court in which case the application will be discontinued. Yukon Corporations Act
sec.sec. 193 (10)-(16).
A dissenting stockholder is not required to give security for costs for the
application to the Supreme Court. Yukon Corporations Act sec. 193(11).
A dissenting stockholder may withdraw his Objection Notice at any time
prior to (a) the Wyoming Continuation becoming effective in accordance with the
Wyoming Continuance Resolution (b) the making of an agreement under subsection
Yukon Corporations Act sec. 193(10) between the Corporation and the dissenting
stockholder as to the payment to be made by the Corporation for his shares,
whether by the acceptance of the Corporation's offer under subsection (7) or
otherwise, or (c) the pronouncement of an order under subsection Yukon
Corporations Act sec. 193(13). As well the Corporation may rescind the Wyoming
Continuance Resolution. In any of the foregoing events the dissenting
stockholder shall be reinstated as a holder of his shares.
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The Corporation shall not make payment for shares of a dissenting
stockholder if there are reasonable grounds for believing that:
(a) the Corporation is or would after the payment be unable to pay its
liabilities as they become due, or
(b) the realizable value of the Corporation's assets would thereby be
less than the aggregate of its liabilities. Yukon Corporations Act
sec. 193(20). (the "Solvency Test").
If the solvency test at Yukon Corporations Act Section 193(20) is
applicable the Corporation must, within ten days after (a) the pronouncement of
an order under subsection Yukon Corporations Act sec. 193(13), or (b) the making
of an agreement between the stockholder and the Corporation as to the payment to
be made for his shares, notify each dissenting stockholder that it is unable
lawfully to pay dissenting stockholders for their shares. Yukon Corporations Act
sec. 193(18). In that event the dissenting stockholder may, within thirty days
after receiving the notice from the Corporation, serve a notice of withdrawal of
his Objection Notice and be reinstated as a stockholder. If the dissenting
stockholder does not withdraw his Objection Notice within the thirty day time
period he shall be classed as creditor of the Corporation. His claim will rank
subordinate to the rights of other creditors but in priority to the rights of
the Corporation's stockholders. Yukon Corporations Act sec. 193(18).
The foregoing is only a summary of the provisions of Section 193 of the
Yukon Corporations Act. Stockholders considering exercising such right of
dissent should specifically refer to Section 193 of the Yukon Corporations Act,
a copy of which is attached hereto as Exhibit E. A failure to comply strictly
with the provisions of the statute may prejudice the stockholder's right of
dissent. It is suggested that any stockholder seeking to exercise such right
obtain his own legal advice as to the manner of exercising such right and the
implications thereof for the stockholder.
Wyoming Law. Upon the effectiveness of the change of domicile of the
Corporation from the Yukon Territory, Canada to Wyoming, the Corporation will be
subject to the provisions of the Wyoming Corporation Act. Accordingly,
stockholders will have a right of dissent under Sections 17-16-1301 through
17-16-1331. A record stockholder may assert dissenters' 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 the Corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. A beneficial stockholder may assert dissenters' rights as to shares held
on his behalf only if (i) he submits to the Corporation the record stockholder's
written consent to the dissent not later than the time the beneficial
stockholder asserts dissenters' rights and (ii) 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.
In order to dissent, a stockholder is required to send to the Corporation
at or before the meeting, a written notice of intent to demand payment ("Notice
of Intent") to the Delaware Reincorporation. Wyoming Corporations Act sec.
17-16-1321. The Notice of Intent should be sent to the Corporation at 12725
Stowe Drive, Poway, California 92064, Attention: Robert Putnam. A vote against
the Delaware Reincorporation, an abstention, the return of a signed but unmarked
proxy or the execution or exercise of a proxy to vote against the Delaware
Reincorporation does not constitute a Notice of Intent, but a stockholder need
not vote his shares against the Delaware Reincorporation in order to object. A
vote in favor of the Delaware Reincorporation will deprive the stockholder of
further dissent rights with respect to the Delaware Reincorporation, although
the mere return of a signed but unmarked proxy will not.
If any Notices of Intent are received by the Corporation and if the
Delaware Reincorporation is adopted, the Corporation shall deliver a written
dissenters' notice ("Dissenters' Notice") within ten days of the approval of the
Delaware Reincorporation to all stockholders duly submitting Notices of Intent.
Wyoming Corporation Act sec. 17-16-1322.
A stockholder receiving a Dissenters' Notice shall have not less than 30
nor more than 60 days after the date of delivery of such notice to demand
payment, certify that he acquired beneficial ownership of the shares prior to
the required date and deposit his share certificates in accordance with the
Dissenters' Notice. Wyoming Corporation Act sec. 17-16-1323.
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Upon receipt of the payment demand, the Corporation shall pay each
dissenter the amount the Corporation deems to be the fair value of his shares,
plus accrued interest. The payment shall be accompanied by a statement of how
the Corporation's estimate of fair value was determined. Wyoming Corporation Act
sec. 17-16-1325. A stockholder objecting to the Corporation's estimate of fair
value may submit his own estimate of fair value and demand payment of his
estimate, less any payment already received. Wyoming Corporation Act sec.
17-16-1328. In the event the Corporation and the stockholders are unable to
resolve the matter within 60 days, the Corporation is required to commence a
judicial proceeding to determine the fair value of the shares. Wyoming
Corporation Act sec. 17-16-1330.
The foregoing is only a summary of the provisions of the Sections
17-16-1301 through 17-16-1331 of the Wyoming Corporation Act. Stockholders
considering exercising such right of dissent should specifically refer to such
sections of the Wyoming Corporation Act, a copy of which is attached hereto as
Exhibit F. A failure to strictly comply with the provisions of the statute may
prejudice the stockholder's right of dissent. It is suggested that any
stockholder seeking to exercise such right obtain his own legal advice as to the
manner of exercising such right and the implication thereof for the stockholder.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS -- OWNERSHIP OF THE CORPORATION
COMMON STOCK
General. The following section summarizes certain provisions of United
States federal income tax law that may affect (i) the Corporation and its
subsidiaries, and (ii) U.S. Stockholders (as defined below) of the Corporation.
Although this summary discusses the principal tax considerations deemed by the
Corporation to be material to a current investment in the Corporation's Common
Stock, it does not purport to discuss all of the United States federal income
tax consequences that may be relevant to such an investment nor will it apply to
the same extent or in the same way to all investors. It is based, among other
things, on provisions of the Code, and published judicial decisions, regulations
and rulings thereunder as in effect on the date of this report, and the
assumption that the Corporation will continue to be structured and to operate
its business in the manner described in this report. No information is provided
herein with respect to the effect of any state or local tax law, rule or
regulation nor is any information provided as to the effect of any foreign tax
law (other than the federal law of Canada to the extent specifically set forth
herein) or any provision of United States tax law other than United States
federal income tax law. The following summary assumes that the Corporation will
continue to operate its current business without material changes in the
structure of its operations.
Persons that are not U.S. Stockholders will be taxed differently under
United States federal income tax law from U.S. Stockholders. THIS DISCUSSION
DOES NOT ADDRESS U.S. TAXATION OF NONU.S. STOCKHOLDERS. EACH U.S. AND NON-U.S.
INVESTOR IN THE CORPORATION'S COMMON STOCK OR WARRANTS IS URGED TO CONSULT WITH
AN INDIVIDUAL TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO SUCH INVESTOR
OF AN INVESTMENT IN SUCH SECURITIES.
The Corporation and Subsidiaries. The Corporation is a holding company
incorporated in Canada. All of the Corporation's business operations are
conducted by its U.S. subsidiary in the United States. The Corporation is
subject to tax in Canada and may be subject to tax in the United States. The
U.S. subsidiary is also subject to tax in the United States. The U.S. subsidiary
is not expected to be subject to tax in Canada unless it receives certain types
of Canadian source income or establishes a Canadian trade or business.
U.S. Withholding Tax on Dividends to the Corporation. The Corporation will
be subject to a U.S. withholding tax on any dividends paid by its U.S.
subsidiary. The tax rate is expected to be 6% for dividends paid in 1996,
reduced to 5% for dividends paid in 1997 and thereafter, provided the
Corporation qualifies under the U.S./Canadian Income Tax Treaty (the "Treaty").
Management does not anticipate the payment of dividends for the foreseeable
future. See "Dividends."
Taxation of U.S. Stockholders. For purposes of this summary, U.S.
Stockholders generally include stockholders that are (i) corporations or
partnerships organized under the laws of the United States or any political
subdivision thereof, (ii) estates or trusts, the income of which, from sources
without the United States, is includable in gross income for federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, (iii) United States Citizens, or (iv) United States
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resident aliens (as defined in Section 7701(b) of the Code). For purposes of
this discussion, U.S. Stockholders do not include persons subject to special
provisions of federal income tax law, such as taxexempt organizations, qualified
retirement plans, financial institutions, insurance companies, real estate
investment trusts, regulated investment companies, broker-dealers, and
stockholders who acquired their stock through the exercise of employee stock
options or otherwise as compensation.
Purchase and Sale. If the Corporation Common Stock is sold or exchanged,
gain or loss will be recognized, measured by the difference between the amount
realized from such sale or exchange and the basis, generally the cost, of the
Common Stock sold or exchanged.
Generally, any gain or loss recognized as a result of the foregoing with
respect to the Corporation Common Stock held as a capital asset will be a
capital gain or loss and will either be long-term or short-term depending upon
the period of time the Common Stock sold or exchanged was held. A holding period
of more than one year results in long-term capital gain or loss treatment. The
maximum rate on long-term capital gains for individuals is 28%. There are
limitations on the ability to utilize capital losses to offset ordinary income.
Distributions on Common Stock. No dividends have been paid by the
Corporation to date, and none is anticipated to be paid for the foreseeable
future. However, U.S. Stockholders receiving dividend distributions with respect
to the Corporation's Common Stock would be required to include in gross income
for United States federal income tax purposes the gross amount of such
distributions to the extent that the Corporation has current or accumulated
earnings and profits, without reduction for any Canadian income tax withheld
from such distributions. See "Withholding Tax on Dividends to U.S.
Stockholders." To the extent that distributions exceeded current or accumulated
earnings and profits of the Corporation they would be treated first as a return
of capital up to the U.S. Stockholder's adjusted basis in the Common Stock and
thereafter as gain from the sale or exchange of such shares.
Withholding Tax on Dividends to U.S. Stockholders. If any dividends were
paid by the Corporation, they would be subject to a Canadian withholding tax.
Individual U.S. Stockholders of the Corporation that qualify under the Treaty
would be subject to a 15% Canadian withholding tax on any dividend distributions
from the Corporation. Certain qualifying corporate U.S. Stockholders would only
be subject to a 6% withholding tax, reduced to 5% in 1997 and thereafter. The
withholding tax would be withheld by the Corporation from dividend distributions
and paid to the Canadian government. A U.S. Stockholder may be entitled to a
U.S. foreign tax credit for any Canadian withholding tax. In connection with a
dividend distribution, a domestic corporation that owns 10 percent or more of
the voting stock of the Corporation may also be entitled to a foreign tax credit
with respect to Canadian income taxes paid by the Corporation. Complex rules
govern the availability and amount of foreign tax credits to which a particular
U.S. Stockholder may be entitled. Each U.S. Stockholder should consult its own
tax advisor regarding the possible availability of a foreign tax credit.
Information Reporting Requirements. IRC Section 6046 requires each five
percent-or-greater U.S. Stockholder of the Corporation to file Form 5471. Form
5471 is an information return designed to help the IRS track U.S. persons owning
five percent or more of foreign corporations. EACH U.S. STOCKHOLDER SHOULD
CONSULT WITH U.S. TAX COUNSEL WITH RESPECT TO THESE FILING REQUIREMENTS.
Additional Tax Considerations. Special U.S. tax rules that may be adverse
to a U.S. Stockholder and that are not discussed herein may apply to a U.S.
Stockholder that owns, directly or through rules of attribution, 10% or more of
the voting stock of the Corporation if the Corporation is ever classified as a
controlled foreign corporation ("CBC"). Other adverse U.S. tax rules may apply
to all U.S. Stockholders if the Corporation is ever classified as a passive
foreign investment company ("PFC.") as defined at IRC Section 1296. PFIC status
could characterize the gain on the disposition of shares as an excess
distribution as defined at IRC Section 1291(b) and could result in additional
tax or an interest charge with respect to distributions. Management believes
that the Corporation is not now a CFC or a PFIC, nor has it ever met the
definition of a CFC or a PFIC.
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CANADIAN TAX CONSIDERATIONS -- OWNERSHIP OF THE CORPORATION COMMON STOCK
General. The following summary presents the significant Canadian federal
income tax consequences to a current investor in the Corporation Common Stock.
This summary is based upon current provisions of the Income Tax Act (Canada) and
the Regulations thereunder and proposals to amend such legislation announced by
the Minister of Finance prior to the date of this proxy statement/ prospectus.
It also takes into account the provisions of the Treaty. This summary does not
take into account or anticipate any changes in law, whether by legislative,
government, or judicial action, nor does it take into account provincial or
foreign income tax considerations, which may differ significantly from those
discussed herein.
This summary addresses the Canadian taxation of U.S. stockholders. For
purposes of this summary, U.S. stockholders include U.S. resident individuals
and U.S. corporations. Non-U.S. stockholders should seek independent advice
regarding the income tax consequences of investing in the Corporation Common
Stock.
The Corporation and Subsidiaries. The Corporation was incorporated in
Canada and is subject to tax on its income in Canada. The Corporation is the
parent company of the U.S. subsidiary. The U.S. subsidiary is not expected to be
taxed in Canada unless it commences carrying on a business through a permanent
establishment in Canada.
If the Corporation has a branch in the U.S., it may be subject to income
taxes in the U.S. It will be entitled to a credit against Canadian income taxes
for any such U.S. income taxes, provided the foreign tax credit qualifications
are met.
Taxation of U.S. Stockholders. A U.S. Stockholder who holds the
Corporation Common Stock as capital property will not be subject to Canadian tax
on capital gains realized on the disposition of such Common Stock unless the
Common Stock is "taxable Canadian property" within the meaning of the Income Tax
Act (Canada), and on which no relief is afforded under the Treaty. For most
investors, it is unlikely that the Corporation Common Stock will be considered
taxable Canadian property. However, any stockholder who has been a resident of
Canada should seek independent tax advice.
All U.S. stockholders, whether or not subject to Canadian income tax on the
disposition of stock or warrants, will be subject to Canadian withholding tax on
any dividends received from the Corporation.
Dividends paid on the Corporation Common Stock held by U.S. stockholders
not having a permanent establishment or fixed base in Canada (within the meaning
of the Treaty), will be subject to Canadian withholding tax at the
Treaty-reduced rate of 15%, unless the beneficial owner of the dividend is a
company which owns at least 10% of the voting stock of the Corporation, in which
case the Treaty-reduced tax rate is 6% (reduced to 5% in 1997 and thereafter).
In the absence of an applicable tax treaty, the withholding tax rate would be
25%.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS -- THE CONTINUANCE
The following summary is a general discussion of certain expected United
States federal income tax consequences of the Continuance. This summary is based
upon the Code, regulations and rulings now in effect or proposed thereunder,
current administrative rulings and practice and judicial authority, all of which
are subject to change. Any such change, which may or may not be retroactive,
could alter the tax consequences to the Corporation or its stockholders set
forth herein. This summary does not discuss all aspects of United States federal
income taxation that may be relevant to a particular investor in light of
personal circumstances or to certain types of investors subject to special
treatment under the United States federal income tax laws (for example, life
insurance companies, tax-exempt organizations, foreign investors, dealers in
securities and taxpayers subject to the alternative minimum tax) and does not
discuss any aspect of state, local, Canadian or other foreign tax laws. The
Corporation has not obtained an opinion from tax counsel or independent
accountant in connection with the preparation of this summary.
The Continuance is expected to constitute a reorganization within the
meaning of Section 368(a) of the Code, and the Corporation is expected to be a
party to that reorganization within the meaning of Section 368(b) of the Code.
The transitory domicile of the Corporation as a Wyoming Corporation is likely to
be
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viewed for United States federal income tax purposes as an integrated step of a
single transaction. The discussion below analyzes the continuance as if it
involved a direct continuation from Yukon Territory to Delaware, because this is
now [the transactions are] most likely to be viewed for United States federal
income tax purposes.
If the Continuance constitutes such a reorganization, the following would
be the material United States federal income tax consequences to the Corporation
and its stockholders: (i) no gain or loss would be recognized by the Corporation
upon the Continuance; (ii) no gain or loss would be recognized by stockholders
of the Corporation upon the Continuance, except to holders of the Corporation
Common Stock who receive cash upon the exercise of dissenters rights, as
described herein; (iii) the tax basis of the shares of the Corporation Common
Stock held by stockholders of the Corporation will be unchanged and (iv) the
holding period of the shares of the Corporation Common Stock held by
stockholders of the Corporation will be unchanged, provided such stock is held
as a capital asset at the effective time of the Continuance.
Because stockholders of the Corporation will hold stock in a domestic
corporation rather than a foreign corporation as a result of the Continuance,
the tax treatment of the Corporation stockholders who are U.S. Stockholders (as
defined above under "United States Federal Income Tax
Considerations -- Ownership of the Corporation Common Stock") may also be
affected by Section 367(b) of the Code. Under existing regulations issued
pursuant to Section 367(b) of the Code, since management believes that the
Corporation is not presently, nor has it ever been, a CFC or a PFIC (as defined
above under "United States Federal Income Tax Considerations -- Ownership of the
Corporation Common Stock") neither the Corporation nor stockholders of the
Corporation should be required to recognize gain under Section 367(b) of the
Code. However, under proposed regulations pursuant to Section 367(b) of the
Code, which regulations (with certain exceptions) are proposed to be effective
for transactions occurring on or after the date which is 30 days after the date
on which such regulations are finalized, U.S. stockholders of the Corporation
who own less than 10 percent of the Corporation could recognize gain, if any,
realized on the Continuance, if such proposed regulations are adopted as final
regulations in the form currently proposed, and if such adoption as final
regulations occurs more than 30 days before the Continuance takes place. In
addition, if the proposed regulations are adopted as final regulations in the
form currently proposed, to the extent of the gain, if any, realized on the
Continuance, U.S. Stockholders who own 10% or more of the Corporation will be
taxed on their pro rata shares of the Corporation's cumulative earnings and
profits that had not been previously subject to U.S. tax and that had been
accumulated as of the date of Continuance, even if the proposed regulations are
finalized after the date of Continuance.
For U.S. tax purposes, the U.S. stockholders of the Corporation Common
Stock who receive cash upon the exercise of any dissenters rights generally will
recognize gain or loss measured by the difference between the amount of cash
received and their aggregate adjusted tax basis in such shares. Such gain or
loss generally will be long-term capital gain or loss, if such shares have been
held at the effective time of the Continuance for more than one year. However,
stockholders who exercise dissenters' rights and who are considered for United
Stated federal income tax purposes to own constructively shares of the
Corporation Common Stock actually owned by other persons may, under certain
circumstances, recognize dividend income (taxable as ordinary income) equal to
the full amount of the cash they receive.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY. SUCH DISCUSSION MAY NOT BE APPLICABLE TO A STOCKHOLDER
WHO ACQUIRED SHARES OF THE CORPORATION STOCK PURSUANT TO THE EXERCISE OF AN
EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. THE CORPORATION STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR MORE SPECIFIC AND DEFINITE
ADVICE AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THEM OF THE
CONTINUANCE AS WELL AS ADVICE TO THE APPLICATION AND EFFECT OF STATE, LOCAL,
CANADIAN AND OTHER FOREIGN INCOME AND OTHER TAX LAWS.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS -- OWNERSHIP OF THE CORPORATION
COMMON STOCK FOLLOWING THE CONTINUANCE
If the Continuance takes place, certain of the tax considerations described
above under "United States Federal Income Tax Considerations -- Ownership of the
Corporation Common Stock" would no longer apply. Only the tax considerations
altered by the Continuance are described below.
The Corporation and Subsidiaries. Following the Continuance, it is not
expected that the Corporation would be subject to tax in Canada. The Corporation
would be subject to tax in the U.S.
U.S. Withholding Tax on Dividends to the Corporation. If the Continuance
takes place, the Corporation will be a U.S. corporation. Accordingly, dividends,
if any paid to the Corporation by its U.S. subsidiary would no longer be subject
to U.S. withholding tax.
Distributions on Common Stock. If the Continuance takes place, because the
Corporation will be a U.S. corporation, the rules generally applicable regarding
the dividends received deduction available to corporations receiving dividends
from certain United States corporations would apply to dividends, if any, paid
by the Corporation to corporations that are U.S. stockholders.
Withholding Tax on Dividends to U.S. Stockholders. If the Continuance
takes place, because the Corporation will be a U.S. corporation, there would no
longer be a Canadian withholding tax on dividends paid by the Corporation to
U.S. stockholders.
Information Reporting Requirements. If the Continuance takes place,
because the Corporation will be a U.S. corporation, the information reporting
requirements that may apply to U.S. stockholders of foreign corporations would
no longer be applicable.
Additional Tax Considerations. If the Continuance takes place, because the
Corporation will be a U.S. corporation, special U.S. tax rules that could have
applied in certain circumstances to the Corporation as a foreign corporation,
would no longer be applicable.
Non-U.S. Stockholders. If the Continuance takes place, because the
Corporation will be a U.S. corporation, dividends paid to Canadian stockholders
or other non-U.S. Stockholders could be subject to U.S. withholding tax at a
statutory rate of 30 percent or such lower rate as is provided by any applicable
income tax treaty between the United States and the stockholder's country of tax
residence.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS -- THE CONTINUANCE
The following is a general summary of certain of the Canadian federal
income tax considerations relating to the Continuance of the Corporation which
are generally applicable to the Corporation and the holders of shares of the
Corporation, who deal at arm's length with the Corporation and hold shares of
the Corporation as capital property, all for the purposes of the Income Tax Act
(Canada) ("ITA"). The summary is based on the current provisions of the ITA,
regulations thereunder (the "Regulations") and current administrative and
assessing practices of Revenue Canada Taxation ("Revenue Canada"). In addition,
this summary takes into account all specific proposals to amend the ITA and
Regulations publicly announced by the Department of Finance prior to the date
hereof (collectively, the "Proposed Tax Amendments"). No assurance can be given
that the Proposed Tax Amendments will be enacted as announced or at all. This
summary does not otherwise take into account or anticipate any changes in law,
whether by judicial, governmental or legislative decision or action, nor does it
take into account provincial, territorial or foreign tax legislation or
considerations which may differ significantly from those discussed herein.
This summary is of a general nature only and is not intended to be nor
should it be construed to be, legal or tax advice to any particular holder of
shares of the Corporation. Accordingly, such persons should consult their own
tax advisors for advice with respect to their own particular circumstances.
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The Corporation
Upon the Continuance of the Corporation, the Corporation will cease to be a
resident of Canada for tax purposes under the ITA, assuming central mind and
management of the Corporation is situated outside Canada. The taxation year of
the Corporation will be deemed to end immediately before the Corporation ceased
to be a resident of Canada. Each property owned by the Corporation immediately
before the deemed year end is deemed to have been disposed by the Corporation
for proceeds of disposition equal to the property's fair market value. Gains and
losses derived by the Corporation from such deemed disposition will be included
in computing its income for the taxation year ending at the deemed year end and
will be subject to tax under Part I of the ITA.
Further, tax pursuant to Part XIV of the ITA, will apply at the rate of
25%, reduced by the Treaty to 6% if the continuance occurs in 1996 or 5% if
after 1996, of the amount if any by which the fair market value of the
Corporation's assets at the time of the continuance exceeds the aggregate of the
paid up capital in respect of the shares outstanding immediately before the
continuance and the aggregate of the corporation's debts (excluding those
relating to dividends) all as calculated in accordance with detailed rules under
the ITA.
The following summary is applicable to holders of shares of the Corporation
who are residents of Canada for the purposes of the ITA.
Residents of Canada
A holder of shares of the Corporation will not dispose of, or be deemed to
dispose of, such shares on the Continuance of the Corporation. No tax
consequence will accrue to such holder solely as a result of the Continuance.
A disposition or deemed disposition by a holder of the Corporation share
after the Continuance, will generally result in a holder realizing a capital
gain (or a capital loss) equal to the amount by which proceeds of disposition
are greater (or less) than the aggregate of the holder's adjusted cost base of
the share and the costs of such disposition.
Three quarters of any capital gain realized by a holder will be included in
computing the holder's income as a taxable capital gain. Three quarters of any
capital loss realized by a holder may generally be deducted against taxable
capital gains realized in the year of disposition or the three preceding
taxation years or any subsequent taxation years, subject to detailed rules
contained in the ITA in this regard.
Dividends received by a holder of shares in the Corporation after the
Continuance, will generally be fully included in computing the holder's income
for the purposes of the ITA. A holder may receive a foreign tax credit,
calculated in accordance with detailed rules under the ITA, in respect of all or
a portion of any United States withholding taxes payable on dividends paid to
the holder.
Residents of Canada who exercise dissenters rights prior to the time the
corporation ceases to be a Canadian resident company, with respect to the
Continuance of the Corporation will dispose of their shares to the Corporation
for fair market value. Such holder will generally realize a deemed dividend
equal to the difference between the paid up capital of the shares repurchased by
the Corporation and the amount received from the Corporation on the repurchase
by the Corporation. Such deemed dividend received by an individual will be
included in income of the individual subject to the gross up and dividend tax
credit rules normally applicable to dividends received from taxable Canadian
corporations. A "private corporation," as defined in the ITA, or any other
corporation controlled by or for the benefit of an individual or a related group
of individuals will generally be liable to pay a 33 1/3% refundable tax under
Part IV of the Act on any deemed dividend received to the extent such deemed
dividend is deductible in computing the corporation's income under the ITA. The
amount of any such deemed dividend will not generally be included in computing
the proceeds of disposition to any holder for the purposes of computing any
capital gain or loss arising on the disposition of the shares to the
Corporation. If the stockholder is a corporation, any such capital loss may in
certain circumstances be reduced by the amount of any dividends, including
deemed dividends, which were deductible in computing taxable income of the
corporate stockholder. Analogous rules apply to a partnership or trust of which
a corporation is a member or a beneficiary.
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Non-Residents of Canada
The following summary is applicable to non-residents of Canada for the
purposes of the ITA.
A holder of shares of the Corporation will not dispose of, or be deemed to
dispose of, the shares on the Continuance of the Corporation. No tax consequence
will be accrued to such holder solely as a result of the Continuance.
A disposition or deemed disposition by a holder of a share in the
Corporation after the Continuance who is not a resident in Canada will not give
rise to tax under the ITA.
Dividends received on shares of the Corporation after the Continuance will
not give rise to tax under the ITA.
A non-resident of Canada for the purposes of the ITA who exercises
dissenters rights on the Continuance of the Corporation will have its shares of
the Corporation purchased by the Corporation for fair market value. Such
purchase will result in a deemed dividend being received by the holder equal to
the amount by which the amount received by the holder on the repurchase of the
shares exceeds its paid up capital. Such deemed dividend will be subject to a
25% withholding tax. Such withholding tax may be reduced by the provisions of
any bilateral tax treaty entered into between Canada and the country in which
the holder is resident. The amount of any such deemed dividend will not
generally be included in computing the proceeds of disposition to any holder for
the purposes of computing any capital gain or loss arising on the disposition of
the shares to the Corporation.
RATIFICATION OF MATERIAL CHANGES IN CONSTATING
DOCUMENTS AFFECTING STOCKHOLDERS' RIGHTS
(PROPOSALS THREE-EIGHT)
INTRODUCTION
The Delaware Constating Documents effectively amend the Canadian Constating
Documents by (i) authorizing an increase in the number of shares of Common Stock
that the Corporation is authorized to issue from 30,000,000 to 60,000,000; (ii)
authorizing the issuance of 5,000,000 shares of $.001 par value Preferred Stock;
(iii) altering the procedure to change the number of directors; (iv) changing
the name of the Corporation from "Norris Communications Corp." to "Norris
Communications, Inc.;" (v) eliminating the personal liability of directors to
the fullest extent allowed under Delaware law; (vi) providing additional
indemnification in excess of that currently provided.
The Board of Directors unanimously deems each of the foregoing changes in
the Corporation's Constating documents to be in the best interest of the
Corporation and its stockholders.
INCREASE IN AUTHORIZED COMMON STOCK
(PROPOSAL THREE)
The Delaware Constating Documents authorize the issuance of 60,000,000 of
$.001 par value Common Stock. The Corporation's Articles presently provide that
the authorized Common Stock of the Corporation shall consist of 30,000,000
shares of Common Stock, no par value.
At July 2, 1996, the number of shares either issued or reserved for
issuance totaled approximately 25,441,600, leaving only 4,558,400 shares
available for future issuance. Since it is the Corporation's intention to
finance its operations through the issuance from time to time of various debt
and equity securities and to consider the acquisition of complimentary
businesses (possibly utilizing Common Stock as consideration in some instances),
the continued availability of sufficient shares of Common Stock is desirable to
provide the Corporation with the flexibility to take advantage of opportunities
to issue Common Stock in such situations. The stockholders, as a consequence,
are being asked to ratify the increase in the number of shares of Common Stock
that will be authorized for issuance as a result of the Merger.
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The additional Common Stock will not have any pre-emptive rights or
subscription rights and when fully paid, will not be liable for further calls or
assessments.
On April 16, 1996, the Corporation entered into a Placement Agreement with
Iacocca Capital Partners, L.P., contemplating the private placement of
securities through the sale of Common Stock and/or warrants convertible into
Common Stock. Pursuant to the Placement Agreement, Iacocca is required to use
its best efforts in connection with the offering, and will be attempting to
raise approximately $5,000,000. Investors are given a choice of investments, and
at their election, may purchase shares of Common Stock or warrants or any
combination thereof. As a consequence, the number of shares of Common Stock and
the number and face value of the warrants to be sold will vary. The proceeds of
the private placement received or to be received will be used to repay
indebtedness of approximately 2.2 million and for working capital On June 7,
1996 the Corporation closed the first tranche of the private placement and
received gross proceeds of $2,500,000. The purchase price for the 2,420,143
shares of Common Stock sold was $.70. The remaining shares are being offered at
a purchase price equal to a 30% discount to the average closing bid price of the
shares for the five days immediately preceding the closing. The five warrants
(sold at a face value of $805,000) are convertible into Common Stock (without
the additional consideration) in an amount equal to face value of the warrant
divided by the lessor of (i) $.70 per share or (ii) a 30% discount to the
average closing bid price for the shares for the five days prior to (but not
including) the conversion date. The remaining warrants (also offered at face
value) will be convertible into Common Stock (without additional consideration)
in an amount equal to the face value of the warrant divided by a 30% discount to
the average closing bid price for the shares for the five days prior to (but not
including) the conversion date. The number of shares issuable upon conversion of
the warrants will be further increased at the rate of 7% per year until the
warrant is converted. Since both the price of the Common Stock and the
conversion date are presently unknown, the ultimate number of shares of Common
Stock to be issued upon conversion is unknown and impossible to determine at
this time. In the event of a decline in the price of the Common Stock to $.76
per share, the Corporation will have insufficient shares of Common Stock
authorized and available for issuance upon conversion.
Other than as set forth above, there are, at present, no plans,
undertakings, agreements or arrangements concerning the issuance of additional
shares of Common Stock, except for shares presently reserved for issuance. If
any plans, understandings, agreements or arrangements are made concerning the
issuance of any such shares, holders of then outstanding shares of the
Corporation's capital stock may or may not be given the opportunity to vote
thereon, depending on the nature of any such transactions, the law applicable
thereto and the judgment of the Corporation's Board of Directors regarding the
submission thereof to the Corporation's stockholders.
VOTE REQUIRED; BOARD RECOMMENDATION
The ratification of an increase in the number of shares of Common Stock of
the Corporation that are authorized for issuance will require the affirmative
vote of two-thirds of the stockholders voting at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL.
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AUTHORIZATION OF PREFERRED STOCK
(PROPOSAL FOUR)
The Delaware Constating Documents authorize the issuance of 5,000,000 of
$.001 par value Preferred Stock. No Preferred Stock is currently authorized in
the Canadian Constating Documents.
The Board of Directors considers it desirable to have the Preferred Stock
available for issuance from time to time for such purposes and for such
consideration as the Board of Directors may approve without the need to obtain
the approval of the Corporation's stockholders. Moreover, the terms of the
Preferred Stock including, without limitation, dividends, conversion prices,
voting rights, liquidation and redemption prices will be determined by the Board
of Directors.
Although, at the present time, there are no plans to issue the Preferred
Stock which will be authorized upon the approval of the change of domicile to
Delaware and the adoption of the Delaware Constating Documents, the Board of
Directors could issue such Preferred Stock with dividend and liquidation rights
senior to those of the holders of the Common Stock without stockholder approval.
In addition, although the Board has no present intention of doing so, shares of
Preferred Stock could, without stockholder approval, be issued to a holder who
would vote against a merger, a sale of assets or another extraordinary corporate
transaction which may result in the disapproval of a transaction favored by or
favorable to a majority of stockholders.
VOTE REQUIRED; BOARD RECOMMENDATION
The ratification of the authorization of the issuance of Preferred Stock
will require the affirmative vote of two-thirds of the stockholders voting at
the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROCEDURE TO CHANGE THE NUMBER OF DIRECTORS
(PROPOSAL FIVE)
The Delaware Bylaws currently provide the directors with authority to fix
the number of directors in a range from four to seven, and the currently
established number is four. The Canadian Constating Documents provide that the
Corporation shall have at least the minimum number of directors required under
the Yukon Corporations Act, but the Board of Directors may appoint additional
directors between annual general meetings of stockholders, provided the number
of additional directors does not exceed one-third the number of directors
elected or appointed at the last such meeting. The Yukon Corporations Act
requires that a corporation have at least three directors and permits the Board
of Directors to appoint between annual general meetings, one additional
director. Currently, the Corporation has four directors.
If the Merger is approved, the four directors of the Corporation will
continue as directors of Norris Delaware. The Board of Directors, in addition,
will be permitted to name up to three additional directors. There are, at
present, no plans to appoint any additional directors, although Iacocca Capital
Partners, L.P., the Corporation's placement agent, will have a right to name one
director upon the closing of the Corporation's 1996 private placement.
VOTE REQUIRED; BOARD RECOMMENDATION
The ratification of the procedures set forth in the Delaware Bylaws to
change the number of directors will require the affirmative vote of two-thirds
of the stockholders voting at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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PROPOSED CHANGE OF CORPORATION'S NAME
(PROPOSAL SIX)
At the Effective Time of the Merger the Corporation will be merged with and
into Norris Delaware and thereafter cease to exist. As a result of the Merger,
the Corporation's name will effectively be changed from "Norris Communications
Corp." to "Norris Communications, Inc." Each of the Corporation's subsidiary
corporations currently use the "Norris Communications, Inc." name and the "NCI"
acronym and logo. The Board of Directors believes that a unified name will
provide efficiencies in marketing the Corporation's products on a national and
international basis. Cost savings in advertising, purchasing of printed
materials and other support services also will be recognized.
VOTE REQUIRED; BOARD RECOMMENDATION
The ratification of the change of the Corporation's name will require the
affirmative vote of two-thirds of the stockholders voting at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSED CHANGES IN THE LIMITED LIABILITY OF DIRECTORS
AND IN THE INDEMNIFICATION PROVIDED TO THE CORPORATION'S
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
(PROPOSALS SEVEN AND EIGHT)
The Canadian Constating Documents include a provision which eliminates
officers' and directors' personal liability under certain circumstances for
breach of duty of care to the Corporation and provides for mandatory
indemnification of the Corporation's directors and officers of the Corporation
if (i) such officer or director acted honestly and in good faith with a view to
the best interests of the Corporation and (ii) in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, such
officer or director had reasonable grounds for believing his conduct was lawful.
The Corporation believes that it is important to continue to provide the
Corporation's directors and officers with protection from the risk of litigation
and personal liability, thereby ensuring that the Corporation can continue to
attract and retain experienced individuals to serve as directors and officers
and that the Corporation's directors and officers will continue to consider all
possible alternatives when making business decisions. The Board of Directors has
determined that it is in the best interests of the stockholders of Norris
Delaware that the Certificate of Incorporation of Norris Delaware include a
"Delaware Director Liability Provision" (as defined below) and that the Bylaws
of Norris Delaware contain a "Delaware Indemnification Provision" (as defined
below) in order to take full advantage of the protections permitted under
Delaware law. Due to certain differences between Yukon and Delaware law, Norris
Delaware may be able to provide indemnification to its employees and agents and
limited liability to its directors under a somewhat broader range of
circumstances than currently permitted under Yukon law. The stockholders should
note that the members of the Corporation's Board of Directors will be
beneficiaries of the Delaware Director Liability Provision and the Delaware
Indemnification Provision and therefore have a personal interest in their
approval.
At present, there is no pending litigation or proceeding involving a
director, officer or employee of the Corporation where indemnification would be
required or permitted under the charter documents of the Corporation or Norris
Delaware or where a director's liability would be limited thereby.
Director Liability. The Certificate of Incorporation of Norris Delaware
includes a provision eliminating the directors' personal liability for monetary
damages for a breach of the directors' duty of care to Norris Delaware or its
stockholders (the "Delaware Director Liability Provision"). As a result of the
Delaware Director Liability Provision, no director of Norris Delaware will be
liable for monetary damages for negligence or gross negligence occurring after
the Delaware Reincorporation. Each director will, however, remain personally
liable to Norris Delaware for failure to act in good faith or to comply with his
or her duty of loyalty to Norris Delaware and will continue to be subject to
equitable remedies, although such remedies in some circumstances may not as a
practical matter be available. In addition, under Delaware law, each director
will
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remain liable for engaging in a transaction from which such director derives an
improper personal benefit, for engaging in intentional misconduct or a knowing
violation of law or for the wrongful payment of a dividend or repurchase of
shares by the Corporation where such dividend or repurchase was willfully or
negligently caused by such director. The Delaware Director Liability Provision
also may not limit a director's liability for violations of the federal
securities laws.
The Delaware Director Liability Provision is a somewhat broader
limitation-of-liability provision in comparison to the provisions set forth in
the Canadian Constating Documents. Delaware law also may permit the limitation
of directors' liability in a broader range of circumstances than does Yukon law.
Indemnification. Delaware law provides a detailed statutory framework
covering indemnification of directors, officers, employees and agents against
liabilities and expenses arising out of legal proceedings brought against them
by reason of their status or service as directors, officers, employees or
agents. Section 145 of the General Corporation Law of Delaware ("Section 145")
provides that a director, officer, employee or agent of a corporation: (a) shall
be indemnified by the corporation for expenses, including attorneys' fees, in
defense of any action or proceeding if the director, officer, employee or agent
is sued by reason of his or her service to the corporation, to the extent that
such person has been successful in defense of such action or proceeding, or in
defense of any claim, issue or matter raised in such litigation; (b) may, in
actions other than actions by or in the right of the corporation (such as
derivative actions), be indemnified for expenses, judgments, fines, amounts paid
in settlement of such litigation and other amounts even if he or she is not
successful on the merits, if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation (and in a criminal proceeding, if he or she did not have reasonable
cause to believe his or her conduct was unlawful); and (c) may be indemnified by
the corporation for expenses (but not judgments or settlements) of any action by
the corporation or of a derivative action (such as a suit by a stockholder
alleging a breach by a director or officer of a duty owed to the corporation),
even if he or she is not successful, provided that he or she acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, provided that no indemnification is permitted
without court approval if the person is adjudged liable to the corporation.
Delaware law also permits a corporation to elect to indemnify its
directors, officers, employees and agents under a broader range of circumstances
than that provided under Section 145. The indemnification provision in the
Bylaws of Norris Delaware (the "Delaware Indemnification Provision") takes full
advantage of the Delaware indemnification laws with regard to directors and
officers and provides, among other things, that: (i) Norris Delaware is required
to indemnify its directors and officers to the full extent permitted by law,
including those circumstances in which indemnification would otherwise be
discretionary; (ii) Norris Delaware is required to advance expenses to its
directors and officers as incurred, including expenses relating to obtaining a
determination that such directors and officers are entitled to indemnification,
provided that they undertake to repay the amount advanced if it is ultimately
determined that they are not entitled to indemnification; (iii) a director or
officer may bring suit against Norris Delaware if a claim for indemnification is
not timely paid; and (iv) Norris Delaware may not retroactively amend such
provisions in a way which is adverse to its current or former directors or
officers.
Like the Bylaws of Norris Delaware, the Canadian Constating Documents
provide that the Corporation is required to indemnify its directors and
officers. Yukon law, however, restricts a corporation from providing
indemnification in certain situations in which indemnification may be permitted
under Delaware law. Yukon law, for example, prohibits indemnification of a
director for liability resulting from acts or omissions that show a reckless
disregard for the director's duty to the corporation or its shareholders in
circumstances in which the director was or should have been aware of a serious
risk of injury to the corporation or its shareholders, or for liability
resulting from acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its stockholders. Delaware law does not expressly prohibit
indemnification in such circumstances. The standard of conduct required of
persons being indemnified under Yukon law in civil actions is also more
stringent than that applied in Delaware. Under Yukon law, a person must have
acted in good faith and in a manner the person reasonably believed to be in the
best interests of the corporation and, in actions by or in the right of the
corporation, of its stockholders. Under Delaware law,
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a person must have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation.
The Canadian Constating Documents, unlike the Bylaws of Norris Delaware, do
not provide for the indemnification of employees or agents of the Corporation.
The employees and agents of Norris Delaware will have indemnification rights
under Section 145 and the Norris Delaware Bylaws.
Possible Disadvantages of Indemnification and Directors' Limited Liability
Generally. The Delaware Director Liability Provision and the Delaware
Indemnification Provision could have an adverse impact on the Corporation. In
the event that Norris Delaware is injured as a result of a director's breach of
fiduciary duties, including in connection with a takeover attempt, the Delaware
Director Liability Provision could prevent Norris Delaware from recovering
compensation for the damage it has suffered. The fact that a director knows that
he or she will not suffer personal liability for his or her negligence or gross
negligence may also cause the director to be less careful in handling Norris
Delaware's affairs. In addition, the Delaware Indemnification Provision may
require Norris Delaware to pay the costs of a legal defense and legal judgment
arising out of injuries to third parties caused by the acts of its directors or
officers which Norris Delaware would not otherwise be obligated to pay. The
comparable charter and bylaw provisions currently in effect for the Corporation,
however, have these same potential adverse effects.
VOTE REQUIRED; BOARD RECOMMENDATION
The ratification of the provisions of the Delaware Constating Documents
limiting the liability of directors and the increased indemnification rights
provided to the Corporation's officers, directors, employees and agents by the
Delaware Constating Documents will require the affirmative vote of two-thirds of
the stockholders voting at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL
LIMITING THE LIABILITY OF DIRECTORS AND "FOR" THE INCREASED INDEMNIFICATION OF
THE CORPORATION'S OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
APPROVAL OF AMENDMENTS TO 1994 STOCK OPTION PLAN
(PROPOSAL NINE)
INTRODUCTION
In 1994, the Board of Directors of the Corporation and the stockholders of
the Corporation approved the 1994 Stock Option Plan (the "1994 Plan") under
which 500,000 shares of Common Stock were initially authorized for issuance
pursuant to the exercise of stock options granted thereunder. In January 1996,
the Board of Directors amended the 1994 Plan, subject to stockholder approval,
to increase the number of shares authorized for issuance under the 1994 Plan by
3,500,000 shares. If such amendment is approved, a total of 4,000,000 shares
will be authorized for issuance under the 1994 Plan. To date, no options have
been or will be granted to purchase any of such additional 3,500,000 shares
prior to obtaining stockholder approval of such amendment.
VOTE REQUIRED; BOARD RECOMMENDATION
The proposal to approve the increase in the number of shares authorized for
issuance under the 1994 Plan requires the affirmative vote of a majority of the
shares of Common Stock represented in person or by proxy and eligible to vote at
the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
GENERAL DESCRIPTION OF THE 1994 PLAN
The 1994 Plan is designed to promote the interest of the Corporation and
its stockholders by providing an incentive to certain key employees, directors
and consultants of the Corporation and its affiliates to continue
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their employment and to afford such employees, directors and consultants the
opportunity to acquire and enlarge their stock ownership in the Corporation in
order that they may have a direct interest in the Corporation's success. The
1994 Plan provides for the granting of options which either qualify for
treatment as incentive stock options under Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code") and are designated "incentive stock
options" or which do not qualify for such treatment and are designated
"nonstatutory stock options." Unless the context clearly indicates to the
contrary, the term "option" used herein shall mean either an incentive stock
option or a non-statutory stock option and the term "optionee" shall mean any
person holding an option granted under the 1994 Plan.
ADMINISTRATION
The 1994 Plan is administered by a committee which the Board shall appoint
to administer the 1994 Plan (the "Committee"). The 1994 Plan is currently
administered by the Compensation Committee of the Board of Directors. The
Committee may make such rules and regulations and establish such procedures for
the administration of the 1994 Plan as it deems appropriate. In accordance with
the provisions of the 1994 Plan, the Committee has authority to determine from
time to time the persons who will be granted options, the number of shares
subject to each option, the time or times when options may be granted and to
prescribe such terms and provisions of each option granted which are not
inconsistent with the 1994 Plan. The Committee also construes and interprets the
1994 Plan and options granted under it and determines all questions of policy
which may arise in the administration of the 1994 Plan.
ELIGIBILITY
Key employees, directors and consultants of the Corporation and its
affiliates are eligible for selection as participants in the 1994 Plan.
Incentive stock options may be granted only to full-time key employees of the
Corporation including, without limitation, officers and members of the Board who
are also full-time key employees at the time of grant. Non-qualified stock
options may be granted to employees (including officers) and directors of and
consultants to the Corporation. In no event, however, may a member of the
Committee be granted an option under the 1994 Plan. As of July 2, 1996,
management estimates that approximately 46 persons were eligible to receive
options and five optionees were holding options under the 1994 Plan.
CEILING OF INCENTIVE STOCK OPTION GRANTS
The aggregate fair market value (determined at the time the option is
granted) of the shares of Common Stock for which incentive stock options may be
exercisable for the first time by any employee during any calendar year (under
all incentive stock option plans of the Corporation) may not exceed $100,000.
Should it be determined that any incentive stock option granted pursuant to the
1994 Plan exceeds such maximum, such incentive stock option shall be considered
a non-qualified stock option and not qualify for treatment as an incentive stock
option under Section 422 of the Code to the extent, but only to the extent, of
such excess.
OPTION PRICE
The option exercise price per share for non-qualified stock options granted
under the 1994 Plan must be 85% of the fair market value of the Common Stock
determined on the date the option is granted. The option exercise price per
share for incentive stock options granted under the 1994 Plan must be 100% of
the fair market value of the Common Stock determined on the date that the option
is granted, except that in the case of an employee owning more than 10% of the
combined voting power of all classes of stock of the Corporation (applying
attribution rates), the option exercise price of any incentive stock option
shall be at least 110% of the fair market value of such shares on the date of
grant. The option exercise price is payable by check or by bank draft made
payable to the order of the Corporation or in shares of Common Stock of the
Corporation owned by the optionee having a fair market value on the exercise
date (determined by the Committee) equal to the option price for the shares
being purchased. The average for the bid and asked price for common stock on
June 27, 1996 as reported by NASDAQ was $1.25
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OPTION TERM
No option shall be exercisable after the expiration of ten years from the
date it was granted. Incentive stock options granted to any employee owning more
than 10% of the combined voting power of all classes of stock of the Corporation
will expire five years from the date such option is granted.
TERMINATION OF OPTION
Options granted under the 1994 Plan are contingent upon continued
employment by the Corporation or an affiliate of the Corporation or continued
relationship as a director or consultant; however, if the employment or other
relationship is terminated after 12 months from the date of the grant of the
option, the optionee has the right to exercise his or her option at any time
within a three month period after such termination, but only to the extent that
the optionee was entitled to exercise the option immediately prior to such
termination. If the optionee dies, the option may be exercised at any time
within 18 months following his or her death by his or her estate or by the
person or persons to whom his or her fights under the option passed by law or by
the laws of descent or distribution, but only to the extent that such option was
exercisable by the optionee on the date of optionee's termination or within not
more than three months after such termination. If an optionee becomes
permanently and totally disabled, the option may be exercised at any time within
12 months following such disability, but only to the extent that such option was
exercisable by the optionee on the date of the optionee's termination or within
not more than three months after such termination.
AMENDMENT OF THE 1994 PLAN
The Board of Directors may terminate or amend the 1994 Plan at any time as
it deems advisable, provided, however, that no amendment to the 1994 Plan which
would materially (i) impair any options previously granted, (ii) increase the
maximum number of shares of Common Stock for which options may be granted under
the 1994 Plan, (iii) increase the benefits accruing to options under the 1994
Plan or (iv) modify the requirements as to eligibility to participate in the
1994 Plan or alter the method of determining the option exercise price, may be
made without stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES
Federal income tax laws have frequently been revised and may be changed
again in the future. The Corporation has been advised by its counsel of the
following federal income tax consequences of the grant and exercise of options
under the 1994 Plan and the disposition of shares issued thereunder in existence
as of the date that this Proxy Statement is being printed.
Incentive Stock Options. There are no tax consequences to the optionee
upon the grant of an incentive stock option pursuant to the procedures set forth
in the 1994 Plan. There are no tax consequences to the optionee upon exercise of
an incentive stock option, except that the amount by which the fair market value
of the share at the time of exercise exceeds the option exercise price is
included in the optionee's alternative minimum taxable income (unless the shares
are sold in the same taxable year), possibly giving rise to alternative minimum
tax.
If the shares of Common Stock acquired are not disposed of within two years
from the date the incentive stock option was granted and within one year after
the shares are transferred to the optionee, any gain realized upon the
subsequent disposition of the shares will be characterized as long-term capital
gain and any loss will be characterized as long-term capital loss.
If all requirements other than the above described holding period
requirements are met, a "disqualifying disposition" occurs and gain in an amount
equal to the lesser of (i) the fair market value of the share on the date of
exercise minus the option exercise price or (ii) the amount realized on
disposition minus the option exercise price (except for certain "wash" sales,
gifts, or sales to related persons), is taxed as ordinary income and the
Corporation will be entitled to a corresponding deduction in an amount equal to
the optionee's ordinary income at that time. The gain in excess of this amount,
if any, will be characterized as long-term capital gain if the optionee held the
shares for more than one year. Persons that may be subject to the
32
<PAGE> 36
application of the provisions of Section 16(b) of the Securities Exchange Act of
1934 are subject to certain additional rules.
Nonstatutory Options. Other than incentive stock options granted under the
1994 Plan, all options granted under the 1994 Plan will be taxed as nonstatutory
options. Upon the grant of a nonstatutory option, no income will be recognized
by the optionee and the Corporation will not be entitled to a deduction. This is
because such options are not actively traded on an established market and the
fair market value of the option privilege is not easily ascertainable. Upon the
exercise of nonstatutory options, the optionee will recognize taxable income in
the amount by which the then fair market value of the shares of Common Stock
acquired exceeds the option exercise price, with the Corporation being entitled
to a deduction in an equal amount. The amount of such taxable income will be
characterized as compensation income to the optionee. Persons that may be
subject to the application of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 are subject to certain additional rules.
Upon the subsequent disposition of the Common Stock, the optionee will
recognize gain or loss, which will be characterized as capital gain or loss in
an amount equal to the difference between the proceeds received upon disposition
and his or her basis for the shares (the basis being equal to the sum of the
price paid for the stock and the amount of income realized upon exercise of the
option) provided the shares are held as a capital asset. Any capital gain or
loss to the optionee will be characterized as long-term or short-term, depending
upon whether his or her holding period for tax purposes exceeds one year.
The taxable income recognized upon the exercise of nonstatutory options is
subject to withholding for federal income tax purposes. Accordingly, the
Corporation generally must, as a condition to the exercise of a nonstatutory
option, deduct from payments otherwise due to the optionee the amount of taxes
required to be withheld by virtue of such exercise or require that the optionee
pay such withholding to the Corporation or make other arrangements satisfactory
to the Corporation regarding the payment of such taxes.
The preceding paragraphs as they relate to the optionee are intended to be
merely a summary of the most important Federal income tax consequences of the
grant and exercise of options to a U.S. citizen or resident under the 1994 Plan
and the disposition of shares issued thereunder in existence as of the date that
this Proxy Statement is being printed. Each optionee should consult his or her
own tax counsel as to the consequences under federal, state and local tax laws
for the particular optionee's circumstances.
THE FOREGOING SUMMARY OF CERTAIN MATERIAL FEATURES OF THE 1994 PLAN DOES
NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
1994 PLAN, A COPY OF WHICH, AS AMENDED BY THE BOARD, WILL BE FURNISHED WITHOUT
COST TO STOCKHOLDERS ON REQUEST TO ROBERT PUTNAM, SECRETARY, NORRIS
COMMUNICATIONS CORP., 12725 STOWE DRIVE, POWAY, CALIFORNIA 92064.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as otherwise set out herein, no director or senior officer of the
Corporation or any proposed nominee of management of the Corporation for
election as a director of the Corporation, nor any associate or affiliate of the
foregoing persons has any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in matters to be acted upon at
the meeting.
33
<PAGE> 37
OTHER MATTERS
The board of directors is not aware of any other matters to be brought
before the special general meeting. If any other matters, however, are properly
brought before the meeting, the persons named in the enclosed form of proxy will
have discretionary authority to vote all proxies with respect to such matters in
accordance with their best judgment.
The contents of this Proxy Statement (Information Circular) have been
approved and its mailing has been authorized by a resolution of the directors of
the Corporation.
Dated at Poway, California this 3rd day of July, 1996
ON BEHALF OF THE BOARD
[SIG]
- ------------------------------------------
Robert Putnam, Secretary
34
<PAGE> 38
EXHIBIT A
MERGER AGREEMENT
<PAGE> 39
EXHIBIT A
PLAN OF REORGANIZATION AND AGREEMENT OF MERGER
THIS PLAN OF REORGANIZATION AND AGREEMENT OF MERGER (the "Merger
Agreement") is made as of July , 1996 by and between Norris Communications
Corp., a Wyoming corporation ("Norris Wyoming"), and Norris Communications
Corp., a Delaware corporation ("Norris Delaware"). Norris Wyoming and Norris
Delaware are sometimes referred to herein as the "Constituent Corporations."
RECITALS
A. Norris Delaware is a corporation duly organized and existing under the
laws of the State of Delaware.
B. Norris Wyoming is a corporation duly organized and existing under the
laws of the State of Wyoming.
C. On the date of this Merger Agreement, Norris Delaware has authority to
issue 30,000,000 shares of Common Stock, par value $0.001 per share, of which
ten shares are issued and outstanding and owned by Norris Wyoming.
D. On the date of this Merger Agreement, Norris Wyoming has authority to
issue 30,000,000 shares of Common Stock, without par value, of which 22,013,023
shares are issued and outstanding, and 5,000,000 shares of Preferred Stock,
without par value, of which no shares are issued or outstanding.
E. The respective Boards of Directors of Norris Delaware and Norris Wyoming
have determined that, for the purpose of effecting the reincorporation of Norris
Wyoming in the State of Delaware, it is advisable and to the advantage of such
corporations and their respective shareholders that Norris Wyoming merge with
and into Norris Delaware upon the terms and conditions herein provided.
F. The respective Boards of Directors of Norris Delaware and Norris Wyoming
have approved this Merger Agreement and have directed that this Merger Agreement
be submitted to the vote of their respective shareholders.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that Norris Wyoming
shall merge with and into Norris Delaware on the following terms, conditions and
other provisions.
I. TERMS AND CONDITIONS
1.1. Merger. Norris Wyoming shall be merged with and into Norris Delaware
(the "Merger"), and Norris Delaware shall be the surviving corporation,
effective upon the date this Merger Agreement is made effective in accordance
with applicable law (the "Effective Date").
1.2. Succession. Upon the Effective Date, the separate existence of Norris
Wyoming shall cease and Norris Delaware shall succeed to all of the rights,
privileges, powers and property of Norris Wyoming in the manner of and as more
fully set forth in Section 259 of the General Corporation Law of the State of
Delaware.
1.3. Common Stock of Norris Wyoming. Upon the Effective Date, by virtue of
the Merger and without any action on the part of the holder thereof or the
Constituent Corporations, each share of Common Stock of Norris Wyoming issued
and outstanding immediately prior thereto shall be changed and converted into
one fully paid and nonassessable share of Common Stock, par value $0.001 per
share, of Norris Delaware.
1.4. Common Stock of Norris Delaware. Upon the Effective Date, by virtue
of the Merger and without any action on the part of the holder thereof or the
Constituent Corporations, each share of Common Stock of Norris Delaware issued
and outstanding immediately prior thereto shall automatically be canceled and
returned to the status of an authorized but unissued share.
1.5. Stock Certificates. Upon and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of Common
Stock of Norris Wyoming shall be deemed for all purposes to
1
<PAGE> 40
evidence ownership of and to represent the shares of Common Stock of Norris
Delaware into which the shares of Common Stock of Norris Wyoming represented by
such certificates have been converted in the Merger. The registered owner on the
books and records of Norris Delaware or its transfer agent of any such
outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to Norris
Delaware or its transfer agent, have and be entitled to exercise any voting and
other rights with respect to and to receive any dividends and other
distributions upon the shares of Common Stock of Norris Delaware evidenced by
such outstanding certificate as provided above.
1.6. Options. Upon the Effective Date, Norris Delaware will assume and
continue all of Norris Wyoming's stock option plans, including but not limited
to Norris Wyoming's 1994 Stock Option Plan, as amended, and 1992 Stock Option
Plan, as amended, and the outstanding and unexercised portions of all options
and rights to purchase Common Stock of Norris Wyoming shall be converted into
and become options or rights to purchase the same number of shares of Common
Stock of Norris Delaware at the same exercise price and upon the same terms and
subject to the same conditions as set forth in the agreements entered into by
Norris Wyoming pertaining to such options and rights, as such agreements are in
effect at the Effective Date. Upon the Effective Date, Norris Delaware will
assume the outstanding and unexercised portions of such options and rights and
all obligations of Norris Wyoming with respect thereto.
1.7. Other Employee Benefit Plans. Upon the Effective Date, Norris
Delaware will assume all obligations of Norris Wyoming under any and all
employee benefit plans in effect as of the Effective Date or with respect to
which employee rights or accrued benefits are outstanding as of the Effective
Date.
1.8. Warrants. Upon the Effective Date, each of the warrants to purchase
shares of Common Stock of Norris Wyoming which is outstanding immediately prior
to the Effective Date shall be converted into and become a warrant to purchase
the same number of shares of Common Stock of Norris Delaware at the same
exercise price and upon the same terms and subject to the same conditions as set
forth in each of such respective warrants as in effect at the Effective Date.
Upon the Effective Date, Norris Delaware will assume the outstanding and
unexercised portions of such warrants and all obligations of Norris Wyoming with
respect thereto.
1.9. Reservation of Shares. Upon the Effective Date, an aggregate number
of shares of Common Stock of Norris Delaware shall be reserved for issuance upon
the exercise of options, stock purchase rights and warrants equal to the
aggregate number of shares of Common Stock of Norris Wyoming so reserved
immediately prior to the Effective Date.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Norris Delaware as in effect immediately prior to the Effective
Date shall continue in full force and effect thereafter as the Certificate of
Incorporation of Norris Delaware without change or amendment, until such
Certificate of Incorporation is duly amended in accordance with the provisions
thereof and applicable law. The Bylaws of Norris Delaware in effect immediately
prior to the Effective Date shall continue in full force and effect thereafter
as the Bylaws of Norris Delaware without change or amendment, until such Bylaws
are duly amended in accordance with the provisions thereof and applicable law.
2.2. Directors. The directors of Norris Delaware immediately prior to the
Effective Date shall upon the Effective Date remain the directors of Norris
Delaware and shall serve until the next annual meeting of shareholders of Norris
Delaware and until their successors are duly elected and qualified or until
their earlier resignation, removal or death.
2.3. Officers. The officers of Norris Wyoming shall become officers of
Norris Delaware upon the Effective Date and shall serve until their successors
are duly elected and qualified or their earlier resignation, removal or death.
2
<PAGE> 41
III. MISCELLANEOUS
3.1. Further Assurances. From time to time, as and when required by Norris
Delaware or by its successors and assigns, there shall be executed and delivered
on behalf of Norris Wyoming such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other actions, as shall be
appropriate or necessary in order to vest, perfect or confirm, of record or
otherwise, in Norris Delaware the title to and possession of all of the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Norris Wyoming and otherwise to carry out the purposes of this
Merger Agreement, and the proper officers and directors of Norris Delaware are
fully authorized in the name and on behalf of Norris Wyoming 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 shareholders
of the Constituent Corporations and subject to applicable law, this Merger
Agreement may be amended in any manner as may be determined in the judgment of
the respective Boards of Directors of Norris Wyoming and Norris Delaware to be
necessary, desirable or expedient in order to clarify the intention of the
parties hereto or to effect or facilitate the purposes and intent of this Merger
Agreement; provided, however, that an amendment made subsequent to the adoption
of this Merger Agreement by the shareholders of either Constituent Corporation
shall not: (1) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of such Constituent
Corporation; (2) alter or change any term of the Certificate of Incorporation of
Norris Delaware to be effected by the Merger; or (3) alter or change any of the
terms and conditions of this Merger Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of either
Constituent Corporation.
3.3. Abandonment. At any time before the Effective Date, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either Norris Wyoming or Norris Delaware or both, notwithstanding
the approval of this Merger Agreement by the shareholders of Norris Wyoming and
Norris Delaware.
3.4. Governing Law. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
Wyoming Business Corporation Act.
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.
3
<PAGE> 42
IN WITNESS WHEREOF, this Merger Agreement, having first been duly approved
by the Boards of Directors of Norris Wyoming and Norris Delaware, is hereby
executed on behalf of each said corporation and attested by their respective
officers thereunto duly authorized.
NORRIS COMMUNICATIONS CORP.,
a Wyoming corporation
By: [SIG]
------------------------------------
R. Gordon Root, President
ATTEST:
[SIG]
- -----------------------------------
ROBERT PUTNAM, SECRETARY
NORRIS COMMUNICATIONS CORP.,
a Delaware corporation
By: [SIG]
------------------------------------
R. Gordon Root, President
ATTEST:
[SIG]
- ------------------------------------
ROBERT PUTNAM, SECRETARY
4
<PAGE> 43
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NORRIS COMMUNICATIONS, INC.,
A DELAWARE CORPORATION
<PAGE> 44
[LETTERHEAD]
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"NORRIS COMMUNICATIONS CORP.", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF
MAY, A.D. 1996, AT 9 0'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[STATE SEAL] /s/ Edward J. Freel
------------------------------
Edward J. Freel, Secretary of
State
2576148 8100 AUTHENTICATION: 7968537
960158240 DATE: 05-31-96
<PAGE> 45
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NORRIS COMMUNICATIONS CORP.
ORGANIZED FEBRUARY 29, 1996
The undersigned certifies that:
1. He is the sole incorporator of Norris Communications Corp.
2. The Certificate of incorporation of this corporation is amended and restated
pursuant to sec.241 and sec.245 of the Delaware Code to read as follows:
FIRST: The name of this corporation is Norris Communications, Inc.
SECOND: Its Registered Office in the State of Delaware is to be located at
9 East Loockerman Street, in the City of Dover, County of Kent, 19901. The
Registered Agent in charge thereof is National Registered Agents, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is Sixty-Five Million (65,000,000), divided into Sixty
Million (60,000,000) shares of common stock of the par value of $.001 per share,
and Five Million (5,000,000) shares of preferred stock of the par value of $.001
per share.
FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of the Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
a) The number of shares constituting that series and the distinctive
designation of that series;
b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
e) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
f) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of
such sinking fund;
g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the corporation,
and the relative rights of priority, if any, of payment of shares of that
series;
1
<PAGE> 46
h) Any other relative rights, preferences and limitations of that
series. Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment on the common shares with respect to the
same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the corporation, the assets available for distribution to holders of shares
of preferred Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
SIXTH: The name and mailing address of the incorporator are as follows:
<TABLE>
<S> <C>
NAME MAILING ADDRESS
William Petty 2030 Main Street
Suite 1040
Irvine, California 92714.
</TABLE>
SEVENTH: The duration of the corporation shall be perpetual.
EIGHTH: When a compromise or arrangement is proposed between the
corporation and its creditors or any class of them or between the corporation
and its shareholders or any class of them, a court of equity jurisdiction within
the state, on application of the corporation or of a creditor or shareholder
thereof, or on application of a receiver appointed for the corporation pursuant
to provisions of Section 291 of Title 8 of the Delaware Code or on application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation pursuant to provisions of Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors or of the
shareholders or class of shareholders to be affected by the proposed compromise
or arrangement or reorganization, to be summoned in such manner as the court
directs. If a majority in number representing 3/4 in value of the creditors or
class of creditors, or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or a reorganization, agree to
a compromise or arrangement or a reorganization of the corporation as a
consequence of the compromise or arrangement or reorganization, the compromise
or arrangement and the reorganization, if sanctioned by the court to which the
application has been made, shall be binding on all the creditors or class of
creditors, or on all the shareholders or class of shareholders and also on the
corporation.
NINTH: The personal liability of all of the directors of the corporation
is hereby eliminated to the fullest extent allowed as provided by the Delaware
General Corporation Law, as the same may be supplemented and amended.
TENTH: The corporation shall, to the fullest extent legally permissible
under the provisions of the Delaware General Corporation Law, as the same may be
amended and supplemented, shall indemnify and hold harmless any and all persons
whom it shall have power to indemnify under said provisions from and against any
and all liabilities (including expenses) imposed upon or reasonably incurred by
him in connection with any action, suit or other proceeding in which he may be
involved or with which he may be threatened, or other matters referred to in or
covered by said provisions both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director or officer of the corporation. Such
indemnification provided shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, Agreement or Resolution
adopted by the shareholders entitled to vote thereon after notice.
3. The corporation has not received any payment for any of its stock.
4. Directors were not named in the Certificate of Incorporation and have not
been elected.
2
<PAGE> 47
The undersigned further declares under penalty of perjury under the laws of the
State of Delaware that the matters set forth in this certificate are true and
correct of his own knowledge.
/s/ WILLIAM PETTY
--------------------------------------
William Petty, Incorporator
Dated on May 28, 1996.
3
<PAGE> 48
EXHIBIT C
BYLAWS
OF
NORRIS COMMUNICATIONS, INC.,
A DELAWARE CORPORATION
<PAGE> 49
NORRIS COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
BYLAWS
ARTICLE I
OFFICES
SECTION 1.01 Registered Office. The registered office of Norris
Communications, Inc. (hereinafter called the Corporation) in the State of
Delaware shall be at 9 East Loockerman Street, in the City of Dover, County of
Kent, and the name of the registered agent in charge thereof shall be National
Registered Agents, Inc.
SECTION 1.02 Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors (hereinafter called the Board) may from time
to time determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01 Annual Meetings. Annual meetings of the stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time, date and place as the Board shall determine by resolution.
SECTION 2.02 Special Meetings. A special meeting of the stockholders for
the transaction of any proper business may be called at any time by (i) the
Board or (ii) the Chairman of the Board or (iii) the President or (iv)
stockholders entitled to cast at least ten percent (10%) of the votes at such
meeting.
SECTION 2.03 Place of Meetings. All meetings of the stockholders shall be
held at such places, within or without the State of Delaware, as may from time
to time be designated by the person or persons calling the respective meeting
and specified in the respective notices or waivers of notice thereof.
SECTION 2.04 Notice of Meetings. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to him at his post office address furnished by him to the Secretary of
the Corporation for such purpose or, if he shall not have furnished to the
Secretary his address for such purpose, then at his post office address last
known to the Secretary, or by transmitting a notice thereof to him at such
address by telegraph, cable, or wireless. Except as otherwise expressly required
by law, no publication of any notice of a meeting of the stockholders shall be
required. Every notice of a meeting of the stockholders shall state the place,
date and hour of the meeting, and, in the case of a special meeting, shall also
state the purpose or purposes for which the meeting is called. Notice of any
meeting of stockholders shall not be required to be given to any stockholder who
shall have waived such notice and such notice shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, except as a
stockholder who shall attend such 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. Except as otherwise expressly
required by law, notice of any adjourned meeting of the stockholders need not be
given if the time and place thereof are announced at the meeting at which the
adjournment is taken.
SECTION 2.05 Quorum. Except in the case of any meeting for the election
of directors summarily ordered as provided by law, the holders of record of a
majority in voting interest of the shares of stock of the Corporation entitled
to be voted thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. In the absence of a quorum at any
meeting or any adjournment thereof, a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat or, in
the absence therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such
<PAGE> 50
meeting from time to time. At any such adjourned meeting at which a quorum is
present any business may be transacted which might have been transacted at the
meeting as originally called.
SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of these Bylaws as the
record date for the determination of stockholders entitled to notice of and
to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or (b) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the
meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he shall have expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants in common, tenants
by entirety or otherwise, or with respect to which two or more persons have the
same fiduciary relationship, shall be voted in accordance with the provisions of
the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders all
matters, except as otherwise provided in the Certificate of Incorporation, in
these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat and thereon, a quorum being present. The vote at any meeting of the
stockholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it shall state
the number of shares voted.
SECTION 2.07 List of Stockholders. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) 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.
SECTION 2.08 Judges. If at any meeting of the stockholders a vote by
written ballot shall be taken on any question, the chairman of such meeting may
appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
ability. Such judges shall decide upon the qualification of the voters and shall
report the number of shares represented at the meeting and entitled to vote on
such question, shall conduct and accept the votes, and, when the voting is
completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
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subscribed and delivered by them to the Secretary of the Corporation. The judges
need not be stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which he shall have a material interest.
SECTION 2.09 Action Without Meeting. Any action required to be taken at
any annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01 General Powers. The property, business and affairs of the
Corporation shall be managed by the Board.
SECTION 3.02 Number and Term of Office. The number of directors shall be
not less than four (4) nor more than seven (7). The exact number of directors
shall be seven (7) until changed, within the limits specified above, by a bylaw
amending this Section 3.02, duly adopted by the Board of Directors or by the
stockholders. Directors need not be stockholders. Each of the directors of the
Corporation shall hold office until his successor shall have been duly elected
and shall qualify or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3.03 Election of Directors. The directors shall be elected
annually by the stockholders of the Corporation and the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
SECTION 3.04 Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.05 Vacancies. Except as otherwise provided in the Certificate
of Incorporation, any vacancy in the Board, whether because of death,
resignation, disqualification, an increase in the number of directors, or any
other cause, may be filled by vote of the majority of the remaining directors,
although less than a quorum. Each director so chosen to fill a vacancy shall
hold office until his successor shall have been elected and shall qualify or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special meeting
of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
SECTION 3.07 First Meeting. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
SECTION 3.08 Regular Meetings. Regular meetings of the Board may be held
at such times as the Board shall from time to time by resolution determine. If
any day fixed for a regular meeting shall be a legal holiday at the place where
the meeting is to be held, then the meeting shall be held at the same hour and
place
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on the next succeeding business day not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
SECTION 3.09 Special Meetings. Special meetings of the Board shall be
held whenever called by the President or a majority of the authorized number of
directors. Except as otherwise provided by law or by these Bylaws, notice of the
time and place of each such special meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least five (5)
days before the day on which the meeting is to be held, or shall be sent to him
at such place by telegraph or cable or be delivered personally not less than
forty-eight (48) hours before the time at which the meeting is to be held.
Except where otherwise required by law or by these Bylaws, notice of the purpose
of a special meeting need not be given. Notice of any meeting of the Board shall
not be required to be given to any director who is present at such meeting,
except a director who shall attend such 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.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise provided in
these Bylaws or by law, the presence of a majority of the authorized number of
directors shall be required to constitute a quorum for the transaction of
business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
SECTION 3.11 Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.12 Removal of Directors. Subject to the provisions of the
Certificate of Incorporation, any director may be removed at any time, either
with or without cause, by the affirmative vote of the stockholders having a
majority of the voting power of the Corporation given at a special meeting of
the stockholders called for the purpose.
SECTION 3.13 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
SECTION 3.14 Committees. The Board 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. Any such committee,
to the extent provided in the resolution of the Board and except as otherwise
limited by law, shall have and may exercise all the powers and authority of the
Board 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. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
ARTICLE IV
OFFICERS
SECTION 4.01 Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof and their respective
titles to be determined by the Board), a Secretary and a Treasurer.
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SECTION 4.02 Election, Term of Office and Qualifications. The officers of
the Corporation, except such officers as may be appointed in accordance with
Section 4.03, shall be elected annually by the Board at the first meeting
thereof held after the election thereof. Each officer shall hold office until
his successor shall have been duly chosen and shall qualify or until his
resignation or removal in the manner hereinafter provided.
SECTION 4.03 Assistants, Agents and Employees, Etc. In addition to the
officers specified in Section 4.01, the Board may appoint other assistants,
agents and employees as it may deem necessary or advisable, including one or
more Assistant Secretaries, and one or more Assistant Treasurers, each of whom
shall hold office for such period, have such authority, and perform such duties
as the Board may from time to time determine. The Board may delegate to any
officer of the Corporation or any committee of the Board the power to appoint,
remove and prescribe the duties of any such assistants, agents or employees.
SECTION 4.04 Removal. Any officer, assistant, agent or employee of the
Corporation may be removed, with or without cause, at any time: (i) in the case
of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of an officer, assistant, agent or
employee, by any officer of the Corporation or committee of the Board upon whom
or which such power of removal may be conferred by the Board.
SECTION 4.05 Resignations. Any officer or assistant may resign at any
time by giving written notice of his resignation to the Board or the Secretary
of the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, upon receipt thereof by the Board or
the Secretary, as the case may be; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled for the
unexpired portion of the term thereof in the manner prescribed in these Bylaws
for regular appointments or elections to such office.
SECTION 4.07 The Chairman of the Board. The Chairman of the Board, if
such an officer be elected, shall, if present, preside at all meetings of the
board of directors and exercise and perform such other powers and duties as may
be from time to time assigned to him by the Board or prescribed by the Bylaws.
If there is no President, the Chairman of the Board shall, in addition, be the
Chief Executive Officer of the Corporation and shall have the powers and duties
prescribed in Section 4.08 of this Article IV.
SECTION 4.08 The President. Subject to such supervisory powers, if any,
as may be given by the Board to the Chairman of the Board, if there be such an
officer, the President of the Corporation shall be the chief executive officer
of the Corporation and shall have, subject to the control of the Board, general
and active supervision and management over the business of the Corporation and
over its several officers, assistants, agents and employees.
SECTION 4.09 The Vice Presidents. Each Vice President shall have such
powers and perform such duties as the Board may from time to time prescribe. At
the request of the President, or in case of the President's absence or inability
to act upon the request of the Board, a Vice President shall perform the duties
of the President and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the President.
SECTION 4.10 The Secretary. The Secretary shall, if present, record the
proceedings of all meetings of the Board, of the stockholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be custodian of
the seal of the Corporation and shall affix and attest the seal to all documents
to be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.
SECTION 4.11 The Chief Financial Officer. The Chief Financial Officer
shall have the general care and custody of the funds and securities of the
Corporation, and shall deposit all such funds in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected by the
Board. He shall
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receive, and give receipts for, moneys due and payable to the Corporation from
any source whatsoever. He shall exercise general supervision over expenditures
and disbursements made by officers, agents and employees of the Corporation and
the preparation of such records and reports in connection therewith as may be
necessary or desirable. He shall, in general, perform all other duties incident
to the office of Chief Financial Officer and such other duties as from time to
time may be assigned to him by the Board.
SECTION 4.12 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such officers
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the Corporation. Nothing contained herein shall
preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving such compensation by reason of
the fact that he is also a director of the Corporation. Nothing contained herein
shall preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving proper compensation therefor.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 5.01 Execution of Contracts. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these Bylaws, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or in any amount.
SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such officer, assistant, agent or attorney shall
give such bond, if any, as the Board may require.
SECTION 5.03 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the Chief Financial Officer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board) may endorse,
assign and deliver checks, drafts and other orders for the payment of money
which are payable to the order of the Corporation.
SECTION 5.04 General and Special Bank Accounts. The Board may from time
to time authorize the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may select
or as may be selected by any officer or officers, assistant or assistants, agent
or agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President or a Vice President, and by the Secretary or an Assistant Secretary or
by the
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Chief Financial Officer or an Assistant Chief Financial Officer. Any of or all
of the signatures on the certificates may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any such certificate, shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, such certificate
may nevertheless be issued by the Corporation with the same effect as though the
person who signed such certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or registrar at the date of
issue. A record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number and
class of shares represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the respective dates of
cancellation. Every certificate surrendered to the Corporation for exchange or
transfer shall be canceled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so canceled, except in cases provided for in Section 6.04.
SECTION 6.02 Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6.03 Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these Bylaws, concerning the
issue, transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates. In any
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so to do.
SECTION 6.05 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board may fix, in advance, a record date, which shall not be more than 60
nor less than 10 days before the date of such meeting, nor more than 60 days
prior to any other action. If in any case involving the determination of
stockholders for any purpose other than notice of or voting at a meeting of
stockholders or expressing consent to corporate action without a meeting the
Board shall not fix such a record date, the record date for determining
stockholders for such purpose shall be the close of business on the day on which
the Board shall adopt the resolution relating thereto. A determination of
stockholders entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of such meeting; provided, however, that the Board may
fix a new record date for the adjourned meeting.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 Action, Etc. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an
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action by or in the right of the Corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.
SECTION 7.02 Actions, Etc., by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 7.01 and 7.02. Such determination shall be made (i)
by the Board by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
SECTION 7.04 Indemnification Against Expenses of Successful
Party. Notwithstanding the other provisions of this Article, to the extent that
a director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation as authorized in this Article. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the Board deems appropriate.
SECTION 7.06 Other Rights and Remedies. The indemnification provided by
this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any Bylaws, 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
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has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7.07 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against 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 Article.
SECTION 7.08 Constituent Corporations. For the purposes of this Article,
references to "the Corporation" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation, so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such constituent
corporation as a 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 Article with respect to the resulting or
surviving corporation as he would if he had served the resulting or surviving
corporation in the same capacity.
SECTION 7.09 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, 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 an 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 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" as referred to in this
Article.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Seal. The Board shall provide a corporate seal, which shall
be in the form of a circle and shall bear the name of the Corporation and words
and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
SECTION 8.02 Waiver of Notices. Whenever notice is required to be given
by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 8.03 Amendments. These Bylaws, or any of them, may be altered,
amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a
majority of the number of directors then in office as directors, acting at any
meeting of the Board, or (ii) by the stockholders, at any annual meeting of
stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, modification,
repeal or adoption is given in the notice of special meeting. Any Bylaws made
or altered by the stockholders may be altered or repealed by either the Board or
the stockholders.
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CERTIFICATE OF SECRETARY
The undersigned, being the duly elected Secretary of Norris Communications,
Inc., a Delaware corporation, hereby certifies that the Bylaws to which this
Certificate is attached were duly adopted by the Board of Directors of said
Corporation on July 2, 1996.
[SIG]
--------------------------------------
Robert Putnam, Its Secretary
10
<PAGE> 59
EXHIBIT D
WYOMING CONTINUANCE RESOLUTION
SPECIAL RESOLUTION OF STOCKHOLDERS
"RESOLVED as a Special Resolution that:
the continuance of the Corporation's jurisdiction from the Yukon Territory to
the State of Wyoming, United States of America and any and all amendments to the
Corporation's Articles and Bylaws as a result thereof be and are hereby
approved.
BE IT FURTHER RESOLVED as a Special Resolution that:
the directors of the Corporation be and they are hereby authorized and directed
to take all such acts and proceedings and to execute and deliver all such
applications, authorizations, certificates, documents, filings and instruments
(along with amendments thereto), whether under seal of the Corporation or
otherwise, as in their opinion may be necessary or desirable in connection with
the foregoing.
BE IT FURTHER RESOLVED as a Special Resolution that:
the directors of the Corporation shall have sole and complete discretion on
whether to abandon the continuance of the Corporation's jurisdiction from the
Yukon Territory to the State of Wyoming, United States of American and,
notwithstanding stockholder approval of same, there shall be no obligation to
proceed with the continuance."
<PAGE> 60
EXHIBIT E
YUKON BUSINESS CORPORATIONS ACT SECTION 193
"SHAREHOLDERS' RIGHT TO DISSENT"
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BUSINESS CORPORATIONS ACT
exchange and
(b) state that a dissenting shareholder is entitled to be paid the fair
value of his shares in accordance with section 193, but failure to make
that statement does not invalidate a sale, lease or exchange referred to in
subsection (1).
(3) At the meeting referred to in subsection (2) the shareholders may
authorize the sale, lease or exchange and may fix or authorize the directors to
fix any of its terms and conditions.
(4) Each share of the corporation carries the right to vote in respect of a
sale, lease or exchange referred to in subsection (1) whether or not it
otherwise carries the right to vote.
(5) The holders of shares of a class or series of shares of the corporation
are entitled to vote separately as a class or series in respect of a sale, lease
or exchange referred to in subsection (1) only if that class or series is
affected by the sale, lease or exchange in a manner different from the shares of
another class or series.
(6) A sale, lease or exchange referred to in subsection (1) is adopted when
the holders of each class or series entitled to vote on it have approved of the
sale, lease or exchange by a special resolution.
(7) The directors of a corporation may, if authorized by the shareholders
approving a proposed sale, lease or exchange, and subject to the rights of third
parties, abandon the sale, lease or exchange without further approval of the
shareholders.
SHAREHOLDER'S RIGHT TO DISSENT
193.(1) Subject to sections 194 and 243, a holder of shares of any class of
a corporation may dissent if the corporation resolves to
(a) amend its articles under section 175 or 176 to add, change or remove
any provisions restricting or constraining the issue or transfer of shares
of that class,
(b) amend its articles under section 175 to add, change or remove any
restrictions on the business or businesses that the corporation may carry
on,
(c) Amalgamate with another corporation, otherwise than under section 186
or 189,
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CHAPITRE 15
LOI SUR LES SOCIETES PAR ACTIONS
b) precisant le droit des actionnaires dissidents de se faire verser la
juste valeur de leurs actions conformement a l'article 195, le defaut de
cette mention ne rendant pas nulles les operations visees au paragraphe
(1).
(3) Lors de l'assemblee visee au paragraphe (2), les actionnaires peuvent
autoriser la vente, la location ou l'echange et en fixer les modalites, ou
autoriser les administrateurs a le faire.
(4) Chaque action de la societe, assortie ou non du droit de vote, emporte
droit de vote quant aux operations visees au paragraphe (1).
(5) Les detenteurs d'actions d'une categorie ou d'une serie ne sont fondes
a voter separement su les operations visees au paragraphe (1) que si elles ont
un effet particulier sur cette categorie ou serie.
(6) L'adoption des operations visees au paragraphe (1) est subordonnee a
leur approbation par resolution speciale des actionnaires de chaque categorie ou
serie fondes a voter a cet effet.
(7) Sous reserve des droits des tiers, les administrateurs peuvent renoncer
aux operations visees au paragraphe (1), si les actionnaires les y ont autorises
en approuvant le projet.
DROIT A LA DISSIDENCE
193.(1) Sous reserve des articles 194 et 243, les detenteurs d'actions
d'une categorie peuvent faire valoir leur dissidence si la societe decide, selon
le cas:
a) de modifier ses statuts conformement aux articles 175 ou 176 afin d'y
ajouter, de modifier ou de supprimer certaines disposions limitant
l'emission ou le transfert d'actions de cette categorie;
b) de modifier ses statuts, conformement a l'article 175 afin d'y etendre,
de modifier ou de supprimer certaines restrictions a ses activites
commerciales;
c) de fusionner avec une autre societe autrement qu'en verru de l'article
186 ou 189;
2
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REVISED STATUTES OF THE YUKON 1986
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(d) be continued under the laws of another jurisdiction under section 191,
or
(e) sell, lease or exchange all or substantially all its property under
section 192.
(2) A holder of shares of any class or series of shares entitled to vote
under section 178 may dissent if the corporation resolves to amend its articles
in a manner described in that section.
(3) In addition to any other right he may have, but subject to subsection
(2), a shareholder entitled to dissent under this section and who complies with
this section is entitled to be paid by the corporation the fair value of the
shares held by him in respect of which he dissents, determined as of the close
of business on the last business day before the day on which the resolution from
which he dissents was adopted.
(4) A dissenting shareholder may only claim under this section with respect
to all the shares of a class held by him or on behalf of any one beneficial
owner and registered in the name of the dissenting shareholder.
(5) A dissenting shareholder shall send to the corporation a written
objection to a resolution referred to in subsection (1) or (2).
(a) at or before any meeting of shareholders at which the resolution is to
be voted on, or
(b) if the corporation did not send notice to the shareholder of the
purpose of the meeting or of his right to dissent.
(6) An application may be made to the Supreme Court after the adoption of a
resolution referred to in subsection (1) or (2),
(a) by the corporation, or
(b) by a shareholder if he has sent an objection to the corporation under
subsection (3),
to fix the fair value in accordance with subsection (3) of the shares of a
shareholder who dissents under this section.
(7) If an application is made under subsection (6), the
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LOI SUR LES SOCIETES PAR ACTIONS
d) d'obtenir une prorogation sous le regime d'une autre attente legislative
conformement a l'article 191;
e) de vendre, louer ou echanger la totalite ou la quasi-totalite de ses
biens en vertu de l'article 192.
(2) Les detenteurs d'actions d'une categorie ou d'une serie, habiles a
voter en vertu de l'article 178, peuvent faire valoir leur dissidence si la
societe decide d'apporter a ses statuts une modification visee a cet article.
(3) Outre les droits qu'il peut avoir, mais sous reserve du paragraphe
(20), l'actionnaire habilite a faire valoir sa dissidence et qui se conforme au
present article est fonde a se faire verser par la societe la juste valeur des
actions en cause fixee a l'heure de fermeture des bureaux la veille de la date
de la resolution.
(4) L'actionnaire dissident ne peut se prevaloir du present article que
pour la totalite des actions d'une categorie, inscrites a son nom mais detenues
pour le compte du proprietaire beneficiaire.
(5) L'actionnaire dissident doit envoyer a la societe une opposition ecrite
a la resolution mentonnet au paragraphe (1) ou (2):
a) avant ou pendant l'assemblee convoquee pour voter sur la resolution;
b) dans un delai raisonnable apres avoir appris l'adoption de la resolution
et son droit a la dissidence.
(6) Apres l'adoption de la resolution mentionnee au paragraphe (1) ou (2),
une requete peut etre presentee a la Cour supreme:
a) soit par la societe;
b) soit par un actionnaire s'il a envoye opposition a la societe en
application du paragraphe (5),
afin que soit fixee la juste valeur des actions de l'actionnaire dissident en
conformite avec le paragraphe (3).
3
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(7) If an application is made under subsection (6), the corporation shall,
unless the Supreme Court otherwise orders, send to each dissenting shareholder a
written offer to pay him an amount considered by the directors to be the fair
value of the shares.
(8) Unless the Supreme Court otherwise orders, an offer referred to in
subsection (7) shall be sent to each dissenting shareholder
(a) at least ten days before the date on which the application is
returnable, if the corporation is the applicant, or
(b) within ten days after the corporation is served with a copy of the
originating notice, if a shareholder is the applicant.
(9) Every offer made under subsection (7) shall
(a) be made on the same terms, and
(b) contain or be accompanied by a statement showing how the fair value was
determined.
(10) A dissenting shareholder may make an agreement with the corporation
for the purchase of his shares by the corporation, in the amount of the
corporation's offer under subsection (7) or otherwise, at any time before the
Supreme Court pronounces an order fixing the fair value of the shares.
(11) A dissenting shareholder
(a) is not required to give security for costs in respect of an application
under subsection (6), and
(b) except in special circumstances shall not be required to pay the costs
of the application or appraisal.
(12) In connection with an application under subsection (6), the Supreme
Court may give directions for
(a) joining as parties all dissenting shareholders whose shares have not
been purchased by the corporation and for the representation of dissenting
shareholders who, in the opinion of the Supreme Court, are in need of
representation,
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CHAPITRE 15
LOI SUR LES SOCIETES PAR ACTIONS
(7) Au cas ou une demande est presentee en application du paragraphe (6),
la societe doit, sauf ordonnance contraire de la cour supreme, envoyer aux
actionnaires dissidents une offre ecrite de remboursement de leurs actions, a
leur juste valeur calculee par les administrateurs.
(8) Sauf ordonnance contraire de la Cour supreme, l'offre mentionnee au
paragraphe (7) est envoyee a chaque actionnaire dissident:
a) dix jours au moins avant la date a laquelle la requete doit etre
rerournee, si requerant est une societe;
b) dans les dix jours de la signification a la societe d'une copie de
l'avis introductif si le requerant est un actionnaire.
(9) Toute offre faite en application du paragraphe (7) doit:
a) etre faite aux memes conditions;
b) contenir ou etre accompagnee d'une declaration indiquant la facon dont a
ete determinee la juste valeur.
(10) Avant que la Cour supreme ne prononce une ordonnance fixant la juste
valeur des actions, l'actionnaire dissident peut conclure avec la societe une
convention en vue de l'acquisition de ses actions par la societe, notamment au
prix prevu dans l'offre faite en application du paragraphe (7).
(11) L'actionnaire dissident:
a) n'est pas tenu de fournir une caution pour les frais relativement a la
requete visee au paragraphe (6);
b) sauf dans des circonstances exceptionnelles, n'est pas tenu de payer les
frais de la requete ou de l'evaluation.
(12) Sur requete presentee en vertu du paragraphe (6), la Cour supreme peut
donner des directives concernant:
a) la mise en cause de tous les actionnaires dissidents dont les actions
n'ont pas ete rachetees par la societe et la representation de ceux qui, se
l'avis de la Cour supreme, en ont besoin;
4
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REVISED STATUTES OF THE YUKON 1986
CHAPTER 15
BUSINESS CORPORATIONS ACT
(b) the trial of issues and interlocutory matters, including pleadings and
examinations for discovery,
(c) the payment to the shareholders of all or part of the sum offered by
the corporation for the shares,
(d) the deposit of the share certificates with the Supreme Court or with
the corporation or its transfer agent,
(e) the appointment and payment of independent appraisers, and the
procedures to be followed by them,
(f) the service of the documents, and
(g) the burden of proof on the parties.
(13) On an application under subsection (6), the Supreme Court shall make
an order
(a) fixing the fair value of the shares in accordance with subsection (3)
of all dissenting shareholders who are parties to the application,
(b) giving judgment in the amount against the corporation and in favour of
each of those dissenting shareholders, and
(c) fixing the time within which the corporation must pay the amount to a
shareholder.
(14) On
(a) the action approved by the resolution from which the shareholder
dissents becoming effective,
(b) the making of an agreement under subsection (10) between the
corporation and the dissenting shareholder as to the payment to be made by
the corporation for his shareS, whether by the acceptance of the
corporation's offer under subsection (7) or otherwise, or
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LOIS REVISEES DU YUKON 1986
CHAPITRE 15
LOI SUR LES SOCIETES PAR ACTIONS
b) l'instruction des points en litige et des questions interiocutoires, y
compris les plaidoiries et les interrogatoires au prealable;
c) le versement a l'actionnaire, de la totalite ou d'une partie de la somme
offerte par la societe pour ses actions;
d) le depot de certificats d'actions aupres de la Cour supreme, de la
societe ou de son agent de transfert;
e) la nomination et la remuneration des evaluateurs independants et la
procedure qu'ils sont tenus de suivre;
f) la signification des documents;
g) les fardeau de la preuve qui incombe aux parties.
(13) Sur requete presentee en vertu du paragraphe (6), la Cour supreme rend
une ordonnance:
a) fixant la juste valeur des actions de tous les actionnaires dissidents
qui sont partie a la requete en conformite avec le paragraphe (3);
b) rendant contre la societe un jugement de ce montant, en faveur de
chacun des actionnaires dissidents;
c) fixant le delai dans lequel la societe doit payer ce montant a un
actionnaire.
(14) L'actionnaire cesse d'avoir des droits comme actionnaire, a part le
droit de se faire rembourser la juste valeur de ses actions dont le montant a
ete convenu entre la societe et l'actionnaire ou le montant du jugement, selon
le cas, des que se realise l'une ou l'autre des conditions suivantes:
a) la prise d'effet des mesures approuvees par la resolution au sujet de
laquelle l'actionnaire a exprime sa dissidence;
b) la conclusion de'une convention en vertu du paragraphe (10) entre la
societe et l'actionnaire dissident concernant le remboursement qui lui sera
fait pour ses actions, notamment par l'acceptation de l'offre de la societe
faire en vertu du paragraphe (7);
5
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REVISED STATUTES OF THE YUKON 1986
CHAPTER 15
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(c) the prouncement of an order under subsection (13),
whichever first occurs, the shareholder ceases to have any rights as a
shareholder other than the right to be paid the fair value of his shares in the
amount agreed to between the corporation and the shareholder or in the amount of
the judgment, as the case may be.
(15) Paragraph (14)(a) does not apply to a shareholder referred to in
paragraph (5)(b).
(16) Until one of the events mentioned in subsection (14) occurs.
(a) the shareholder may withdraw his dissent, or
(b) the corporation may rescind the resolution,
and in either event proceedings under this section shall be discontinued.
(17) The Supreme Court may in its discretion allow a reasonable rate of
interest on the amount payable to each dissenting shareholder, from the date on
which the shareholder ceases to have any rights as a shareholder by reason of
subsection (14) until the date of payment,
(18) If subsection (20) applies, the corporation shall, within ten days
after
(a) the pronouncement of an order under subsection (13), or
(b) the making of an agreement between the shareholder and the corporation
as to the payment to be made for his shares,
notify each dissenting shareholder that it is unable lawfully to pay dissenting
shareholders for their shares.
(19) Notwithstanding that a judgment has been given in favour of a
dissenting shareholder under paragraph (13)(b), if subsection (20) applies, the
dissenting shareholder, by written notice delivered to the corporation within 30
days after receiving the notice under subsection (18), may withdraw his notice
of objection, in which case the corporation is deemed to consent to the
withdrawal and the shareholder is reinstated to his full rights as a
shareholder, failing which he retains a status as a claimant against the
corporation, to be paid soon as the corporation is lawfully able to do so or, in
a liquidation, to be ranked subordinate to the rights of creditors of the
corporation but in priority to its shareholders.
(20) A corporation shall not make a payment to a dissenting shareholder
under this section if there are reasonable grounds for believing that
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LOIS REVISEES DU YUKON 1986
CHAPITRE 15
LOI SUR LES SOCIETES PAR ACTIONS
c) le prononce d'une ordonnance en vertu du paragraphe (13).
(15) L'alinea (14)a) ne s'applique pas a l'actionnaire mentionne a l'alinea
(5)b).
(16) Jusqu'a ce que se realise l'un des evenements mentionne au paragraphe
(14):
a) l'actionnaire peut retirer sa dissidence;
b) la societe peut annuler la resolution;
et dans l'un ou l'autre cas, les procedures entamees en vertu du present article
doivent etre suspendues.
(17) La Cour supreme peut, a sa discretion, accorder un taux d'interet
raisonnable sur les montants payables aux actionnaires dissidents, calcule a
partir de la date a laquelle l'actionnaire a cesse de l'etre en vertu du
paragraphe (14) jusqu'a la date du paiement.
(18) Dans les cas prevus au paragraphe (20), la societe doit aviser les
actionnaires dissidents qu'il lui est legalement impossible de rembourser, dans
les dix jours;
a) soit du prononce de l'ordonnance prevue au paragraphe (13);
b) soit de la conclusion de la convention entre l'actionnaire et la societe
concernant le remboursement,
(19) Meme si un jugement a ete rendu en faveur d'un actionnaire dissident
en vertu de l'alinea (13)b), celui-ci peut, dans les cas prevus au paragraphe
(20), par avis ecrit remis a la societe dans les trente jours de la reception de
l'avis prevu au paragraphe (18), retirer son avis d'opposition et recouvrer ses
droits, la societe etant reputee consentir a ce retrait, ou bien conserve la
qualite de creancier pour etre rembourse par la societe des qu'elle sera
legalement en mesure de le faire ou en cas de liquidation, pour etre colloque
apres les droits des autres creanciers mais par preference aux actionnaires.
(20) La societe ne peut effectuer aucun paiement aux actionnaires
dissidents en vertu du present article s'il existe des motifs raisonnables de
croire que:
6
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REVISED STATUTES OF THE YUKON 1986
CHAPTER 15
BUSINESS CORPORATIONS ACT
(a) the corporation is or would after the payment be unable to pay its
liabilities as they become due, or
(b) the realizable value of the corporation's assets would thereby be less
than the aggregate of its liabilities.
PART 15
CORPORATE REORGANIZATION AND ARRANGEMENTS
ARTICLES OF REORGANIZATION RESULTING FROM COURT ORDER
194.(1) In this section, "order for reorganization" means an order of the
Supreme Court made under
(a) section 243,
(b) the Bankruptcy Act (Canada) approving a proposal, or
(c) any other Act of the Parliament of Canada or an Act of the Legislature
that affects the rights among the corporation, its shareholders and
creditors.
(2) If a corporation is subject to an order for reorganization, its
articles may be amended by the order to effect any change that might lawfully be
made by an amendment under section 175.
(3) If the Supreme Court makes an order for reorganization, the Court may
also
(a) authorize the issue of debt obligations of the corporation, whether or
not convertible into shares of any class or having attached any rights or
options to acquire shares of any class, and fix the terms of those debt
obligations, and
(b) appoint directors in place of or in addition to all or any of the
directors then in office.
(4) After an order for reorganization has been made, articles of
reorganization in the prescribed form shall be sent to the registrar together
with the documents required by sections 22 and 114, if applicable.
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LI SUR LES SOCIETES PAR ACTIONS
a) ou bien elle ne peut, ou ne pourrait de ce fait, acquitter son passif a
echeance;
b) ou bien la valeur de realisation de son actif serait, de ce fait,
inferieure a son passif.
PARTIE 15
REORGANISATION DE LA SOCIETE
ET ARRANGEMENTS
REORGANISATION APRES UNE ORDONNANCE DE LA COUR
194.(1) Dans le present article, ordonnance de reorganisation s'entend
d'une ordonnance de la Cour supreme rendue en vertu:
a) soit de l'article 243;
b) soit de la Loi sur la faillite (Canada) approuvant une proposition;
c) soit de route loi federale ou territoriale touchant les rapports de
droit entre la societe, ses actionnaires et ses creanciers.
(2) L'ordonnance de reorganisation rendue conformement au paragraphe (1) a
l'egard d'une societe, peut effectuer dans ses statuts les modifications prevues
a l'article 175.
(3) La Cour supreme peut, dans l'ordonnance de reorganisation:
a) autoriser, en en fixant les modalites, l'emission de titres de creance,
convertibles ou non en actions de toute categorie ou assortis du droit ou
de l'option d'acquerir de telles actions;
b) ajouter d'autres administrateurs ou remplacer ceux qui sont en
fonctions.
(4) Apres le prononce de l'ordonnance de reorganisation, les clauses
reglementant, en la forme prescrite, la reorganisation sont envoyees au
registraire, accompagnees, le cas echeant, des documents exiges aux articles 22
et 114.
7
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EXHIBIT F
WYOMING BUSINESS CORPORATION ACT
SEC.17-16-1301 THROUGH SEC.17-16-1331
"DISSENTERS' RIGHTS"
<PAGE> 68
sec. 17-16-1301 WYOMING BUSINESS CORPORATION ACT sec. 17-16-1301
(d) The corporation shall notify each shareholder, whether or not entitled
to vote, of the proposed shareholders' meeting in accordance with W.S.
17-16-705. The notice shall as state that the purpose, or one (1) of the
purposes, of the meeting is to consider the sale, lease, exchange, or other
disposition of all, or substantially all, the property of the corporation and
contained or be accompanied by a description of the transaction.
(e) Unless the articles of incorporation or the board of directors, acting
pursuant to subsection (c) of this section, require a greater vote or a vote by
voting groups, the transaction to be authorized shall be approved by a majority
of all the votes entitled to be cast on the transaction.
(f) After a sale, lease, exchange or other disposition of property is
authorized, the transaction may be abandoned, subject to any contractual rights,
without further shareholder action.
(g) A transaction that constitutes a distribution is governed by W.S.
17-16-640 and not by this section. (Laws 1989, ch. 249, sec. 1.)
- --------------------------
CROSS REFERENCES. -- As to action without meeting, see sec. 17-16-704. As to
waiver of notice, see sec. 17-16-706.
SHAREHOLDER APPROVAL NOT REQUIRED FOR MORTGAGE. -- By declining to include
"mortgage" in this section, the legislature demonstrated an express intention
that a mortgage would not be considered as a disposition of assets made outside
the usual and regular course of its business. Shareholder approval thus is not
required for the giving of a mortgage by the corporation. Carroll ex rel. Miller
v. Wyoming Prod. Credit Ass'n, 755 P.2d 869 (Wyo. 1988).
ARTICLE 13. DISSENTERS' RIGHTS
Subarticle A. Right to Dissent and Obtain Payment for Shares
SEC. 17-16-1301. DEFINITIONS.
As used in this article:
(i) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder;
(ii) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving, new, or acquiring
corporation by merger, consolidation, or share exchange of that issuer;
(iii) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under W.S. 17-16-1302 and who exercises that right when
and in the manner required by W.S. 17-16-1320 through 17-16-1328;
(iv) "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 the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable;
(v) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
<PAGE> 69
sec. 17-16-1302 WYOMING STATUTES 1977 sec. 17-16-1302
corporation on its principal bank loans, or, if none, at a rate that is fair and
equitable under all the circumstances;
(vi) "Record shareholder" means the person in whose names shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation;
(vii) "Shareholder" means the record shareholder or the beneficial
shareholder. (Laws 1989, ch. 249, sec. 1.)
EDITOR'S NOTES -- There is no subsection (b) in this section as it appears in
the 1989, printed act.
SEC. 17-16-1302. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and to obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(i) Consummation of a plan of merger or consolidation to which the
corporation is a party if;
(A) Shareholder approval is required for the merger or the
consolidation by W.S. 17-16-1103 or 17-16-111 or the articles of
incorporation and the shareholder is entitled to vote on the merger or
consolidation; or
(B) The corporation is a subsidiary that is merged with its parent
under W.S. 17-16-1104.
(ii) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(iii) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one (1) year after the date of sale;
(iv) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
<PAGE> 70
sec. 17-16-1303 WYOMING BUSINESS CORPORATION ACT sec. 17-16-1320
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under W.S. 17-6-604.
(v) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation. (Laws 1989, ch. 249, sec. 1.)
AM JR. 2D, ALR AND C.J.S. REFERENCES. -- Right of stockholder as individual
to complain as against officers, directors or large stockholders or their
transactions in corporation's outstanding stock involving its control or other
purpose, 132 ALR 260.
SEC. 17-16-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
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 shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(i) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(ii) He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote. (Laws
1989, ch. 249, sec. 1.)
Subarticle B. Procedure for Exercise of Dissenters' Rights
SEC. 17-16-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under W.S. 17-16-1302
is taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in W.S. 17-16-1322. (Laws 1989.
ch. 249, sec. 1.)
<PAGE> 71
sec. 17-16-1321 WYOMING STATUTES 1977 sec. 17-16-1323
Am. Jur. 2d, ALR and C.J.S. references. -- Statute for protection of dissenting
shareholder upon change of corporate structure affecting his preferential
rights, 78 ALR 1118.
Timeliness and sufficiency of dissenting shareholder's notice of his objection
to consolidation or merger and of his demand for payment for his shares. 40
ALR3d 260.
SEC. 17-16-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
W.S. 17-16-1302 is submitted to a vote at a shareholders' meeting, a shareholder
who wishes to assert dissenters' rights shall deliver to the corporation before
the vote is taken written notice of his intent to demand payment for his shares
if the proposed action is effectuated and shall not vote his shares in favor of
the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
of this section is not entitled to payment for his shares under this article.
(Laws 1989, ch. 249, sec. 1.)
# 17-16-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of W.S. 17-16-1321.
(b) The dissenters' notice shall be sent no later than ten (10) days after
the corporate action was taken, and shall:
(i) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
(ii) Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;
(iii) Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(iv) Set a date by which the corporation shall receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the notice required by subsection (a) of this
section is delivered; and
(v) Be accompanied by a copy of this article. (Laws 1989, ch. 249,
sec. 1.)
SEC. 17-16-1323. DUTY TO DEMAND PAYMENT.
A shareholder sent a dissenters' notice described in W.S. 17-16-1322 shall
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
W.S. 17-16-1322(b)(iii), and deposit his certificates in accordance with the
terms of the notice.
<PAGE> 72
sec. 17-16-1324 WYOMING BUSINESS CORPORATION ACT sec. 17-16-1325
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article. (Laws 1989, ch. 249.
sec. 1.)
SEC. 17-16-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under W.S. 17-16-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(Laws 1989, ch. 249, sec. 1.)
SEC. 17-16-1325. PAYMENT.
(a) Except as provided in W.S. 17-16-1327, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with W.S. 17-16-1323 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment shall be accompanied by:
(i) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;
(ii) A statement of the corporation's estimate of the fair value of
the shares;
(iii) An explanation of how the interest was calculated;
(iv) A statement of the dissenter's right to demand payment under W.S.
17-16-1328; and
(v) A copy of this article. (Laws 1989, ch. 249, sec. 1.)
AM. JUR. 2D, ALR AND C.J.S. REFERENCES. -- Construction and effect of
provision for payment of dissenting stockholders in statutes relating to merger
or consolidation of corporations, 87 ALR 597; 162 ALR 1237; 174 ALR 960.
Valuation of stock of dissenting stockholders in case of sale of
corporation's entire assets, 48 ALR3d 430.
<PAGE> 73
sec. 17-16-1326 WYOMING STATUTES 1977 sec. 17-16-1328
SEC. 17-16-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under W.S. 17-16-1322 and repeat the payment demand
procedure. (Laws 1989, ch. 249, sec. 1.)
SEC. 17-16-1327. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by W.S. 17-16-1325
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The 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 under
W.S. 17-16-1328. (Laws 1989, ch. 249, sec. 1.)
SEC. 17-16-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate, less any payment under W.S. 17-16-1325, or reject the
corporation's offer under W.S. 17-16-1327 and demand payment of the fair value
of his shares and interest due, if:
(i) The dissenter believes that the amount paid under W.S. 17-16-1325
or offered under W.S. 17-16-1327 is less than the fair value of his shares
or that the interest due is incorrectly calculated;
(ii) The corporation fails to make payment under W.S. 17-16-1325
within sixth (60) days after the date set for demanding payment; or
(iii) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection
<PAGE> 74
sec. 17-16-1330 WYOMING BUSINESS CORPORATION ACT sec. 17-16-1330
(a) of this section within thirty (30) days after the corporation made or
offered payment for his shares. (Laws 1989, ch. 249, sec. 1.)
Subarticle C. Judicial Appraisal of Shares
SEC. 17-16-1330. COURT ACTION.
(a) If a demand for payment under W.S. 17-16-1328 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the sixty (60) day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office, or if none in this state, its
registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one (1) or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in the amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for:
(i) The amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation; or
(ii) The fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under W.S.
17-16-1327. (Laws 1989, ch. 249, sec. 1.)
CROSS REFERENCES. -- As to service by publication, see Rule 4, W.R.C.P. As
to depositions and discovery, see Rules 26 to 37, W.R.C.P.
<PAGE> 75
sec. 17-16-1331 WYOMING STATUTES 1977 sec. 17-16-1331
SEC. 17-16-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under W.S. 17-16-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under W.S. 17-16-1328.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(i) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of W.S. 17-16-1320 through 17-16-1328; or
(ii) Against either the 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 this article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonably fees to be paid out of the amounts awarded the
dissenters who were benefited. (Laws 1989, ch. 249, sec. 1.)
ARTICLES 14. DISSOLUTION
CROSS REFERENCES. -- As to dissolution of nonprofit corporations, see
sec.sec. 17-6-109 and 17-6-110. As to dissolution of lodge, and societies, see
sec. 17-9-106. As to dissolution of a corporation formed under the Wyoming
Industrial Corporation Act, see sec. 17-11-116. As to dissolution of partnership
under Uniform Partnership Act, see sec. 17-18-601 et seq. As to dissolution of
limited partnerships, see sec. 17-14-901 et seq. As to dissolution of limited
liability companies, see sec. 17-15-123 through 17-15-129.
As to dissolution of corporation upon judgment against corporation in action
of quo warrants, see sec.sec. 1-31-118 through 1-31-121. As to appointment of
receivers by district court, and as to qualifications, powers and duties of
appointees, see chapter 33 of title 1. As to reorganization of banks, see
chapter 4 of title 13.
AM. JUR. 2D, ALR AND C.J.S. REFERENCES -- Jurisdiction of action involving
internal affairs of foreign corporation, 18 ALR 1383; 89 ALR 736; 155 ALR 1231;
72 ALR2d 1211.
Inherent power of equity, at instance of stockholder, to wind up solvent,
going corporation on ground of fraud, mismanagement or dissentions, 43 ALR 288;
61 ALR 1212; 91 ALR 665.
Conduct of affairs and powers of corporation after its dissolution or
expiration or forfeiture of its charter, 47 ALR 1288; 97 ALR 477.
Dissolution of corporation or expiration or forfeiture of its charter as
affecting property rights, 47 ALR 1328; 97 ALR 477.
Personal liability on contract made by "trustees" or others, in closing
affairs of dissolved corporation, 76 ALR 1478.
Dissolution of corporation on ground of intracorporate deadlock or dissention,
19 ALR2d 1260.
Stockholder's rights to patent, copyright or trademark owned by corporation
upon its dissolution, 30 ALR2d 938.
Service of process on dissolved domestic corporation in the absence of express
statutory direction, 75 ALR2d 1399.
Dissolving or winding up affairs of corpora-
<PAGE> 76
NORRIS COMMUNICATIONS CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL GENERAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 25, 1996
The undersigned stockholder of Norris Communications Corp. (the
"Corporation") hereby appoints R. Gordon Root or failing him Robert Putnam or
failing him Peter Gorrie as proxy to attend the Special General Meeting of
Stockholders and any adjournment or adjournments thereof and to vote the shares
in the capital of the Corporation registered in the name of the undersigned as
follows:
1. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING
THE CORPORATION TO CHANGE ITS DOMICILE FROM YUKON TERRITORY, CANADA TO
WYOMING, U.S.A., BY WAY OF A CONTINUATION UNDER THE YUKON BUSINESS
CORPORATIONS ACT.
/ / FOR / / AGAINST / / ABSTAIN
2. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING
THE CORPORATION TO SUBSEQUENTLY CHANGE ITS DOMICILE FROM WYOMING TO
DELAWARE TO BE ACCOMPLISHED BY THE MERGER OF THE CORPORATION WITH AND
INTO A WHOLLY-OWNED DELAWARE CORPORATION FORMED SOLELY FOR THE PURPOSE
OF COMPLETING THE MERGER.
/ / FOR / / AGAINST / / ABSTAIN
3. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING THE
CORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT THE
CORPORATION IS AUTHORIZED TO ISSUE FROM 30,000,000 TO 60,000,000.
/ / FOR / / AGAINST / / ABSTAIN
4. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING THE
CORPORATION TO ISSUE 5,000,000 SHARES OF $.001 PAR VALUE PREFERRED STOCK.
/ / FOR / / AGAINST / / ABSTAIN
5. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING THE
CORPORATION TO ALTER THE PROCEDURE TO CHANGE THE NUMBER OF MEMBERS OF THE
CORPORATION'S BOARD OF DIRECTORS.
/ / FOR / / AGAINST / / ABSTAIN
6. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING THE
CORPORATION TO CHANGE THE CORPORATION'S NAME FROM "NORRIS COMMUNICATIONS
CORPORATION" TO "NORRIS COMMUNICATIONS, INC."
/ / FOR / / AGAINST / / ABSTAIN
<PAGE> 77
7. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING
THE CORPORATION TO ELIMINATE THE PERSONAL LIABILITY OF DIRECTORS TO THE
FULLEST EXTENT ALLOWED UNDER DELAWARE LAW
/ / FOR / / AGAINST / / ABSTAIN
8. TO CONSIDER AND IF DEEMED ADVISABLE, TO PASS A RESOLUTION AUTHORIZING
THE CORPORATION TO PROVIDE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS OF
THE CORPORATION CERTAIN INDEMNIFICATION RIGHTS IN ADDITION TO THOSE
CURRENTLY PROVIDED.
/ / FOR / / AGAINST / / ABSTAIN
9. TO CONSIDER AND IF DEEMED ADVISABLE, TO APPROVE THE ACTION OF THE
CORPORATION'S BOARD OF DIRECTORS IN AMENDING THE 1994 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AND WHERE A CHOICE IS
SPECIFIED WILL BE VOTED AS DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY
WILL CONFER DISCRETIONARY AUTHORITY AND WILL BE VOTED IN FAVOR OF THE
RESOLUTIONS REFERRED TO ABOVE. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY
TO VOTE IN RESPECT OF ANY AMENDMENTS OR VARIATIONS TO THE MATTERS IDENTIFIED IN
THE NOTICE OF SPECIAL GENERAL MEETING OR ANY OTHER MATTER WHICH MAY PROPERLY
COME BEFORE THE MEETING AND IN SUCH MANNER AS SUCH NOMINEE IN HIS JUDGMENT MAY
DETERMINE, all in the same manner and to the same extent and with the same power
as the undersigned could do if the undersigned were personally present at the
meeting.
The undersigned hereby revokes any proxy previously given.
AS WITNESS MY HAND this ____ day of __________________, 1996.
PRINT NAME _____________________________________________
SIGNATURE _____________________________________________
NOTE: YOU MUST DATE AND SIGN THE PROXY
NOTES
1. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AND WHERE A CHOICE IS
SPECIFIED WILL BE DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED IN FAVOR OF THE RESOLUTIONS REFERRED
TO ABOVE. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY TO VOTE IN RESPECT OF
ANY AMENDMENTS OR VARIATIONS TO THE MATTERS IDENTIFIED IN THE NOTICE OF ANNUAL
GENERAL MEETING OR ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING
AND IN SUCH MANNER AS SUCH NOMINEE IN HIS JUDGMENT MAY DETERMINE.
<PAGE> 78
2. IF THE SHAREHOLDER DOES NOT WANT TO APPOINT EITHER OF THE PERSONS NAMED IN
THE INSTRUMENT OF PROXY, HE SHOULD STRIKE OUT THEIR NAMES AND INSERT IN THE
BLANK SPACE PROVIDED THE NAME OF THE PERSON HE WISHES TO ACT AS HIS PROXY. SUCH
OTHER PERSON NEED NOT BE A SHAREHOLDER OF THE CORPORATION.
3. THE INSTRUMENT OF PROXY WILL NOT BE VALID UNLESS IT IS DATED AND SIGNED BY
THE SHAREHOLDER OR BY HIS ATTORNEY DULY AUTHORIZED BY HIM IN WRITING, OR, IN THE
CASE OF A CORPORATION, IS EXECUTED BY AN OFFICER OR OFFICERS OR ATTORNEY FOR THE
CORPORATION. IF THE INSTRUMENT OF PROXY IS EXECUTED BY AN ATTORNEY FOR AN
INDIVIDUAL SHAREHOLDER OR JOINT SHAREHOLDERS OR BY AN OFFICER OR OFFICERS OR
ATTORNEY OF A CORPORATE SHAREHOLDER, THE INSTRUMENT SO EMPOWERING THE OFFICE OR
OFFICERS OR THE ATTORNEY, AS THE CASE MAY BE, OR A NOTARIAL COPY THEREOF, MUST
ACCOMPANY THE PROXY INSTRUMENT.
4. THE INSTRUMENT OF PROXY TO BE EFFECTIVE MUST BE DEPOSITED WITH:
ROBERT PUTNAM
SECRETARY
NORRIS COMMUNICATIONS
12725 STOWE DRIVE
POWAY, CALIFORNIA 92064
NOT LESS THAN FORTY-EIGHT (48) HOURS, EXCLUDING SATURDAYS AND HOLIDAYS,
PRECEDING THE MEETING OR AN ADJOURNMENT OF THE MEETING.
5. IF THIS PROXY IS BEING MAILED FROM CANADA, ADDITIONAL POSTAGE MAY BE
REQUIRED. GENERALLY, U.S. MAILINGS REQUIRE $.32 POSTAGE AND CANADIAN MAILINGS
REQUIRE $.52 (CDN) POSTAGE.
